Australian investors’ confidence in commercial property slumped to the lowest in 30 months as business confidence soured, a National Australia Bank Ltd. survey showed.
The NAB Commercial Property Index dropped to minus 19, the lowest since the bank started the measure in March 2010. Retail properties fared the worst, with values falling 1.6 percent in the quarter, followed by offices, where values dropped 0.6 percent, the bank said in an e-mailed report today.
“With few signs of an imminent turnaround on the horizon, confidence surrounding the outlook for retail property remains subdued,” Alan Oster, chief economist at the bank, said in the report. “The deterioration in business conditions seen in NAB’s latest business surveys may also be weighing on sentiment in the office property market.”
The Reserve Bank of Australia’s 150 basis points of interest rate cuts are having limited impact on businesses and consumers. Australia’s business conditions gauge, a measure of hiring, sales and profit, slid to minus 3 in September from zero the previous month, and consumers reduced spending on clothing, footwear and personal accessories and cut department-store purchases in September.
Retail property values are expected to drop 1 percent by Sept. 30, 2013, while office values recover slightly, rising 0.4 percent, according to the survey of 250 property industry participants including fund managers, real estate agents and property developers.
Hotels in city centers will perform the best, with values rising 1.8 percent in the next 12 months, and industrial property values are forecast climb 1.3 percent, according to the survey.