Investors who back Perth's CBD office market are in line for strong rents over the next 10 years, according to property group, JLL.
Despite challenging market conditions in the Western Australian capital over the last two years, JLL WA managing director, John Williams, said the downturn was coming to an end, offering higher yields than Sydney's CBD office market.
"One of the attractions of the smaller CBD markets such as Perth is that prime grade assets with a strong tenant profile have higher yields than similar assets in the Sydney or Melbourne CBD market," Williams said.
"As at the second quarter of this year, the prime yield range for the Perth CBD office market was 6.5 per cent to 8.25 per cent.
"The mid-point (7.38 per cent) of the Perth prime grade yield range is 138 basis points higher than the Sydney CBD prime midpoint yield. Over the past 10 years, prime grade yields in Perth CBD have been an average 114 basis points higher than prime grade Sydney CBD yields.
"This relatively high yield has provided prime CBD assets in Perth with relatively high total returns over the long-term. Furthermore, prime assets in the Perth CBD have typically attracted high profile corporate and government tenants, providing prime CBD assets with strong lease covenants."