Commercial property woes in Australia

The value of commercial property in Australia has dropped to new lows and there is no sign of a reprieve for the industrial and retail sub-sectors.

National Australia Bank's (NAB) quarterly Australian commercial property index dropped to minus 16 points in the June quarter, from minus eight points in the March quarter.

Values weakened across all sectors in the past three months, with fewer expecting good rental returns, property professionals surveyed in the report said.

NAB chief economist Alan Oster said the results reflected the mixed state of the broader economy, showing sectors outside of the mining industry were "really struggling".

"The retail and industrial sectors are the key drivers that are pushing [values ] down, and that's associated with the multi-speed economy."

Retail property values are expected to fall by 1.2 per cent in the next year, largely because of an oversupply and as consumers continue to tighten their purse strings.

"The retail sector is under a lot of stress, and more are essentially closing up," Oster said. "Generally, there's not a massive oversupply [in the office market]."


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