The commercial property sector is showing tangible signs of weakness after a downcast Macquarie CountryWide Trust auction in Melbourne yesterday.
The listed property trust put 10 supermarket locations up for sale with a combined book value totalling $118 million. Only two of these properties were sold, for a meager $8.8 million all up.
The auction was seen as a litmus test for the commercial property market – which like all asset classes has been re-priced amid the global credit turmoil.
Macquarie CountryWide CEO Steven Sewell was not surprised with the weak outcome. “Interest rates have moved, and there hasn’t been a lot of positivity,” he told The Australian Financial Review.
Commercial property operators may now have to face the reality of revising valuations and development projects.