Is this state ‘best insulated’ from the market downturn?
One capital city earmarked for high growth during 2019 is expected to see its property market fare considerably better than the rest of the country.
Revealed at CBRE’s South Australian Market Outlook event in Adelaide, the South Australian property market was described as being “better insulated” from the downturn underway in the wider Australian property market.
This, it said, is due to the state’s stable economic growth trajectory, which then helps to protect it against global and domestic economic uncertainties.
According to Bradley Speers, Australian head of research at CBRE, the Adelaide market is holding up well compared to the Sydney and Melbourne markets, with Adelaide one of only two capital city markets to rise over the last quarter of 2018.
He also said the area is seeing flow-on economic benefits from strong growth within the defence, medial, engineering and resources industries.
“The local industrial and logistics sector has rebounded really well following the cessation of car manufacturing in 2016,” Mr Speers said.
“Underpinning that has been large-scale infrastructure projects, in addition to a lot of spending in the utilities sector.
He added: “The exciting thing about the South Australian industrial market is the future. We haven’t even embarked seriously on the ship and submarine-building programs, which are going to create a lot of blue-collar jobs, and the Australian space agency also holds lots of growth potential.”
Over the last year, Adelaide’s residential property market saw an uptick of 3 per cent, Patrick McCarthy, the associate director of residential valuations at CBRE, said.
However, he warned that an increase of apartments in the pipeline in Adelaide meant developers would be focusing on the owner-occupier market, rather than investors.
“Adelaide apartments have generally been geared towards investors, but in the face of increasing stock, developers need to pitch more to owner/occupiers – providing stock that offers quality fit-outs, larger outdoor/entertaining spaces and open areas,” Mr McCarthy said.
Sentiment
Despite Adelaide’s strong investment prospects, the results of CBRE’s ‘2019 Asia Pacific Investors Intentions Survey’ saw Australian investors preferring Melbourne to Sydney and Asian investors preferring Sydney.
The survey also found investors were looking to sell and buy more, increasing the liquidity available within markets this year.
“Most markets across Australia, including Adelaide, will record rental growth this year, which will continue to attract investment – both from domestic and offshore investors,” Mr Speers said.
“South Australia in particular has always proven to be very stable in terms of economic growth and better sheltered from downturns, which will help to position it favourably from an investment perspective.”
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