NAB has signalled that market sentiment for commercial property is becoming more optimistic.
Market sentiment for commercial property has “shifted quite noticeably” in the last three to six months, according to National Australia Bank’s (NAB) chief economist, Sally Auld.
Speaking at a NAB Commercial Broker Economics Update Webinar on Wednesday (17 September), Auld said: “It’s really clear that the mood has shifted in that [commercial property] space, and that’s partly a function of valuations, partly a function of rates having come down, (because we know that’s a pretty rate sensitive sector).
“So, I think generally speaking, my view would be it’s right to be reasonably optimistic on that space.”
NAB’s latest Commercial Property Index, which gauges sentiment and confidence in Australia’s commercial property market, eased back slightly in the June quarter after reaching an eight-year high in the first quarter.
However, commercial property market sentiment remains near eight-year highs, NAB research found.
For the next 12 months, confidence is positive across all sectors and states, with property professionals forecasting capital values and rents to grow in all sectors in the next one to two years.
Confidence levels saw the most obvious improvement in Melbourne’s commercial property market, turning positive for the first time since 2022.
The turnaround in Melbourne was attributed to a strong lift in the city’s office property sector, with retail also showing signs of improvement.
The new optimism was driven by fewer empty offices, hopes that property values would rise, and a generally brighter mood among developers and investors.
At NAB’s webinar, Auld noted that in Victoria, where the market has been more subdued, she had anecdotally heard property developers and investors say that it was the “right time to start deploying capital back into that space”.
“So I think, more generally, [the outlook is] pretty constructive on commercial property,” she finished.
[Related: Why brokers are turning to commercial lending to grow their business]
