Australian Commercial Property is Runnning Its Own Race

16 October, 2009 by Leave a Comment

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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Filed Under: Economic Issues, Global Scene, Investment Objectives, Offices, Property Cycles, Your Exposure Tagged With: , , , , , , , , , , ,

The “Fund Gap” Threatens …
Higher-Priced Commercial Property

25 June, 2009 by Leave a Comment

Earlier this year, you read about a funding crisis pending for Property Trusts and Institutional buyers. And this is not helped by the RuddBank failing to materialise.

With a surge in the Share Market since March, several recent capital raisings have helped some of these larger property owners.

However, with the latest hiccup in Share Market confidence, you’re unlikely to see much more capital raised in this way.

Capital Gap

Capital Gap

As such, Quadrant Real Estate Advisors have concerns with the high debt levels for these owners of Investment-grade property.

As you can appreciate, the financiers are proving to be rather difficult.

Therefore, over the next two years, you could see a gap of up to $30 billion emerge, between properly valuations and what bank are prepared to fund.

But these problems seem to relate mostly to commercial properties worth more than $20 million.

Because, for properties less than $10 million … the market appears conservatively geared, and is experiencing strong demand — especially for properties in Melbourne, priced under $5 million.

So it is somewhat a two-tiered market … with a number of good opportunities starting to emerge.

Filed Under: Offices, Using Debt, Your Exposure Tagged With: , , , , , , , , , , , , , , , , ,