SA commercial property to weather COVID-19 storm – if lockdown short-lived
The impact of SA’s Stage-2 coronavirus circuit breaker lockdowns remains to be seen, but experts believe the damage could be catastrophic if drawn out for a prolonged period.
Commercial SA director Andrew Turner said Adelaide could weather a short-term lockdown, but feared the outcome if the virus takes longer to control.
“What’s concerning is the damage it may cause all the businesses out there, especially the small to medium-sized businesses, which will create more vacancy, which is not a good thing,” Mr Turner said
“Tenants are going to be struggling even more to pay rents – some were struggling before COVID and that first wave was a kick in the guts for them, and then here’s another one.
“I thought we’d come out a lot worse from March/April than we did, and by May and June it was really picking up and then the months since then, right up until last week, the market was extremely healthy.“
We were leasing, we were selling, the market was buoyant.
“I think if it’s a six-day lockdown I don’t think it’s going to make any difference at all.
“But if six days becomes four, six, eight weeks, it’ll create a lot of damage.
“Our tenants are a pretty good cross section of the industry as a whole, and a third of our tenants are really struggling, so this could be diabolical for them.”
Mr Turner said sales had been strong in the wake of the first wave.
“We’re achieving up to 30 per cent more than what we were expecting in some cases, and pretty much in all cases we’re achieving what we expect or better – we’re not underselling anything,” he said.
“I don’t think it’s done any damage to the commercial market as such – certainly it has to a lot of businesses, that goes without saying – but, interestingly, that’s not been reflected in the value of properties.”
Mr Turner said the commercial real estate market’s strength partly lied in the current underperformance of the share market.
“People feel confident with bricks and mortar,” he said.
“The general consensus is interest rates are not going to increase rapidly over the next few years and that gives people confidence to buy and I don’t think that will change.”
Mr Turner said people could still buy and sell during the six day shutdown – the market is not stopping for anything.
“We are all working from home and still talking with clients and negotiating deals,” he said.
“The only thing we’re not doing is inspections and meeting people on site, but with the digital technology available, people get a pretty good idea.
“We’ve sold plenty of multimillion-dollar properties to people since march who haven’t even sighted the property”
Business SA welcomed the lockdown as an effort to control the virus, but chief executive officer Martin Haese said the fallout for businesses as a result could be disastrous.
“Business SA has been inundated with well over 500 phone calls from concerned business owners in the last 24 hours,” Mr Haese said.
“While absolutely necessary to stop the spread of the virus and prevent further longer-term lockdown restrictions which could be catastrophic for the State, the six-day shutdown will certainly come at a cost to business owners.
“Today’s announcement of zero new cases is a good sign that hopefully continues so that this hard and fast shutdown doesn’t last a second longer than it has too.
“Business SA thanks all South Australian business owners for supporting the shutdown. They are helping to save lives and livelihoods.”
CIRCUIT BREAKER PROPERTY Q&A
Responses supplied by Real Estate Institute of South Australia director Cain Cooke.
Are open inspections and auctions banned in SA, and from when?
Yes. Currently open inspections and auctions are banned in SA from midnight on Wednesday, November 18 until midnight on Tuesday, November 24.
Can I still hold private inspections and online auctions?
No. Private inspections cannot be held for the six days from midnight Wednesday. Online auctions may be held however all parties must remain in their own residences for this.
Do I need to wear a mask in SA?
At this stage the wearing of masks outside is strongly recommended but not mandatory.
Can I still lease or rent out my holiday home?
No. You cannot lease or rent out your holiday home during the six-day period.
Can I move house during stage 2 lockdown in SA?
No. You may only leave your residence if you are an emergency services worker or providing essential services, to receive medical care including COVID-19 testing, to obtain medical supplies, to obtain essential food supplies (one person from the household, once per day), ‘end of life’ visits or in an emergency situation.
Can I move interstate during stage 2 lockdown in SA?
This matter should be referred to the State Government.
Can I have tradies over to my house for urgent work?
No. You cannot have any tradespeople attend your home during the six-day period unless it is an emergency.
Can I still continue with my new house build?
No. All construction has been ceased for the six-day period.