Confidence returns to resource rich states

Confidence returns to resource rich states

Posted on Thursday, January 12 2012 at 12:38 PM

The mining boom has injected massive optimism back into Queensland, just 12 months after floods devastated parts of the state.

The capital city of Brisbane recorded the biggest comeback in confidence out of all the states and territories in Australia, according to the results of a Property Council-ANZ industry confidence survey.

Western Australia was another big performer, while the Northern Territory’s $30 billion INPEX Ichthys gas field project has recently sent the territory’s confidence skyrocketing.

Other factors believed to be bringing confidence back to the market include the drop in interest rates and more savings in people’s bank accounts.

Property Council chief executive Peter Verwer says property professionals have a reasonably positive view of the sector’s short-term future, but there are still plenty of reasons to be cautious.

“It’s clear that Europe’s debt woes, a slow recovery in the US and disappointment in Australia’s political leadership are making property participants nervous about Australia’s economic prospects,” he says.

“Of particular concern for property players is New South Wales. While it’s too early to say that investors have placed the state on ‘credit watch’, almost a year into a new government it’s clear there’s growing disillusionment in the state’s rate of progress.”

NSW and Victoria both showed declining confidence, as well as the Australian Capital Territory and Tasmania. However, real estate professionals showed an upswing in confidence when it comes to commercial and industrial property.

ANZ global chief economist Warren Hogan says although the commercial property market is showing signs of a multi-year cyclical upswing, the outlook still holds risk.

“Considerable uncertainties in Europe, the Middle East, the US and China threaten economic and financial market stability and will continue to weigh on investor sentiment and property yields,” he says.

“Consumer restraint, reduced workspace ratios, employer caution and potential job shedding all present significant risks to commercial property demand.

“Nonetheless, ANZ’s outlook for commercial property remains positive. Tight vacancies, limited capacity expansion and attractive yields will support growing investor interest and are laying the groundwork for a marked increase in valuations as rents rise and yields compress.”

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