Real Estate Agents in Australia March 2012 7
The residential market continued
rental prices down. In the search for domestic investors, agents have partnered with financial service firms and turned towards self-
managed superannuation funds (SMSFs) to pick up the slack, based on a surge of over 30% in real estate investment by SMSFs since the global financial crisis.
The commercial market
While the residential market accounts for the majority of industry revenue, the commercial market also is a significant source of revenue. However, since fund managers and other financial institutions who own many commercial properties can organise direct deals with buyers, the industry’s services are not as influential in the industry. Currently, foreign investment is driving the commercial market’s recovery, bringing positive news to office, industrial and rural markets. Retail property rents and prices are also slowly starting to rise. Healthy economic conditions including strong market transparency, healthy GDP growth, market stability and geographical proximity to emerging markets are attracting more foreign and local investment. The Real Estate Agents industry responded positively to growth in the commercial property market in 2009-10, but this only became apparent in the second half of the year. The retail property market began to stabilise as demand for retail space returned to the market. Improvements to a range of economic and financial conditions increased consumer and business confidence. At the same time, historically low interest rates and the flow-on effect of the emergency stimulus package led to
steady growth in retail sales (3.4% year on year). The growth in retail sales strengthened the demand for retail space and property investment over the year, adding to industry revenue. The industrial property market also rebounded, which helped stabilise the industry somewhat in 2009-10. The growth in downstream demand for industrial products as a result of improved economic, demographic and financial conditions led to a rise in manufacturing activity and import volumes. This subsequently increased industry-wide inventory levels and led to growth in demand for industrial space. The value of industrial sales activity rose by about 20% over the year. The strong exchange rate caused greater import volumes spurring industrial activity, particularly on the east coast. The office market grew overall in 2009-10. A contraction in leasing through the first half of 2009-10 affected the office market, and only just began to move into the recovery phase in early 2010-11. Investment volumes remained low, although sales volumes picked up during the year (by 19% in Sydney and 18% in Brisbane). Growth in sales volumes resulted from improvements in white-collar employment and recovery in the financial sector; this growth was from a relatively low base.
IBISWorld forecasts that industry revenue will increase by 1.6% per annum over the next five years, to total $9.8 billion in 2016-17. The industry is expected to slow in the short term as consumer sentiment creates an even more cautious environment. Nonetheless, improvements across a range of economic, financial and
demographic conditions will drive demand over the medium term and will bring the industry out of a minor slump quite easily. In the bigger picture, the ongoing transformation of the Chinese economy is a major driver of the Australian market, bringing export earnings, foreign investment and taxation revenue, which directly and