Commercial property market down in Mar qtr
Australia's commercial property sector continued to move downwards in the first three months of the year, a survey shows.
National Australia Bank's (NAB) quarterly Australian commercial property index fell to -8 points in the March quarter, compared to -6 points in the December quarter, with forward expectations also dropping slightly.
NAB said the fall reflected weakness in a number of sectors, with retail and industrial markets particularly soft.
"Conditions are still by far the weakest for retail, with the index sinking to an all-time low of -45 points (from -36 points in the December quarter)," it said in a statement.
"This sector is being hammered by ongoing caution among households, poor retail business conditions and depressed confidence among retailers."
NAB said that volatile economic conditions had also impacted the industrial property index, which dropped to -17 points, from -14 in the December quarter.
Office property and CBD hotels both did well in the March quarter, registering +12 and +57 points respectively.
Meanwhile, there was less confidence in new development plans.
"Developers are delaying more projects, chasing fewer new acquisitions and increasing refurbishments," NAB said.
"This suggests they are adopting more cautious and cost effective strategies and awaiting a change in market conditions before edging back into the market."
There were mixed conditions in state property markets, with WA reporting the only positive index reading.
Improvements were seen in NSW and Queensland, although both reported negative index readings (-6 and -15 respectively).
Victoria weakened slightly, to -11 points, while conditions in SA/NT remained volatile, with its index falling to -18 points, from -3 points in the December quarter.
WA was down slightly to +19 points, from +21 points in the previous period.
The survey noted that access to debt and equity funding appeared easier during the March quarter, although interest rate concerns were on the rise again.
Future expectations for the market were low, NAB said.
"Overall conditions in the commercial property market are now expected to remain negative until the September quarter of 2012, with NAB's Commercial Property Index forecast to rise to +25 points by March 2013 and +41 points by March 2014."
Brought to you by