Apr 13 2017Add to Favorites
Rents for skyscraper offices in Australian cities are rising faster than those in any other global location, according to the latest index covering commercial building over 30 storeys high.
But Hong Kong has the most expensive skyscrapers with an average rent of US$302.67 per square foot, followed by Manhattan in New York at $159, Tokyo at $134.39, San Francisco at $113 and London at $104.56.
But these top five most expensive rental locations have not seen much growth in the second half of 2016, up by 0.6%, 0.6%, 1.1% respectively and then the last two unchanged, according to Knight Frank’s latest skyscraper index.
It is Melbourne and Sydney that have seen rents grow the fastest with an increase of 11% and 10.1% respectively in the second half of last year to $50.89 and $97.34, still some considerable way for the top cities.
Some cities have seen rents fall including Seoul with a drop of 4.8% to $29.93 per square foot, Singapore down 4.2% to $63.64, Shanghai down 2% to $67.81 and Beijing down 1.3% to $59.84. The report suggests that this highlights heightened economic uncertainty and a cautious business outlook.
The index report says that in Sydney, stock withdrawals to accommodate the new Metro line and residential conversions are reducing the overall supply, while Melbourne had the strongest level of net absorption in 2016.
Dan Gaunt, head of Knight Frank’s City Agency, pointed out, however, that despite uncertainty following the decision of the UK to leave the European Union, rents in London’s skyscrapers remain significantly higher than those in other major European cities.
He added that demand for space in the UK capital’s landmark tall buildings shows little sign of diminishing and he predicts that rents are likely to remain at their current level through 2017.
‘The strong performance for Melbourne and Sydney reflect local market factors. If we set those cities to one side, the general picture from the latest skyscraper index is flat growth, which reflects the nervousness in most office markets in the second half of last year over political risks, like Brexit and the US election,’ said James Roberts, Knight Frank chief economist.
‘However, in 2017 the tone of global economic news is improving, and both Brexit and the Trump Government have not had the negative impact on growth that was initially feared. When we compile the next skyscraper index in the summer, I expect to see more cities reporting rental growth in tower buildings,’ he added.
Home loan approvals have fallen significantly off the back of the APRA and the Royal Commission initiatives together with new Responsible Lending Criteria. The ABS recently reported that home loan approvals have fallen by 13.6% year on year and within that, investment loans have come back by c.20%
Off the back of successfully settling a $48m syndicated first mortgage for a residential apartment development in Sans Souci just weeks ago, Sydney-based real estate investment manager Centennial Property Group (CPG) opened a new fund with a focus on the industrial and logistics market, Centennial Industrial and Logistics Fund II (CIL II). The fund, available only to wholesale and private high net worth investors, opened on 1 November and was seeking to raise c. $38 million. CPG closed the fund less than two weeks later, well before the official close date, due to oversubscription.
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