New South Wales Dominated Volumes In 2017, But Victoria Leads In Average Prices

As of mid-December 2017, CoreLogic collected 18,281 commercial sales over 2017. While this is significantly lower than the 25,000 collected in the previous year, we expect an upward revision of sales volumes over the next 3 months.

The highest number of commercial sales occurred in New South Wales, with 6,051 commercial properties reported as sold to CoreLogic throughout the year. Sales volumes by state are presented in Graph 1.

Of the sales in New South Wales, approximately 5% were captured in the Sydney CBD. It is worth noting that the three highest postcodes in terms of sales volumes were capital city areas. These were the Sydney CBD (293 sales), the Melbourne CBD (283 sales) and the Adelaide CBD (179 sales). However, CBD postcode sales made up just 5.4% of all commercial sales records collected across Australia.

The combined value of commercial sales collected across Australia was $61.1 billion, according to CoreLogic records. Combined commercial sales values by state are presented in Graph 2.

New South Wales also had the highest combined sales value of disclosed commercial properties. The data suggests that, despite having a lower number of commercial sales, the average price commercial property sale price in New South Wales ($3.7 million) was similar to that of Victoria ($3.6 million).

Victoria’s commercial sale price average is highly skewed by the $680 million sale of the highpoint shopping centre in Maribyrnong. This was also the highest, disclosed commercial sale across the country for 2017.

When using a trimmed mean (which accounts for excessively high and excessively low sales of commercial space), the average commercial sale price in New South was is closer to $1.26 million, based on CoreLogic records. In Victoria, the average is higher at $1.32 million.

Another reason Victoria has a relatively high average sale price is the portion of metropolitan sales. Of the commercial sales in the state, 74% were in the greater metropolitan region. In New South Wales, just 55% of commercial property sales collected by CoreLogic were in the greater capital city area.

Ultimately, the relatively high purchase prices of commercial property in Victoria reflect the strength of the economy, particularly in the Melbourne metropolitan. As of December 2017, Victoria accounted for 25% of the full time job creation across Australia, with 4% more full time workers at November 2017 than in the previous year. Retail turnover growth was the second highest of the states at 3.36% in the year to October. These are important indicators of demand for commercial real estate. As the Victorian economy expands, vacancy rates are likely to tighten, improving yields. This suggests strong performance of commercial real estate in Victoria going into 2018.


reposted from Corelogic

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