CAPITAL TRANSACTIONS

According to Rino Carpinelli, State Managing Director at Savills Australia, Adelaide is continuing to experience sound demand from institutional and overseas investors due to the attractiveness of yields relative to the eastern states together with the stable long-term growth it is well known for.  

Despite the global pandemic, we have also seen increased activity from both Sydney and Melbourne private investors, and we expect that this will also continue into 2021 and beyond.

“The Adelaide story is compelling, with a strengthening Office Leasing market, abolition of stamp duty, significant federal and state government continuing expenditure in technology, defence, medical, education and space industries and significant private capital expenditure with a combination of apartment towers, office buildings, student accommodation and hotels under construction within the CBD,” said Mr. Carpinelli.

“This activity is driving increased enquiry from groups who previously may have overlooked Adelaide.”

“Notable transactions over the past 12 months have included 50 Flinders Street, 60 Wakefield Street and 22 King William Street with several others currently under due diligence. A-Grade market yields have over the past 12 months tightened, being influenced by the eastern seaboard and the low interest rate environment with yields likely to remain at historical lows for some time.”

“We are predicting continuing demand for CBD assets in the New Year, being largely driven by institutional and offshore investors with a focus on premium grade buildings and/or genuine repositioning opportunities.” 

INDUSTRIAL & LOGISTICS

Despite what has been a very interesting year, we are experiencing increased activity in the sales and leasing markets,” said Steve Bobridge, Director of Industrial & Logistics at Savills Australia. “While this occurred mainly in the second half yields for quality long term lease investment properties have achieved below 6.0% in a range of price brackets.

Mr Bobridge said yields are currently expected to continue to firm with a lack of quality stock available in the market as Vendors hold onto assets. No stamp duty payable and the lower interest rate environment provide a healthy return for industrial and commercial investments.

“We see 2021 anticipating an increase in the volume of sales and leasing transactions in the market together with new projects in Adelaide with the Defence requirements.”

“We are seeing interstate interest now the borders are open, and they are very keen to investigate opportunities available in SA with an attractive yield in comparison to the eastern seaboard.”

OFFICE LEASING

According to Andrew Ingleton, Director of Office Leasing at Savills Australia, the office leasing sector in Adelaide has been surprisingly buoyant in October/November with both large and small transactions occurring.

“Adelaide appears to have recovered faster from the COVID shutdown than our interstate counterparts. We have also noticed that much of the October activity was attributed to SA based organisations with local decision making whilst there has been a flurry of interstate-based businesses in early December illustrating the different time lines in different states.

“Our vacancy rates increased a little in Adelaide but not to the same extent as they have in most other states. Sublease space is often the barometer of a severe market downturn, and Adelaide has fared quite well in that regard.

“So, whilst 2020 will forever be one of the worst years on record for relocations in the Office market, the pent-up demand suggests that 2021 will be a different story, and the recovery will be sudden rather than gradual.”