Investment Property Slumps In Australia

Report:

THE dearth of investment sales of assets of more than $100 million has left values languishing as vendors and buyers fail to reach agreement on prices.

But that may be the least of their worries. There are predictions that values could drop by up to 30 per cent in the coming 12 months.

Investment Property Databank says in a report that Australian commercial property returns were unchanged from the preceding quarter, earning investors 1.1 per cent in the September quarter. This is the lowest total return since March 1995.

Capital values at the All Property level slid -0.5 per cent. The mixed use and other properties category was the worst, values on a quarterly basis falling -1.1 per cent, while office capital values slid -0.6 per cent.

John Garimort, managing director in Australia of Investment Property Databank, said All Property total returns were unchanged largely because there had been a dearth of transactions.

"However, there is in excess of $20 billion of commercial real estate for sale, and once the expectations of buyers and sellers converge, we expect values to fall substantially.