As the retail sector slowly gathers pace again, commercial property continues to suffer the hardships driven by the current epidemic. In fact, the return of commercial property has dropped to a woeful 0.9 per cent in September 2020 which is the lowest number in more than ten years. The analysis conducted by the Property Council and MSCI Australia Annual Property Index has found that there is no clear time when commercial property will rebound.
The terrible result is on the back of the worst annual income return since records were taken 25 years ago. The annual income return of 4.7 per cent return offset by a negative capital growth result of 3.7 percent has produced the 0.9 result.
The poor annual income return result was due to land lords, especially those in the higher end malls, having tenants who have had difficulty paying their rents due to lock downs and reduced customer traffic. This has resulted in significant write downs in asset values.
As a few big companies have started to announce progress in developing a Coronavirus Vaccine, markets have rebounded with consumer confidence increasing in anticipation of life going back to normal.
The high level of confidence have driven retail sales to a huge gain allowing some confidence to flow back into the industry.
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Insurance Industry nervous about JobKeeper changes
Insurance companies are expecting huge fallouts from the impending changes to the JobKeeper scheme. Every month a Sensis Business Index survey is completed which aims to gauge the current situation for businesses around the country across all sectors.
JobKeeper was introduced by the federal government as a major cost program to mitigate the effect that Covid had on the economy. Businesses that have a 30% or more drop in revenue can apply for the program which assists by paying a portion of the employees salary.
Focusing on the Insurance and Finance industry has shown some concerning results from the survey. 47% off the businesses that responded to the survey from the Insurance and Finance industry said that they were utilising the JobKeeper program for their employees. A similar percentage have said that the JobKeeper program is crucial for their company’s survival. 42% of the businesses that were interviewed expect that should JobKeeper change, there will be a major impact to their business.
As expected, businesses in Melbourne, who are harder hit by the pandemic, have placed a substantially higher level of importance on the program for their businesses survival.
Despite the doom and gloom in the economy and the recession we are currently experiencing, most industries have a positive and confident outlook for the next 12 months.
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