The last quarter of 2018 saw a sharp rise in Sydney office incentives, dampening rental growth.
Analysts Leanne Truong and Lee Power highlighted figures showing prime incentives in Sydney jumped 59 basis points to 18.6 per cent. This followed small increases in the second and third quarters of 2018 with 4 and 9 basis points respectively.
The rising incentives in Sydney resulted in an overall moderation in year-on-year gross effective rental growth in spite of the 2.4 per cent increase in face rents. Rental growth in Sydney fell from 10 per cent in the third quarter to 7 per cent in the fourth quarter of last year.
“Incentives will need to be monitored closely going forward,” the Deutsche Bank analysts said. “However, we believe record low vacancies and limited supply should ensure incentives stay in check for the rest of 2019.”
Article source: https://www.afr.com/real-estate/commercial/leasing/sydney-office-incentives-rise-need-to-be-monitored-closely-deutsche-bank-20190116-h1a4a6?
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