The worst fears of people came true when the COVID-19 pandemic hit the country last year. However, the commercial property market maintained its resilient nature, and the local investor demand never slowed down. The market did get a jolt with more officegoers in Brisbane opting to work from home and continuing with the trend. Conversely, industrial real estate experienced an upswing, with more business owners requiring warehouses and storage spaces.
In a nutshell, the negative impact of the pandemic was insulated by the vast migration of interstate settlers and the presence of well-developed infrastructure in the state. Thus, if you plan to invest in commercial real estate in Brisbane, you must take a look at the property market analysis for 2021 to make the right decision. The data will help you to find the best property type for investment and identify the high-performing suburbs that get the best rental yield.
Suburban Markets Are Leading the Way
Although the workforce is returning to the CBD offices, the level of occupancy before the pandemic has not been achieved. The fringe and suburban areas are displaying better performance because of the higher availability of commercial spaces in these parts as compared to the CBD. With travel restrictions, offshore investments have reduced drastically. However, local investors and high-net-worth individuals are filling the gap and looking at affordable commercial real estates in Brisbane.
Queensland has come up as a feasible option with its diverse economy, which is making a swift comeback after the downturn. Also, the state has $50 billion infrastructure development projects underway that have helped in employment growth. The rise in population and jobs will increase the demand for office spaces and help in gaining the growth momentum back in 2021.
Also, the low-interest rates will catapult the sector to its original position. The growth in the mining sector is further promoting the migration of interstate Australians and helping Brisbane to become a preferred choice among investors.
Logistics Companies Are Driving IndustrialGrowth
Industrial real estate has been moving on the growth path since e-commerce businesses are thriving in the current conditions. The advantages of contactless deliveries and shopping online have made people depend on this mode of making purchases. The trend has continued even after the easing of restrictions, which has led to better demand in the sector because of the higher yield.
The rental income for investors has been growing at a steady pace. The average rent for industrial properties in Brisbane is currently at $119/sq m while the vacancy rate for structures that are more than 3000sq m stands at 6.4%. With limited stock in supply, the prices of the property will continue to soar in 2021. Many large corporations are eyeing the region to set up their logistics centres in and around the city. Amazon has already come up with a fulfilment centre in Lytton, which is a charming suburb of the capital city along the river. Huge demand is pouring in from all quarters, including private and institutional investors as well as foreign buyers.
Office Property Demand Back on Track
According to the forecasts and the current trends, office spaces are witnessing a renewed demand as the economy is recovering. The workforce is coming back to the workstations as the virus has been contained in most parts of the state. There has been a surge in white-collar jobs in suburban areas, and the demand from cross-border investors in the country has been rising.
Property Group Dexus has been given the approval to develop Eagle Street Pier and Waterfront Place precinct into massive commercial twin towers along with leisure space. The $2.1 billion project has been approved by the City Council, and the riverside location makes it highly viable. It is expected to become a gateway to the Brisbane CBD and will become a central point of attraction for businesses and the workforce.
The affordability of B grade office properties in the CBD is attracting several buyers, and the fantastic positioning of these buildings further adds to their appeal. Enquiries and inspections have been coming back to normal rates as the coronavirus cases are going down.
Social distancing will ensure the need for bigger workspaces and structures with new designs that can support the safety norms. Also, suburban offices will be in high demand because workers prefer to work closer to home rather than travelling to the CBD.
Retail Sector on It Way To Normalcy
With local tourism opening and the Queensland economy in the recovery mode, the retail sector is expected to experience slow but positive growth. Fashion businesses were the worst-hit segment due to the COVID-19 pandemic. However, things are taking a positive turn as November-December 2020 witnessed a massive hike in retail spending. The crowds returned to the shopping precincts for the holiday season and helped in giving a much-needed boost to the sector.
The big-box retail chains have been unaffected by the pandemic as most buyers are unwilling to buy these items without having a good look at them. These products include bulky furniture like sofa and beds and high-end electronics like laptops and LCD TVs. Thus, the brick-and-mortar stores in Brisbane have not been as impacted by the contagion as other capital cities. The growth in population will ensure that the neighbourhood retail stores and large format retail shops continue to rake in dollars in 2021.
Medical-Related Properties To Become Prominent
Although it is a small segment of the commercial real estate sector, it is getting the required attention in the pandemic-affected world. Pharmaceutical companies and healthcare centres are in high demand in the current conditions. The investment in the domain is expected to grow in 2021, with more focus on improving the infrastructure.
Also, the offshore investment in commercial properties will be ignited once again in the New Year as the country has been able to contain the virus better than other countries.
Commercial real estate in Brisbane is on its way to expand and grow in 2021, according to most estimates. With the advantages of interstate migration, mining boom, high online sales, growth in retail spending, and low-interest rates, the city is one of the best destinations for making a sound investment.