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Will confidence levels boost commercial construction?

By Greg Bell

The start of 2016 in many respects marks the beginning of a new era for commercial property for sale in Surfers Paradise and other parts of the country. While the past 12 months have seen their fair share of ups and downs, the market has nevertheless held its own and continued to thrive.

One factor that will prove critical in making sure this can continue is confidence. Improved sentiment in both the corporate and personal sectors is just what is needed to give the economy the boost it so desperately needs at the start of the new year.

Let's face it, interest rates have been at a historic low for some time now since May 2015, to be exact and Australians are starting to look for new ways of making their money work for them. A property investment could play a critical role in this moving forward, but only if the situation is right for those planning on going ahead with a purchase.

Spotlight on business confidence

Corporate sentiment way largely buoyant at the end of last year, providing a good basis from which 2016 could get underway. The NAB Monthly Business Survey for November showed a recovery in the non-mining economy, something which bodes well for office leasing on the Gold Coast.

As investors turn their attention away from the resources sector, there's plenty of opportunity for other industries to come to the fore. Commercial developments is just one option, and with business sentiment faring so positively, it's possible this prediction could soon come true.

Chief economist at the NAB Group Alan Oster explained there is now reason to "put more faith" in industries outside mining.

Mr Oster continued: "Given improved prospects for the domestic economy outside of mining, relatively subdued confidence is most likely a reflection of the uncertain global economic environment.

"In any case, it was good to see a broad-based increase in confidence across industries."

Individual state analysis also reveals a positive trend for Queensland. It was the fifth consecutive month in which the Sunshine State recorded the highest result out of any other mainland region, which is likely to have been welcomed by those leasing retail property on the Gold Coast.

Queensland treasurer Curtis Pitt explained that the Christmas period is a telling time for retailers, so these results are likely to have cemented the optimism already seen towards the end of 2015. Much of this latest trend is a result of the reaction to the state budget released last July, Mr Pitt noted, which has positioned the region for growth, especially in terms of employment prospects.

Consumer sentiment follows suit

It's not only businesses who are feeling happy at the start of 2016, as there's also evidence to suggest consumers are just as hopeful about what the future has in store.

During the week to 11 January, the ANZ-Roy Morgan Consumer Confidence Index witnessed a 1.9 per cent decline, offsetting some of the significant gains made the previous week. The overall reading for the week stood at 114.1, which nevertheless still remains higher than the monthly average of 112.7.

These results will have a knock-on effect for commercial property on the Gold Coast and other locations. More confident consumers means a greater willingness to spend, especially when it comes to big ticket items.

A more buoyant outlook could therefore improve prospects for retail leasing and other commercial activities, providing of course it can be sustained throughout the coming months. All eyes will be on the latest cash rate announcement and other key events to make sure the economy remains in this delicate state of balance.

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