Over the past two years, the inner city market was undoubtedly one of the hardest-hit areas in Melbourne.
Before COVID, Melbourne attracted the most overseas migrants in the country, with a considerable percentage of them being students and visitors who gravitated towards inner-city rentals. A perfect storm of missing CBD workers, extended lockdowns and closed internal and international borders effectively prohibiting international students and tourists alike from returning, saw the area suffer a severe blow. The Docklands, Melbourne and Southbank areas are mainly high rise apartments for inner-city living, so those areas were affected greatly last year.
But Daniel Cole, Director of Barry Plant Docklands, can see that positive change is happening. “Now, with the international travel ban removed and borders reopening, international students are allowed to return to school which is helping the sector to recover. As consumer confidence returns, alongside domestic and international tourism, we believe the sector will continue to advance. Over the past few months, we have seen a strong demand for smaller apartments in the lower price range. Together with the AirBnB market taking up supply in the area, inner-city apartments are finally seeing increases in rents. It has been over two years since we have seen such demand - we are now seeing multiple groups at our open for inspections, where previously virtual tours were commonplace.”
Docklands in particular is seeing a vast improvement - at one stage in the last 12 months, our Docklands office had a 20% vacancy rate, which has now been taken down to 2% vacancy in the last couple of months. This is an excellent improvement that Daniel expects to continue.
The timing around a ‘normalisation’ of migration both internationally and domestically remains highly uncertain, as it depends on both government policy and the desire to travel abroad. “Once these things move in favour, we expect Melbourne’s inner-city rents to rise again and the CBD’s vibrancy to continue to return,” Daniel says.
Data is sourced from RP Data by a third party
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