Retail Returns to Favour

Retail property has had some press coverage of late.

It has shown a surprising improvement, given global events and the hike in interest rates.

Westfield (a good retail barometer) reported a strong mid-year result from its Australian shopping centres.

RetailMar2010As you can see from the table, Vacancy rates have fallen significantly and Yields firmed — particularly within the strip shopping centres of Melbourne.

And furthermore, rentals have also started to climb … as the economic recovery has given shoppers confidence to start spending again.

Currently yields ranging between 4% and 6.5% across these various strip centres. And would indicate that investors are returning to retail property once more.

If you are planning to acquire some Retail property, you need …

    1. A strong tenant (well-established, or proven backing);
    2. A long lease (5 years+); and also
    3. Solid rental reviews (CPI or at least 3.75% pa).

With these in place, you should be able enjoy a good long-term investment.

From here on …
Back to a 2-Speed Economy?

The latest figures show unemployment crept up from 5.2% to 5.3% last month — probably due to school leavers. However, the total number of hours worked actually jumped by 2.4% during February.

2-Speed Economy

2-Speed Economy

With predictions of a 60% surge in commodity prices from next month’s contract re-negotiations, this will put further strain upon the labour and capital resources of both New South Wales and Victoria.
[Read more…]

CBD Offices on the Move

Westpac has just released an Australia-wide outlook for Commercial property. And it predicts you will start to see growth in rents and values during 2010-11.

Two Cities

Two Cities

As employment numbers grow with the improved economy, demand for Office space will also take off again.
[Read more…]

Election Year Blues?

It’s not just rising interest rates that the Rudd government will have to contend with, in the run-up to the next election.

The joy of the resources boom restarting brings with it certain unwanted side effects. What you will start to see is wage rate increases; plus the drawing away of materials and equipment, from other sectors within our economy.

Our Exporters

Our Exporters


Furthermore, the stronger Australian dollar will bring increased hardship to our tourism and manufacturing industries — who exported goods and services internationally.

Not to mention, our local businesses … who are finding it harder and harder to compete with cheaper imports.

China

China

Clearly, Australia doesn’t want to miss out on the extraordinary growth occurring in both China and India.

However, the real test of the government will be in how it oversees the insatiable demand for labour and capital by the mining sector — while not starving the rest of the economy of these same key business imports.

With the voice of trade unions becoming louder, the temptation for Rudd is to resort to government subsidies. But sadly, it is often the most vocal (rather than the most deserving) who seemed to benefit from these type of handouts.

Maybe the preferred option would be to allow the “fittest” to survive; and thereby cause of Australia’s overall productivity to rise in the process?

But then, it is an election year!

Nonetheless, the continued stronger demand bodes well for Commercial property during 2010 and beyond.

Was the RBA Asleep at the Wheel?

In fact, the RBA has been cautious … NOT asleep!

Last week, we covered the statistical anomaly relating to Australia’s low unemployment figure. And that may well have influenced the RBA in holding rates steady last month.

Although, the patchy spending in December and January probably coloured their thinking as well.

Bursting Bubbles

Bursting Bubbles


Nonetheless, you continue to see a surge in home values; and headline inflation is now starting to creep up again. [Read more…]

"Statistics Never Lie, or Do They?"

There are some interesting outcomes emerging from a wash-up of the recent financial turmoil.

Australia has fared best among the Western countries, with its unemployment rate at only 5.3% and falling. But does this now mean you’ll start to see wage pressures emerging?
[Read more…]

Your Baby-Boomer Opportunity!

Whenever you go through a major structural change within society or the economy … opportunities will always emerge.

But you’ll find that Baby Boomers won’t be retiring — well, not in the conventional sense. Most will leave their long-time employment, to establish some type of small consultancy business.

In the past, many well-known firms simply evolved as a result of one generation following the next into the family business.

Traditional Family Business

Traditional Family Business

Invariably, sons (and even daughters) left school to join their parent’s firm. It was a handy way to ensure easy succession; and stood Australia in good stead throughout the 1900s. [Read more…]

What about the Baby-Boomer Effect?

Yesterday, the Federal government released Australia’s third Inter-generational Report.

And about five years ago, I came out with a somewhat startling statement:

“If you haven’t sold your traditional family home by 2010-11 … you had better be prepared to hold it until 2025 — because there simply won’t be a market for it!”

Chatswood ... Sydney

Chatswood … Sydney

And given the recent surge in home sales (particularly in Sydney and Melbourne) over the past 6 months … you would be excused for thinking my prediction might be way off the mark. [Read more…]

The Office Market is Looking Good

While several capital cities still have a reasonably high Office vacancies, there is a general shortage of space looming.

Room to MoveTwelve months ago, it was all doom and gloom for the CBD Office markets in Perth and Brisbane — with falls expected in both rents and values. New projects were being finished, as the resources boom ground to a halt.

In Sydney … investment banks, lawyers and accountants were reducing staff in anticipation of a severe downturn in the finance sector.
[Read more…]

Your Opportunities Moving Forward?

There has been much written already about the global financial crisis.

But in layman’s terms, it occurred as a result of capital imbalances occurring throughout the world. And nowhere more so, than in America.

The principal cause can be found with the high levels of US debt-funded consumption. And in order to better understand this distortion, you might care to consider the following figures …
US Share [Read more…]

Biggest Economic Threat For Australia

It might surprise you to hear this, however …

h3. A Strong US Recovery

… would probably be the worst thing to happen for Australia in 2010.

If that occurs, the US Federal Reserve would be forced to quickly raise interest rates, from zero to around 3%. And that would cause the collapse in the Australian dollar from its current level of around US90c.

Up until now, Australia has been shielded from inflationary pressures, with a high dollar holding down the cost of imports.
[Read more…]