CBRE revenue surges in strong market
CBRE’s Pacific Advisory Services has increased its revenue by more than a third over the first quarter of this year compared with a year earlier, as confidence from investors and occupiers rises.
Most lines of business in CBRE’s Australian and New Zealand markets – sales, valuation and property management – recorded double-digit year-on-year growth. The first quarter result was clocked up before the more recent headwinds from rising inflation in Australia and the Russia-Ukraine war, CBRE’s Pacific chief, Phil Rowland, noted.
The uplift in the local market was part of a broader rebound in CBRE’s revenue, which rose 25.5 per cent to $US7.3 billion ($10.5 billion). The New York-listed commercial real estate agency booked a 59.3 per cent rise in its core adjusted net income to $US469 million globally.
“Capital markets activity remained high, with notable strength in the office and industrial sectors,” Mr Rowland said.
“This was fuelled by domestic and offshore buyer interest with a strengthening flight-to-quality theme, as international capital pursues high-quality assets, particularly in the office sector.”
For the local arm, growth in leasing activity was led by the industrial sector, a category that performed strongly across CBRE’s global business. Demand for warehouse space is outstripping supply across the major capital cities in Australia and New Zealand. Vacancy is at a record Australian low of 1.3 per cent and rental growth is accelerating.
“We also saw elevated leasing enquiries in the office sector and cost pressures eased as corporates prioritise their employee value proposition,” Mr Rowland said.
“This was demonstrated in our Australian relocation analysis for Q1, which highlighted a 7.5 per cent median increase in rentals paid to relocate versus the comparable period in 2021.”
The coming office deals, including the record $2 billion Southern Cross towers deal in Melbourne that CBRE helped broker and which is still in due diligence, will boost earnings subsequently as well.
CBRE’s valuations business benefitted in the first quarter as investors took advantage of historically low interest rates to refinance assets. The refinancing activity, along with positive market conditions in the commercial and residential sectors, boosted year-on-year growth in the valuations division, Mr Rowland said.
