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October 1, 2019

Brisbane: The new world city

Jack Green

Brisbane continues to transform itself into a self-titled ‘new world city’. It is a destination for both domestic and international real estate investors off the back of Queensland’s improving economic growth and a multibillion-dollar infrastructure pipeline.

Where does Brisbane sit in the Australian commercial real estate market?

Brisbane CBD comprises over 2.2 million sqm of office stock, making it just under half the size of the Melbourne CBD and slightly smaller again when compared to Sydney. Its vacancy, however, is a lot higher, albeit on a downward trajectory having dropped to 11.9%, from 12.9% just six months previously. Brisbane fringe vacancy contracted from 15.7% to 13.8% over the same period.

This improvement indicates Brisbane is continuing to recover from its record-high vacancy rates after the end of the mining boom. The 11.9% Brisbane CBD vacancy rate is currently the lowest it has been since early-2013, indicating strong sentiment regarding the ‘River City’. This sentiment is amplified given the fact that Perth, the other major resource-driven office market, continues to struggle, with vacancy at 18.4% and incentives upwards of 50%.

Queensland’s economic fundamentals are mixed. According to CommSec’s July 2019 State of the States Report, Queensland ranks fifth in Australia in terms of overall economic performance, despite having the nation’s third best relative economic and population growth.

The State of the States Report, however, does not incorporate Gross State Product, a category in which Queensland (3.4%) outperformed the Australian average (2.8%) in 2018. Queensland’s unemployment rate is 6.0% at present, above the national average of 5.1%.

Overall, the Queensland economic outlook seems able to withstand weakening global and domestic conditions, particularly as a weaker currency is a positive to growth in key sectors such as resourcing, tourism and international students. Additionally, the reduction in housing construction has been offset by increased commercial construction and business investment in and around the Brisbane CBD.

Office outlook

A turnaround in the Brisbane CBD office market is slowly emerging, with an optimistic outlook for the remainder of 2019 and beyond. It is reasonable to anticipate the state’s economy will continue to pick up and investment sentiment to increase off the back of Australia’s weakening dollar. Significant public infrastructure investment and steady population growth will also help.

Investors seeking higher yielding assets have been looking at the Brisbane market for a while now, with 2019 on track to be a record year in terms of investment. The estimated volume of sales, either settled, pending or under due diligence, reached approximately $2 billion through the first half of the year. Only the limited availability of stock seems to be a hindrance for investors.

Rents appear likely to continue to edge upwards as vacancy drops, dictated by a positive combination of relatively low new supply and stronger tenant demand.

This should drive some further tightening of capitalisation rates as domestic and offshore investors continue to take advantage of the yield discrepancy between Brisbane, its southern counterparts and also comparable international city destinations.

One potential negative, however, is the proposed Queensland Government land tax change. This continues to be lobbied against by the industry but, if legislated as is, is likely to negatively impact foreign investors. On top of increases to existing land tax rates, which now range from 1.7% to 2.75%, a new proposed land tax foreign surcharge of 2% will apply to foreign companies.

Why Brisbane?

International destination

Brisbane is one of Australia’s primary tourist destinations, with its array of restaurants, galleries and shopping, but it also acts as a gateway to everything else Queensland has to offer. The Great Barrier Reef, Whitsunday Islands and rainforests of Far North Queensland are a short flight away, while the Gold Coast and its famous beaches are within driving distance.

In 2018, Queensland’s international visitor count for the year grew 2.3% to 2.8 million. The weak Australian dollar is helping drive an increase in tourism, with international tourists flocking down under, as well as nationals forgoing an international holiday to travel domestically.

It’s not just tourism drawing international visitors to Brisbane. With seven world-class universities and a number of private schools accommodating international students, it is no coincidence international enrolments in Queensland educational facilities rose 9.1% in 2018.


When measured against cities across the world, Brisbane is attractive for its liveability.

In 2019, The Economist ranked Brisbane 18th out of 150 cities worldwide, based on the criteria of stability, infrastructure, education, healthcare and environment. Mercer, which uses similar yet more extensive criteria, placed Brisbane at number 35 out of 231 cities evaluated in their 2018 Quality of Life index.

Relative value

Along the east coast of Australia, Brisbane’s residential market is comparatively well placed. As at March 2019, the median apartment value in Brisbane was $372,900, whilst Melbourne was $466,900 and Sydney a whopping $696,900. Similarly, for houses, Brisbane holds an average price of $563,700, while Melbourne’s $809,500 and Sydney’s $1.03 million sit far higher.

Those priced out of the residential market in the southern cities can find value in Brisbane.

Brisbane is well placed within the wider Australian commercial market, and has an abundance of infrastructure projects in the works. It is little wonder the ‘River City’ is becoming an increasingly popular destination for international real estate investors.

Project Cost Estimated Completion Description
Cross River Rail $5.4 billion 2024 Set to be utilised by more than 160,000 commuters daily, the 10.2-kilometre rail line between Dutton Park and Bowen Hills will consist of almost six kilometres of tunnel beneath the Brisbane River and CBD.
Northshore $5 billion 2035 With construction beginning in 2020, and spanning an area of 302 hectares, Northshore will be Queensland’s largest urban renewal project, consisting of high-end apartments, commercial space, retail, restaurants and bars.
Queen’s Wharf $3.6 billion 2024 The 26-hectare integrated resort development will consist of five new hotels, as well as 50 bars, restaurants and cafes, a pedestrian bridge to Southbank, and is expected to draw an additional 1.39 million visitors to Brisbane each year.
Brisbane Live Precinct $2 billion 2022 The Brisbane Live Precinct, located in Roma Street, will centre around a new 17,000-seat arena.
Millennium Square $2 billion 2021 Millennium Square, located in Bowen Hills, is touted as the ‘city within a city’. It will consist of a state-of-the-art multimedia hub, residential towers, entertainment facilities and one-hectare garden.
Brisbane’s New Runway $1.3 billion 2020 Brisbane’s New Runway is currently the largest aviation construction project in Australia. Once complete, Brisbane will have the best runway system in Australia, and current aircraft capacity will effectively be doubled.
Herston Quarter $1.1 billion 2028 Linking old with new, Herston Quarter is set to become one of the nation’s largest and most complex biomedical precincts. The redevelopment is set to showcase the area’s local heritage, as well as provide aged care and retirement living, and residential accommodation.
Brisbane Metro $944 million 2023 Construction has begun on Brisbane Metro, which will be a key part of Brisbane’s greater transport network, connecting the city to the suburbs.
West Village $800 million 2023 Located on the fringe of Brisbane’s CBD, West Village will include seven residential buildings and about 13,000 sqm of retail and commercial space, alongside one hectare of open space linked by pedestrian and cycle laneways.
Brisbane International Cruise Ship Terminal $158 million 2020 South-east Queensland currently does not have a dedicated facility able to accommodate mega cruise ships. However, once complete, the Brisbane International Cruise Ship Terminal will be able to cater to the largest vessels in the world.
Queensland Cultural Centre $150 million 2022 The new development at Southbank will serve as the Queensland Performing Arts Centre’s fifth theatre, and will in turn make QPAC the largest performing arts centre in Australia.