Respondents to the 16th Australian Property Directions Survey, released by the Australian Property Institute yesterday, believe the greatest growth potential in property over the next few years is the commercial office sector in Sydney and Melbourne and to a lesser extent Brisbane.
According to the API survey, some further growth potential is indicated for industrial property in all three cities – Sydney, Melbourne and Brisbane while respondents again see retail property at its zenith in all three cities – Sydney, Melbourne and Brisbane.
“The April 2006 survey shows that the retail is at its peak in Sydney, Melbourne and Brisbane, maintaining its top position with a downturn over the next two years “, API NSW president Tom Webster said yesterday.
Webster said the survey revealed that the Melbourne and Sydney commercial office markets will show continued improvement over the next two years, but will not reach their peak in that time.
The API respondents are fairly evenly split over whether non-residential property will out perform the equity markets over the next year.
“Three years out, respondents are more evenly split between unlikely, the same or likely that non-residential property will out perform equity markets.
“Five years out, the respondents are still fairly evenly split in their view on whether non-residential property performance will outperform equity markets,” the survey added.
Similar to April 2005 survey, Brisbane shows the greatest growth projections for both market value and market rent for commercial and industrial property with commercial property in Brisbane seeing the largest growth predictions for the three types of property in the three cities.
Overall, however, according to survey participants, commercial offices in Sydney, Melbourne and Brisbane are predicted to have the biggest growth potential than both industrial and retail property.
Predictions for industrial property growth for all three cities are stronger than a year ago and are generally lower for retail property, apart from Brisbane, than a year ago.
The industrial markets in Sydney, Melbourne and Brisbane should continue at or near peak levels for the next two years.
This and the last survey have shown residential is in decline and this will continue for at least the next year before showing some minor improvement after two years.
INTEREST RATES AND INFLATION
“The majority of respondents see interest rates steady over the next 6 to 12 months with approximately 60% seeing increases over the next three years,” Webster added.
“The majority of respondents see inflation being steady over the next 6 to 12 months, with the respondents almost equally divided between Higher, Similar and Lower in 3 years.”
FOREIGN INVESTMENT
Most respondents see Foreign Investment as being steady over the next 6 months then rising over the next 12 to 36 of the study period.
BUSINESS CONFIDENCE
The majority of respondents see Business Confidence as being steady over the next 6 months then being steady to rising in the next twelve months.
Survey participants included leading property companies such as Mirvac, Stockland, Lend Lease, GPT, the “Big Four” commercial agents – CBRE, Colliers, JLL and Knight Frank as well as Herron Todd White, Ashe Morgan Winthrop, ING Real Estate, Investa plus the major banking groups.
By Nelson Yap
