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Investment boosts market

As we near the end of a tough financial year and breathe a sigh of relief after the elections in Greece this week, we can take some comfort from the solid performance of commercial property markets. While the global financial markets are shrouded in uncertainty due to Eurozone issues, property markets, particularly Australia's, have maintained relative stability due to underlying strong fundamentals.

There have been positives for the Australian market in the past month or so. The two cuts by the RBA to the official cash rate in May and June are generally being viewed as a stimulus for consumer spending and development.

Certainly the state of the construction sector has been worrying. The NSW budget addresses this issue head-on with initiatives aimed at boosting the state's flagging construction industry.

Infrastructure was a big winner in the budget and the improvement to transport networks in NSW will encourage growth in the industrial sector.

Further allocations to the south-west and north-west rail links will help ease congestion on roads and further upgrading of the M2 and M5 motorways, including building the vital Erskine Park Link Road, will improve efficiencies for industrial operators.

This is all the more important with rising transport costs. The continuing investment in Port Botany to increase its capacity is also welcome, as our analysis shows that an increase in the volume of container-trade activity has a positive relationship with take-up of industrial space, rental growth and land values.


At a national level, the first-quarter GDP report card reinforces the theme of a steady, broad-based recovery in commercial property markets.

The strong headline growth figure announced earlier this month will boost confidence both domestically and among offshore observers of Australia's economy.

The Australian economy expanded 1.3 per cent in the first quarter of this year, and 4.3 per cent since the first quarter of last year. Commercial investment volumes for Sydney for the first half of this year also show the market is holding up well, tracking slightly above last year's totals. Volumes (as at May 31) reached $1.08 billion compared to $938,325,000 for the same period last year.

Michael Fenton, NSW managing director, Jones Lang LaSalle