Sydney and Melbourne office markets most hit by WFH
The central office market in Perth along with the suburban markets may represent better prospects for investors than traditional key markets in the central business districts (CBDs) of Melbourne and Sydney, according to SG Hiscock.
The firm’s director and portfolio manager of AREITs (Australian real estate investments trusts), Grant Berry, said during a webinar that although there would a structural element of working from home going forward, the office would still have a role to play.
“We are moving back into the office but the situation is varied. What it tells you is that work from home is real. We will have an element of working from home going forward, but it certainly is not going to be the new normal, because there is certainly the role for the office,” he said.
Berry said that data from the Property Council of Australia (PCA) analysed the occupancy in the office markets in respective cities relative to their pre-COVID levels, with Darwin and Hobart having already recovered to their original pre-COVID levels, while Melbourne and Sydney were still lagging behind.
“But there also are some positive things about office markets as well and that is business conditions are bouncing back very strongly and that is good. What we are doing with our portfolio we have skewed it more towards the Perth market here and the suburban markets as opposed to the key CBD markets in Melbourne and Sydney where we think that work from home will be more of a drag,” the portfolio manager said.
According to the PCA’s data, as of May, Darwin and Hobart’s office markets were at close to 100% of their respective pre-COVID levels, Adelaide and Perth were closer to 80% while Canberra and Brisbane stood were back to the 70% of their pre-COVID occupancy levels and were followed by Sydney and Melbourne which due to lockdowns was at around 40% of the office occupancy levels compared to the pre-pandemic levels.
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