Commercial Market Confidence Slowly Returns
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Commercial Market Confidence Slowly Returns

Commercial property sentiment has improved for a consecutive quarter.

By Terry Christodoulou
Fri, Feb 19, 2021 12:23amGrey Clock < 1 min

While Australia has fared better than most countries in its response to COVID-19, the commercial market has taken a hit.

The recovery from the pandemic amplified recession is now, slowly, starting to find the commercial property market sentiment according to NAB’s quarterly commercial sentiment survey which – through its Commercial Property Index –  saw expectations for capital values and rents lift to a still weak -35 pts, well below the overage of 0 pts.

Overall sentiment towards the commercial property market lifted in all states in Q4, although still negative, ranging from -64 pts in VIC to -11 pts in QLD and WA. Market conditions are expected to remain negative in all states in the next 12 months except in WA (+8 pts), with VIC (-51 pts) the least confident.

Longer-term confidence however looks more positive in most states, except VIC (-16 pts) and NSW (-5 pts), with WA (+34 pts) highest.

Sentiment is not consistent across all commercial sectors, CBD hotels registered a score of -64 pts, Retail -58pts and Office -41pts, the industrial sentiment rose sharply (-25 pts) pointing to demand for online retail and requirements for warehousing and logistic spaces as the cause.

Expectations for a stronger near-term recovery in economic activity has boosted overall confidence levels in commercial property markets with an expectation to measure +2 pts in two-years.

On the development front, an above average 54% of property developers plan to start new works in the short-term (next 6 months), up from 39% in Q3.

Further, the rental outlook across commercial markets is less decisive, with Retail (-3.9% & -1.8%) and Office (-2.7% & -1.4%), with the outlook weakest in the Eastern seaboard states. The outlook for Industrial rents (1.4% & 2.1%) has however improved sharply.


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Hong Kong Takes Drastic Action to Avert Property Slump

The city’s real-estate market has been hurt by high interest rates and mainland China’s economic slowdown

Fri, Mar 1, 2024 3 min

Hong Kong has taken a bold step to ease a real-estate slump, scrapping a series of property taxes in an effort to turn around a market that is often seen as a proxy for the city’s beleaguered economy.

The government has removed longstanding property taxes that were imposed on nonpermanent residents, those buying a second home, or people reselling a property within two years after buying, Financial Secretary Paul Chan said in his annual budget speech on Wednesday.

The move is an attempt to revive a property market that is still one of the most expensive in the world, but that has been badly shaken by social unrest, the fallout of the government’s strict approach to containing Covid-19 and the slowdown of China’s economy . Hong Kong’s high interest rates, which track U.S. rates due to its currency peg,  have increased the pressure .

The decision to ease the tax burden could encourage more buying from people in mainland China, who have been a driving force in Hong Kong’s property market for years. Chinese tycoons, squeezed by problems at home, have  in some cases become forced sellers  of Hong Kong real estate—dealing major damage to the luxury segment.

Hong Kong’s super luxury homes  have lost more than a quarter of their value  since the middle of 2022.

The additional taxes were introduced in a series of announcements starting in 2010, when the government was focused on cooling down soaring home prices that had made Hong Kong one of the world’s least affordable property markets. They are all in the form of stamp duty, a tax imposed on property sales.

“The relevant measures are no longer necessary amidst the current economic and market conditions,” Chan said.

The tax cuts will lead to more buying and support prices in the coming months, said Eddie Kwok, senior director of valuation and advisory services at CBRE Hong Kong, a property consultant. But in the longer term, the market will remain sensitive to the level of interest rates and developers may still need to lower their prices to attract demand thanks to a stockpile of new homes, he said.

Hong Kong’s authorities had already relaxed rules last year to help revive the market, allowing home buyers to pay less upfront when buying certain properties, and cutting by half the taxes for those buying a second property and for home purchases by foreigners. By the end of 2023, the price index for private homes reached a seven-year low, according to Hong Kong’s Rating and Valuation Department.

The city’s monetary authority relaxed mortgage rules further on Wednesday, allowing potential buyers to borrow more for homes valued at around $4 million.

The shares of Hong Kong’s property developers jumped after the announcement, defying a selloff in the wider market. New World Development , Sun Hung Kai Properties and Henderson Land Development were higher in afternoon trading, clawing back some of their losses from a slide in their stock prices this year.

The city’s budget deficit will widen to about $13 billion in the coming fiscal year, which starts on April 1. That is larger than expected, Chan said. Revenues from land sales and leases, an important source of government income, will fall to about $2.5 billion, about $8.4 billion lower than the original estimate and far lower than the previous year, according to Chan.

The sweeping property measures are part of broader plans by Hong Kong’s government to prop up the city amid competition from Singapore and elsewhere. Stringent pandemic controls and anxieties about Beijing’s political crackdown led to  an exodus of local residents and foreigners  from the Asian financial centre.

But tens of thousands of Chinese nationals have arrived in the past year, the result of Hong Kong  rolling out new visa rules aimed at luring talent in 2022.


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