Steady economic growth but with divergence in performance across geographies and industries has resonated through to Australian property sectors. Sydney and Melbourne recorded the strongest property performance in 2015 - a trend we expect to continue in 2016 but notably with improvement in Brisbane and Perth.
The impact of lower interest rates is being directly felt in the retail and residential property sectors, while further downstream benefitting office and industrial. The lower AUD will increasingly factor into investment and consumption decisions, improving the economy at a broad level.
Increased offshore demand punctuated investment markets in 2015 with Australia’s higher interest rate / yield structure supporting attraction of capital to all sectors. The improved prospect for rent growth in most sectors is supportive of the investment outlook as it provides potential for capital value stability (rather than decline) in an environment of rising debt costs and higher required returns, which we expect will emerge later in 2016.