To paraphrase Winston Churchill, the last few years are not the end of Perth or even the beginning of our demise. However in the early stages of 2017, we are certainly poised for the beginning of our next beginning.
Y Research’s 2017 market outlook entitled “Looking forward to the year of looking forward” postulates that the looming end of the construction phase of the resources boom and property development boom will both provide a short-term challenge for the evolving local economy, but also provide the catalyst to speed up moves to improve the economic diversity of the State and its property markets.
For the property sector, the resources boom underpinned significant returns to property investors in terms of above national market rents and world record low vacancy rates in our office markets. During the resources boom, Western Australia experienced record new development across our property market adding:
- office space the equivalent of 14 Brookfield Place towers;
- shopping centre space equal to 4 Garden City Shopping Centres;
- over 210,000 homes (including an increasing number of apartments) and
- industrial space the equivalent to 18 Coles Distribution Centres at Perth Airport.
The key question, looking forward, is how will the State and its property market’s evolve post the resources boom? This market outlook provides an overview on the key trends emerging and outlines how they will shape Western Australia in the years ahead.
This Market Outlook is to be read in conjunction with Y Research’s Disclaimer and Distribution Policy.
The Economy: Economic Signposts
How politics impact the market: Every vote matters – March 2017 State Election
WA Property Markets in 2017: Market Sector Overviews – Office, Retail, Apartments and Industrial
Our State continues to evolve and grow, however the transition to the post boom economy will be difficult for Perth in 2017. Whatever the period ends up being known by (“After the Boom”, “the New Normal”, “Boom 2.0”), 2017 marks four years from the peak of the resources boom and the end of a decade of resources and property construction.
Both sectors are now focusing on less development going forward and maximising existing assets through maintenance and expansion. Fundamentals of price, location, quality and competitive advantage remain key. Perth will remain an occupier (commercial, retail and residential) driven market in 2017.
While there will be external noise and uncertainty about the State Election, a Trump Presidency, Free Trade Agreements and potential Black Swan events, Western Australia is poised for our next beginning. After four years of looking backwards to what we have lost, it is time to look to the future, to plan for tomorrow today; to focus less on what happened and more on what’s next. The last quarter of 2016 saw business confidence improving, full time employment increase, a higher iron ore price, a new 6 star hotel at Crown Burswood open, the announcement of direct flights to London from Perth and significant leasing activity in the Perth CBD office market. The signs point to the end of economic dark times as dawn breaks on the City of Lights across 2017.