Australian Commercial Property Confidence Drops as Economy Slows
Australian investors’ confidence in commercial property slumped in the three months to June 30 as the nation’s softer economy weighed on business and consumer sentiment.
The NAB Commercial Property Index dropped to minus 16, the third-lowest level since the bank started the measure in March 2010 and the weakest since December 2012. Offices fared the worst, with that index seeing the biggest drop from the first quarter.
NAB’s business conditions gauge slumped to minus 8 from minus 4, a four-year low in June as low interest rates and a falling Australian dollar failed to boost the economy. The Reserve Bank of Australia, which is seeking to rebalance the economy toward industries including residential construction as the mining investment boom wanes, yesterday cut its benchmark rate by a quarter percentage point to a record-low 2.5 percent,
“Consumer confidence is still the main challenge facing property businesses,” NAB said in today’s report. “The immense impact structural change is having on the Australian economy is becoming increasingly apparent, with the economy now growing at its slowest pace in almost two years.”
Values and rents of office, retail and industrial properties fell in the second quarter, according to the report. Expectations for capital and rental growth were also lower than earlier expected, it said.
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