Which will be the better performing city in the next two years, Sydney or Melbourne? The Autumn 2018 Consensus Forecasts contains all you need to know on the economic and office outlook for Australian office markets from industry experts. A preview of the predictions for Sydney CBD and Melbourne CBD are provided below.
With the January 2018 Office Market Report revealing Sydney CBD recorded the equal lowest vacancy rate, it comes as no surprise that the majority of experts surveyed believed Sydney would continue to be Australia’s hottest market. Sydney’s ongoing employment growth coupled with the lack of new office stock coming online are forecast to fuel Sydney’s rents to $1,220 p.a. by 2019 and continue to increase to $1,280 p.a. in 2020. This increase to Sydney’s already sky-high rents will see incentives continue to drop, down to 18 per cent by 2020. However, a new supply cycle will see landlords become more competitive with rent prices and incentives, giving tenants an increase in options.
Melbourne CBD boasted the largest vacancy drop among all Australian CBDs in January 2018, however this triumph will be short lived with vacancy forecast to rise to 6.2 per cent by 2020. Rental growth of 3.7 per cent per annum for prime stock is expected by 2020, decreasing from elevated levels in 2019. This is a result of the large quantity of stock projected to come online from 2019. Overall the outlook for Melbourne CBD is less dynamic and will remain stable when compared to Sydney over the next three years.
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Please note the quoted figures are not attributed to a Property Council forecasting model, but rather a consensus of forecasts from a range of key market and industry experts.