Office market to lead commercial property recovery

A new survey of commercial property industry players has revealed the office market will lead the sector’s recovery in the next 12 months, with Melbourne likely to be the best performer.

NAB’s new quarterly commercial property survey, released this morning, shows developers, real estate agents and investors are most confident about the recovery taking hold in the third quarter of 2010, when the office, retail and hotels sector are expected to bounce back strongly.

As conditions improve, so too will the availability of credit, with respondents indicating that barriers to debt will ease over the next three months – although finding equity is expected to become more difficult. Half of all respondents plan to source more debt over the six months.

And in a healthy sign for the construction sector, 76% of developers surveyed indicated that they will be commencing new works within the next 12 months.

Investors are also confident about the recovery, with capital values expected to rise across all commercial sectors over the next 12 months.

The office sector (where a 3.3% rise in capital values is expected) is considered the best investment option, followed by the retail sector (up 2.4%) and the industrial sector (up 1.8%).

In terms of the geographic markets to follow, the majority of respondents see Melbourne as the fastest growing market over the next six months, with Sydney likely to do best over the next 12 months.

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