Commercial property development – Looking back on 2020 and moving forward into 2021
The year that was 2020 brought a host of challenges to the commercial property sector but as we move into 2021 things are looking more positive. Experts predict that commercial property development will remain resilient and grow stronger as we move towards a post-pandemic world.
- There was a decrease in commercial building projects during 2020, but an increase is predicted towards the middle of 2021.
- Compared to other industries, commercial property development is in a strong position.
- Commercial property investment paused during March to July 2020, but has picked up again.
- Australia is seen as a desirable place for international investors in Europe and China.
- Commercial property investors have money to spend and are looking for properties with sustainability qualities.
- When Australia opens its borders to international students again, there is expected to be a spike in apartment developments.
- The design of commercial workplaces and offices may shift as Australians return to the workplace in 2021.
- In light of the tragic 2019-20 bushfire season, fire safety in commercial buildings remains a high priority.
- Experts are hopeful, predicting recovery on the horizon for commercial property development.
Less commercial building projects completed during 2020 – 21
According to a report released in November 2020 by the Australian Construction Industry Forum (ACIF), many new construction projects have been put on hold over 2020 and the start of 2021.
Lockdown measures and COVID-19 restrictions are considered to have hit the accommodation, entertainment, retail and education sectors the hardest. Surprisingly the health and aged care sectors have also seen a decrease in new building projects.
The reduction in commercial building projects has had a big impact on employment in the Australian construction industry. However, experts are predicting a positive turn towards the middle of 2021.
The commercial property development sector is showing resilience despite the challenging year
Compared to other industries and sectors which have suffered significantly, industrial and commercial property is showing resilience. Investments, construction activity and employment are expected to grow stronger in these sectors throughout 2021.
With some experts saying Australia is out of the COVID recession, employment is expected to grow in commercial property and construction industries. The promise of a successful vaccine as well as increased money to spend in 2021 suggests it is good news for commercial property in the coming year.
Commercial property investment set to continue in 2021
At the start of 2021 we see many commercial properties remaining vacant as many small and medium sized businesses have struggled to stay in operation. However, the value of commercial properties has not decreased.
It is predicted that interest rates will remain low for some time, encouraging more commercial property investment from local and international investors. There has been activity from both European and Chinese investors during 2020.
Since Australia has been fairly successful in handling the coronavirus pandemic, we could become a highly desirable location for investment in the coming year.
There has been a trend towards investment in science and medical commercial properties as COVID-19 has drawn attention to the importance of research and development of medicinal and pharmaceutical technologies.
Environmentally and socially sustainable qualities are highly desirable for commercial property investors
As the world moves closer and closer towards the end of COVID-19, investors are looking for properties that will hold value in a post-pandemic world. Particularly important is the sustainability factor, both for the environment and for local communities.
Although there was a lack of commercial investments during lockdown from March to July of 2020, interest has picked up significantly. Commercial property investors are willing to pay a high price for properties that have the potential to succeed where sustainability is concerned.
Higher demand for apartment development sites predicted
During COVID-19 many of the major Australian cities have seen investors pull out from buying new apartments and instead invest in build-to-rent properties. Rental drops were experienced in Melbourne and Sydney while there was an increase in rental demand in Perth.
As more time passes and Australia looks at opening its doors to international students again there is likely to be a higher demand for apartment and unit development sites. A greater demand for housing could see significant growth for the residential development sector.
Design of commercial offices could shift as Australians return to the workplace
In 2020 many Australian businesses had to adapt to remote work. While this may continue in waves during 2021, many Australians are returning to the office. Social distancing requirements are still in place and this may affect the layout and design of workplaces.
Commercial property developers may need to take a cautious and considered approach moving forward. Experts expect an increase in meeting rooms and video meeting technologies. Workspaces may need more flexible designs to cater for the increase in remote workers vs in-office workers.
Fire safety remains a high priority for commercial developments
Given the tragic bushfire season Australia faced during the 2019-20 summer, the emphasis on fire safety in commercial properties is at an all-time high. Commercial properties are expected to meet strict regulations that are tighter than ever.
Minimum standards should be met in accordance with the Building Code of Australia when it comes to installing fire safety systems such as fire doors, fire curtains, emergency exits, smoke detectors, alarm systems and sprinklers.
Ongoing maintenance and annual certification are also required to receive a certificate of compliance. Fire safety equipment should be tested and inspected regularly by a trained professional. New or replacement equipment must have undergone rigorous testing to ensure it meets Australian standards.
Recovery on the horizon for businesses and commercial investors
Although 2020 has been a bumpy road for most industries, experts remain positive as they look towards the coming year. With the promise of a number of effective vaccines on the horizon, things appear hopeful for the commercial property sector in 2021.
(For reference, information was gathered from: