•Sydney CBD outperformed in Q218 with prime net effective rental growth of 4.5%. Secondary effective rents grew by 2.8%. Negative net supply in 2018 is expected to result in vacancy falling to record lows. CBRE forecasts vacancy will reach 3.6% by end-2018.

 

•Melbourne and Brisbane also witnessed effective rental growth over Q218 although prime rental growth in Melbourne has slowed. Brisbane saw a mild uptick in face rental growth whilst Perth saw prime incentives ease back slightly. Secondary markets in Perth, Adelaide and Canberra all witnessed declines in effective rents over the quarter.

 

•Yields compressed in Sydney and Melbourne. Sales activity in Melbourne saw average prime yields fall sub-5% to an indicative 4.95% with Sydney prime yields sharpening further to an indicative 4.8%.