Perth’s CBD is experiencing a state of transition.
While boarded-up shop fronts and ‘for lease’ signs may be a common site in the centre of Perth at the moment, we believe they’re just a symptom of a great city going through regeneration.
We also believe that the end result will be that we’ll have a more vibrant, more exciting and more residential CBD very soon. And that could be great news for property investors.
The changing face of post-pandemic Perth
Since the pandemic hit, CBD’s around the world have been struggling and Perth’s is no exception. While we’ve had a good run in WA, with more people working from home, there are generally fewer people commuting into the centre of the city. This means less office space is needed to accommodate the city’s workforce and that’s putting pressure on office rents. But it also means there are fewer people browsing the shops, buying their lunches, visiting the pubs and cafes and socialising. And this has been compounded by the rise in online shopping, which means fewer people have the need to physically visit a store to spend their money.
The result is that many CBD-based businesses become less viable, and a lot more shops, cafes, offices and other spaces become vacant.
Government planning contributing
At the same time as this happens, three layers of government have combined to hatch a plan for CBD regeneration – the WA government, the Australian government and the city of Perth.
Their strategy, known as The Perth City Deal, will pour $1.5 billion into regenerating and redeveloping the CBD by 2030. This includes developing three university campuses in the city, the most notable of which will be Edith Cowan’s $695 million Creative Industries, Business and Technology campus. These will be complemented by high tech industries, such as the Australian Space Automation AI and Robotics Control Complex.
There will be significant investment in Perth’s cultural attractions, including the Perth Cultural Centre rejuvenation, the Perth Concert Hall Redevelopment and the WACA redevelopment and public swimming pool. There are also plans for a feasibility study into Aboriginal Cultural Centre.
On top of this, $105 million will be invested in improving public transport accessibility and safety.
In short, each of these measures aims to breathe new life into the city, making it a more attractive place to work and play, but also a more attractive place to live.
The property market changing too
As this happens, the property market is changing too, with new residential developments starting to take shape. We’re already seeing some important projects right in the heart of the CBD, including at Elizabeth Quay and Perth Hub on Wellington Street. Many more have already been given approval and our view is that this is only the beginning.
After all, as office space and retail becomes less viable it begins to make financial sense to redevelop many buildings. This, in turn, creates a cycle where people living in the city need facilities, so new bars, cafes, supermarkets and more begin to spring up again.
As Perth’s rental market begins to tighten to unprecedented levels, there’s little doubt more space is needed to accommodate residents. More of this needs to be closer to the city, where public transport and amenities are located.
If you look at other Australian cities, especially Sydney and Melbourne, this has been the pattern. Between 2009 and 2019, the population of the City of Sydney (the council which encompasses the inner city) grew close to 40% on the back of new residential development, while NSW grew at a rate of 14.7%. Meanwhile, the city of Melbourne has been one of Victoria’s fastest-growing regions and is expected to grow 50% in the next 10 years.
While we may be more used to open spaces in the West than our counterparts in the Eastern States, that’s likely to change as more activity comes into the city.
What this means for property investors
For property investors, the Perth CBD should present new opportunities over the coming years. Young professionals, students and even downsizers will be increasingly attracted to life in a vibrant CBD.
In the next few years, we expect more significant projects to come online to capitalise on this trend, with many of the underutilised buildings in the centre of Perth being converted into residential apartment blocks. We also expect that the City of Perth could be one of WA’s fastest-growing areas.
This should encourage a strong rental market and encourage price growth too, making it an important place to consider for your next investment.
If you’d like to know more about the Perth property market and how our award-winning team can help you make the most of your investment property, contact our friendly team today.