Commercial Property and The Current Economy

These are Better Indicators of our Economic Well-beingLAST WEEK, we explored just how the misuse of statistics by some commentators was distorting of the truth about Australia’s economic well-being, on a state-by-state basis.

So it is with several other indicators, as David Bassanese pointed out in a recent article (AFR: 22 March, page 36).

Many commentators are pushing for interest rates reductions, because the “economy is soft”. And they list … [Read more…]

Commercial Property Snapshot: Retail Within The Melbourne CBD

LAST TUESDAY, you gained some insights into the changing Retail scene, for Commercial property around Australia.

According to some recent research by JLL & CBRE (BusinessDay: 29 Feb 2012), these trends are clearly starting to emerge within the Melbourne CBD.

The current vacancy rate is hovering at around 1%. And in part, this is due to the Growing number of people living and working within central Melbourne.

However, part of the reason behind this also lies in the recent entry into the market of several major overseas retailers. [Read more…]

Commercial Property to Benefit From Structural Changes Within the Economy

Industry Restructure is necessary for Australia's long-term growth.IN CASE you missed the lead story in last Friday’s Financial Review … the Treasury secretary (Martin Parkinson) was outspokenly critical of the government’s recent handouts to the car industry.

And more particularly, given the recent strong growth in the unemployment figures.

In his view, taxpayers ought not be subsidising so-called “strategic industries” — when these represent inevitable structural changes, which need to occur in order to make Australia more productive in the long-term. [Read more…]

How Commercial Property Investors Benefitted From The Past 7 Days?

The Reserve Bank believes things are on the up.LAST TUESDAY, the RBA left the cash rate on hold — much to the surprise of most pundits. And yet, only the week before, that’s exactly what I suggest would happened.

You might also remember I suggested that you lock in a fixed rate mortgage — because it was then about 1% below the variable mortgage rate.

Many scoffed, and said that rates will continue to come down. Well, the past 7 days have certainly put paid to that theory — with the big 4 Banks raising their rates, quite out of step with the RBA. [Read more…]

What Will Happen to Interest Rates
When The RBA Meets Next Week?

THE GENERAL consensus seems to be that the RBA will further reduce rates by 25 basis points. But can this view be fully justified; and what does all this mean for Commercial property investors?

The RBA faces a real DilemmaMost pundits would point to the recent CPI figures and say “Yes”! And on the surface, an underlying inflation rate of 2.5% per annum is plumb in the middle of the RBA’s stated target zone.

Yet despite what seems to be a rather hesitant mood by consumers, inflation in the service sector actually surged by massive 4.4% per annum. And some other sectors (not affected by overseas competition) also finished the year strongly, growing by 3.9% per annum. [Read more…]

Is There a Credit Squeeze Looming?

WILL COMMERCIAL property investors and businesses be starved of ready funds during 2012?

Is there a Credit Squeeze looming?The banks seemed to be protesting about the increased cost of offshore borrowing. And using that as their excuse for not wanting to pass on any future RBA rate reductions in full.

But are they really telling you the whole truth? [Read more…]

Commercial Property: The Impact of China

LAST week, The Australian newspaper invited three Commercial property experts to respond to the following question:

If China’s growth story begins to peter out, what will be the impact on Australia’s commercial property market?

China's Impact on Australian Commercial PropertyThose experts included … Greg Marr (MD of DTZ), Tony Crabb (Research Head of Savills), together with me (as CEO of Properly Edge Australia).

And you can read all three responses, which appeared in Saturday’s Weekend Australian [Commercial Property 3]. What I’ve included here below is my contribution to that analysis … [Read more…]

How Can Commercial Property Investors Make Any Sense of the Retail Scene?

What's needed is some Retail TherapyACCORDING to the Australian Retailers Association, its members are projecting $39.5 billion in sales from mid-November until Christmas — reflecting an overall increase of just 2% on last year.

Many shoppers still remain extremely hesitant, despite the RBA’s recent interest rate reduction.

Although, with household savings at record levels … people may simply be holding back on their main splurge splurge, until the post-Christmas sales. [Read more…]

Will the RBA Cut Rates Again?

 This may well be the last Interest Rate Cut
Last week’s inflation figures were certainly much better than expected.

As such, there had been considerable political pressure placed on the RBA from by the government to cut interest rates this week.

Retailers were virtually pleading with the RBA to do so. Plus, homeowners were also looking for some relief in the run up to Christmas.

However, this is probably the last interest rate cut by the RBA for quite some time. To understand why, you need to cast your mind back to when the GFC began in 2008.

RBA has a real Dilemma going forwardAt the time, business investment was falling.

This is unlikely to occur from now on — because planned mining investment (at $430 billion) is three times greater than in 2008, representing about a third of Australian’s GDP.

And overall, Australia is said to have around $900 billion of business investment in the pipeline.

Furthermore, our main trading partner (China) is now far less dependent upon Western countries for its growth.

In 2008, China’s 12% per annum growth in GDP reflected a 3% to 4% component of exports to the West. While this year’s 9.5% growth in GDP was basically driven by domestic demand — with virtually no exports involved.

Overall, there is said to be around $900 billion of business investment in the pipeline. Add to that the improved stability of Australian banks, with their reduced offshore exposure and improved domestic deposits. Plus, an increase in the Tier 1 capital ratios.

Finally you also need to remember the RBA’s cash rate has now fallen from 7.25% in 2008 to its current level of 4.5% today.

Bottom Line: Apart from the current turmoil in Europe, Australia’s underlying fundamentals are solid. And these augur well for strong growth in Commercial property over the next 5 years.

To reduce interest rates any further would only serve to artificially inflate asset prices — rather than allow the market to grow organically … based upon genuine, sustainable demand.

 

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…]

Why All The Panic?


Are we really heading for GFC Mark II?

Well, not here in Australia anyway! And even overseas, things are vastly different this time around.

In 2008/09, it was private debt causing the problems … because nobody was too sure which banks were overly exposed to the sub-prime mortgage problem. [Read more…]