Business conditions in Australia are deteriorating, and the commercial property market is taking a beating as a result. Figures released by National Australia Bank’s Commercial Property Index indicate the market in Victoria is the weakest area in the country. Expectations for incomes from shops, industrial property, and offices have all fallen in this area.
The national index for all commercial properties has fallen to a record low of -19 points in the third quarter. This figure represents a loss of three points in the past 3 months and a six-point decline over the past year.
The index reveals the outlook for rental value is negative. Rents were down 0.7 per cent in September. The results of the survey also indicate there is little prospect for growth until late 2013.
The vacancy rate for office buildings is close to seven per cent in major markets. It is not expected to drop to the 6.1 per cent range until late 2014.
Retail vacancies are lower than that of offices but are still sitting at approximately five per cent. This figure is historically high for the country. No relief is in sight for retail property owners, since vacancy rates are expected to remain at current levels for the next couple of years.
The outlook for industrial properties is less pessimistic than for offices and retail space. Factories and distribution buildings are set to recover earlier than other sectors, according to predictions in the national index.
The hotel sector did report a positive result in the survey. Its index reading of 6 was down 13 points during the quarter, however.
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