Prices of commercial office towers may peak this year due to the impacts of a growing world economy and the cost of money expected to increase.
With key deals last year particularly in Sydney, the cap rates have been pushed to below 4 percent in some cases. Thus the question remains, how much higher will prices go?
Economist David Cannington from Investa suggests that the answer is a little more, however not by much. The investment demand for commercial property will "maintain downward pressure" on the cap rates.
Dexus' Darren Steinberg suggests that "It is the fundamental rental growth, especially in properties with less capex and less down time, that will drive growth in values from here. There may still be some minor cap rate tightening but we're now nearly at the low point in the cycle."
As the market tightens, especially in Sydney, commercial agents are reconsidering where to expect deals and who will be making them.
Article source: http://www.afr.com/real-estate/are-we-there-yet-office-prices-to-peak-in-2018-20180109-h0fuq5
Ray White’s top 10 listings for January: (Click on address to view listing)
Level 11, 61 York Street Sydney
Suite 28.02, 1 Farrer Street Sydney
Suite 9.02, 420 George Street Sydney
Level 1, 387 George Street Sydney
Level 6, 23 O'Connell Street Sydney
Suite 40.02, 19 Martin Place Sydney
Part floor 23, 9 Castlereagh Street Sydney
Suite 9.03, 46 Market Street Sydney
Part Level 3, 22 Market Street Sydney
Level 4, 86 Liverpool Street Sydney