_Adelaide’s property market to provide stable option for investment in 2023

• Knight Frank recently held an Outlook 2023 event in Adelaide
• The city’s property market is expected to provide a stable option for investment over the course of 2023
• Adelaide’s office leasing market has been less impacted by COVID than the bigger capital cities and industrial rent and land value growth is strong
• The next sector to emerge in the city will be build-to-rent due to the current undersupply in the residential market

Adelaide, Australia – South Australia’s property market is expected to provide a stable option for investment over the course of this year, according to Knight Frank.

At a recent Knight Frank Outlook 2023 event in Adelaide, Knight Frank Chief Economist Ben Burston said Adelaide’s office leasing market has been less impacted by rising vacancy resulting from the pandemic than the bigger capitals of Sydney and Melbourne and industrial rent growth in the city was strong.

He added that the next sector to emerge will be build-to-rent due to undersupply in the residential market.

“Before the pandemic Adelaide’s office vacancy rate was 14 per cent and by the end of 2022 it was 16 per cent, reflecting a marginal increase, while in Melbourne and Sydney we saw an increase of 11 per cent and seven per cent respectively,” he said.

“In Adelaide’s industrial market we have seen surging rental growth in line with the rest of the capital cities, with prime rents rising by 12 per cent, just behind Brisbane at 16 per cent.

“Meanwhile, over the past five years prices of industrial lots ranging from one to five hectares have more than doubled in Adelaide (+115%), with the city seeing stronger growth than Sydney (+110%) Brisbane (+85%) and Perth (+46%).

“But the sector to watch moving forward in Adelaide is build-to-rent – we predict there will be more of these projects due to the supply shortage in residential markets.

“Our data shows that while there are no completed build-to-rent projects or any under construction in Adelaide just yet, there are four schemes proposed totalling a potential 669 units, and we expect momentum to build in coming years.

“While this is still a comparatively small number compared to some of the bigger states, such as New South Wales, Victoria and Queensland, it is significant given that Adelaide has only just started looking at build-to-rent.”

Adelaide currently has the second lowest rental vacancy rate of the Australian capital cities at 0.5 per cent, according to SQM Research.

Knight Frank Director, Head of Investment Sales South Australia Oliver Totani said despite some obvious economic headwinds impacting Australia, Adelaide’s property market remained a stable investment alternative.

“We must remember, South Australia doesn’t get the major peaks, so are protected from the major troughs on the downside,” he said.

“South Australia has a proactive and enterprising State Government, who has recently announced it is fast-tracking what will be the single largest release of residential land in the state’s history, which will deliver at least 23,700 more homes for South Australians.

“This is a great example of how the development and construction pipeline will hopefully be the shot in the arm that drives our economy through the anticipated market turbulence.

“There are more aggressive buyers for good quality assets in Adelaide than there are good quality assets currently being offered to market, which will underpin values moving forward.”

Knight Frank Managing Director South Australia Bobbette Scott said” “Every market offers opportunities, but what is so compelling about Adelaide is that it continues to provide a stable and affordable investment environment for investors.

“With significant investment in South Australia, with world-class health and biomedical, entertainment and sporting precincts, innovation hubs for technology and entrepreneurship, and major defence projects in the pipeline there are certainly exciting times ahead for the state.”

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For further information, please contact:

Vanessa De Groot – Marketing & Communications, Knight Frank
Vanessa.degroot@au.knightfrank.com +61 410 460211

Notes to Editors
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 16,000 people operating from 384 offices across 51 territories. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the firm, please visit knightfrank.com.