WA back on world stage as investors seek destination for capital

3 December 2021

Western Australia’s status as one of the least COVID disrupted markets in the world has seen its popularity skyrocket in recent months to become a go-to destination for commercial investment among the region’s biggest players.

According to research by Colliers, more than $1.943billion has been invested in WA office, retail and industrial assets alone in 2021 YTD (as at October 31, sales above $5million). This is a significant 25% spike in investment since 2019.

John Marasco, Managing Director of Capital Markets & Investment Services, at Colliers, said in a time of global economic challenges, the Western Australian economy had outperformed all other states and economies globally.

“This has had substantial benefits for the local property sector, particularly the highly sought after office, industrial and retail markets,” Mr Marasco said. “All the major east coast investors are heading West because they see value and opportunity.

“And there is more opportunity still to be unlocked as borders re-open and offshore buyers return adding increased competition to the domestic market. It is a very exciting time for the commercial property market in WA.”


In the WA office sector, 2021 YTD transaction levels are already 44.8% above 2019 pre-pandemic levels, with $893.3million in office sales above $5million transacting YTD 2021. This is 195% up on 2020, but more importantly a 44.8% increase on 2019 transactions. The figures are driven by Perth CBD office sales, which are up 160% on 2019.

Adam Woodward, Head of Office Capital Markets at Colliers, said Perth offered a higher yield spread when compared with major eastern states office markets such as Sydney and Melbourne in the current climate.

“This is a big tick for investors, domestically and from offshore,” Mr Woodward said. “There is currently a wall of money looking to invest in Perth, and this is largely attributable to its transformation into a mature and liquid investment market.

“The spread for equivalent prime assets in Sydney and Perth is at historically high levels, approximately 140 basis points compared to the 20-year average of 100 basis points.

“Investors are increasingly being priced out of core CBD markets on the East Coast and are looking further afield to secure core investments. Assets that offer security in the form of a long leases to secure tenants attract high competition.”

With limited new office supply on the horizon, Mr Woodward said net absorption was forecast to continue to increase post-2021 as employment markets recovered much faster than anticipated.

“Occupancy in the Perth office market is higher than the east coast CBD markets, with occupancy at 76% of pre-Covid levels,” he said.

Colliers’ office experts have established the number one track record for major commercial sales in recent years. In 2021 alone, the company has been responsible for the market’s two biggest sales – a 49% stake in Woodside’s headquarters at Capital Square to Dexus for $339million and 140 St Georges Terrace to Primewest and BlackRock for $262million on behalf of AMP Capital.

Mr Woodward and his team are currently marketing Allendale Square in Perth on behalf of Mirvac.


In the retail sector, there have been $500.3million worth of WA shopping centre transactions YTD in 2021, with the largest deal being the $195million sale of The Square Mirrabooka to Fawkner Property.

The deal – which represents the largest sub-regional retail transaction in Australia for two years and the largest in WA for a number of years – was negotiated by Colliers’ Head of Retail Investment Services, Lachlan MacGillivray on behalf of Perron Group.

In the neighbourhood shopping centre market alone there have been $351.85million in WA sales in 2021 YTD, up 143% from $144.43million in 2019.

“I have never seen stronger demand for WA retail than I am witnessing right now,” Mr MacGillivray said. “WA has been the least-interrupted retail sales market in the world throughout the Covid-19 pandemic and, as a result, the WA market has outperformed in a major way.”


In the sought after industrial sector, the WA market has recorded $549.47million in sales above $5million in 2021 alone. This is an increase of more than 250% on the 2019 total sales figure for this sector of $156.49million.

Gavin Bishop, Head of Industrial Capital Markets at Colliers, said demand for industrial property was so high across the country that all major investors were looking for new markets to break into.

“There is so much capital wanting to get placed in the industrial sector, and yields are so tight on the eastern coast, that investors looking seriously at Perth and the WA market more broadly,” Mr Bishop said.

“Buyers are pursuing WA for value and to capitalise on the improving leasing market, where vacancies have tightened significantly over the past 12 months and rental growth has returned. This is all against the backdrop of a rebounding economy and scarcity of land supply to accommodate demand for new development, particularly in core locations such as the eastern corridor.

“The resource sector is driving employment and economic growth, as WA continues to support the global demand associated with the delivery of unprecedented levels of infrastructure stimulus associated with COVID-19 recovery. The state’s economy has been shielded from the worst of the last two years of the pandemic and investors are seeing now as the time to establish a position in the WA market before prices rise.”

Consequently, Colliers is also seeing an increase in the quantity of assets coming to market as private owners and syndicates begin to see the opportunity.

“All of this means there is more scale available in the WA industrial sector than there has been in the past,” Mr Bishop said. “Once WA industrial prices start to increase and are more on par with the eastern states, the yield spread will not be as great as it currently is.

“The time to get into the market is now, and investors from all corners of the country, and the wider Asia-Pacific region, are well aware.”

Mr Bishop and his team recently sold WA’s well known Brownes Dairy facility to Charter Hall for $63.5million.

“Charter Hall wanted to get into the food sector, and with Brownes being one of the state’s largest producers, this was an ideal opportunity,” Mr Bishop said. “All of the major REITs including Charter Hall, Blackstone, Logos, Centuria, Dexus and others are actively looking to invest within the WA industrial market.

“Dexus’ recent acquisition of Jandakot Airport from Ascot Capital, for circa $1.5billion, is further evidence of the underlying tenant demand in the Perth market. These purchasers are moving to deploy a lot of capital because they see so much demand coming through in WA.”