Investors buoyant on office sector

WA INVESTORS are buoyant about local prospects with 28 per cent indicating they would prefer to invest in the office sector over the next six months according to a survey by Ashe Morgan Winthrop.

This is almost four times the result of the summer survey six months ago when just 7 per cent indicated their office sector preference.

Property Investors Survey Winter 2000 found WA was the second most bullish state for commercial property investment in general, second only to Queensland.

About 18 per cent of WA respondents, made up of property investors, advisers and lenders, said they would invest in property over the next six months compared with the national average of 12.7 per cent.

Ashe Morgan Winthrop WA director John Salter said the office sector, which had been under-performing in the past three years, was starting to receive strong interest.

“Investors are leaving the residential, industrial and retail markets to climb onto this sector,” he said.

“Such positive sentiment has been backed by the recent announcements for developments such as the $310 million exhibition centre, the $245 million Woodside office relocation, and the $100 million David Jones redevelopment, which adds to several other major CBD projects already under way.”

National support for office sector investment has jumped dramatically. Around Australia, 24.8 per cent of respondents preferred to invest in the office sector over the next six months, up 9.4 per cent on the 15.4 per cent of six months ago.

The survey also found positive sentiment for first-time investors for the next six months.

About 60 per cent indicated good or very good opportunities in the next half-year for first-timers.

WA offers the best opportunity in the country for a first time investor, the survey showed.

But there is a nationwide trend away from a positive outlook for residential markets although river or coastal areas are expected to out-perform the rest of the market.

About 36 per cent of WA respondents said they would prefer to invest in the residential market over the next six months – down from 46.4 per cent six months ago.

“Like the rest of the country, WA is seeing a trend away from positive sentiment for the residential market,” Mr Salter said.

“However, this must be taken in context. Six months ago, sentiment for residential property had been unnaturally positive in the lead-up to the introduction of the GST.

“It is now apparent that this has settled and the Winter Survey found that, in every state, the majority of respondents predict stability in this sector for the next six months.”

He said this was largely the result of a combination of a temporary post-GST residential construction lag, and anticipated interest rate rises of between 0.25 and 0.5 per cent in the immediate future. Yet across the board many view the property sector as having reached its peak.

“While the story differs from State to State, the progression along the property cycle is clear,” the survey said.

“The recent shifts in interest rates appear to have had a clear effect in pushing our largest markets past their peaks.”

Almost 15 per cent of WA respondents believed the WA market was at its peak. A further 20 per cent believed the market was falling while 16 per cent thought the market was already in a trough.

“While none of these findings indicate any gloom or doom for property markets, they serve as a warning for investors to begin to review their sell or buy preferences,” the survey said.

Australia-wide, the industrial and residential sector is expected to fall, according to about 26 per cent of respondents. Only 11 per cent expect the office sector to fall within the next six months.

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