Business insight – Part III : Australia Perspective

Feb 8, 2021 | Blog | 0 comments

The impact of the Covid-19 pandemic has been rapid, and in some cases brutal. The Institutional investment market is in a phase of transition from the traditional trophy assets of commercial office and shopping malls, to data centres, health facilities, warehouses and build to rent apartments, according to a recent industry “round table” convened by the Australian Financial Review.

 

Where is the investment?

This does not mean commercial office investment will decline dramatically, but as with prior cyclical “corrections” in the market, landlords’ will need to be more flexible in their tenant offer, with potentially new office development in regional locations, and in the secondary office market, adaptive re-use to residential and student accommodation. Similarly, with regional retail, we may see conversion into industrial use.

The closure of borders and restricted travel has promoted buoyancy in the residential real estate market. Well located properties with home office facilities are highly sought after, as are hobby farms and holiday homes.

 

Other strategic investment

Whilst the residential apartment market has slowed significantly, the construction industry has been supported by massive social and transportation infrastructure investment.

Current major transportation projects in are valued in excess of $80bn, including in NSW, West Connex and Sydney Metro at $16bn and $12bn respectively, and in Victoria, Melbourne Metro at $11bn.

In NSW, Health Infrastructure has around 80 projects underway, with over $10bn to be invested over the next four years, with similar numbers projected for Victoria. As a result of the Infrastructure spend, Consultants in those markets remained busy through 2020 and the prospects for the next couple of years are strong. The majority managed the transition to working from home (WFO) without significant effect on productivity, with ongoing restrictions requiring the extension of the “hybrid” home/office model for the foreseeable future.

“Technology of course has been the enabler behind the success of WFH, so we will not be seeing any reductions in IT budgets in coming years!”

David Tregoning, Atlas Adviser and CEO Creative Futures

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