NAB commercial property index in negative as confidence falls

NAB's Commercial Property Index has fallen four points to -2 in the fourth quarter of 2014.

Source: NAB

The weakest sentiment among the four sectors monitored: office, retail, industrial and CBD hotels, was recorded in the office sector, where the index has slipped from -8 to -10 between quarter three of 2014 and quarter four. However, respondents did expect some improvement next quarter while remaining in the negative, with sentiment regarding the next quarter at -3.

But the biggest drop in sentiment was seen for CBD hotels, where sentiment dropped from 45 in quarter three to -8 points in quarter four.

NAB noted that forward expectations have been reduced in all sectors except for industrial. For the next 12 months, confidence is highest for retail sectors and industrial, with "office clearly lagging".
However, positive returns are expected in all four commercial markets in the next one to two years, despite reduced capital growth expectations.

Rents fell in all four markets in quarter four, according to NAB, with industrial and retail rents falling at the slowest rate. Oversupply was seen to be hurting the office sector, where high vacancies were seen and rents decreased to -1.3%.