As 2019 draws to an end it is timely to reflect on the positivity in the Ballarat commercial market during the year and look ahead to likely trends in 2020.
2019 was a year of highlights for Ballarat as it continued to attract national media commentary as a market showing consistent median price growth, low unemployment and a strong underlying economy benefiting from investment in both the public and private sectors. Most notably is the GovHub project in the CBD which is well under construction and due for completion in late 2021.
With record low interest rates and predictions that the RBA is likely to cut rates even closer to zero in 2020, increasing numbers of investors are seeking commercial property as an important component in their investment strategy. Falling interest rates tend to drive commercial property yields down which in turn supports capital growth. This has been evidenced in Ballarat during 2019 with yields under 6% becoming more common as more commercial investors enter the market seeking high yielding assets.
We expect the Ballarat investment market in 2020 to further react to the continuing downward shift in interest rates driving yields down and prices higher. The expectation is that total returns on commercial property including both rental yield and capital growth are likely to exceed 10 percent. 2019 also saw the Ballarat CBD re-activating with a range of national retailers showing confidence and taking up sites in the main retailing precincts. The announcement that Myers was renewing their lease also added to the increasing optimism in the CBD.
The Ballarat industrial sector experienced significant gains in land and capital values during 2019 with many new projects in planning or under construction. These developments include a range of small to medium warehouse developments in Delacombe, Wendouree, Ballarat West Employment Zone and Mitchell Park.
With significant government focus on decentralization, Ballarat as with other major regional centres can look to the future with even more confidence as developments attract new business opportunities, underpinning a strengthening and growing local economy.