As a result of the global financial crisis … sales of Melbourne CBD Offices fell in 2008 (to $425.2m) from the level achieved in 2007 (of $850.9m) — according to research released by CBRE.
Institutional buyers and REITs have virtually withdrawn from the market … leaving private syndicates, wealthy families and overseas buyers to transact most of the deals.
And this is likely to continue into 2009/10.
As you would expect, Office yields have also softened across Australia during the downturn.
However, Melbourne has strongly held its ground — performing almost twice as well as all the other capital cities — where you are likely to see falls of up to 40% in overall value.
In fact, the recent purchase by the Laidlaw family of the Transport Accident Commission building in Geelong for about $75 million … is evidence of the underlying strength of the Melbourne market.
Unlike the early 1990s, you are in a low interest environment; and the demand-supply cycle is a lot healthier this time around.
As such, you will not see an extended downturn for the Australian Commercial Property Market. Although the recovery in some markets (like Brisbane, Perth and Sydney) may end up being a little slower.
But even for those markets, you can expect to see them getting back to normal during 2010/11.
The next 12 months is a perfect time to set yourself up for when the upturn occurs.
And if you would like to take advantage of some of these emerging opportunities … you can let me know, by simply leaving your details below.