Australian commercial property experts have maintained an optimistic outlook on investment values for the coming 12 months. However, the price of retail assets is expected to deteriorate further, according to new studies.
The studies carried out by RICS in Q4 2019, surveyed professionals working in the property sector, to better understand market confidence. The results offered the strongest stance for commercial capital values since Q1 of 2018.
Investor outlook edged higher to +8, while owner-occupier remained near zero. Finance availability was one of the key drivers of investor interest, with 40% of respondents naming simple access to credit as their foundation of confidence.
Industrial and office properties should significantly outperform retail properties nationwide, although Melbourne and Sydney should see higher overall increases than Perth or Brisbane.
Office values may jump by 3.5% over the next 12 months, while key industrial benchmarks across the country could see a rise by 4%. This market confidence is driven by the anticipated prime office space rental returns, with Melbourne. Sydney, Perth and Brisbane all reporting prospects of a healthy increase over Q1 of 2020.
In terms of rental yields, prime office returns should see increases of up to 3.2% this year, while industrial yields may increase by up to 2.6%. Although the forecast looks grim for Perth and Sydney, Melbourne and Brisbane should see some positive increases in prime retail locations.
Retail will remain the foreseen underperformer and unlikely to see an improvement due to the global outbreak of coronavirus. With the potential for a supply-chain fallout, and with an impact on tourism on a global scale, it’s hard to predict where the outbreak could take the retail industry in the coming months.