SA outlook: Investors to cast eyes south in 2018

Agents in South Australia say investors are already pinpointing the southern state as a major target for 2018, with more attractive yields on offer than what they can find on the eastern seaboard.

Savills’ Capital Transactions director Peter Isaksson says buyers have been showing “significant interest” in South Australia, with many now poised to make major inroads into the local commercial property investment market.

“Throughout the past month, we have been contacted by numerous interstate and overseas buyers saying they want to focus on SA in 2018 and will be visiting every four to six weeks to look at opportunities,” Isaksonn says.

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“These players have commented that it is very hard to buy property on the eastern seaboard, where yields are very low and looking like they’ll contract further in 2018.”

Meanwhile, another investor grabbed a prime piece of retail property on the iconic Rundle Mall strip on a yield of around 5% – significantly higher than typical yields in the premier CBD retail strips in other capital cities.

Adelaide’s office leasing market is on the improve.

And the year is expected to start with a bang, with two major retail properties tipped to hit the market after the Australia Day weekend.

The outlook is also good in the office leasing arena, with South Australia in 2017 recording positive net absorption (more space leased than vacated throughout the year) for the first time in years.

Savills’ Office Leasing director Adam Hartley says vacancy rates have now stabilised at 16.1%, due in large part to a major spike in demand from smaller tenants for spaces of less than 500sqm.

The space available in the Adelaide CBD is likely to tighten further, with the South Australian Government currently seeking three offices of around 9000sqm, 14,000sqm and 22,000sqm, having also recently secured 7000sqm of space at 50 Flinders St.

“Other notable tenants’ transactions include the Attorney-General’s department and another blue-chip corporation soon to commit to the Charter Hall development on Franklin St,” Hartley says.