_Through the looking glass to 2020

We are heading into uncharted waters, with the global economic and property market cycle entering its 11th year since the last downturn – a record expansion by some measures. 

And yet despite the extended growth cycle, macroeconomic conditions are very different from what we would normally expect after an extended period of growth. The trade war and an increasingly fractious geopolitical landscape are casting a shadow over the global growth outlook, weak domestic demand is resulting in slow growth in Australia, and price and wage inflation pressures have been conspicuously absent for several years now.

These influences naturally elicit caution for the property market outlook as we head into 2020. However, they have also resulted in sustained monetary policy easing both in Australia and globally, and coupled with a seismic shift in the balance of global savings and investment, have led to record low interest rates that continue to underpin investor sentiment and market momentum.

These forces set the scene for our 2020, with a contrasting outlook for occupier and investment markets. Leasing market conditions will be impacted by subdued economic growth, but the sharp downward shift in interest rates, and the prospect of more to come, will drive the investment market to new highs, prolonging price cycle.

Below are our top ten predictions for the property industry in 2020. For more information read our 2020 Outlook report here.

1. Economic growth set to improve in 2020 but remain slow 

2. Interest rates to fall further 

3. Office property yields will tighten 

4. Capital growth to pick up after slowing in 2019 

5. Lower interest rates will boost investment activity

6. Capital raisings and yield compression to drive more development starts

7. Office vacancy in Melbourne set to increase, particularly in the Docklands & Western Core

8. Rents to grow at a more even pace across office markets

9. Strong capital inflows into the industrial sector

10. After dealing with cladding issues, property owners to focus on education and increasing building density