Rents are spiking for apartments in East Perth because of strong economic growth, low unemployment, corporate relocations and supply shortages, new research from Knight Frank says.
Knight Frank said rents in September for studio apartments on Adelaide Terrace were averaging $500 per week, up from $400 per week in May and June.
Furnished apartments on Adelaide Terrace are attracting average gross yields of 6.48 per cent, compared with a metro-wide yield of 4.8 per cent.
Since 2005, Knight Frank said, there has been a 59 per cent increase in the number of people living in the Perth CBD, putting a squeeze on apartment supply.
The apartment development pipeline is also drying up, after more than 1,200 apartments were delivered to market in the central Perth area over 2009 and 2010.
Knight Frank has forecast just over 350 apartments either under construction or planned for construction for 2012 and 2013.
“It is our opinion that the stock levels of inner city apartments will decrease significantly due to this lack of supply of newly constructed apartments and also as more owners selling their property take it off the market to benefit from the increasing rental returns,” Knight Frank residential project marketing director Neil Kay said.
“The knock-on effect is likely to result in buyers and investors jumping back into the market and driving capital growth.”
