Strong Demand Dominating the Australian Commercial Property Sector

The team at Cushman & Wakefield Valuation and Advisory have compiled a summary of key 2018/2019 institutional transactions across the Sydney CBD, North Sydney and Metropolitan commercial markets. The aim of the document is to provide the reader with a snapshot of the key sales in each market and then further expand upon each sale (via a one page summary for each property) outlining the key investment metrics and drivers of the transaction.

Over the last 12 months, there has been continued strong demand within the commercial property sector (within these markets) in terms of investment activity and tenant demand. The commercial sales summary provides a snapshot of key investment metrics over 2018/19. In particular it highlights the tightening (albeit stabilising) yield bias within the Sydney Metropolitan market and the general convergence of yields between asset grades and locations.

A prime example of this is within North Sydney where the differential yield spread between A and B grade assets has narrowed to as little as 25 – 50 basis points. This differential has proven to be even tighter in some instances within the Sydney CBD. The Parramatta office market continues to perform strongly, reflecting investment metrics generally aligned with those of North Sydney. Meanwhile, sales in non-core Sydney Metropolitan markets have also reflected tightening yields as competition exists between purchasers moving up the risk scale in search of yield. All these factors highlight the convergence story and the relative point in cycle.

This report has been collated as a centralised point of analysis of the key sales. We hope it will be of assistance to both investors and owners alike in summarising recent benchmark investment activity.

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