RBA Reprieve …
But don’t be Fooled

The RBA appears to be performing a rather fine balancing act.

Key factors affecting the RBA's future decisionsIts Board knows rising inflation is about to emerge. And this is only temporarily masked by a poor March quarter, following the nation’s flooding earlier in the year. [Read more…]

Top Commercial Property Investors
Always Have a Master Plan

You need a good Master Plan
When you’re just starting out, your main aim is probably just trying to secure a worthwhile property.

However, to be truly successful, you actually do need to have a Master Plan.

And to help you, here are 6 Steps towards formulating one for yourself. [Read more…]

Commercial Sales Gain Momentum

AuctioAuctioneer's gavelneer's gavel
Around Australia, Commercial clearance rates at auction are now about on par with Residential property — averaging at around 50%.

Victoria seems to be leading the way, with Commercial clearance rates for some types of property approaching 70%.

New South Wales is running about six months behind at? around 60%, with firming yields. And Queensland is probably a further 12 to 18 months away in its recovery. [Read more…]

Retail Reality

Wallet Workout
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 Property Facing Challenges

Retail challenges.


Having weathered the recent rate increases, consumer confidence seems to have risen just a measly 0.3% during November — according to the latest Westpac/Melbourne Institute consumer sentiment index.

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…]

Why November?

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

Price Pressures

Sure, the September quarter CPI had fallen to within the RBA’s target range. And yes, there is still some uncertainty overseas.

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…]

“Doing Nothing Will Cost You!”

Whenever Investors are confused … the Property Market tends to do nothing and simply moves sideways.

Confusion Reigns

Confusion Reigns


You observed that when the GFC first struck.

People simply put their buying decisions ‘on hold’. And then, frantically played catch-up over the last 12 months … as soon as they realised things were still okay here in Australia.

Over that period, you have seen most Commercial markets around the country showing good growth — particularly in Melbourne.
[Read more…]

“Cycles Ain’t Cycles”

Overall, Australia has sailed through the Global Financial Crisis more or less unscathed. And from all accounts, Victoria and enjoys the standout economy of all the States.

The Traditional Cycle Has Been Interrupted

Last week, you explored the traditional cycle for CBD Offices — being 18 years from peak to peak. And over that same period, Retail and Industrial properties tend to go through several cycles.

Commercial Property Cycles

However, given Australia’s privileged position within the global scene … my view is you are now at the upswing in the cycle for the Office market. In other words, you are already at the halfway point in the traditional Cycle.
[Read more…]

Commercial Property Cycles

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…]

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.

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…]