Parramatta Blog

Commercial Property Investors will be cautious until interest rates reach their high in 2023, according to analysts, as the economy is expected to be severely affected by inflation and cost of living pressure.

The commercial property market ended 2022 on a quiet note, with deals stagnating and confidence ebbing after a roller-coaster year in which the Reserve Bank raised interest rates eight times.

Looking ahead, there is uncertainty about how high interest rates will go and for how long, but many are expecting a turning point in inflation. A turning point for inflation would provide greater clarity on the interest rate outlook and is expected to restore confidence and liquidity by mid-2023.

Offices

Sydney and Melbourne's office vacancy rates did not improve as much as real estate experts had anticipated in 2022 because both cities are still having trouble luring workers back to the workplace full-time. However, this was not universally true. Office markets in prosperous areas like Sunshine Coast, Gold Coast, and Perth, have benefited from population growth and are anticipated to continue to enjoy strong levels of confidence, maintaining occupancy rates high and promising future possibilities.

Hotels & Accommodation

Travelers can take vacations abroad, but in 2023, health and economic considerations are more likely to favour the domestic hotel industry. Student accommodation has also bounced back strongly over 2022 with further growth expected this year.

Life Sciences & Healthcare

With an ever-growing investment pool looking at non-traditional asset classes, the life sciences and healthcare sector is expected to continue to grow rapidly in 2023.

Retail & Industrial

Retail assets have suffered due to the structural shift to online shopping, while industrial assets have outperformed for the same reason. The industrial sector will continue to have high demand for logistics spaces, continuing to put upward pressure on prices.

The market would welcome a record year for development completions in 2023, But this is still likely to be insufficient to restore a more normal balance between supply and demand.

*Written by Jayden Ayoub | Commercial Sales & Leasing