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The latest index print has reflected softening business conditions and subdued economic growth.
NAB Behavioural & Industry Economics has released its latest Commercial Property Survey for the third quarter of 2024, with NAB’s Commercial Property Index printing at -2 index points amid softening business conditions and subdued economic growth.
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The quarterly property survey aims to gauge market conditions in the commercial property market based on a survey of around 300 property professionals such as real estate agents/managers, property developers, asset/fund managers, and owners/investors.
While the sentiment printed negative for the September quarter, it did represent a lift from the June quarter (-11 index points).
The survey also reflected disparate sentiments across different segments of the sector.
Despite improvements, the survey saw negative sentiments for office (up 7 to -18 index points) and retail (up 29 to -10 index points) segments, with industrial unchanged (+40 index points) and CBD hotels, which is typically volatile, remaining neutral.
There was also a noticeable difference between near- and long-term confidence, with the 12-month measure subdued +8 (+9 in Q2), while long-term confidence improved to +28 (+22 in Q2).
Complicated outlook
On Tuesday, NAB senior economist Gerard Burg commented on how the variances in sentiment between the different commercial property segments during a NAB Commercial Broker Quarterly Economic Update webinar.
“Since the pandemic, we’ve really seen the office sector start to deteriorate dropping down to the kind of levels we see of the retail sector,” Burg said.
“By contrast, the conditions in the industrial sector remain very strong. This is really driven by things like warehousing and transport and logistics, which continue to go at a much stronger level than those other sectors.
“Now retail really reflects that sort of longer-term story of conditions in our economy. Consumption trends have been somewhat subdued in the post-GFC period, we've also seen the growing competition from online retail, which has really impacted bricks-and-mortar retailers.
“In terms of the office sector, it is very much driven by the shifting patterns in demand for office space, as the environment has shifted more towards a hybrid working environment.”
[Related: CPI returns to RBA target band]
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