Historically high business and property confidence, the abolishment of commercial property stamp duty, and infrastructure investment in leading technologies such as Ten Gigabit Adelaide helped propel commercial property sales to just under $1 billion in 2018.
Ideal market conditions saw strong growth in interstate and international investment. Grenfell Street lay claim to two of the largest sales of 2018 with the $184.6 million take-over of the Bendigo & Adelaide Bank tower by Centuria Capital Group and the Lederer Group, and Wingate/IPG’s $103.5 million purchase of 77 Grenfell Street’s 20-level tower. Charter Hall’s $135 million acquisition of the Telephone Exchange Building was a central component to the $250 million GPO development vision which is now underway.
South Australia led the charge nationally across all confidence measures throughout 2018. For the June quarter, the ANZ/Property Council (of Australia) Survey revealed historic peaks in confidence in South Australia across the property sector, economic growth expectations and economy management. The surge in property confidence exceeded the South Australian historic average by more than 30 points, reflecting the buoyant market. SA retained the highest property confidence in the country for the rest of the year while other states saw significant declines. Roy Morgan Business Confidence measures also found business confidence in SA continued to surge throughout the year as business confidence fell in New South Wales, Victoria and Queensland.
Savill’s associate director for capital strategy and research, Shrabastee Mallik, said of the Roy Morgan Business Confidence index results, ““This clearly illustrates to us that Adelaide’s office markets are going to continue to grow in terms of attractiveness throughout the next two to three years.”
In July 2018, South Australia became the first jurisdiction to abolish commercial property stamp duty. The tax cut significantly enhanced the value proposition for CBD property as investors sought to look for opportunities beyond the crowded markets of other capital cities.
Significant infrastructure investment such as City of Adelaide’s transformational Ten Gigabit Adelaide network is playing a key role in driving commercial property confidence. The high-speed, high-performance fibre optic data network is being rolled out to 1,000 commercial buildings across the city of Adelaide and has led to a considerable increase in activity within the commercial property sector. Since the network was launched in early 2018, six Ten Gigabit Adelaide-connected buildings have sold with the combined value of $620 million while two more, valued at $205 million, are currently under contract. The network is also driving interest from local and national companies currently looking for space and is continuing to have a positive impact on office vacancy rates across the city.
“Ten Gigabit Adelaide and $3 billion of investment in the north-western sector of the CBD over the past decade, has transformed the city and subsequently resulted in an attractive proposition for capital,” said Guy Bennett, Knight Frank’s Partner, Head of Institutional Sales, SA and Victoria.