Commercial Property: Looking Ahead

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Confidence is now returningTHROUGHOUT the last half of 2012, you would have seen our articles consistently predicting a turn-around in confidence, early in 2013.

And more particularly, we also explained why there would be a rebound in China’s growth — following transition to the new Administration.

What’s changed, as you return from the Christmas break?

Perhaps a quick recap would be helpful:

  • A partial resolution of the US fiscal cliff;
  • US employment data continues to improve;
  • Our government has backed off its surplus commitment;
  • China’s trade figures declared a 14% export surge;
  • Iron ore prices have jumped 70% since September;
  • The EEC claims the “essential threat” to the euro is over; and
  • Australian share prices and bond yields have risen.

All throughout last year, Australia’s underlying economic fundamentals remained strong.

It was simply a confidence thing. People no longer “felt wealthy”, compared to how it had been in the early 2000s. Any interest rate cuts were being squirrelled away into savings accounts, which then reached record levels.

And as we explained, this had been occurring on a week-by-week (or a month-by-month) basis.

However, as confidence returns to the economy,you won’t see people releasing the purse strings on the drip-feed. Instead, they will be spending in lump sums on big-ticket items — playing catch up for the past 5 years of hibernation.

Bottom Line: You were warned last year about trying to pick the bottom of the Commercial property market.

Recently, you’ve seen a surge in car sales. Next will be high-priced household items; and then a boost for house sales, as people undertake the upgrade they had postponed.

And so by mid-2013, they will once again begin turning their attention to Commercial property — particularly, in the under $2 million market.

The question is … will you have already secured your position? Or have you meekly been waiting for the “clear signs,” and be knocked over in the rush?

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