With CBD office towers selling at 20% discounts to their peak value, some are hailing this as evidence that the correction in Australia’s office market is nearing the bottom.
The shift to remote work, coupled with uncertain business conditions and surging interest rates, sent office values tumbling worldwide. However, the shakeout arrived late in Australia, with some experts flagging values could drop 25% before it washes through.
The stock prices of ASX-listed landlords plunged in anticipation of a wipe-out, while the owners of unlisted assets, including super funds, faced pressure to write down their valuations.
As Nick Lenaghan of the AFR reports, commercial property deals slumped in the past year amid a standoff between owners and would-be buyers over pricing. The hardest hit was the trade in office towers, where transaction volumes shrank by two-thirds, dropping to below $10 billion.
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