Throughout much of 2016 the commercial property asset class, both direct and listed, benefitted from the tailwinds of global investor uncertainty, a flight to defensive asset classes and declining bond market yields. Recent global events have disrupted these tailwinds to an extent, with the most obvious example being the incremental shift higher in wholesale funding costs. However, as we enter 2017 Australia will continue to cement its position with investors as an appealing global destination for global capital deployment. Australia will continue to resonate with investors due to its consistent growth through economic cycles, transparent financial system together with sound political and legal frameworks. The significant amount of infrastructure investment taking place in our nation over the next four years will further enhance the appeal of commercial property by lifting underlying land values and increasing efficiencies for tenants.  

John Kenny
Chief Executive Officer
Australia and New Zealand



The Australian market has seen a buoyant year in 2016, against a backdrop of a lower global total return environment and strong domestic investment conditions. Transaction volumes are set to reach $11 billion, down from the $35 billion recorded in 2015. This dip in volumes is an indication of the strength of the economic climate across Australia, as landlords look to build stock and maintain holdings in our outperforming markets. Healthy leasing conditions in Sydney and Melbourne have contributed to this, as private and institutional investors alike have sought more exposure across Australia’s core Eastern seaboard markets. Offshore capital continues to also have a strong impact on our markets, with flows from German and Korean investors a particular theme across 2016.

Looking towards 2017, we expect to see an increase in domestic investment activity as conditions continue to favour the Australian market. Globally, Australia is increasingly offering a more transparent and stable environment to the core alternates of Europe and the US. As a result, both offshore and Australian groups are refocussing their attention on the domestic market. With lower transaction volumes, the large development pipelines in Sydney and Melbourne are the key focus for opportunities for domestic and global capital partners. Equally, lower transaction volumes may continue to drive increased M&A activity in the listed market; something that has been a prevalent theme of 2016. All features of Australia’s investment landscape point towards another active year in 2017, as our relative global appeal continues to drive investor appetite.


John Marasco
Managing Director
Capital Markets & Investment Services



Tenant demand continues to diverge between the high demand cities of Sydney and Melbourne and the lower demand environments of Brisbane, Perth and Adelaide.

While tenants in the IT & Communications sector have driven demand in recent years, it’s expected that Financial & Insurance Services and Education & Training sectors will underpin tenant demand in 2017, according to Deloitte Access Economics Employment Forecasts.

Sydney and Melbourne’s strong rental growth over the last twelve months will continue, albeit not at the same rate, as available space diminishes. A high volume of withdrawals in Sydney CBD will continue through to 2018, easing in 2019 and Melbourne CBD will experience a subdued supply pipeline from mid-2017, keeping vacancy low. Metro markets surrounding Sydney and Melbourne CBD’s will absorb the spill over of tenants unable to find suitable (and affordable) accommodation, assisting in above average rental growth.

Despite the weakness in Adelaide’s leasing market, there are signs of increased demand over the next 12 months as enquiry levels improve and large lease expiries come to term, providing a possible catalyst for tenant movement.  Brisbane & Perth will continue to be a tenant’s market as depressed business confidence and subdued white collar labour conditions continue.

Furthermore, the way we work continues to be a fluid concept. Offices of the future will need to combine flexible/co-working options, connectivity, and activation in an increasingly competitive market. The rapid rise of co-working organisations having entered the Australian market indicate tenant’s desire for lease flexibility.  While start-ups and small businesses have taken to this concept more so than their larger counterparts, we expect to see a preference of flexible lease structures permeate through the market moving forward. 


Simion Hunt
Managing Director
Office Leasing



Against a backdrop of lower for longer interest rates and benign global inflation, we expect that the demand for retail property assets will remain high. Even after taking into account the significant amount of cap rate compression that has occurred, the spread between retail property sector yields and risk free rates remain wider than they have averaged over the past 20 years. This is because even as retail asset yields sharpen, bond yields have fallen at a greater rate, maintaining a wide spread between the two. In this vein we suspect there is room for retail property yields to compress further, approaching their long term historical averages. 

The key challenge for investors will continue to be a lack of stock coming to market. Key players such as Vicinity Centres, Scentre Group, Blackstone and Aventus Property have all played large roles in the divestment and acquisition of retail assets, but with their strategies potentially approaching finalisation, the challenge of finding assets to acquire becomes harder. For this reason, the valuations for retail property assets, particularly the Regional and Super Regional sectors have become theoretical in nature, and should be repriced once assets come to market for sale.

We also expect the yield on quality Sub regional and Neighbourhood centres to tighten in the absence of other investment retail investment opportunities, as new entrants, particularly those from overseas, look to set positions in the sector.

Given the significant amount of transaction volume that has taken place over recent periods, we believe that retail players will continue to divest non-core assets over the next twelve months, in order to drive the development pipelines of retained core assets with the objective of driving superior returns.


Lachlan MacGillivray
Head of Retail Investment Services



The increasing level of shopping centre floor space will be met with demand from international retailers such as H&M, Uniqlo and Zara, as these operators pursue market share and maturity in the Australian market.Relative to Australian mini majors and other successful retail concepts, these international retailers are still underrepresented in the Australian market place. In addition, we expect that landlords will begin to receive more enquiry from a variety of South African retailers who are looking to expand operations beyond their home shores. Organisations such as Shoprite, Pick n Pay, Massmart, Steinhoff, The Foschini Group and Edcon have all demonstrated a high degree of success within select African retail markets, benefitting from the swelling middle class consumer market.

Looking forward, growth within the African nation will face headwinds of economic instability, labour disputes, currency exchange challenges and a lack of distribution infrastructure. It is logical therefore, that many of these groups together with their underlying brands will look offshore to facilitate revenue growth, and Australia will likely become an appealing option.

In addition to offshore tenant demand, domestic consumption will be supported by a robust level of population growth which according the ABS, is running at an annual rate of 1.3 per cent, and expected to reach almost  30 million by 2029, and almost 40 million by 2056.


Michael Bate
National Director
Head of Retail



Industrial investors and developers are set to reap significant capital and land value growth from over $110 billion in road, rail and ancillary infrastructure spending over the next four years. The development of new transport infrastructure will create new industrial precincts, creating new entry opportunities for developers and tenants. Existing precincts will also feel the benefits, with underlying land and asset values anticipated to rise too, as competition for infrastructure adjacent assets rises. Infrastructure spending of this magnitude is a once in 20 year event, and will create significant value for agile entrants incorporating infrastructure led value uplift in their investment strategies.Capital market sentiment finished on a strong note in 2016, with the completion of two major portfolio transactions between Goodman and Blackstone, breaking the $1 billion record set by GIC in 2015. Offshore and domestic investor appetite for portfolio transactions remains high, of active investors in the market. In the past three years Asian investment has been a key geographical hub of capital inflow, however we are anticipating increased interest from European and US funds in the core and core plus space. Secondary assets are set to become more popular due to their higher yields. Spreads between prime and secondary industrial assets are presently 120 basis points, we believe this spread will tighten in 2017 as investors actively pursue secondary assets with large land parcels for upgrades and expansions.

Supply levels are forecast to fall in 2017, the long term national average for supply is 2 million square meters however, Colliers Research is forecasting 1.5 million square meters to complete in 2017. Effective rents are likely to see stronger growth in the East Coast markets in 2017, growth within the industrial sectors of construction services, retail, transport and logistics have all recorded significant output growth in 2016, up by an average of 4% year on year. However, industrial effective rents grew by less than 3%. Despite outperforming inflation of 1.3%, there is significant headroom .for effective rental growth in 2017.

Firming rents, rising land values and sharpening yields, all of which is underpinned by a historical record in infrastructure spending, points to a robust outlook for industrial property in 2017.


Malcom Tyson
Managing Director



Despite Australia’s attachment to the suburban block, it is one of the most concentrated urban countries in the world. As the nation continues to embrace denser living, the demand for accommodation in close proximity to employment and other amenities has driven up inner city land and residential prices. With an increased investment in infrastructure such as light rail, improved motorways and public transport networks providing more choice for buyers beyond the typical capital city focus. We are now seeing population growth in outer suburbs and regional centres driven by social amenity and both government and private investment.  Within these regions there is an increase in demand for apartments and medium density townhomes which are offering an affordable alternative to detached dwellings.

It is expected that the demand from owner occupiers will continue to grow in 2017 which will lead to changes in the apartment mix type for new developments. We will also see the investor interest strengthen to replicate levels last seen in 2015, should interest rates remain low. Despite investment hurdles for foreign investors such as the foreign investor surcharge and complexity of transferring funds from China, offshore buyer interest will remain. A demographic shift is seeing the older generation migrate toward the CBD in most markets and embrace apartment living.

Employment and increasing amenity are stimulating growth within regional areas such as Newcastle, Canberra, Adelaide and also Auckland. Newcastle in particular is benefitting from the lifestyle amenity offering and proximity to Sydney, whilst the South Australian government off the plan stamp duty concessions continue to be a key driver, particularly in the Adelaide CBD where residential population has increased by approximately 80% in the last 5 years. The residential development site values are expected to increase due the reduction in high quality stock. The appetite from astute developers is not likely to waver as a strong competition from both local and international players. 


Peter Chittenden
Managing Director



There’s been a strong emphasis on workplaces throughout this year, and in particular how workplace models are changing steadily to incorporate the experience of all stakeholders. As a result, we’ve seen and read a heightened number of articles on agile working, changes to technology within the workplace, changes in the way we collaborate and connect with clients and so on.

When an organisation commits to making a change towards a new workplace there is a high priority on getting the transformation right, for both employees and clients. There does, however, seem to be a lack of understanding and emphasise on HOW to manage space within the workplace. It is not a simple change effort and requires a thought out service centric workplace service model and ongoing management. This area, of HOW to manage your workplace is the responsibility of both occupiers and landlords, and will no doubt be a topic that will continue to grow throughout 2017.

The two book ends of Occupier Services at Colliers International are Workplace Strategy and Workplace Management Services. Both are crucial for forming a continuous feedback loop to feed key insights from a practical implementation aspect, back through to the theoretical process and out again. Think of it like a ‘lessons learnt’ feedback loop.

Get used to the word ‘workplace’, it’s no longer a premise, lease or where you work. It is so much more – it is your people, how they want to work, a platform for optimum performance, how you attract and retain staff, how well the building meets your needs, whether there’s an ability to offer flexible space on demand, how the facility meets health and wellbeing needs and the technology on offer to enable the workplace. Organisations today have a choice of how far they want to go with flexibility and agility in their workplace and what they want to achieve from their workplace.


Doug Henry
Managing Director
Occupier Services



Rise in Chinese arrivals boost tourism industry
International arrivals to Australia continue to increase with the largest growth originating from China.  Chinese visitor arrivals have increased exponentially from 100,000 in the year 2000, to over one million for the Year Ending June 2016.  International visitor arrivals data for Year Ending June 2016 show that China continues to be Australia’s largest source market in terms of visitor nights and visitor expenditure and is Australia’s fastest growing source market, with growth of over 23% over the past 12 months.  Importantly, there has been a move away from traditional tour groups and instead more individual travel from the rapidly emerging middle class in China. 

The Chinese have also been very active in acquiring Australian hotel assets, purchasing a total of A$829 million hotel assets to November 2016, representing 37% of the total transaction volume.  The most significant transaction by Chinese investors in 2016 was the A$700 million sale of “The Ribbon” hotel in Sydney’s Darling Harbour which is proposed to include a W branded hotel.    China, which up until 2008 had only invested A$7.6 million in Australian hotels, has acquired A$2.7 billion of hotel assets since 2009. 

New supply positive for some markets
An increase in the supply pipeline is expected across all Australian cities through to 2022.  This new supply is considered to be an overall positive for cities with strong overall market fundamentals such as Sydney and Melbourne and will further help to revitalise these cities. Increasing levels of proposed new supply in markets such as Perth and Brisbane however is anticipated to be challenging as demand has fallen off from the peak of the mining boom.  Although not all likely developments are likely to proceed, there will undoubtedly be pressure on existing inventory in these cities to refurbish in order to remain competitive.


Gus Moors
Head of Hotels



With bumper crops and increases in livestock having been a core theme of 2016, we anticipate this will improve investment activity throughout 2017. Higher crop and livestock yields and the associated improvement in cash flows will most likely incentivise farmers to leverage into assets during 2017.

There has been an improvement in investment activity in certain sectors such as wine, some areas of horticulture and several high intensity farming assets such as pigs and poultry. Wine has seen export markets strengthen over the last couple of years which has now supported the 

increase in sales volumes we have seen over the last 12 months. Interest and the number of transactions have improved with several assets which have had extended marketing campaigns having transacted this year. Activity in the wine sector is expected to remain strong during 2017, and a possible uplift in values could be expected. 

Neighbour to neighbour transactions have slowed this year, but this sector is expected to improve in 2017 as farmers have a stronger cash flow due to good years in 2017. Many farmers are gearing up to increase their investments off the back of a good year in 2016.  Institutional investors such as super funds are looking to large assets which are above $20 million. We expect this to continue into 2017, but the types of assets that they consider may be more diversified. High intensive farming and large scale horticulture as assets which these investors may consider as there are higher returns and more stable cash flow with these sorts of agriculture assets.


Shane McIntyre
Head of Rural & Agribusiness




The Australian Healthcare sector will continue to see significant change and both direct and indirect changes across the funding and legislative framework seeks to drive higher optionality for the consumer by transitioning to a consumer funded and lead framework.

Ultimately, M&A activity across the high demand sectors of Manufactured housing Estates, Retirement Villages and Residential Aged Care are likely to increase as marginalised players exit and scale is sought by corporatized operators to drive underlying earnings growth and by nexus yield.

In particular the emergence of transactions between local sports and services clubs and local Government incentive driven operations (particularly in Queensland) are gaining popularity as participants seek to broaden the opportunities for expansionary growth outside traditional constructs.

Onshore and offshore capital is plentiful with growing interest in Australian healthcare emerging from Korea and Japan as well as local superannuation funds as they seek to allocate surplus capital which may see asset price rise due to buying competition.

Residential Aged Care & Retirement Villages
A consumer driven, market based system where price, providers and care type is determined by the consumer is the Governments intent which inturn is forcing operators to adapt their accommodation and care service models. The importance of a clear market positioning strategy is therefore rising and the role of allied health and broadening of service provision (possibly via partnership) across the continuum of care is highly topical. As a result M&A activity is likely to increase with the probability of a mega merger also increasing.

Due to the deregulation of the home care environment and the changes in Residential Aged Care, vertical ‘apartment style’ village integrations are anticipated to increase as the rising volume of baby boomer retirees prefer to remain in urban settings – especially where higher levels of care can now accessed before the requirements of 24/7 care set in. Looking forward, should a suitable site come available we expect that bidders will be aggressive, potentially repricing the market.

Manufactured Housing Estates (MHEs)
With a financial structure less complex than retirement villages, this industry is ripe for growth.  It is more likely that co-location of services within MHEs will develop overtime as whilst a lower cost option, necessity of care will persist.

Security of income and the potential to add valued through additional development and management efficiencies will continue to facilitate investor interest locally and offshore.


Shalain Singh
Head of Healthcare & Retirement Living


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