Commercial property investors are concerned political uncertainty will damage business confidence in Canberra, and are questioning the delay in determining the election outcome.
The prospect of a hung parliament is creating disquiet among business owners and commercial real estate investors concerned it will affect business confidence in the nation’s capital, says Raine & Horne Commercial Canberra.
“Wherever you are in Australia, you need business confidence. However, political instability significantly impacts the Canberra commercial property market,” said Nick Cotis, Director of Operations - Sales & Leasing Executive, Raine & Horne Commercial Canberra.
“When Malcolm Turnbull took over last September, there was a surge in business confidence in Canberra. Government departments were looking to expand or move within Canberra, and we saw an almost immediate impact on the commercial markets,” said Cotis.
But the possibility of political horse-trading with independents and minor parties is creating alarm among investors with commercial assets in Canberra, says Cotis.
“Our institutional clients are worried the main political parties will be required to shift public sector agencies interstate as part of their negotiations with minor parties and independents,” he said.
“This will create a commercial office glut and long-term vacancy rates will blow out, with a consequent hit to yields also a distinct possibility,” said Cotis.
Currently, office yields in Canberra are 6% if a property has a Commonwealth Government tenant on a long-term lease, while properties leased to private sector businesses are attracting yields of 7-8%, according to Raine & Horne Commercial Canberra.
Cotis also said there is also disquiet about why it is taking so long to determine the election outcome.
“A constant theme among our investors is that it’s 2016 and not 1901, and that we should be able to get a decision faster,” he said.
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