Adelaide’s 2019 Market Insight and Predictions

February 25, 2019

Adelaide primed for increased activity in 2019

Following a strong end to 2018, momentum continues to build in South Australia as positive economic conditions and investment in infrastructure drive activity and growth.

Much of this activity has centred around the attraction of new industries (hi-tech and innovation), securing of defence contracts and a boom in 3PL operations as a result of e-commerce activity.  As a result, supply across the market has tightened which in turn has not only seen some improvement in rents and pricing but it has caused a rise in demand for vacant land.

We expect new construction levels to increase in the coming 12 months as occupiers and tenants seek to take matters into their own hands rather than wait for the existing stock to come available.  This also creates an opportunity for developers to start to speculate construction in order to meet the current and future levels of demand expected as the growth industries mature over the course of the year.

From an investment point of view, Adelaide has become a destination for capital placement with interstate funds descending on the market to secure well placed industrial assets.

The tightening of the eastern seaboard markets is forcing groups to seek out alternative, higher-yielding assets in alternate locations and Adelaide is benefiting from this, although stock supply remains low.  To give you an idea of the demand, our office is currently trying to place in excess of $500m into Adelaide industrial assets from interstate groups.  Plenty of good reasons to be excited about the year ahead!

Market Predictions

  • Prime rents:  Increase
  • Prime improved values:  Increase
  • Prime vacant land values: Increase
  • Prime yields: Tighten

Steve Smith
Leedwell Property