Australia Market Outlook 2015
Australia continues to experience a period of ongoing, albeit sub-trend, economic expansion. The mix of domestic growth is changing and the transition from isn’t necessarily smooth such that the overall outlook for the economy remains finely balanced. Generally we expect more favourable revenue conditions for retail and industrial occupiers, and combined with contained supply (in most markets) should provide some support for rent growth. Office occupier revenue growth, however, will be low relative to past cyclical upswings. These trends are reflected in our rent growth expectations which are for modest improvement in the industrial and retail sectors while office rents remain flat restrained by higher supply. For investment markets, we expect “required returns”, the lowering of which has been the key driver of yield compression in 2014, to stabilise and that yield compression will be determined increasingly by rent growth prospects.