The future of Australia's property market looks bright with co-working spaces here to stay and retail set to change dramatically according to analysts.
CBRE's annual Australian Market Outlook conference held last week revealed optimism about the future of Australia's property market.
One of the key outtakes at the event shows the Asia Pacific emerging as the strongest growing economy globally, with property investors increasing their focus on alternative sectors that offer income stability and higher returns.
CBRE's head of global research, Dr Nick Axford, says all major economies are experiencing growth.
"It is difficult to find a major economy that isn't growing at the moment," says Axford.
"While the forecast is positive for now, we are late in the cycle, which signals rising interest rates over the coming years."
"While globally, investor sentiment differs from region to region, there is an overwhelming emphasis on asset diversification and stability of income as we move beyond traditional yield based performance. The world has changed, it's not just about core markets anymore there is a bit shift towards alternative sectors."
The results of CBRE's 2018 Asia Pacific Investors Intention Survey revealed co-working spaces becoming a fixture of the Australian property market.
The survey showed 33 per cent of office occupiers identify co-working centres as an ideal strategy for increasing their space requirements over the next two years.
In addition, 42 per cent of investors say flexible space is the number one occupier trend that will have the most impact on real estate value.
CBRE's Asia Pacific head of research, Henry Chin, says co-working is here to stay.
"Flexibility in the workplace is here to stay and one of the best strategies to improve the attraction of a building," says Chin.
"Our results indicate that half of investors surveyed believe that having up to 20 per cent of a building contain co-working space will enhance a building's value. Given that we are virtually at the end of the yield compression cycle, and that investors see co-working as a means to add value, we expect the number of co-working options will increase over the next few years."
Axford says the impact of co-working internationally should translate to an Australian market.
"In London for example, the number of co-working spaces over the past six years has risen significantly, now accounting for up to 20 per cent of office take-up," says Axford.
In terms of the retail sector, Axford thinks the ways consumers interact with the sector will fundamentally change the way the landscape looks in the coming years.
"There is unequivocally a future for retail but the future is very different," says Axford.
"There is a clear difference between shopping and buying, and the future for physical retail space is about catering to those that buy, and maximising the experience and entertainment for those whom shopping is a leisure activity. This means truly understanding what drives the consumer."
CBRE says traditional shopping centres as we know them will stay, but will morph and evolve into mixed use centres catering for communities and experiences, rather than for shopping alone.
"Health and wellness will also be integrated into these centres, with this continuing to become a huge part of everywhere we go," says Axford.
Business News Australia
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