So what is the outlook for 2016?

Many of you will be aware that Samantha Reece is moderating the 2016 Property Council Outlook Lunch on 19th February.

This should be an interesting session dealing with office, retail, industrial and residential.

2016 has already started with a mixed bag of emotions, with some banks predicting a 3-5% property price adjustment and even going as far as to use the word “recession.” On the other hand we are also hearing from some sectors of the property industry that sales have started well in 2016 (compared to YTD) while others are predicting this will be a year of stabilisation.

We recently received the latest edition of the Committee for Perth fact sheet and as always this does provide a great deal of clarity.

Sure in 2014/2015 the mining sector shed 12,900 jobs but our employment rate still grew 1.1%.

And while Western Australia has the fastest growing economy, it is the ranking on business investment (which was down by 12.3%) and unemployment (now at 6.3%) which appears to be our downfall. Overall WA was ranked 5th nationally by CommSec’s State of State Report.

And while population growth in 2013/14 fell from 2.6% to 1.9% it is still expected to recover to 2.2% in 2017/18.

But regardless of these stats, the State still accounted for 26% of Australia’s business investment in 2014-15. And furthermore in November 2015, WA accounted for 56% of the value of Australia’s resource projects under construction or committed, according to the Office of the Chief Economist.

And in September 2015, there was $171 billion worth of resource projects under construction or committed in Western Australia and a further $110.4 billion under consideration, according to the Western Australia Department of Mines and Petroleum.

This in turn is matched with $24 billion of State Government investment which includes Perth Stadium, Perth City Link, Elizabeth Quay and Perth Children’s Hospital, to name just a few.

However what is most concerning is that across a range of goods, Perth is still the most expensive city in Australia and New Zealand, ranking alongside Tokyo, New York and Paris in overall prices.

With the mining sector certainly reflecting a significant adjustment in 2014/15, WA has followed suit and it just demonstrates how lax we have been, as a state, to actually utilise the boom time to grow other industries so that we are more sustainable.

But this also indicates that WA is going to have to focus on business investment and think outside of the box in order to leverage ourselves into a more positive economic position over the forthcoming 12 months.

There are certainly still plenty of positive signs, but take heed, if you continue to do business as usual – despite these indicators – you will undoubtedly suffer. However as with all challenges, often companies that are innovative come to the fore and we are seeing that on a daily basis.

There is no doubt that this will be the year to invest, and as our data shows if you choose close to a major piece of infrastructure your capital returns will defy the overall Perth median – and let’s face it, there are plenty of infrastructure projects to choose from thanks to State Government and private investment.

Perth is evolving and as they say – no pain no gain. Just make sure that you are prepared to maximise on these changing economic conditions so that you can be ahead of the pack!

For a full copy of the Committee for Perth fact sheet click here:

Commercial market needs to diversify

I attended the Property Council lunch last week which outlined the status of the Perth office market.

While vacancy rates are currently at 16% with projections that it could reach as high as 23%, the news still has a positive spin.

Interestingly, the Perth office market has grown steadily over the past 24 years, but we have held all our hopes on a one horse race – that is the mining sector.

Graphs shown be Deloiite clearly showed that mining began to play a major role for the WA economy in the 1980’s and we subsequently have ridden that high without then thinking about growing other sectors of our economy.

However with all the building works occurring at The Springs, Elizabeth Quays and Waterbank, what is clear, is that Perth is now moving into a new era – and quite frankly I am excited!

While we have been somewhat remiss in building our economy so that it is robust, now is the time and Deloitte predicted that there were five key markets that they believed would fuel WA’s future including gas, tourism, agribusiness, health, international education and wealth management.

The beauty about building these sectors is that there is obviously spin off industries including gas processing and transport etc.

However what this means is that we have to stop relying on the mining sector to be our saviour and actually take some control of where we take our economy – and that takes decisive action from the private and public sector alike.

This next ten year phase is definitely therefore about taking Perth to a new standard and with 150,000sqm of office space coming onto the market, there is no doubt that companies will look favourably at relocating into newer spaces at more competitive rates.

And if you happen to be holding onto older stock, now is the time to invest and be creative with how you may attract major sectors such as education into the CBD.

But if you stay still then you will undoubtedly suffer.

The writing is on the wall – so make some sound decisions and stay ahead of the pack – or otherwise you will find the next phase of Perth’s evolution will undoubtedly eclipse you!