Residential development property and retail assets have highest number of distressed sales: LandMark White

Katherine JimenezDecember 7, 2020

Residential development property and retail assets were identified as having the highest number of distressed sales listings in the September quarter, a new report revealed.

The findings were in the latest quarterly LandMark White Forced Sales Monitor report which showed that overall distressed sales listings from receivers, mortgagees and liquidators around the country had declined in the three months to September and appeared to be generally on their way down.

However the results for some of the states and sectors varied significantly.

While NSW and Victoria's share of distressed listing both fell in the three months to September, the number of forced listings in Queensland increased during that period and now account for 65% of the national total.

Regional areas continued to do it tough. The majority of listed receivers’ stock was found in regional rather than metropolitan areas, with the regional share at 71% in the September quarter. Over the year to date, the split was 75% regional to 25% metropolitan areas, compared to 67/33 in the year prior.

Breaking down the figures into sectors, the data revealed that the highest number of distressed listings in the third quarter was in the residential development sector, accounting for 23% of the total.

But the biggest mover was the retail sector, which rose from 11% in the June quarter to 19% in September. The industrial sector accounted for 16%, down from 19%, while the office sector increased from 9% to 12% - the highest share so far, the report said.

It also looked at the distressed ratio of the five major sectors across the past year and found that the sector with the highest saturation of distressed sales in the September quarter was residential development at 27%, closely followed by the leisure sector at 26%. On a year on year basis, the residential development sector fell from 44% to 38%, while the leisure sector fell from 32% to 29%.

The distressed ratio for the retail sector rose sharply in the September quarter, moving from 12% to 18% having shown a steady downward trend over the previous four quarters. The industrial sector's distressed ratio rose to 24% in the quarter, after two consecutive falls. The office sector was unchanged at 15%, and 12% on an annual basis.

The take out message from the report was that distressed sales listings were on their way down. It concluded that "although one in five commercial properties advertised in the national press were receivers’ sales, our view is that their effect on the market is diminishing and will continue to do so in the absence of any shocks or major increase in the cost of borrowing".

 

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