Real Investment Analytics (RIA) releases the Australian
Commercial Property Market Indicators (CPMI) for Dec
2019.
The CPMI provides the most extensive investment
portfolio performance reporting dataset for the Australian
commercial property market. It includes a selection of
descriptive and performance measures, covering a broad
range of traditional and alternative commercial property
sectors across various market segmentations. The dataset
is primarily compiled from public sources.
The dataset currently captures over 4,000 property
investments, with an estimated value of $320 billion.
The key highlights for December 2019 are:
- The profile of the commercial property market comprises of retail shopping centres (39%), office buildings (37%), industrial properties (13%) and the remaining (11%) representing alternative sectors.
- Space market conditions were generally favourable with an overall occupancy rate of 98%. While the office and industrial property sectors have seen vacancy rates fall, the retail sector experienced a rise in vacancies, reflected in a slightly lower occupancy rate of 98.5%.
- Lease expiries across the commercial property market remain stable with a weighted average lease expiry (WALE) of seven years. Notably, the WALE across alternative sectors is significantly longer, averaging 13 years.
- The overall market capitalisation rate stood at 5.3% in the December quarter, representing a mild compression of 20 basis points over the year. Across property sectors, cap rates were firm: office (5.2%), retail (5.2%), and industrial (5.5%). Notably, while cap rates continue to compress for the office, industrial and alternative sectors, they have stabilised for the retail sector.
- Movements in asset prices have generally started to stabilise for the office and retail property sectors while asset prices for industrial properties continue to climb strongly.
- Discount rates have also been gradually firming and remain relatively tight, averaging 7.3% for the overall market. Discount rates across key sectors are approaching 6.5% while it stands at around 11% for alternatives.
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Nothing in this document constitutes general or specific financial product or services advice and is provided for general information purposes only and should not be relied upon. Real Investment Analytics Pty Ltd (ACN 616 588 348) makes no representation or warranty, express or implied, as to the correctness, currency or completeness of the information contained in this document and disclaims all responsibility and liability for any loss or damage, whether direct or indirect, incurred by any person or entity who relies or purports to rely upon this document.
Contact: Anthony De Francesco, Managing Director of RIA, M: +61 (0) 438506 284, E: anthony.defrancesco@rianalytics.com.au