CBRE Pacific CEO Phil Rowland and Pacific Head of Research Sameer Chopra discuss the outlook, opportunities and challenges in the real estate sector.
CBRE recently went live with the Q4 edition of Talking Property: The House View – CBRE’s quarterly podcast where our Pacific CEO Phil Rowland and Pacific Head of Research Sameer Chopra discuss the outlook, opportunities and challenges in the real estate sector.
There are clearly continued challenges, particularly in the capital markets arena, as the cost of debt rises and sentiment wanes. An acute housing supply shortage in Australia is also continuing to dominate the headlines.
But there are also clear areas of opportunity, one of them being alternative asset classes such as student accommodation.
You can listen in to their wide-ranging conversation where, which includes their views on the outlook for house prices, construction costs, office occupancy trends and commercial asset values.
On residential and office occupancy Sameer Chopra said, “Our new controversial view here is that the fastest growth will be at the front end of the cycle and late cycle. So I'm expecting 2023 and 2025 will be double-digit capital value growth, whereas 2024 will be more modest So I'm calling it plus 10% this year plus five next year and then plus 10. So you get to about 25% price growth over three years and that reflects the cost of the higher cost of building new stock.
“On office occupancy, I expect it to be back to 2019 levels in CBD offices around the country as late as maybe the end of this year, early next year. I was on a plane recently, and it dawned on me that it feels just like before and speaking to friends, their kids who are going to university are all talking about, better experiences like their parents had and retailers are talking about returning back to just in time supply chains. So why not the office environment? I expect we won't even talk about office occupancy next year.”
Phil Rowland on leasing activity, says, “Particularly in office this bifurcation of prime and secondary markets is really taking hold. And what's been very interesting has been the resilience of the leasing market, particularly in office in the last couple of quarters, which of course heavily contrasts with the investment sentiment in the sector. Occupier sentiment earlier in the year was strong, as companies came off a two-year period of strong financial and employment growth, really wanting to set their workplaces, post pandemic. But of course, the wider economic environment has shifted, there is no doubt about that. Normally with lowering levels of business covenants like we've seen over the last six months, leasing should have slowed down, but that's not actually what we're seeing, especially at the premium end.”
Listen to the latest CBRE Talking Property Podcast episode here.