What happens when you gather the State’s property market leaders in the same room for two hours of talks? You hear sharp analysis of the biggest issue impacting the sector and more importantly their innovative solutions. Westpac Group hosted this thinktank with Business News in October and here we share a series of articles generated from that forum focusing on emerging trends in the WA Property Market.
We’re Open for Business
There’s no doubt that nationally these are turbulent times in the property market with unprecedented rises in some areas and falls in other. In WA, retail and commercial values may have declined but are counterbalanced by home values which are spectacularly up. CBRE senior director Ben Styles says COVID-19 has been particularly kind too in the state’s industrial sector with more than $2billion worth of transactions in WA this year, substantially higher than previously seen.
There has been strong buyer depth across the entire Industrial market, but in particular the Institutional space.
Westpac has a significant investment in supporting the property sector, currently over $67billion. Making it one of the nation’s largest participants in the sector.
Westpac National General Manager Martin Green says business activity is at the strongest levels we have seen since the GFC, with expected growth this year estimated to be significant.
Whilst post-Covid 19 trends are still emerging, there is far more investment activity and attention on our smaller capital cities as investors and developers are seeing these cities propositions strengthen in terms of liveability and economic incremental growth.
Trends show that in WA major regional destinations are growing as remote working options, fast-tracked by the pandemic, enable professionals to make the ‘sea changes’ and ‘tree changes’ once only the domain of the retired.
However, Mr Green says the backbone of the growth, perhaps surprisingly, is the renaissance of private enterprise groups, and private syndicates which are making big moves, confident they can grow in the turbulent market.
“We’re seeing that private enterprise is more and more active in our commercial markets, particularly the Eastern Seaboard, where investors are taking very different decisions to what they took two, three years ago,” he says.
Westpac Regional State Manager Property WA Matt Kenny says Westpac is well and truly “ open for business”. Our message is simple – we continue to back Australia’s Commercial Property sector and help investors and developers step back into growth mode. With a National reopening around the corner, commercial real estate will continue to play a pivotal role in the futures of our cities.
He says investors are focusing on both smaller projects in all asset classes, in particular commercial and industrial assets.
The Bank is looking to continue to drive its Residential construction book, we are very focussed on supporting proven developers with strong development proposals where we take a balanced approach to all risk fundamentals not just presales. The banks risk management framework is being re-aligned to this approach and support the market as it restores with higher activity with low supply in most cities.
“On the equity side, in terms of raising equity, it’s insatiable out there at the moment, so the problem is finding property,” he says.
CBRE Perth Senior Director, Valuations Jason Fenner says local WA based groups are buoyed by the ‘flood of money’ into well leased property. He says unlike some based over east, local knowledge and presence to start from the ground up, finding sites and sourcing occupiers in both a tough leasing market and a market where travel access has been patchy is invaluable. It’s a particular trend in industrial property and large format retail that he expects to continue over the next 12 to 24 months.
“We’ve got a very strong base in WA of local knowledge, and there’s a lot of local developers and high net worth individuals that have got confidence given the end product is currently very liquid and at record low yields he says.
Mr Fenner says the benefit of having a WA presence is also playing out in new childcare centres, service stations, medical centers where groups can ‘get in front of the active occupiers’ to do the leasing deals to get projects off the ground. “Managing construction cost risk in the next 12 months, that’s going to be the toughest job.”