2018 is expected to be a buoyant year in the Melbourne CBD, with an enormous wave of funds set to hit Australian shores from international investors as well as a high amount of capital currently sitting in the local market.
“This, combined with already low interest rates and the severe lack of supply, is set to create a squeeze in the already tightly held market in the Melbourne CBD and prime City Fringe suburbs,” Daniel Wolman, Colliers International Director of Melbourne City Sales, said.
“Further compression of yields and increased capital values are expected to continue in 2018.
“Traditionally, we have experienced major transactions from REITS, superfunds and major corporates which have re-rated the market place.
“Not only is this expected to continue in 2018, but we are now facing increased competition from cash-rich privates who are mobilised financially and are more agile in the market.
“In 2017, we witnessed several of these players compete in bidding wars with the institutional power houses for prime assets valued as high as $500 million if not more.
“There is an overwhelmingly positive sentiment in the Melbourne CBD, driven by a precedent of stability and long term growth. The market is rallying behind our state’s extensive investment and long term vision, which is currently being realised through inter-generational infrastructure projects, supporting Melbourne’s current and future population growth.”