Thursday 11th August 2016 - 1:43 pm

Commercial property:worth a look

by Alan Thornhill

 

Commercial property?

 

With returns on interest investments at historic lows – and fresh doubts appearing about the future of residential investment, this might be worth some thought.

Especially in view of the results of the National Australia Bank’s latest Commercial Property Survey,which is for Q2 2016

 

It shows that: “sentiment in the retail commercial property market has risen to its highest level in over six years.”

 

However, the bank adds: “strong retail market confidence was not enough to offset the lower sentiment recorded across the office, industrial and CBD hotels sectors.

 

“ Overall, the NAB Commercial Property Index fell 7 points to +5 in the second quarter of this year,” it said.

 

“This was a strong quarter for capital growth in the retail property sector, with respondents expecting retail to grow 1.5 per cent in the next year.

 

“As a result, sentiment in the retail commercial property sector rose to its highest level since early 2010,” NAB Group Chief Economist Alan Oster said.

 

“However, sentiment from respondents was lower across all other sectors, particularly in CBD hotels which was the weakest sector overall .”

 

“Looking towards the future, confidence levels remain broadly unchanged over the next one to two years across all markets.”

 

Market sentiment remained strongest in NSW (+37) and Victoria (+28), likely driven by the continued non-mining recovery whilst sentiment fell heavily in SA/NT (-27

to -51) and, although still subdued, improved slightly in WA (up +4 to -48).

 

The Q2 Survey showed that one in two developers plan to start new works within the next six months.

 

“But developers have also reported further deterioration in their debt and equity funding situations.”

 

That is expected to continue over the next six months.

 

“This is coupled with respondents reporting the average pre-commitment percentage required for developments increased for the fifth straight quarter,” Mr Oster said.

 

The Bank said About 230 property professionals had participated in the Q2 Survey.


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