Media release - 7th July, 2016
The prospect of a hung parliament is creating disquiet among business owners and commercial real estate investors concerned that it will affect business confidence in the nation’s capital, according to Raine & Horne Commercial Canberra.
“Wherever you are in Australia, you need business confidence. However, political instability significantly impacts the Canberra commercial property market,” said Nick Cotis, Director of Operations - Sales & Leasing Executive, Raine & Horne Commercial Canberra.
“When Malcolm Turnbull took over last September, there was a surge in business confidence in Canberra. Government departments were looking to expand or move within Canberra, and we saw an almost immediate impact on the commercial markets.”
To illustrate, in September last year, office vacancy rates in Canberra were sitting at around 15% with strong indications leading up to the election that the Canberra office vacancy rate had fallen to around 12%, according to Raine & Horne Commercial Canberra.
But the possibility of political horse-trading with independents and minor parties is creating alarm among investors with commercial assets in Canberra, says Mr Cotis.
“Our institutional clients are worried the main political parties will be required to shift public sector agencies interstate as part of their negotiations with minor parties and independents,” he said.
“This will create a commercial office glut and long-term vacancy rates will blow out, with a consequent hit to yields also a distinct possibility.”
Currently, office yields in Canberra are 6% if a property has a Commonwealth Government tenant on a long term lease, while properties leased to private sector businesses are attracting yields of 7-8%, according to Raine & Horne Commercial Canberra.
“We’ve been inundated with calls from our interstate and local owners concerned about how the ongoing political indecision will impact their office assets in Canberra.
“Interestingly, plenty of private and institutional investors are questioning why it’s taking so long to get a result in this age of technology.
“A constant theme among our investors is that it’s 2016 and not 1901, and that we should be able to get a decision faster. It’s archaic and it’s put the country in limbo, not to mention the effect it is having on commercial property markets in Canberra,” said Mr Cotis.
For all your commercial sales, leasing and property management needs in the ACT, contact Raine & Horne Commercial Canberra on 02 6239 6888.
For further media information contact:
Nick Cotis, Sales & Leasing Executive, Raine & Horne Commercial Canberra on 0419 630 642
Andrew Harrington, National Communications Manager, Raine & Horne on 02 9258 5400