3 Months Into 2019 – Market Wrap
It’s an interesting scenario when you are asked to fill in a survey for an organisation. In some instances it really allows you to succinctly define matters.
Here is an extract of a recent Royal Institute of Chartered Surveyor’s questionnaire. It perhaps gives our clients some guidance as to the last 3 months and beyond. These responses are reflective of the writer’s thoughts.
How has occupier demand changed during the last 3 months in the region you operate in?
Office – Unchanged
Industrial – Unchanged
Retail – Down
How has available space for occupation (ie. to lease) changed during the last 3 months in the region you operate in?
Office – Unchanged
Industrial – Unchanged
Retail – Up
How do you expect rentals to change over the next 3 months in the region (Melbourne) you operate in?
Office – Unchanged
Industrial – Unchanged
Retail – Down
How do you expect average rents to change over the next 12 months in the region you operate in?
Prime Office – Unchanged
Prime Industrial – Unchanged
Prime Retail – Down 5% – 10%
Secondary Office – Unchanged
Secondary Industrial – Unchanged
Secondary Retail – Down 5% – 10%
Beyond the next 3 months, what do you expect to happen to rental growth (up to 3 years ahead)?
Office – Unchanged
Industrial – Unchanged
Retail – Down
How do you expect average rents to change over the next 12 months in the region you operate in?
Prime Office – Unchanged
Prime Industrial – Unchanged
Prime Retail – Down 5% – 10%
Secondary Office – Unchanged
Secondary Industrial – Unchanged
Secondary Retail – Down 5% – 10%
Land Tax
One of the highest levels of general enquiry that FVG has seen for a long period of time. In essence, other than bracket creep, the major concern shown by property owners was after paying Land Tax and other outgoings (if applicable), where is the value in holding a real estate property as an investment and are there better investment scenarios to consider?
In saying this and referring to our previous blog “2019 Retail Property Market Outlook”, I can honestly recommend consideration to the thought process that suburban retail property and holdings in some precincts has certainly come to an end as far as rental growth, compression of yields, further increases in capital growth/value and assessment of profile risk.
Property owners must be cognisant that without some form of added value, suburban retail is the poorer relative of the commercial office and industrial sectors, especially in light of changing consumer spending patterns and internet shopping.
Please contact me to discuss and elaborate on my thoughts.
SMSF Direct Property
It is probably the first time that I have strongly recommended to all holders of SMSF Direct Property to obtain an independent property valuation. There is no doubt in my mind that, due to the last 12 month period, factors such as “credit squeeze”, “Royal Commission” findings, lack of real estate sales and general pushback from prospective purchasers, that valuations for this purpose will see a change and importantly, for the first time since inception, the cost of a valuation to obtain a “real” level of value is imperative so a valued decision may be made.
Remembering that shortfalls, both in regard to rental and loan to value ratio, can only be taken from your SMSF holding itself. A high percentage of SMSF property participants will, for the first time, see substantial decreases in their investment performance. Do not rely upon an unqualified professional to provide you with a current market value/rental in the real estate market of 2019.
Caution – be prudent!!
If you require any advisory/valuation/representation assistance, please do not hesitate
to contact Mark Ruttner on 03 9690 1112 or mr@fvg.com.au
General Enquiries valuations@fvg.com.au
