Office and industrial sectors to lead commercial property growth in 2012: PCA-ANZ survey
Office and industrial property values are expected to increase in the first quarter of 2012, but further declines are forecast for the already struggling retail and tourism property sectors, the latest Property Council of Australia (PCA)-ANZ Property Industry Confidence Survey has revealed.
“Weak retail and tourism industry conditions are expected to negatively impact capital growth in these sectors, with the balance of property industry respondents across Australia expecting prices to decrease in March quarter 2012 in both tourism and retail property,” the report says.
The divergence in expectations across sectors and markets is attributed to “varying domestic economic performance across industries and states/territories and the respective property market fundamentals”.
Growth expectations are strongest for office and industrial property in WA, Queensland and the Northern Territory.
Source: PCA-ANZ
Across the commercial sector, capital growth expectations are more optimistic for WA than in any other state.
“Positive expectations for the Queensland office and industrial property sectors are welcome after the Queensland economy endured a tough 2011,” the report says.
The capital growth outlook is negative across all commercial property sectors in South Australia, Tasmania and ACT.
Despite the mixed outlook, ANZ believes the commercial property market is in “the early stages of a multi-year cyclical upswing, with rents set to rise and yields to compress”.
“The office and industrial markets are particularly well placed with tight vacancies, limited capacity expansion and attractive yields expected to support growing investor interest and a marked increase in valuations as rents rise and yields compress.
“However, considerable uncertainties in Europe, the Middle East, the US and China threaten economic and financial market stability and will continue to weigh on investor sentiment and property yields through 2012.
“Consumer restraint, reduced workspace ratios, employer caution and potential job shedding, all present significant risks to commercial property demand.”