Retail property values and rents will peak in Sydney and Melbourne by 2018. Photo: Glenn Hunt

Retail property on the up and up: API

Nick Lenaghan|Apr 17, 2019

Property values and rents in the retail sector are expected to peak in Sydney and Melbourne by 2018 when they will move into a downswing, according to the Australian Property Institute.

Retail property in Brisbane is also following an upward trend, but will take longer to reach the top of the property cycle, according to the API survey of sentiment among valuers, fund managers, property analysts and financiers.

“Our survey predicts the market until the end of 2018, and respondents believe that retail property in Brisbane will still not have reached its peak by this time,” said API chief executive Mike Zissler.

“The retail property market in Perth, which is currently on the downswing of the property cycle, is expected to commence the upswing of the property cycle during 2018.”

More broadly, API’s survey respondents expect market values and rents for commercial property in the Sydney CBD and suburban CBDs to increase above inflation in the next 12 months and at a faster rate than predicted a year ago.

Sydney’s industrial and retail property market values are expected to increase at a similar rate to that predicted a year ago, while market rentals will increase more quickly.

In Melbourne market values and rents for all property markets are expected to increase. Commercial CBD property should be the strongest performer, while industrial property is expected to achieve smaller growth in values and rents, according to API.

Most respondents expect effective rents to increase in Sydney and Melbourne over the next 12 months and remain stable in Brisbane.

A small majority expect effective rents in Perth to decline over the period.

The survey also found incentives for prime and A-grade commercial property in the Sydney CBD are in the 20 per cent to 29 per cent range.

“In the Sydney CBD, respondents believe lease incentives for all property grades have decreased over the past year,” Mr Zissler said.