Australia

Thanks to six new hotels currently under construction.In a report, JLL said Sydney has seen a total of 2,270 new rooms open since 2020, representing a 10.4% increase in total room stock.No new hotels have opened over the first three quarters of 2024, after a total of 816 rooms opened over 2023, representing a 3.5% increase in total room stock.Here’s more from JLL:There are currently six new hotels under construction in the CBD and fringe suburbs, which will add 1,173 rooms or 5.1% to existing stock. The next anticipated hotel opening is set to be The Eve Surry Hills Village (102 rooms), opening in the coming months.Trading performance continues to outperform 2019 levelsSydney RevPAR showed signs of improvement with a notable 5.3% increase from last year, and has now exceeded pre-COVID levels (YTD September 2019). Recovery continues to be driven by steady growth in both ADR and occupancy.Sydney transaction volume totalled AUD 338.3 million to YTD Q3 2024, including a handful of notable sales such as Courtyard by Marriott North Ryde, Novotel Parramatta, Woolstore 1888 by Ovolo and Holiday Inn Bondi Junction.Outlook: Demand continues to improve with a strong forecast for summer monthsSydney hotels are benefiting from an ongoing recovery in corporate/MICE demand, driven by the market’s reputation as a global business hub and key gateway city. The resurgence of international visitor numbers and Chinese tourists is anticipated to drive future demand.Despite challenging economic conditions and elevated borrowing costs, investor interest in Sydney remains robust. This can be attributed to favourable underlying fundamentals, the tightly-held nature of the market, limited new supply and a positive long-term outlook.Note: Sydney Hotels refer to all grades of accommodation and includes both hotels and serviced apartments.

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. 

Only 18,800sqm of new stock was added over the past year.

Sydney and Perth saw positive absorption whilst Brisbane and Melbourne were negative.

Prime grade offices dominated demand.

Investors are advised to keep a closer eye on these dynamics.

This total value was from 20 big-ticket transactions.

The market is showing signs of strengthening. 

Hotels have an inflation hedging appeal.

Its proximity to the rising wealth in Asian markets will drive tourism growth.