Commercial property weathers initial coronavirus impact: survey
The early onset of coronavirus in Australia left commercial property sentiment largely unscathed through the first quarter, with only the hotel sector fielding a mass hit to confidence, according to NAB’s latest Commercial Property Survey.
Completed between late-February and late-March, the survey accounted for the closure of the international borders but predated the impact to the economy and business confidence brought about by stage three social distancing measures.
Sentiment towards the CBD hotel market plunged by 55 points in the first quarter to fall 38 points below the long term average. All other sectors held steady, with the office sector down 3 points and industrial property down 7 points, though both remained positive. Confidence in retail fell 2 points, but does not account for the shutdown of many physical retail stores through April.
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NAB’s chief economist Alan Oster says the impact on commercial property confidence has been muted so far, but says signs of tension could be seen should the coronavirus impact continue to linger over the economy.
“If the coronavirus impact on the broader economy is sustained, it is likely to feed through into much lower commercial property market confidence in the future,” Oster says.
“As it becomes increasingly clear that efforts to contain the coronavirus are having a very sharp impact on the economy, the true impact on commercial property capital values, rents and vacancy will depend on how long the virus takes to get under control, the extent of the containment measures and the timing of the phasing back to normal.”
