“A gradually strengthening global economy will provide support for accommodation demand from both tourists and business, while the addition to room supply will remain constrained given weaken construction volumes over recent years – pushing up room rates and occupancy levels further, encouraging development,” says BIS Shrapnel.
“It is noted that while the more business focused CBD markets look relatively healthy, conditions for tourism-focused operators remain tougher, especially in markets like the Gold Coat and borth Queensland,” says BIS Shrapnel.
Retail building is expected to remain weak in 2012-13, with BIS Shrapnel saying that the weaker economy and competition from online retailers has resulted in weaker trading results, meaning that the expansion plans of many retailers and shopping centres developers are on hold.
Despite an expected improvement in economic conditions, the flow-through effect on new shopping centre construction will take time.
Investors wanting to take a punt in the retail space should consider bulky good centres and neighbouring shopping centres, says BIS Shrapnel.
“Bulky goods centres and neighbourhood shopping centres building has outperformed and this is anticipated to continue for the near future.
“This reflects the relatively aggressive expansion plans including ALDI, Woolworths (especially with their new Masters hardware chain), Wesfarmers and Costco.”
A sustained commercial property recovery is also tipped by ANZ in its September property outlook update following the sector “plateauing” in 2012.
“Market fundamentals still suggest the broader ex-retail commercial property market is at the early stages of a multi-year cyclical upswing.
“Low vacancy and restricted supply present considerable upside to effective rents, particularly in the office and industrial sectors. Moreover, current yields belie the positive fundamentals and will firm as investor sentiment rebounds,” says ANZ in its report, authored by its head of property research Paul Braddick and other ANZ economists.
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