Investors bank on open borders

Within days of Premier Mark McGowan lifting the state’s borders, Richard Cash was taking calls from investors on the eastern seaboard eager to venture west.

The Colliers International state chief executive met with three Sydney groups and other interstate buyers in mid-March to discuss opportunities across office, retail and industrial sectors.

“Within a week or so, people were ringing to say, ‘We haven’t been to Perth in two years, we are looking to get over to look at particular asset classes’,” Mr Cash told Business News.

“These buyers have been keeping abreast of what is on the market here in Western Australia; they are aware of which assets are for sale, but they want to physically inspect before they participate in the process.

“Now the borders have reopened, it is not an exaggeration to say that the market is about to heat up.”

Business News understands an east coast fund is interested in Perth’s Allendale Square, put on the market last year by its owner Mirvac and valued at $232 million.

A joint venture agreement between Victoria’s Gurner Group on a $500 million apartment project on the Chellingworth Motors site in Nedlands this month confirmed the east coast interest in WA development sites.

An unconditional contract is in place with an eastern states-based developer for Lot 203 Wunderlich Road in Subiaco, which has approval for 201 apartments and 11 offices.

CBRE’s Derek Barlow, who is brokering the deal, said he had worked with the buyer during the past 18 months, when border restrictions limited opportunities to visit the site.

When the border reopened, however, the buyer was quick to execute a contract, with the deal expected to settle in coming months.

Mr Barlow said he expected more interest in infill development sites from interstate and overseas buyers this year, with construction costs and builder uncertainty expected to normalise.

“With Perth’s median apartment and house prices currently the lowest of any state in the nation, developers are seeing the opportunity for price growth in the Perth market,” he said.

Ray White Commercial WA senior commercial property adviser Brett Wilkins agreed that lower land values in Perth compared with other states was bringing investors into the state.

“We are seeing two different streams: investors chasing the higher yields and developers chasing the cheaper WA development sites,” Mr Wilkins said.

Mr Wilkins, who helped broker the recent sale of four Elizabeth Quay retail lots to local and Hong Kong investors for $12.86 million, has spoken with several interstate funds since the border opened.

Industrial strength He was also behind the $1.3 billion off-market sale of Jandakot Airport to Sydney-based Dexus, one of the largest ever property deals in WA.

This brought investment in industrial assets to record levels in 2021, and industry experts say the interest in the state’s industrial market will only continue.

JLL head of industrial WA Nick Goodridge said he expected the market to attract strong interest from the eastern states this year.

“From an industrial perspective, WA is on the radar; we are going to be the beneficiary of really sharp pricing on the east coast,” he said.

“Groups and the investment fund managers in the capitals are looking at WA as a growth market and a market that still offers some value when you compare it to the eastern states.

“We expect that to really continue and [have] big flows of capital coming in.”

Growth Cygnet West partner Wayne Lawrence said interstate and foreign buyers looking to expand their footprint in WA had shown strong interest in recent weeks.

“Additionally, we have noticed an increase of online subscribers of our property research who are based in Singapore, Hong Kong and [South] Korea,” he said.

Mr Lawrence said WA was an attractive market due to its strong yields.

“Comparatively, across the investment property assets classes, whether it be office, retail or industrial, our yields are at least 100 basis points more attractive than on the east coast,” he said.

“This, coupled with the general acknowledgement that we are coming out of the bottom of the cycle, makes for appealing growth prospects.”