ADELAIDE is just one major player short of becoming a city to truly take notice of says one of Australia’s most senior property experts.
”We need a Samsung or Apple or Alibaba here and need to see a CBUS or Lang Walker to announce a new building,” says Colliers International’s national director (capital markets) Craig Shute.
“We are a major corporation away from a significant sizeable expansion in Adelaide.”
Adelaide, he says, is in an anticipation phase, it’s all about the next, and sizeable, push, particularly given recent, strong institutional interest in Adelaide from major Sydney and Singapore corporates in particular.
Much is about converting the forward scouts to the city so they can relay there is enough good news to go away and run investment models and convince committees overseas, he said.
An October 2017 report by PwC that the projected $90 billon incoming shipbuilding spend would equate to a further 3 to 4 per cent added to the GSP each year over the over the life of the construction program, is a solid base to sell from he said.
“Sydney and Singapore investors were in town in February and March, they are spending more time here, doing more research and are ready to act,” he said.
But intriguingly, there is a dark horse entrant in a CBD office market that is 52 per cent privately owned and with 86 per cent of last year’s $900 million city office sales originating in domestic capital.
While last week’s $82.25 million sale of 121 King William St – which stuck to the emerging trend of “off market” transactions via a two week closed window for potential buyers – went to the Sydney based Charter Hall, another city is doing more than casting an envious eye over South Australia’s capital.
“The trend recently has been from Melbourne privates that are now coming to Adelaide. We are speaking to lots of people.”
Hong Kong buyers who have been traditional buyers in Sydney are now being attracted to Melbourne he said, with the private investors who are selling up in Victoria, now sizing up Adelaide.
Melbourne’s Nikos has snapped up 60 Flinders St for $101 million while IPG/Wingate paid $103 million for 77 Grenfell St. QE also, paid $43 million for 431 King William St.
The resurgence of the resources sector – Santos is unrecognisable from the costs and staff shredding outfit of a couple of years ago while BHP is set to be given the keys to the brand new Charter Hall tower fronting Victoria Square in September – impacts heavily upon interstate perception also Mr Shute said.
The city just needs that new, big name he said to ignite the sizeable good works going on in the background.
“If PwC are right, people will come here.”
The much lauded 10 Gig initiative, which expects to sconnect all major CBD buildings will be ready by the end of the year,” has not gone unnoticed outside SA. Then there is the burgeoning infrastructure.
“Five years ago in Adelaide it was a different picture, then the state government went cap in hand to the Feds, got investment and technology and space has come from it.
“All these investments are high tech, the industries of the future, We have just got really lucky with the timing.
“The Melbourne privates have been able to piece it all together. They don’t have to go and convince a board room and talk about population.
“Everyone is looking around and they want a piece of the puzzle.
People are wanting to reposition themselves in the game, with office vacancy rates coming down he said.
“The challenge for us this year will be finding good stock. Overseas buyers want to buy A grade and new buildings like 55 Currie St. It’s hard to see where it will come along.
“2019 will be a tightly held market, a lot of newer buildings have been transacted.”
Off market transactions will likely lead to pressure on prices he said with a fall in yields of 0.5 per cent conceivable, Mr Shute said.
The message is that Adelaide is travelling well but, with a little fortune and belief, is on the cusp of something far, far bigger.
CBD re-positioning takes place as Melbourne investors hone in by Richard Evants, originally appeared in The Advertiser 7 May 2019.
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