August 2014 – Gold Coast Strata Office

14 October, 2014 / Vanessa Rader

The Gold Coast Strata Office market, much like the broader Gold Coast
markets has been through a prolonged period of volatility.

Market activity and values where reasonably strong pre GFC howeverresponded adversely in 2008 and beyond due to the high levels of supply which were anticipated to enter the market.

During this time of economic uncertainty, Gold Coast as an office location was one of the worst hit markets resulting in rapidly rising vacancy levels peaking at 22.7% in the second half of 2010 which had a negative impact on both the rental and investment market.

There is a reasonably high volume of strata office property spread across the Gold Coast region, major office locations include Southport, Surfers/Broadbeach, Bundall and the most recent office precinct to the area Varsity Lakes/Robina. Over the past ten years, the highest volume of sales has come from development in this new location together with new assets within Southport. Southport has been recipient to the greatest volume of new stock in the period immediately prior to the GFC, which had an immediate negative impact on this market. With a large volume of new or under construction stock, high settlement risk, finance issues and high vacancies; this resulted in capital values needing to reduce quickly to absorb stock. After repricing and completion of stock there was some increase in investment which is notable in the 2010 period where close to 90 transactions were completed with over $40 million turning over, Southport represented 67 of these sales mostly by opportunistic investors looking to capitalise on the massive market falls.

This high supply situation has had the most devastating effect on capital values for the Southport market. Current average values have shown some rebound to $2,550/sqm after dipping to the low of $2,280/sqm in 2012; this 55.2% less than the high achieved pre GFC which averaged $5,685/sqm. The Varsity Lakes/Robina market also resulted in an immediate fall in values post GFC falling from $5,280/sqm in 2008 to $4,440/sqm the following year, a stable value was achievable for this region the following years before falling more recently to the current rate of $3,300/sqm, 37.4% down from its peak. Markets with limited transactional activity such as Bundall and Burleigh/Coolangatta have shown a more stable result in average capital values, albeit showing some negative affects to the economic slowdown of the 2008–2011period. Bundall currently average a value of $2,500/sqm with Burleigh/Coolangatta averaging $3,540/sqm albeit these averages are based on a small sample and transactions in the sub $500,000 price range.

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