NAB Commercial Property Index. Source: NAB.
  • NAB Commercial Property Index records rose, but are still below average
  • Industrial assets the only sector to successfully weather COVID-19
  • Retail, office and hotels expected to make a slow recovery
  • NAB's numbers align with other industry reports on commercial property

According to NAB‘s Commercial Property Survey Q1, despite a rapidly recovering economy and record-high business conditions, the local commercial property market continues on a slow recovery.

NAB’s Commercial Property Index rose for the third consecutive quarter but remained negative at -22 points – below the survey average of -1 point.

Sentiment across all sectors improved, however, industrial property was the only sector to weather the challenge of COVID-19, recording a survey high of 42 points.

This compares to retail, which rose from -58 to -41 points, CBD hotels from -64 to -60 points, and the office sector from -41 to -30 points.

NAB Commercial Property Index by Sector

Source: NAB.

When breaking down the data by state, sentiment across the country lifted but remained negative in all states excluding Queensland.

Victoria in particular still lagged behind the other states substantially, recording -51 points. However, as shown in the figure below, long-term confidence is expected to be the highest in WA.

NAB Commercial Property Index by State

Source: NAB.

These findings generally align with commercial property analysis from Cushman & Wakefield latest quarterly Investment MarketBeat report.

They found retail investment still has yet to recover from COVID-19, but the industrial sector is set to make a full recovery with billion-dollar transactions expected to boost 2021 numbers.

CBRE Research also analysed Australia’s industrial market. They found that the Industrial & Logistics sector actually suffered the least in 2020, recording an increase in sales volumes in Australia, while activity in office, retail, and hotel assets declined – lining up with NAB’s numbers.

When taking the latest data from various research reports as a whole, commercial property is set to make a recovery in the next year or two, with the industrial and logistics sector, in particular, making a big comeback.

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