With the fastest-growing population in Australia, the Sunshine State is basking in the glow of growing confidence in south-east Queensland.
Queensland’s population growth rate was the highest in Australia in 2019-20, and Ray White Commercial Queensland managing director Michael McCullagh said the steady growth, in tandem with other factors, had resulted in “heightened interest” from investors.
“As well as the effects of positive interstate migration, the low cash rate environment is making the cost of capital quite cheap to invest in,” he said. “Money in the bank is not getting the returns it once was.”
He said instead, many investors are looking to commercial real estate, with Queensland popular, partly thanks to multi-billion-dollar public and private infrastructure projects that are currently underway.
“I think there’s a growing confidence in Brisbane and south-east Queensland,” Mr McCullagh said. “The level of infrastructure that’s been built over the last few years and projected over the next five years, whether it be the Queens Wharf development, the new runway at Brisbane airport, or the talk of the Olympic Games being held here in Brisbane in 2032; it’s driving a lot of demand in the state.”
Mr McCullagh said it was not only investors, but also owner-occupiers showing interesting in acquiring commercial property.
“Particularly in the sub two-to-three-million price point, we’re seeing strong demand from owner-occupiers that are looking at growing and expanding their businesses, comparing buying versus leasing,” he said.
“And, once again, with a low cash rate environment, there’s a good argument for buying their own premises.”
This opinion is echoed by Luke Moroney, founder of Search Party Property, a buyers’ agency servicing residential and commercial markets in Brisbane and surrounding areas.
“There’s a lot of construction going on in south-east Queensland, like the hospital upgrades in Logan and Caboolture, and the widening of highways, and I know it’s 11 years away but there’s a lot of hype around the Olympics potentially being held here – that’s going to be a huge win for the region,” he said.
Mr Moroney points to childcare centres, petrol stations and fast-food outlets as being among the most popular choices for commercial investors.
“For our customers, we don’t want them to take on heightened risk,” he said. “We want to make sure there is an anchor tenant in place and there is stability in the long term.
“There is also that chase for yield at the moment, so if it’s a well-established commercial space, it’s going to generate a lot of interest.”
One development generating significant interest is the construction of a new Holiday Inn Express & Suites on the Sunshine Coast by Pro-invest Group, a global investment firm specialising in private equity real estate and real estate asset management.
Pro-invest co-CEO Jan Smits said the new nine-storey hotel on First Avenue, Maroochydore, would feature 181 rooms, a roof-top swimming pool, bar and dining venue, conference and function facilities, parking and ground-level retail space.
“We believe Holiday Inn Express & Suites Sunshine Coast is a great addition to Maroochydore, particularly as the region transitions from a largely leisure-based to a more diversified market with major growth in businesses establishing themselves in the city centre to take advantage of the large-scale infrastructure projects currently underway,” Mr Smits said.
In Brisbane, Colliers capital markets national director Don Mackenzie said even the inner-city office market was showing positive signs of returning to pre-COVID levels.
“My view on offices is that they’re here to stay,” Mr Mackenzie said. “For growing business, collaborating, mentoring, building camaraderie, and attracting new staff. You can’t do that over Zoom.
“It could look a little different to pre-COVID but the office is still an important part of a profitable organisation.”
When it came to commercial office investment, offshore capital investment continued to form a large slice of the commercial investment pie, Mr Mackenzie said.
“We’ve had offshore capital coming into our market for a long period of time. We’ve always been a favourable market to invest in because we’re a growth city,” he said.
“We’re not land constrained, we’re still able to expand and grow which we’re doing through revitalising precincts like Roma Street station and Howard Smith Wharves.
“These innovative developments change the way people work, live and play and are what’s driving a lot of the growth after population growth. It helps people to have confidence in our state and our major city.”
For anyone considering making an investment, Mr McCullagh recommends “following the infrastructure trail”.
“Whether that be the Cross River Rail, Brisbane Metro, those sorts of pockets and nodes around future infrastructure or current infrastructure projects — there’s going to be continued demand around there,” he said.
“Also consider the health and medical industry, so property around hospitals, new medical precincts and not just for pure medical use but also affiliate uses.”
It seems the sun really is shining down on Queensland.
Keep up with Commercial Real Estate news.
Keep up with Commercial Real Estate news.