THE outlook for commercial property has hit a new low as business conditions deteriorate, with the manufacturing sector and gloomy retail market showing little signs of recovery.
According to National Australia Bank's latest Commercial Property Index, the Victorian market is the weakest in the country. Expectations for capital gains and incomes for the three main sectors - office, shops and factory assets - have fallen in Victoria.
Overall, the national index for all commercial property hit a record low of -19 points for the September quarter - a fall of three points in the past three months and off six points since a year ago.
The quarterly index and survey of property professionals found the outlook for rents - the bread-and-butter income for commercial property owners -- to be negative, down 0.7 per cent in September.
It also found there was little prospect for growth until late next year.
The expectations and forecasts varied strongly from state to state, NAB chief economist Alan Oster said.
"Victoria is expected to underperform the national average with weaker state economic conditions driving higher levels of pessimism, especially in the state's retail and industrial property markets,'' Mr Oster said.
Office
OFFICE buildings have a vacancy rate nudging 7 per cent across the capital city markets, and are not expected to show any major improvement until a forecast drop to 6.1 per cent in late 2014. Rents are expected to rise just 0.3 per cent during the next year.
Retail
RETAIL vacancies, despite being lower than office rates, are still historically high at about 5 per cent and are expected to stay that way for the next couple of years.
Industrial
THE outlook for industrial property, such as factories and distribution buildings, was less pessimistic and is set to show an earlier recovery than other sectors.
Hotel
CBD Hotels was the only sector to report a positive result in the survey, with an index reading of six, however, this was down 13 points during the three months.
http://www.heraldsun.com.au/realestate/commercial-property-in-serious-decline/story-fnczi4hc-1226513571916
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