SA commercial transactions peak to new heights

ADELAIDE, February 28, 2020 – The weight of capital targeting Adelaide last year was a record breaking one with the highest level of commercial property investment ever recorded in South Australia.

Transaction volumes in 2019 reached a total of $1.99 billion across all commercial sectors, smashing the previous annual record of $1.60 billion recorded 15 years ago in 2003.   

According to JLL’s Director of Research, Rick Warner, 2019 saw the total SA office transaction volumes hitting $799.3 million, the industrial sector capturing $395.8 million and the retail sector taking $791.8 million.

JLL’s SA Managing Director, Ben Parkinson said, “These figures validate South Australia’s position as an established destination for both domestic and global institutional capital.”

“Throughout the past two years, the global hunt for yield has steered offshore capital towards South Australia, where commercial yields are comparatively higher than the eastern seaboard market,” Mr Parkinson said.

Mr Warner said, “In 2019, offshore investors were net buyers of commercial property in SA, accounting for 61% of total transaction volumes ($1.21 billion across the office, industrial and retail sectors). Conversely, offshore groups were net sellers of commercial real estate nationally in 2019-the first time in more than a decade.”

The three largest office transactions in 2019 were brokered in the second half of the year. These transactions included the sale of the Allianz Centre at 55 Currie Street for $148,250,000, the Grenfell Centre at 25 Grenfell Street for $134,220,000 and the SGIC/CGU building at 80 Flinders Street for $127,000,000.

“Attractive comparative yields to the eastern seaboard office markets (prime yield spreads between Adelaide and the Sydney and Melbourne CBD office markets currently sit between 185-215 basis points) and an ongoing positive occupier demand profile has resulted in an unprecedented weight of capital into the Adelaide CBD market,” Mr Parkinson said.

Mr Warner predicts the chances of reaching a $2 billion figure for the year of 2020 is unlikely, primarily due to the significance of the $650 million sale of Westfield Marion that occurred in 2019.

“This ongoing investment demand that we’ve recorded throughout the past two years is expected to carry through 2020 with the only downside risk to transaction volumes is a lack of assets brought to market throughout the next 12 months,” he concluded.