independent valuations, page-28

Roadster you said:

"Portfolio plus, the reason property yields blow out when the cash rate falls , is because the cash rate if falling because the economy is in trouble, therefore real estate values fall and yields increase, this will continue."

This really is a BOF...Blinding Flash of the Obvious!

I guess what I was saying - perhaps not so clearly - Look behind the text book answer and consider the position of investors who get rewarded for the risk they take when investing and presently there is a massive gap arising between the safe and the not-so-safe.

Cash @3% or a commecial building tenanted (in the best of situations) by the Australian Govt at say 7%...yeah, that's a return differential far greater than say two years ago.

Even if you look at a less attractive building where the tenants are not so strong...3% v say 9% leaves a lot of differential for reducing returns caused by the vcacany rate increasing.

Besides...when buying these buildings for yield means that you are not necessarily concerned in the value of the property short term, unless you have a tight LVR covenant.

Cautiously, private money and private syndicates will begin to look at quality assets where they gear very conservatively (borrowings no more than 40%) and wish to take a medium/long term outlook.

Interesting times.