Commercial property buyers waiting in the wings
For the eighth month in a row, the official cash rate has remained steady at 2.5%, after the Reserve Bank of Australia decided last week there were no compelling reasons to lift or decrease it.
It has now been in freefall since October 2011.
While this is good news for borrowers, it does indicate that the nation’s central bank remains cautious about the Australian economy’s ability to accelerate growth.
By the same token, the RBA’s assessment that interest rates are just right suggests that, so far, the economy is continuing to manage recovery from the fizzling resources boom and rising unemployment.
If the strength in housing prices spills into the commercial property sector, the continued low-interest rate could be the trigger property owners need to finally test the market and extract a return for their long-held investments.
Then again, with the Australian dollar still too high for the central bank’s liking, it is unlikely the RBA will jack up rates any time soon, as that could push the currency even higher and upset the economic balance.
So perhaps the waiting game is not quite nearly over, which leads to the problem of an empty larder that many commercial property agencies are fretting about.
Lemon & Baxter Real Estate told a briefing last week that many sectors of the commercial property landscape remained tight beyond trends. They said there were many buyers both here and offshore who were champing at the bit to buy assets.
But a subdued supply, particularly of premium stock, meant investors were being forced to wait on the sidelines.
How much longer they will remain happy to wait before losing interest is anyone’s guess, they said.
Sweet sale for deli
For the owners of a delicatessen and grocery shop in Melbourne’s Highett, the wait was up and they were able to see their property sold more than $100,000 above the listing price.
The building sold by Crabtrees Real Estate at 12-14 Railway Parade is 279sqm on a 346sqm plot and was offered with vacant possession.
Situated near a railway station in a strip shopping centre with strong passing trade, the site was bought by a not-for-profit community organisation for $1 million.
Family Life, which operates four opportunity shops in Melbourne, plans to open a fifth one at the address.
Batman owners spreading wings
Brisbane’s majestic State Law Building, nicknamed the Batman building due to its swish façade, is being sold by Harburg Investments, which bought it for $91 million in 2008.
At the northern end of the CBD, the 25-storey tower at 50 Ann St is fully leased to the Queensland state government until 2020.
CBRE, which is marketing the property, said it was eco-upgraded eight years ago to become one of Brisbane’s first 5-Star NABERS energy rated buildings. The building provides more than 25,500sqm of office space.
Offers around the $140 million mark are expected in the expressions-of-interest campaign which closes on May 8, CBRE said.
Sydney commercial property sales tipped to grow
Bawdens Industrial’s latest study predicts Sydney will continue to enjoy increasing commercial property transactions this year.
Having identified a correlation between the number of deals at year’s end for the past four years and confidence in the Federal Government at the time, the agency tipped that the value of small-to-medium sized industrial properties was likely to grow in 2014.
The study showed the level of vacancies at the end of 2013 was at its lowest since before the global financial crisis.
“This lack of supply coupled to continuing low interest rates is expected to underpin values in 2014 and 2015,’’ Bawdens said.
“An increase in deal volumes is expected as a sense of urgency returns to (Sydney’s) SME industrial property market.”
Property council’s union move
The Property Council of Australia has called on the Senate to pass legislation giving the Australian Building and Construction Commission more teeth and more resources to stamp out unlawful union action on building sites.
The call came as the Victorian Supreme Court whacked a $1.25 million fine on the CFMEU union for blockading building progress on Melbourne’s Emporium project.
It said the penalty followed similar sanctions, including jail terms, handed down in other states recently and likelihood that there were many more “disturbing allegations to be tested”.