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- The level of activity and buyer demand in Adelaide’s commercial property market is at its highest level since before the GFC, around 13 years ago
- Knight Frank has negotiated more than $205m in investment sales over the first quarter of the 2021-22 financial year, nearly double the circa $104m the previous quarter
- Assets sales included medical, office, industrial, retail and bulky goods
- Oliver Totani predicts the present ‘bull market’ for commercial property in Adelaide will continue for some time in terms of buyer activity and depth, with no signs of a downturn
Adelaide’s commercial property market is on the rise, with activity and buyer demand at their highest levels since before the GFC, with no signs of a downturn on the horizon, according to Knight Frank.
Over the first quarter of the 2021-22 fiscal year, the real estate agency negotiated more than $205 million in investment sales for commercial property, nearly doubling the $104 million in sales in the previous quarter and more than tripling the $68 million in the same quarter of the previous fiscal year.
The Coates site at 1052 Port Road in Albert Park sold for $16.1 million, an office building at 25 Nile Street in Port Adelaide sold for $62.75 million, and one of the largest medical asset sales in recent memory occurred at 520 South Road in Kurralta Park, known as the Tennyson Centre, for $92.75 million.
According to Knight Frank Head of Investment Sales South Australia Oliver Totani, the market is the healthiest it has been since roughly 13 years ago, before the GFC.
“On a very positive note, in addition to the $205 million-plus in transactions negotiated over July to September, we have a further $100 million in property currently on the market, as well as multiple off-market transactions in play,” he said.
“It’s an extremely strong and aggressive market, with large amounts of capital needing to be placed.”
Mr Totani said the agency has seen around a 20 per cent increase in new listings since the first quarter of the financial year.
“The secret is out; we are experiencing some of the best selling conditions since pre the GFC, with strong buyer demand, and vendors increasingly looking to capitalise on this strong market,” he said.
Mr Totani predicted that the present ‘bull market’ for commercial property in Adelaide will continue for some time in terms of buyer activity and depth, with no signs of a downturn.
The strongest surprise in recent activity levels had been Adelaide’s outstanding performance in relation to the rest of the country, according to Mr Totani.
“The city is now truly on the radar for domestic and overseas investors,” he said.
“The value on offer in Adelaide is also a drawcard, with the yield spread between our city and the cities on the eastern seaboard sitting at 0.75 per cent to 1.5 per cent, depending on the asset type.”
“Adelaide is now playing catch up, with the recent market disruption bringing forward three to five years of growth.”
Mr Totani stated that the medical and non-discretionary retail sectors had outperformed in Adelaide in terms of investment sales since the pandemic’s commencement, but that this was expected to change as Australia begins to open up.
“With the majority of the economy soon to be back in full swing we are seeing the smart capital revert back to the more traditional assets like CBD office and more generalised retail,” he said.
“Overarchingly there is unheralded demand for income-producing assets, but with buying opportunities limited, buyers are being forced to move up the risk curve and look for value-add opportunities to hit their return metrics.”
