The National Australia Bank has started a new survey to complement its existing business confidence and conditions and small and medium enterprises surveys that appear monthly and quarterly.
The new one looks at the prospects of commercial property, with an external panel of respondents comprising of Real Estate Agents/Managers (41%), Property Developers (22%), Asset/Fund Managers (20%) and Owners/Investors (17%).
The NAB said the first survey draws on a large panel of 212 respondents and it intends to "significantly increase the number of respondents in the next survey".
In the report out yesterday, the NAB said that the office sector is "expected to demonstrate the best market performance across commercial markets over the next 12 months, followed by retail and industrial".
But the residential housing sector was expected to do better overall (although many of the respondents in this first survey came from that sector).
Melbourne is the strongest performer across all sectors at the moment, with Sydney "improving solidly as the next 12 month period unfolds".
The NAB says Melbourne is the clear favourite for office developers and investors, particularly A Grade CBD stock, outperforming their nearest rival, Sydney CBD.
"Capital values are expected to rebound over the next 12 months, in particular for Office and Retail stock," the NAB said.
"While the majority of respondents still believe there will be little change (<1%) in the next quarter, the trend suggests an accelerating shift in positive sentiment for commercial property.
"Industrial stock still lags its Office and Retail counterparts.
"As expected, the most positive capital value expectations were received on Melbourne and Sydney commercial holdings.
"Of interest, Retail is expected to experience slightly better growth than Office over the next quarter, before yielding to Office which has a capital growth expectation of over 3.25% per annum by April 2011."
In contrast, the bank said the Brisbane Office property market received the lowest net score by some margin for all grades, while Perth delivered net positive results, reflecting flow on effects from new resources related projects.
"Capital values are expected to rise across all commercial sectors, with Office (+3.3%) considered the best investment option over 12 months, followed by Retail (+2.4%) and Industrial (+1.8%)," the NAB forecast.
"Rents are tipped to follow a similar path, with Office overtaking Retail for best performance expectation during 6 month forecast period through the remainder of the surveyed timeframe.
"Vacancy expectations for all commercial markets show improvement across the board with Industrial selected as the market for best absorption over the next 12 months.
"Retail vacancy is expected to increase slightly over the next 6 months before improving by about 50 basis points over the full 12 months."
The respondents to the survey "overwhelmingly believe that Q3 2010 will be the recovery quarter for all markets except Industrial, which has a wide spread (directed mainly towards Q4 2010)".
"76% of developers surveyed indicated that they will be commencing new works within the next 12 months, while 70% of land/stock to be developed is already under existing ownership.
"Respondents have indicated they believe debt sourcing barriers will ease over the next 3 months, while the procurement of equity will become more difficult.
"50% of respondents plan to source more debt within the next 6 months.
"In addition, the percentage of respondents ruling out any debt additions is falling at a rapid pace over the next year, from 46% to 22%.
"Over 26% of respondents feel that bank credit conditions will improve over the next 12 months in relation to development projects. In particular, current pre-commitment requirements estimated at 55% are pegged to improve from Q2 2010 onwards.
"The top 5 concerns for property businesses at present are: 1. Availability of Stock; 2. Debt Sourcing; 3. Interest Rates; 4. Business Costs; and 5. Availability of Equity.
"Nationally, House prices are expected to rise 5.2% over the next year, with Melbourne ranking first at 5.8% and Sydney last (4.95%)."
"House prices are expected to rise across the nation over the coming year, with average responses received falling between a 4.95% – 5.8% band.
"The Australian national average value increase expectation came in at 5.2% for the coming 12 months, with Melbourne seen as the leading growth city for the period (5.8%). Perth (5.6%) and Adelaide (5.3%) follow closely, while Canberra (5.1%) and Sydney (4.95%) fall below the expected national average.
"These figures indicate that most respondents do not agree that there is a housing price bubble, or that rising interest rates will negatively impact housing growth over the next 12 months.
"With Australian housing prices rising, on average, by 13% to the year to March 2010 (RP Data-Rismark), respondents have indicated that a lack of current supply and increasing demand should outweigh any harmful price impacts and continue the strong housing price growth into 2011.
"If we include residential property in the mix, it is overwhelmingly the most popular investment and development option in the near to medium term. 66% of respondents voted the residential sector as their No.1 selection for strongest performer for the March 2010 qua
