Low vacancy in inner city
VACANCY rates are at an all time low in Brisbane’s inner city as a tightening property market puts the strain on renters, according to Colliers International.
Colliers International research analyst Lachlan Walker (pictured) says the inner city vacancy rate has dropped to 1.4 per cent, compared to 2.2 per cent in outer Brisbane and 3.7 per cent state-wide.
“These record lows have just never been seen before in Brisbane, and it looks like rentals are going to tighten further and push up yields,” says Walker.
“It all depends on the buyers, but we’ve seen buyers struggle to get finances with everything that’s been going on, and a lot of projects have fallen through, like Vision, Empire Square, and I don’t know what will happen with Trilogy.”
Colliers International will release the Brisbane Apartment Report in February with sales data and vacancy levels for the final 2008 period.
Walker says development in the inner city, as well as the western and eastern suburbs have been put on hold, but if there’s going to be any significant development it would come from West End or Hamilton.
“There’s Mirvac Place on the waterfront at Hamilton, and a lot of our results will depend on the sort of sales made there,” he says.
“2008 was a tough year, everyone was a bit scared, and we don’t know what 2009 will bring yet, but we expect this market tightening to continue.”
According to a leading indicators report by international property and construction consultants Davis Langdon, the Brisbane and overall southeast Queensland property and construction sectors are facing a tough 12 months ahead with investor sentiment tipped to remain subdued for at least the first half of 2009.
Davis Langdon’s Brisbane office director Phil Plant, says the Brisbane market was very hard to gauge as it was changing on almost a daily basis.
“China’s $870 billion economic injection will almost certainly have a positive impact on the resources sector in Queensland, which will go some of the way to mitigating other economic fallout for the State,” he says.
Plant says Brisbane commercial and residential markets had been hit hard by the economic downturn.
“In the past month one major residential tower has been scrapped and one commercial tower deferred due largely to the difficulty in obtaining finance. Tenant demand has dropped with rents and car-parking rates also starting to ease,” he says.
“With 10 office towers currently under construction, the outlook for additional new construction is unlikely in the short to medium term.”
Davis Langdon has also identified a slowdown in the retail market with construction at a five year low in this sector and several projects being deferred due to weaker spending forecasts.
“However, rental growth has remained solid so it is not all gloom and doom,” says Plant.
Plant says that overall, the softening in demand in the southeast had led to reduced building prices, particularly in the more competitive small to medium sized building markets.
“We are predicting modest price rises of between three and four per cent over the next 12 months although an improvement in market conditions could see this figure increase,” he says.
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