Sales of Australian commercial property assets are at their lowest level of Q1 activity since 2011, with sales down 31 per cent year-on-year, new data from CBRE reveals.
CBRE Australian head of research, Stephen McNabb, said of the estimated $3.1 billion worth of transactions in Q1 2015, just $1.6 billion had been spent by domestic investors, down 55 per cent on the corresponding period in 2014.
While domestic investment slumped, foreign spending increased by $500 million (52 per cent), to $1.4 billion.
McNabb said the subdued start to 2015 reflected a number of key factors, including the paring back from a record-breaking 2014.
“We have also seen yield compression sharply concentrated within prime and premium assets, but as yet but as yet little compelling reason for owners to sell these assets,” he said.
“However, we are at a point where we expect some domestic investors to look to trade out along the risk curve seeking value add opportunities which would drive higher turnover through the remainder of 2015.”
The research also reported that value of sales of office space was nine per cent down on Q1 2014, while the industrial and retail sectors were even more subdued, with sales of industrial assets down 49 per cent, and retail property down 60 per cent.
Yet despite the sluggish start to the year for the office market, CBRE regional director capital markets, Josh Cullen, said transactions in the sector were likely to increase throughout the year and potentially surpass the 2014 record.
“The Q1 result was primarily due to a lack of available stock and we’re certainly continuing to see extremely strong demand from both domestic and international investors,” he said.