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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