- A varied outlook is expected for the various sectors and regions.
- Busselton retail may see a boost, with several factors playing in its favour.
- Industrial remains robust, with prices and demand to grow in 2024.
Each sector and location will see varying outcomes in 2024, with the Perth property market outlook including insights across the commercial, industrial, and retail markets.
Sharing their insights for the commercial edition of the 2024 Perth real estate market predictions are Momentum Wealth’s and Westbridge Funds Management’s Damian Collins, REIWA’s Cath Hart, and SVN’s Rocco Demaio.
Momentum expected in the office market late in 2024
“The office is not rendered obsolete; nevertheless, demand is tempered by diminished space requirements per headcount,” said Collins.
“The Perth office market is surpassing its eastern seaboard counterparts, particularly in the resources sector, leading to a contraction in vacancy rates.
“While forthcoming supply in the CBD may constrain rental growth in the short term, a resurgence in momentum is anticipated from late 2024 to early 2025.”
Collins identified opportunities in the West Perth fringe market, offering potential for investors to secure assets. He underscored the persistent “flight to quality” trend, accentuating the significance of high-quality office spaces in attracting and retaining personnel.
Hart noted that the regional office market varies from region to region.
“In some, larger spaces are in demand to meet the needs of growing businesses and government agencies, but the space isn’t available.
“Premises that meet demand are likely to have vacancies filled quickly.
“Regions often have older buildings that will need to be refurbished to meet the needs of tenants, and this is something property owners may need to consider in order to fill vacancies.”
Industrial demand robust
Demaio predicted sustained and robust demand for industrial land in 2024, culminating in elevated rents and heightened sales activity.
However, he cautioned that with the return of economic stability in 2024, certain businesses may grapple with augmented demands from landlords, potentially leading to vacancies or lease defaults.
Hart said that in general, the industrial market is performing well.
“In several regions, there is strong demand for larger industrial lots, but a shortage of developed land. Based on this, prices are expected to keep rising over the next year.
“Many regional businesses are looking to scale up their operations and, as well as needing accommodation for employees, also need more space for their business. This is one factor fuelling industrial demand.
“As well as seeing local businesses growing, Geraldton is also seeing external interest, and it is a region to watch. Bunbury is another region with a shortage of large industrial lots and strong demand.”
Retail markets varied
Collins also noted that assets with non-discretionary or convenience-based offerings will continue to present compelling opportunities.
“While supermarket-anchored retail centres and fast-food properties remain highly sought after, CBD retail faces challenges due to reduced foot traffic resulting from the prevalence of hybrid working,” said Collins.
The retail market is expected to remain soft, particularly for smaller retail, said Hart.
“Larger retail is expected to perform better.
“Some areas, such as those with a primary industry nearby, tend to perform well. This includes Geraldton, Karratha and Port Hedland where they see a constant stream of workers as well as tourists.
“Large retail outside of the Bunbury CBD is performing well and this is expected to continue, however, the CBD has a large number of vacancies, and this is unlikely to change in the short term without a significant drawcard to bring people into the city centre.”
Hart added that Busselton, Vasse, and Margaret River are areas to watch for retail, and could be considered a hotspot.
“The Busselton airport has revitalised the area, bringing a lot of FIFO families to the region. It also takes direct flights from Melbourne, with flights from Sydney to commence in 2024. This should see more growth in the region. In addition, the region also sees a lot of tourism.”