Well, what a challenging time the world faces. By saying that, one of the areas I feel will be least affected will be the commercial property market, in particular throughout South East Queensland.
If we step back from the sad loss of life this virus has brought to the forefront, the world has been in turmoil for a period of a few weeks, the reality is now settling in and we are accepting this is the new way of life.
We are certainly showing little effect on the commercial market at present. Some vendors are electing to postpone their sale until there is more certainty in the market, others are taking advantage of the still abundant level of buyers who are seeking commercial opportunities. Likewise, some purchasers are keen to get into the market, while others are sitting back waiting to see where it all goes.
Sales are still occurring and as a matter of fact, over the Easter weekend, we had a sale of an office complex up the Queensland North Coast, which sold for the high $800,000’s as a result of a virtual tour, sight unseen. The buyer was cash unconditional and a deposit was transferred over the weekend.
We also had an Expressions of Interest campaign close late last week, which also resulted in a successful sale in the multi-millions, although conditional. So activity is still relatively strong in the commercial arena.
As we adjust to the new world, we have to take into account that in Australia we have record low-interest rates and there is still an abundance of money sitting in both super accounts and privately held. Buyers are reluctant to leave money in a bank with such low returns and they are also concerned with the constantly fluctuating stock market. Even though the stock market has rebounded somewhat, buyers are concerned with what is going to happen as the virus period continues.
Where does this all lead? Quality income producing commercial assets.
We do have some challenges around where tenants are currently sitting and their positions with regards to the payment of rent; however, this will wash over in the next 6 months and while buyers are taking all of that into consideration in their offers, they are open minded to the understanding that with long leases and quality tenants, it is the best security they can have of all the investment markets.
South East Queensland is still rated as a better yield destination than the Sydney and Melbourne markets and a lot of southerners are paying attention to our commercial real estate.
In summary, as we continue to travel through these unchartered waters, business leaders, the general business community, sellers and buyers are all starting to come to terms with the fact that our life will eventually return to normal. It is believed that both the Federal and State governments will inject billions to fast-track infrastructure projects in an attempt to kick start the economy. Projects like Job Keeper, assistance with land tax and more, have all contributed to a return of confidence and this will escalate over the coming weeks and months.
Our team here at the Ray White Surfers Paradise Group remains dedicated to our clients. Whilst our day to day might look different, we are still providing all forms of real estate services.
My brother, Andrew Bell and I have been in the industry for many years and we are here to be the trusted advisors for our community. If I can be of any assistance to your property needs, whether it be the sale, purchase or management of a commercial asset, please do not hesitate to give me a call.
For now, stay well.
Director, The Ray White Surfers Paradise Group