Insider Tips to Help You Discover How to Succeed with Commercial Property
The Reserve Bank of Australia (RBA) is not seeing the Australian flood disasters as having a prolonged effect upon the national economy.
It certainly expects the March quarter GDP to decline by 0.5%. But it is then projecting a 4.25% surge, over the remainder of this year. [Read more…]
As this graph shows, there has been a strong long-term relationship between unemployment and retail vacancies.
And were you to base your Investment decisions on this measure alone, you could be forgiven for assuming there will be a healthy couple of years ahead of the retail sector as a whole.
[Read more…]
Retail challenges.
Households still appear to prefer paying down debt, rather than spending — with Australia’s saving level hovering around a record 10.5% of its disposable income.
[Read more…]
Which, when you think about it, is quite an achievement in itself!
About a fortnight ago,Treasurer Wayne Swan was crowing about the Labor government’s achievements during his Mid-Year Outlook.
[Read more…]
Most people seemed taken by surprise, when the RBA chose to raise the cash rate to 4.75% on Cup Day this week.
However, with Oaks Day being held yesterday, I thought today would be better timing for this post.
Price Pressures
However, with industry facing capacity constraints and the mining boom heading towards previous levels … inflation is poised to accelerate during the December quarter, as wages start to rise.
[Read more…]
Balance
And the rising $A is certainly making its job easier, by generally cooling activity.
Work Allocation
The IMF has recently trimmed its overall global forecast — down to 4.2% from 4.3%, for 2011.
The emerging and developing economies are tipped to grow by 6.4% (with China’s growth being over 9%).
Whereas, the various advanced economies are expected to grow by a subdued 2.2%, on average.
However, any double-dip recession is considered most unlikely — as investment and domestic consumption has replaced the building up of inventories.
According to the IMF: “Investment in machinery and equipment is already showing strength in a number of advanced economies.”
Nonetheless, spending and investment in most advanced economies will be constrained by households replenishing their savings; and banks remaining reluctant to lend freely to businesses. Plus, the US housing market still languishes.
Overall, the lack of business investment (and therefore employment growth) will adversely impact on tax revenues. And thereby, make government debt reduction programs a slow process.
On all counts, Australia will continue to enjoy solid growth — relative to other advanced economies. And this will provide ongoing pressure for interest rates to rise, over the next three years.
All the more reason to lock in your interest rates long-term … for any Commercial property investments you intend to make.
The US Federal Reserve is concerned that consumption is still being underpinned by government funding.
And so, even though stimulus measures may be winding down … the Fed has decided to maintain interest rates at their historically low level.
It seems that households and businesses are preferring to repay debt, rather than spend to encourage investment and growth.
In Europe, there is still simply not enough trust between Banks to lend to one another. And that means credit is extremely tight. Right now, Central Banks are stepping in to lend to private banks, in an attempt to free up funds to boost economic activity.
China still remains the bright light with its growing demand for of the commodities Australia exports.
The IMF actually predicts that the Asian economy (which includes Australia) will be 50% larger within five years.
And it will then represent about a third of the world’s trading activity.
h2. The Implications for Commercial Property
Already, major Asian sovereign wealth funds and property trusts are starting to target Office towers within Australian capital cities.
In fact, foreign buyers have invested around $1.7 billion during the past 12 months — representing about 70% of the purchase is made.
While this won’t directly affect the smaller private buyer … it will force everyone to move down a price bracket ought to — looking for better value.
Therefore, as yields quickly firm at the upper levels … this will soon have a ripple effect down through more modestly priced Commercial investment property.
Couple this with rising rentals, as the supply of Office space starts to fall around Australia … and now would be the perfect time to position yourself, ready for the next growth cycle.
While the Rudd government may have moved quickly to provide guarantees for the major Banks during a financial turmoil … the impact of doing so has been disastrous for borrowers.
Right now, these major Banks seem to account for virtually 80% of all owner-occupier loans for property.
As such, the margins they are charging have never been higher — despite the Banks’ protestations of being “squeezed”.
RBA's Dilemma
Buying and negatively gearing a Commercial investment property is not forever in one — particularly, with interest rates on the rise.
And if you already have high personal debt … adding to that wouldn’t be a smart move on your part.
Negative Gearing
Any gearing you decide to take on, should be viewed as part of your overall strategy — and not there simply to minimise your tax bill.
[Read more…]
The RBA’s decision on interest rates yesterday came about because of what’s happening here in Australia, rather than in Europe.
It has been made against the backdrop of our exporters having recently extracted massive price hikes for iron or in coal, as a result of China’s strong growth.
Since the global turmoil started in 2008, the $A has climbed by nearly 55% against the $US — and just over 40% against our other key trading partners.
RBA Logic
As a result, the NAB’s business confidence index stands firmly positive for the third consecutive quarter. And even more importantly, actually improved throughout the last quarter.
h2. How will this affect Commercial Property?
[Read more…]
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But first, just watch this short video to gain a quick understanding of these three essential elements that form the foundation of every negotiation.
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To expand on this, here are four key tips to help attract quality tenants.
