Record levels of infrastructure investment in the Brisbane CBD and national-leading interstate migration are among the key growth drivers boosting Queensland’s economy to its strongest position in several years.
That was one of the key outtakes at CBRE’s Queensland Market Outlook event in Brisbane, which highlighted the favourable conditions that are aligning to underpin economic growth and strengthening of the state’s property market.
CBRE Associate Director of Research Ally McDade said Queensland was the number one destination for Australians on the move, with interstate relocations to the state tripling from 6,000 people two years ago to 20,000 people last year.
“For the first time in a long time, Queensland is mixing a recipe for success. More Australians are moving to Queensland than any other state – attracted to its affordable housing and strong jobs growth,” Ms McDade said.
“Infrastructure spending is at a record high $35 billion, while the employment market is also strengthening, with 100,000 new jobs created in 2017 compared to just 17,000 the year prior.”
Ms McDade said Queensland’s booming population growth would be a driver supporting increased retail spending in the Sunshine State.
“Looking at historical trends, the last population boom between 2000 and 2004 saw retail spending peak at 13%. Therefore, if current interstate and overseas migration continues to kick, the outlook for retail trade is also promising,” Ms McDade said.
The research presentation was followed by a panel discussion, highlighting the current conditions and transformations underway in Queensland’s retail and hotel markets.
Discussing the future of bricks and mortar retail, CBRE Regional Director of Retail Asset Services Meagan Wakefield said it was imperative that retailers and landlords adapt and model their assets to remain competitive and attractive to consumers.
“Shopping centres that include unique offerings will drive customers back time and time again. Bricks and mortar isn’t dead, boring retail is,” Ms Wakefield said.
“There will be a continued shift towards either convenience or experience, with centres that are caught in the middle to experience some challenges. Consumers will either go to centres for convenience – with these centres to have a core focus on non-discretionary retail – while experience based centres will be lifestyle destinations that promote dwell time.”
CBRE Director of Queensland Retail Investments Joe Tynan said this shift towards either convenience or experience would also shape investment trends in Queensland’s retail sector.
“A two-tier market has emerged within Queensland’s retail sector. Assets that offer high income security in metropolitan or growth areas are continuing to strengthen, while assets that have low WALEs or vacancies are experiencing more scrutiny from purchasers and financiers, therefore requiring a clear strategic leasing and management strategy.”
Discussing the outlook for Queensland’s hotel market, CBRE Hotels Director Paul Fraser said investment appetite for regional assets was gaining momentum amid a lack of supply in the south-east.
“Between them, Coles and Woolworths have a long-term hold over 200 Queensland venues – of which 154 are located in the south-east. This narrows the pool of available pubs even further in South East Queensland, resulting in publicans and investors chasing assets out of the market and prompting them to look further north to regional locations for opportunities,” Mr Fraser said.
“With only 11,523 gaming authorities in pubs located in South East Queensland – and the State Government not relinquishing any more – assets that offer existing authorities are extremely sought after by investors, achieving yields of between 10.5-11%.”
Mr Fraser said consumerism was also driving major change in the hotels landscape.
“Owners are now putting a consumer lens over their asset – incorporating experience and lifestyle into their venues by activating spaces. Diversifying assets to appeal to a wider audience helps boost average spend and subsequent fiscal performance,” Mr Fraser said.