Sydney’s commercial property market is expected to be strong in 2021 due to continued population growth and a large number of jobs available.
Property prices are predicted to rise as a result, with most analysts predicting an increase between 3% and 5%. This will have a significant impact on rental rates for office space which could see increases of up to 10%
This article discusses why Sydney’s commercial property market is expected to be strong in 2021, what this means for investors, and how it might affect you if you’re looking for new office space.
Sydney’s commercial property market today
The unexpected impact of the global coronavirus pandemic, plus continued population increase has affected the commercial property market in Sydney. Major businesses are creating more jobs in Sydney than ever before. Business Insider predicts job creation will increase by 2.67% per annum over the next decade. This will lead to increased demand for commercial property and it’s likely rental rates will increase as a result.
Suburbs beyond the existing CBD may become hubs for commercial growth and office employees working from home at least part of the time. More residential developments are forecast to take place and this will lead to additional jobs being created. While this will mean increased demand for office space, it also means rental rates will remain relatively stable.
What does this mean for investors?
Rental rates could increase by up to 10% and this will also have a knock-on effect on the value of the property.
If you’re looking to invest in property, now might be a good time. The increased demand for office space will create strong growth possibilities and it’s also likely that supply will be limited because of the difficulty of finding suitable commercial properties. Combined with a stable rental market, this could lead to strong returns for investors.
Purchasing an office space with good transport links would be beneficial. Investors should seek to tap into the expected large increase in part-time office work and work at home employees. There is a risk if you’re in a building with poor transport links and high demand, then you might find it more difficult to rent your property out. This could have a negative impact on the returns you see from your investment.
How will it affect you if you’re looking for new office space?
If you’re looking for new office space, the increased demand will likely lead to more expensive rent. You may be better advised to find a location near to, but outside of the CBD with strong transport links.
How will it affect entrepreneurs?
Businesses looking for new office space may face up to a 10% increase in rental costs. If you plan on buying an office space in Sydney, then there is likely to be strong growth in the value of the commercial property market.
The outlook for Sydney’s commercial property market
The outlook for Sydney’s commercial property market is bright but there are still some issues that need to be addressed first.
Interest rates are at historic lows, and the strong demand for commercial property will likely continue to push up prices. However, there is a significant risk that shortages of office space will make this situation even worse. Housing developers are already struggling with a surplus because the population has increased so quickly in Sydney over the last decade. The lack of supply could cause prices to increase.
This means if you’re planning on entering the commercial property market then you should try to do so this year. This could give you a better return on your money.
COVID-19 – The great unknown
As the global COVID-19 pandemic continues, there is a greater than ever risk it will have an impact on Sydney’s commercial property values. As such, investors should pay attention not only to population growth but also to how the virus may affect their investments over time. If you’re looking for new office space then take note that demand closer to traditional residential suburbs might increase as more people are forced to work from home at least part of the time and amid fears about catching COVID-19 from public transport and social distancing.
Help is available
MGM Martin Real Estate Agency is a leading real estate agency with local experts. Based in Mascot and Zetland, our team have been helping investors find their perfect commercial investment for over thirty years. We can help you navigate the Sydney market to ensure your investments are as profitable and successful as possible.
In these uncertain times, it is easy to make a poor judgement call and a poor investment. Make sure you are getting the right advice from commercial property professionals.