Commercial property recovery slowing
The Australian commercial property market has delivered 12 months of strong returns, but the pace of the recovery in the sector is slowing, according to the PCA/IPD Australia Property Index.
The index returned 10.4 per cent in the year to March 2011 on the back of strong capital growth and income return from the hotel sector, which returned 13.6 per cent.
Office and retail also performed well while the industrial sector lagged due to a slight retraction in capital values, according to the data based on 1535 property assets worth $121 billion.
Rolling annual nominal returns showed that while the commercial property market is still in the upswing phase of the cycle, the return profile shows that recovery is slowing.
IPD managing director for Australia and New Zealand Dr Anthony De Francesco said the slowing recovery is supported by macroeconomic factors including employment and retail sales growth, which point to a softer economic outlook over the short term.
The office sector will continue to outperform retail due to more favourable market conditions, he added.
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