BRISBANE’S GROWTH STORY

It’s been some time since Brisbane was referred to as a ‘big country town’ and you can start to see why it’s now being touted as a future World City. At every point on the compass across Greater Brisbane there is an exciting large-scale lifestyle or infrastructure project either under construction or expected to be delivered over the next decade. The announcement of Brisbane as the host city for the 2032 Olympic games almost two years ago has been a catalyst for both public and private led investment.

Over the last six months the Brisbane City Council has announced three key planning initiatives for the urban and suburban renewal required to keep pace with the city’s population growth. Our Productive City which identified almost 400ha of industrial land to be adapted to ‘non-industrial use’ and defined Urban Enterprise Areas including parts of Albion, Newstead, Bowen Hills, East Brisbane, Woolloongabba and Milton. The Better Suburbs Initiative followed late last year when it earmarked over 70ha of land across 14 industrial sites that could be transitioned into mixed-use precincts providing the basis for city-shaping suburban renewal. Most recently was Brisbane’s Inner City Strategy in which some residential development heights in the Kurilpa Precinct of South Brisbane may reach CBD levels of 90 storeys or 274m.

Transaction volumes are down significantly on previous years, however, this is largely a supply side issue rather than demand. While institutional funds and offshore buyer groups, as well as first-time investors, have been largely subdued, there remains a very strong ‘middle’ from well-capitalised and experienced private buyers.

In early 2023, investors are still attracted to assets with strong lease covenants as many of these have achieved sub five per cent yields. Value-add sites, whether through rent reversion, repositioning or development, also remain sought after. Positive leasing activity, confidence in long-term capital growth, and an investment asset class which is traditionally hedged against inflation have underpinned buyer demand. There is still a scarcity of buying opportunities as sellers remain cautious of potential headwinds, which has contributed to the resilient pricing by forcing buyers to compete.

This is providing confidence in not only Brisbane’s growth story but south east Queensland’s, and demand for commercial investment - despite the various macroeconomic factors that would indicate otherwise - has remained relatively unabated albeit with much greater scrutiny and due diligence.

Michael Mccullagh

Ray White Commercial QLD Managing Director and Partner