Find out what real estate deal was closed for over USD1b in Melbourne in Q3

But investors are still cautious nonetheless.

According to a report by Colliers, Q3 saw transactions worth over USD1 billion and occupancy levels in the Melbourne CBD began improving following the Victorian government’s announcement on September 1 lifting work from home recommendations.

Some of the key real estate deals in Q3 are:

Here’s more from Colliers:

Review 

Investors remain cautious; however, campaigns are still receiving a high level of enquiry as asset managers and investors alike see relative value in Melbourne’s office markets. 

Limited supply: while fast-tracked approvals have added potential projects to the pipeline, only half are expected to proceed due to rising construction costs and subdued precommitments. 

Sublease and direct vacancy remained stubbornly high over Q3, however, constrained pipeline of new supply will help to absorb vacancy over time. 

Forecast 

We expect market sentiment and macroeconomic conditions to impact pricing and be reflected in Q3 and Q4 book values. The Victorian Government’s decision to encourage a return to the office and occupancy levels subsequently normalising over Q4 and into 2023 may offset any negative sentiment as activity in Melbourne’s CBD returns to normal. 

We expect increased absorption of sublease and backfill space, while new supply remains constrained. Melbourne’s office market will enter 2023 with increasing occupancy, absorption of existing vacancy and relatively affordable rents, positioning the city as one of the most promising markets in Australia. 

Expert view 

Melbourne’s office market has experienced a resetting of the cycle and an adjustment that will see the market stabilise and gradually grow over the coming years.