2018 ASIA PACIFIC REAL ESTATE MARKET OUTLOOK | AUSTRALIA 3 CBRE RESEARCH 2018CBRE, Inc. 27 RESIDENTIAL SECTOR TABLE OF CONTENTS09 OFFICE SECTOR 04 EXECUTIVE SUMMARY 06 ECONOMIC OUTLOOK 14 INDUSTRIAL & LOGISTICSSECTOR 18 RETAIL SECTOR 23 HOTEL SECTOR32 CAPITAL MARKETS 37 RISKS & OPPORTUNITIES 2018 ASIA PACIFIC REAL ESTATE MARKET OUTLOOK | AUSTRALIA 4 CBRE RESEARCH 2018CBRE, Inc. ECONOMY We expect the economy will continue to grow below long- run averages in 2018, and with inflation low, stableofficial interest rates are expected. However, global bondyields and interest rates may indeed increase further in2018, and this has the potential to influence asset pricingmore than domestic monetary policy settings. OFFICE 2018 will see the start of convergence from divergencewith all markets expected to witness declining vacancyrates and improving effective rental growth over the year.2018 will be the cyclical peak for Sydney and Melbournebut rental growth rates will slow. The resource-basedmarkets will begin a gradual recovery with a return topositive effective rental growth. Technology is becoming an increasingly significantdisruptor in the property industry with occupiers andowners alike now recognising the need to understand thechange underway and embark on the journey ofpreparation. The traditional real estate premise of“location, location, location” is no longer everything forbusiness success. Companies are increasinglyunderstanding that better business performance nowstarts with understanding how technology could reshapetheir business.LOGISTICS As retail and industrial operations become increasinglyaligned, omnichannel real estate is emerging as a keytrend for 2018. Supply chain efficiency is key for thesuccess of the retail sector with customer expectations fordelivery times increasing, resulting in an amplified focuson streamlining operations.The e-commerce sector in Australia is still in its infancyand consumers are not yet demanding immediatedelivery; thus last mile warehousing has yet to be rolledout extensively across the country. This is expected tochange in 2018 with the entrance of a number of majormulti-national retailers and increased customerexpectations.RETAIL The future of retail is shifting towards experience andconvenience with technology driving change. Combinedthese create demand for omnichannel retail, withretailers requiring a physical and online presence in orderto compete. This, however, can add to retailer operationalcosts which in the current retail climate is exacerbated byweak sales growth.Growth in the retail sector in 2018 is expected to beslightly weaker than 2017 but much slower than the lastcyclical peak in 2014. There is a confluence of structuraland cyclical factors acting as headwinds to the sector: thehousing cycle has peaked; population and income growthare slow; competition is increasing.HOTELS Australia's hotel landscape is set to look quite different in2018 as markets which have lagged the rest of the country(in terms of RevPAR growth) turn their fortunes around,whilst others are expected to see their strong growth ratestaper off. Off the back of this change, we expect investorsto turn attention to markets that are at, or near, thebottom of the cycle, such as Brisbane and Perth. In 2017 the hotel investment market recorded the lowestvolume of transactions since 2010. We don’t expect muchimprovement in 2018, with owners reluctant to sell asthere are limited avenues to redeploy capital within thehotel sector. EXECUTIVE SUMMARY 2018 MARKET OUTLOOK –AUSTRALIA 。。。。。。