Australia

A total of 22,500sqm of new retail space entered the market in Q3.

Space rationalisation is likely to continue.

The market will have time to absorb the existing supply.According to data from Cushman and Wakefield, in 2024, the Sydney market saw an addition of 176,000 sqm of new office space, primarily from the completion of the North Tower and South Tower at Metro Martin, which are largely pre-committed.

These projects will yield over 111,00sqm of new stock.

It was a deal worth AUD420 million.

Vacancy rates have remained stable amidst a muted sales environment.

Thanks to a project under construction at 15 Sydney Avenue.

Completions have underperformed for six consecutive quarters.

Thanks to six new hotels currently under construction.

Vacancy rates in Outer West Sydney, West Melbourne, and South Brisbane are rising.

The city recorded negative demand of -1,346sqm during the quarter.

Absorption hit 53,600sqm in Q3.

And there are 12 major projects under construction.

Transactions underperformed the 10-year average of AUD255.4m.

There was only 147,000sqm of new warehouse space.

New apartment supply remains very low in 2024.In a recent report, JLL said buyer sentiment in the existing housing market in Brisbane has stayed strong, underpinned by a strong inflow of people into the region and also by a lack of available stock in many areas that is keeping competitive tensions high.“New apartment demand is particularly constrained by a lack of available stock, particularly for mass market projects. Sales of luxury apartment projects remain stronger, underpinned by downsizers that continued to be buoyed by strong price growth in existing properties,” the report said.Here’s more from JLL:New apartment supply in Brisbane completions will be higher in 2024 than over recent years, but remains very low. Development conditions remain tough and even securing a builder is a challenge due to so much infrastructure and Olympic work in the pipeline.Rental vacancy remained a low 1.1% in September 2024 (SQM Research). Vacancy has now been around 1% for several years and with little supply relief on the horizon there is unlikely to be much change any time soon.Strong price growth starts to moderateBrisbane existing apartment prices have surged over the past year on the back of limited supply of both new and existing stock and pushed by rising build costs. Nevertheless, the pace of growth is starting to slow.Rents have also surged in Brisbane on the back of tight vacancy the past few years. Nevertheless, affordability is now stretched across many parts of the market and this is increasingly seeing rental growth stall in recent months.Outlook: Supply deficits to buildWhile underlying apartment demand is likely to continue to lift, ongoing tough development conditions will keep new supply levels low, and the supply shortfall is likely to grow increasingly wide.Stretched affordability is likely to remain the only constraint on rents and prices in the near term and the moderation of price growth is likely to continue. However, the increasing supply deficit will likely still support further robust growth over the medium term.Note: Brisbane Residential refers to Inner Brisbane apartments.