It was a year of highs and lows in Western Australia’s property game, with a record 46 per cent surge in Perth’s housing prices in the year to September and stellar commercial gains.
It was a year of highs and lows in Western Australia’s property game, with a record 46 per cent surge in Perth’s housing prices in the year to September and stellar commercial gains. Countering this were alarming office vacancy rates, land shortages, interest rate hikes and affordability crises.
The residential sector posted its fifth year of strong growth, the strongest WA has recorded since the 1980s and welcomed by many lucky homeowners, whose properties soared in value. First homebuyers, on the other hand, were forced to scramble, camp, fight and plead for property as Perth’s median house price edged to $440,000.
According to the Property Council of WA, the commercial market recorded its strongest year in more than 15 years as Perth CBD office properties returned 27.4 per cent in the year to September 2006.
Capital gains accounted for an asset return of 19 per cent for the year and rent delivered 7.2 per cent at the same time. Retail property returns were equally healthy, buoyed by strong consumer spending in the sector, increasing 10.4 per cent in the year to September.
In the CBD, those experiencing rent reviews over the year would have felt the heat from an almost 50 per cent growth in prime effective office rents in the year to September.
The rent hike can almost solely be attributed to record vacancy rates, reported to be a meager 1.7 per cent at the end of September and now estimated at 0.1 per cent for prime space.
After jostling with each other throughout the year for Perth’s few prospective anchor tenants, including BankWest, KPMG, NAB and now BHP Billiton, developers have responded to the office space squeeze by starting work on at least two major office projects.
Joint venture partners ISPT, Pivot Group and Axiom Properties decided to speculatively build their 28,000 square metre retail and commercial building Century City, between Hay Street and St Georges Terrace, without an anchor tenant.
Hawaiian and partner Multiplex have begun work on the smaller of two towers at Bishops See, after KPMG agreed to lease a 7,000sq m portion of the nine level office tower. Pre-commitments are being sought for the larger 27-storey building.
At Raine Square, developers Luke Saraceni and Hossean Pourzand scored the biggest ever leasing deal in Perth in October, securing BankWest for the entire 42,500sq m of their proposed 21-storey tower.
Construction work at Raine Square is expected to begin shortly once a builder is appointed, with BankWest to move in by November 2009.
The tower they are leaving behind is currently the subject of intense investor interest, as a half stake estimated to be worth more than $140 million is on the market.
The state government is also moving at the end of 2009, having reserved 22,000sq m of office space at its 140 William Street project, above the new William Street train station.
Evolution Consortium, spearheaded by CBus Property, was appointed in September to construct a three-tiered high-rise building of up to 20 storeys, to begin in mid-2007.