Commercial Property: Should You Be Cautious
About Investing in the Retail Sector?

The Retail sector is very delicately balancedMany investors just simply fall in love with Retail property. And probably, because of familiarity — as it tends to influence so much of our daily lives.

Therefore, after investing in Residential property for a while, you find people will gravitate naturally towards Retail properly.

To them, it seems to be the next logical step. But is that actually the case? [Read more…]

Office Sector Set to Surge Ahead

Offices are enjoying strong demand
Australia-wide, Office vacancies are falling.

And Melbourne leads the way at 5.5%; with Perth close behind, at 6.6% — due to the rebound in mining activity.

Offices set to SurgeAccording to the Property Council of Australia, these vacancy levels will reach 4.9% and 6.1% respectively, by January of next year.

With zero space coming onto the market in Melbourne, landlords will be well-placed to renegotiate far more attractive deals, as leases fall due for renewal.

Whereas, Brisbane’s current vacancy level of 9.2% is expected to blow out to 9.8% — making it very much a tenants’ market, as far as lease negotiations are concerned.

While rents are rising in most capital cities, selling yields are set to fall as well. This double benefit will be reflected in strong capital growth over the next four years.

Bottom Line: Shrewd investors are currently ranking their preferred Commercial sectors as follows …

  1. Office (both suburban and CBD)
  2. Industrial
  3. Retail

Now is the time for you to start re-balancing your portfolio — and ride the growth wave through to 2018.


Commercial Property Cycles …

h2. How do you ever understand them?

Before talking to you about Commercial property, let’s take a quick look at Investment Cycles in general.

Investment CycleA recent AFR article contained this rather clever chart … showing an Investor’s mood at different points throughout the Cycle.

My reading would be that Australia is currently at the “Optimism” stage of the upturn — perhaps with some capital cities, a little more so than others. But generally, that’s about where most of us are at the moment.
[Read more…]

Commercial Construction
Outlook Remains Soft

While Australia’s overall business expenditure has remained fairly strong, our Commercial construction and infrastructure outlays are expected to decline by at least 10% this financial year.

Construction OutlookBCI Australia is forecasting project construction of some $63 billion 2009-10, which is about $7.7 billion down on that for 2008-09.

In all but for Victoria and South Australia, there was general over construction during the past few years. And therefore, you are not likely to see new Commercial construction pick up, until mid-2010.And that’s good news as far as impending cost rises, for anyone planning a new project.
[Read more…]