The total volume of Commercial sales for the 2017 calendar year has recorded over $1.33 billion across the Gold Coast market representing 571 major transactions; well up from the $632 million achieved during the 2016 period. The high demand and rapid turnover of stock in 2017 eclipsed the sales volumes achieved in the 2015 year which saw $1.25 billion change hands.
During 2017, the 3Q represented the busiest period while all other quarters remained relatively subdued in comparison. The major driver of this increase late in the year was the overwhelming reduction in investment return across tenanted stock around the country. Yields saw strong compression particularly for smaller industrial, retail and office assets in most East Coast major cities and demand into other locations such as the Gold Coast heightened. With interest rates now at a prolonged low, many owners have opted to hold assets keeping stock levels down albeit new highs in values and tighter yields achieved.
Total volumes this period saw a strong change in buyer and asset profile compared to 2015 which was driven strongly by the proliferation of overseas buyers looking to secure major holdings in Australia. The iconic Gold Coast has been a haven of interest for buyers particularly development site property and high value accommodation Hotel assets, these overseas buyers are now limited with some major developers looking to dispose of their assets.
2018 volumes are expected to remain elevated with the reported sale last year of Village Roadshow’s Gold Coast theme parks including Wet n Wild and Movie World on an 154 ha parcel. Selling for approximately $100 million to LGIA Super on a yield anticipated at around 6.00% highlights the confidence in tourism for the region. The world spotlight will be on the Gold Coast this year during the Commonwealth Games which will maintain interest and attraction to this market while continued low interest rates will keep domestic activity elevated during the first half of 2018.
The run of transactions towards the end of the year slowed in 2017 after an outstanding Q3 which saw over $415 million change hands. The last three months of the year recorded over $247 million representing close to 100 commercial transactions which is well ahead of 2016 where just $73 million changed hands in Q4. Interest in Retail and Industrial remained the standout due to their stable returns and affordable price point, which has kept investment yields low. The average Retail asset is selling for just over $3 million (excluding Centre sales) with yields ranging from 3.00% to 8.00%. Industrial is the most affordable asset class with an average sale price of $1.16 million and an average yield of sub 7.00% recorded. Development site assets have returned to the market after a busy period over the last couple of years, fuelled by growth in residential asset values and low interest rates.
Source: Ray White Commercial Gold Coast End of Year Research