Quarterly Australian Commercial Property Survey – Q3, 2014

Overall sentiment in Australian commercial property markets turns positive for the first time since early-2011, but WA continues to weaken. NAB Group Chief Economist Alan Oster said “NAB’s Commercial Property Index rose to +2 points in Q3, its first positive read since March 2011.”

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Overall sentiment in Australian commercial property markets turns positive for the first time since early-2011, but WA continues to weaken.

NAB Group Chief Economist Alan Oster said “NAB’s Commercial Property Index rose to +2 points in Q3, its first positive read since March 2011.”

While the overall index improved, the picture was mixed across the country.

“Sentiment in WA fell to an all time low (and weakened in SA/NT), with the longer-term outlook in WA also deteriorating further. In contrast, sentiment improved in all other states, with NSW the strongest and most optimistic state in next 1-2 years. As a result, the gap between WA and the other states continues to widen” said Mr Oster.

Overall market sentiment improved in all sectors, led by CBD hotels.

Encouragingly, retail sentiment turned positive for the first time since late-2010, underpinned by stronger market conditions in Victoria and NSW, while overall sentiment in industrial markets was broadly neutral.

“Office market sentiment also improved in Q3, but continued to under-perform the broader market, especially in WA where large falls in capital values and rents were reported as downsizing continued in the resources and resources-related sectors”, said Mr Oster.

A key take out from the survey was the persistence of difficult leasing market conditions in all markets.

According to Mr Oster: “average rents continued to fall in all markets, but at slower rates, as leasing incentives and vacancy rates climbed, especially in the national office market.”

On a more positive note, developer confidence improved with a big increase in the number of developers planning to start new works in short-term.

The survey identified stock availability as the biggest challenge facing property firms in the next 12 months, especially in Victoria and NSW, with consumer confidence the next biggest challenge, especially in WA.

For further analysis download the full report.
•    Quarterly Australian Commercial Property Survey Market Overview – Q3, 2014 (PDF, 158KB)
•    Quarterly Australian Commercial Property Survey (Office Market) – Q3, 2014 (PDF, 68KB)
•    Quarterly Australian Commercial Property Survey (Retail Market) – Q3, 2014 (PDF, 65KB)
•    Quarterly Australian Commercial Property Survey (Industrial Market) – Q3, 2014 (PDF, 64KB)
•    Quarterly Australian Commercial Property Survey (CBD Hotel Market) – Q3, 2014 (PDF, 53KB)