THE commercial and residential property markets recovery has slowed down, according to an Australian Property Institute survey.
The 28th Australian Property Directions Survey shows across Sydney, Melbourne and Brisbane — commercial, industrial, retail and residential property in all three cities is seen as currently being stalled at or near the bottom of the property cycle and is predicted to advance slowly along the cycle over the next two years.
The survey also found the residential property markets in the three cities have stalled close to the bottom of the property cycle. In particular, the Sydney market has shown little improvement over the seven years and shows no sign of significant progress.
Over the next two years, Sydney and Brisbane residential property is seen to be advancing from the bottom of the cycle at a faster pace than in Melbourne.
In the commercial sector, retail property is the least advanced along the upswing of the four property classes and is expected to bottom out in 2013.
Meanwhile a majority of respondents see lease incentives as the feature of all Australian capital markets, with estimates made as an annual percentage over a five-year lease term.
Perth has the most change to incentives, with majority of the survey respondents seeing incentives for the city in the 0-9% range for Prime and A Grade property.
“Overall since September, there is a trend for lease incentives to have decreased across CBDs in capital cities except for Adelaide and Hobart where lease incentives have increased according to survey respondents,” API Victorian President Justine Jacono said.
“Perth is seen as having the lowest level of incentives for commercial property of the capital cities.”
Melbourne CBD and Suburban CBDs lease incentives are seen to be more in the 10-19% range and its CBD commercial property was reported as having lower incentive levels than commercial property in Sydney and Brisbane.
In Sydney’s CBD, respondents see incentives for prime commercial property being in the 20-29% range, as a result of increase in the lower 10-19% range. While 87% of respondents in the Sydney CBD and 69% in the Sydney Suburban CBD see 20-29% of leasing incentives for A Grade property.
Brisbane’s incentives are seen by majority of the survey respondents to be in the 20-29% range, but with a declining trend.
Lease incentives for commercial property in Adelaide and Canberra are viewed to be in the 10-19% range, while Hobart received varying responses with incentives seen to be in the 10-19% to 20-29% ranges.
When asked to comment on the importance of Government incentives – both Commonwealth and State – for the residential property development market, 47% of survey respondents rated them as moderately important and 39% as extremely important.
Respondents also predict market values and rentals to increase for Sydney and Brisbane industrial property, whilst rentals for Melbourne industrial property are expected to remain the same but market values will increase.
“Market values and market rentals for commercial property in Brisbane are predicted to increase in the next 12 months while both are predicted to have smaller increases in Sydney and Melbourne,” Jacono said.
However, respondents are less certain in relation to international listed and unlisted trusts and syndicates, with most of them predicting no investment change to moderate investment growth in the next 12 months.
Further to this, the API survey forecast movements for new leasing in effective rents – that take incentives into account. In Sydney, Melbourne and Brisbane, the majority of respondents see effective rents increasing over the next 12 months, with stronger sentiment in Sydney and Brisbane than in Melbourne.
“The large majority of respondents see stable to increasing effective rents for the next six months for new leasing in Sydney, Melbourne and Brisbane,” she concluded.
Property Review
