altering the way in which they interact with their office accommodation . This will dampen absorption levels and keep vacancies elevated over the short term , as well as hinder rental increases or incentive reduction . Sentiment shifts across the workforce will continue as COVID-19 cases re-emerge across the community , adding more setbacks to returning to work in some locations , in particular those which have suffered multiple lockdowns in the past . Confidence in office markets in growth zones such as Sunshine Coast , Gold Coast , and Perth - which have benefited from population gains - are likely to remain high , keeping occupancy rates up and future prospects sound .
5 . Domestic tourism to rebound , impacting hotel market
While Australians are keen to get back to international travel , uncertainties regarding health , economy and safety will see more travellers seek out domestic holiday options . More affordable airfares and certainty surrounding currency will re-route otherwise international travellers back home , improving occupancy levels and growing average daily room rates to never before seen highs . This will put the spotlight back on hotel assets as an attractive investment choice , from major CBD holdings of interest to foreign buyers , through to smaller coastal motels catering for the whole family ( pets included ) for the smaller private buyer .
6 . Owner occupiers continue to seek out industrial assets
The low vacancy situation across the Australian industrial market will continue into 2023 given the current limited development pipeline . This will put pressure on rents to grow and create uncertainty for small businesses . The continued need for a range of industrial assets ( from small units through to large distribution centres ) will see occupiers take greater control of their accommodation needs , despite growing financing costs , and actively seek out assets to suit their current or growing business needs , sheltering from possible increases in rents .
7 . Government stimulus will grow demand for some assets
Childcare and aged care are two asset classes that enjoy high levels of subsidies for both operators and consumers . This aids in keeping occupancy levels high which means some certainty in returns over the longer term . These assets are typically held in high regard by investors seeking well-maintained facilities , which can hedge against possible changes to the cost of finance . Despite the elevated demand for these assets , location will remain key to ensure the long-term prosperity of the asset and its stable , ongoing income stream .
8 . Developments will rebound
After a number of years of limited new supply across most asset classes , next year will see a resurgence in the development of new assets , notably residential and industrial . While construction costs are expected to remain high , the underlying demand for accommodation will see more cranes appear on the skyline . Development site sales have been particularly strong in 2022 , and while planning may be a hindering factor , the development pipeline for stock will look more promising into 2023 .
Vanessa Rader Head of Commercial Research Ray White Group
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