Australian Commercial Property is Runnning Its Own Race

Unlike the US and Europe, Australia has not suffered a banking crisis. Therefore, our banking system is still capable of providing credit for normal growth.

With the US unemployment rate approaching 10%, this will delay any quick turnaround for the Commercial property sector.

Decoupling from the US

Decoupling from the US

As you would expect, there is a strong correlation between high unemployment, tenancy contractions and falling commercial property prices. And as a result, a reluctance by banks to provide credit.
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It’s both Good News … and Bad News!

Business Investment

Business Investment

Government statistics show that business investment rose by 3.3% during the three months to June — most of it accounted for by a massive 20% surge in Victoria.

This increase is the latest confirmation that Australia has entered its recovery phase — emerging from the global turmoil, without experiencing a technical recession.

h3. But what does this mean?
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Keep Your Eye on Inflation!

Balancing Act

Balancing Act


Australia is supposed to be in the midst of a recession; and yet, underlying inflation is still running at 4% per annum.

If that’s the best we can do … what levels will inflation finally reach, once the economy moves into its recovery phase?

Strong sales have seen retailers cutting prices less than expected. And generally, other prices have held firm — because wages have not yet been affected by increases in unemployment.

On top of this, there are also serious supply constraints on the housing front, which are pushing up rentals.

h3. How will this affect things? [Read more…]

Sentiment is Strong … Despite the Economy

Looking Up

Looking Up


These graphs are painting a very encouraging picture.

As you can see, the Westpac-Melbourne Institute consumer sentiment index increased strongly by 9.5% for June.

And that means it has now leapt by some 23% since May — the largest 2-month increase for over 30 years.

First-home buyers have also been active, accounting for nearly 30% of all loans during May.

And this overall level of confidence follows an increase in retail sales, for three months in a row.
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Depreciation : 4 Myths Keeping You From
Maximising Your Secret Tax Advantage

Capture The Benefits

Capture The Benefits

Depreciation is probably the most under-used weapon to legitimately shelter a significant portion of your property income.

And as a Commercial Investor, you really do have an unfair advantage over somebody investing in only residential property.

Therefore, let’s now set about dispelling a few of the common Myths concerning Depreciation.
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Do You Remember Back Then … ?

In an earlier article, I gave you a bullet-point comparison of how things are NOW … compared to the early 1990s … in relation to Commercial property.

Anyway, here are some very revealing graphs — based upon figures from the RBA.

Now & Then

Now & Then


Back in the 1990s, the banks were burdened with a heavy corporate exposure; and interest rates were up around 18% pa.
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Positive Signs Continue in China

China's Recovery

China's Recovery


Despite what the IMF has to say this morning … the World Bank expects China’s economy to start growing by mid-year, as a result of its massive stimulus package (some $A800 billion).

Overall growth for China has become more certain, as activity moves from state-funded projects into housing and improved consumption.
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How to Interpret the Conflicting Signals

Over the past weeks, I’ve posted several articles suggesting things are starting to improve — and more particularly, here in Victoria.

Upward Trend

Upward Trend


Since the low point on 6 March, the Australian stock market has enjoyed roughly a 20% improvement. And that has also been reflected on Wall Street.

However, we then received the recent announcement of unemployment reaching 5.7% for March — the worst for 5 years.

On the one hand, the Bulls are claiming the stock market is now confirming a turnaround. And on the other, the Bears are using the rise in unemployment to support their case as to how bad things are.

Surely, these two indicators can’t both be right?
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CBD Office Markets

CBD Office Sales

CBD Office Sales


As a result of the global financial crisis … sales of Melbourne CBD Offices fell in 2008 (to $425.2m) from the level achieved in 2007 (of $850.9m) — according to research released by CBRE.

Institutional buyers and REITs have virtually withdrawn from the market … leaving private syndicates, wealthy families and overseas buyers to transact most of the deals.
[Read more…]

Are You Passing Up A Truly Great Opportunity?

Only every 18-20 years do you get the chance to take advantage of the Commercial Property market, when it’s in a state of flux!

As such, this year’s full-day Property Workshop (on Saturday 4 April) is probably even more important than in past years — to help you to gain that upper hand.

But remember, the “Early Bird” discount expires — if you are not enrolled by this Sunday.

Therefore, if you haven’t done so already … make sure you grab your self a seat over the weekend.

Victoria is Starting to Shine

Victoria may not have grown as fast as Queensland and WA over the whole of 2008.

December Quarter Growth Figures

December Quarter Growth Figures


However, it far outstripped every other State for the December — once the full impact of the global turmoil had started to take effect.

And as mentioned in an earlier posting … the positive impact of the Bush Fire Relief funds will certainly help to shore up Victoria’s position even further.