Commercial Property Yields Firm As Activity Improves

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Commecrial-Property-Investing

FURTHER EVIDENCE of an underlying strength in the Commercial property market is now provided by the latest IPD/Property Council index.

PCA-Cap-RtaesDuring 2013, you saw investors (both local and overseas) stride out from the shadows of the Global Financial Crisis. And as this graph confirms, every sector has displayed a healthy improvement in selling yields.

Both the US and UK commercial property sectors have responded slightly ahead of Australia, because their labour markets (and therefore demand for space) have been improving at a faster rate.

Savvy Investors are already in the Market

Nevertheless, there has been significant (and consistent) Asian money pouring into Australia over the past 12 to 18 months — as investors have already sought out solid opportunities in the $100 million+ bracket.

This has effectively forced local buyers to bid up prices for lower-valued properties — or simply miss out on securing a position, before the expected upsurge gets fully underway.

The effect of this strong activity won’t take very long to filter down through to the lower price brackets. And then, out into the wider suburban markets around Australia.

Bottom Line: They say that no one rings a bell at the bottom of the market. However, what’s occurring is probably the closest you’ll likely get.

Therefore, observe the signs … and make sure you act accordingly, if you’ve been at all hesitant about stepping into the market.

Chris Lang

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