The State of Play!

Soft LandingThe various signals coming through on the economy are mixed. And we continue to hear more doom and gloom from the US.

Australia’s growth is likely to slow a little. However, on balance, we should now experience a soft landing — with the RBA saying this morning, that the rate rises may have done their job; and inflation looked as though it might have peaked.

Someone responded to what was covered in my last posting by saying it was “old news” — which I found interesting, because the latest figures on Commercial property yields only came available during the week.

Anyway, Australia’s overall strong corporate profits and low borrowings ought to see us capitalize on current events. Even so, our 2-tier economy will serve to emphasize the differences between the resource-rich states (of Queensland & WA) … and the rest of Australia.

At the moment, these States supply about 60% of the global coking coal and dominate the iron ore markets. Also BHP has just announced a trebling of its contract prices.

This could well increase Australia’s overall Terms of Trade by some 20% next financial year; and that would simply compound the current disparity around Australia.

The Brisbane and Perth office markets are presently “out of control” — with their CBD vacancy rates falling to 0.7% and 0.1% respectively. And with the potential for a market collapse there (like the late 1980s), becoming even more likely.

Therefore, it’s good news … but with a twist or two, for Commercial property investors! And just let me know if you missed out on watching the Warning video I made available to clients a few weeks ago.

Speak Your Mind