It has been a long wait for Melbournians, but the news of easing of the COVID-19 restrictions has come as a respite for one and all. The most comforting part of Premier Daniel Andrews statement was the assurance of a normal Christmas for Victoria. It is a relief for common people and businesses, which have been struggling due to the pandemic.
Amidst the global economic slowdown, the commercial real estate in Melbourne has continued to portray its resilience. The office property market continued to remain a top performer in the sector with various transactions taking place in the city. From local investors to international players like Canada’s QuadReal, the office sector has been making big gains despite the current situation.
However, the restrictions had reduced the number of transactions in comparison to the numbers that were recorded in 2019. With the announcement of the easing of the curbs, it seems the commercial real estate will be ruling the roost once again. Let us understand how recent relaxations will impact the sector.
Easing of Restrictions from November
Besides allowing 30 guests for Christmas dinners at home to moving freely without masks, the lifting of controls has been beneficial for the state. Offices will now open with 25% staff from November 30, and on-campus learning will be reinstated in Victoria. Restaurants, cafes, and bars will be able to host bigger crowds and gyms and pools will be frequented by more people as per the new guidelines.
However, the specific announcement that cheered up the real estate sector was the removal of the ‘ring of steel’ limitation that covered Melbourne. It has not only helped families to reunite but businesses to thrive once again in the state. The 25-km travel limit restriction lasted for 123 days and separated the regional parts of the state from the metropolis. The first week of November introduced the lifting of the ‘ring of steel’ which was followed by other relaxations.
The changes have brought about a spike in the number of enquiries for regional commercial properties in Geelong, Bendigo, and Ballarat. The properties in Melbourne are now open for inspections by regional buyers and vice versa. Real estate auctions are now possible with ten people in attendance along with the owner and the real estate agents. The decline in the number of positive cases has helped in the relaxation of the lockdown, which constrained the commercial real estate. If the trend continued, then it will be a fun-filled Christmas for everyone.
Impact on Commercial Real Estate in Melbourne
The opportunity of being able to inspect the property physically has helped in making people come out and participate in the buying and selling process. The property managers are keeping all the safety protocols in mind while allowing the inspections. Along with the on-site inspections, the investors can also continue to take advantage of the virtual tours. With more Melbournians pouring out into the regional areas to inspect properties, the overall confidence among the buyers is growing.
Besides inspections, auctions have also started. An indoor auction can now have up to 20 people, and it must abide by the density quotient rule of 1 per 4 metre square. Outdoor auctions can have up to 50 people belonging to different households. However, the attendees should not include any infants below 12 months of age.
As a part of the COVID-19 relief measures, the Victoria Government has announced a 50% stamp duty discount in regional areas. The concession will be applicable to contracts that will be signed on or after January 1, 2021 for purchasing commercial property. It will ignite a boom in the state since several commercial property owners are waiting to lease their properties after the lockdown. Also, many businesses are planning to relocate to the regional areas to avoid the sky-high prices of Melbourne and the hustle-bustle of the city. The concession will bring the yield from regional properties at par with that of the metropolis.
Essential Service Assets Will Be the Winners
Retail properties that can be leased or purchased by essential service businesses will be in high demand throughout the state. The prices in regional areas will match the selling prices of these shops in Melbourne. The auctions will witness a stiff competition for this segment as the segment has grown exponentially during the pandemic. With panic buying and hoarding taking place, the essential services have been working day and night to meet the growing demand. Although the land prices in the regional areas are not as high as the capital city, the growing demand will offer the required push in the coming months.
Property Listings Are Touching the Roof
The sellers have sprung back into action after the restrictions have eased. The number of listings displayed a jump of 330% after the on-site inspection was allowed. Many property owners were waiting for things to get better and the physical inspections to start. The new listings from Melbourne were higher than those displayed by any other capital city in the country. The parts of the city which witnessed a massive increase in the listings included Wyndham, Whittlesea-Wallan and Melbourne City.
In addition, the growing demand for warehouses and industrial properties has been lifted by an increase in online shopping. It has helped various players to come back to the game. The e-commerce sector has become stronger than ever. Consumers are more likely to shop online post the pandemic which indicates a shift in their buying behaviour. The comfort of ordering products from the safety of their homes and getting contact-less deliveries have enhanced the popularity of the medium. Naturally, more and more brick and mortar businesses are moving towards the digital platform to increase their sales and profits post the pandemic.
The unprecedented times brought about the coronavirus led to one of the strictest lockdowns in the country. While many businesses had to face losses, the commercial real estate in Melbourne managed to stay afloat. The easing of the restrictions has brought back the enthusiasm of the investors, and the sector is ready to operate in its full glory once again.
Sophie Barrett is an experienced real estate marketing professional with a specialisation in commercial property market. She has a Masters degree in marketing from the esteemed Melbourne Business School and has several property management certificates to her credit. Her shrewd marketing policies and business acumen have led to the most rewarding property deals in the major capital cities of Melbourne, Sydney and Perth. She is a popular name in the real estate market and has been serving the industry for almost two decades now. CommercialProperty2Sell is proud to partner with her for some astute discussions and advice on the booming sector.
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