Sydney, interstate and international buyers being increasingly priced out of their own marketplaces are showing more and more interest in the Illawarra’s commercial property market.
That’s according to Tim Jones, director of commercial sales at MMJ Real Estate Wollongong.
“This interest is not only from ‘Mum and Dad’ type purchasers, but also from large institutional buyers who are being starved of stock,” he said.
“Historically these parties have struggled to get their head around regional acquisitions, but the fact that a number have purchased properties in our region this year is an indicator that the Illawarra is on the map more than ever before.”
Mr Jones said that currently the commercial property market in the area appears to be at a high point of the cycle, and demand is definitely outweighing supply in most sectors.
He said much like the Illawarra’s residential market, its commercial market is unique because it is finite.
“Broadly speaking, we have the ocean on one side of us and the escarpment on the other, so we can’t simply expand infinitely outwards when we feel like it like other cities and regions can,” he said.
“This means that there is and probably always will be a relatively limited supply of commercial stock, which can be good and bad.”
Regarding trends within the commercial market in the Illawarra in 2017, Mr Jones said demand and therefore yields have continued to tighten on investment properties, particularly in the $0 to $2 million price range.
“Self-managed super funds continue to dominate in this sector of the market.” he said.
“The most notable trend has been the re-emergence of our industrial market, with a significant up-lift in demand being experienced over the past 12 months.”
Looking to 2018, the agent believed stock will continue to be tightly-held as long as interest rates remain low.
Mr Jones said this should lead to the continuation of the current robust market conditions.
“Investment yields should remain stable, and off the back of a distinct lack of supply, we should see industrial market conditions continue to strengthen.
“Having said this, any significant change in interest rate levels or lending policy would most likely see conditions soften off in some way.”