Property

Perth commercial property market slumps

New commercial property for sale or lease in South Perth. Photo:Daemien Lim.

According to the data, the number of leased and sold properties across the Perth region declined between the months of April, May and June.

Commercial properties such as showrooms, warehouses, offices and retail all saw varying downturns in growth.

The data suggested that of the four categories of commercial property, the hardest hit was retail properties, with a 13.5% decline in sales and leasing, which saw just 32 properties find new occupants. The average lease price also dropped 17.4%, declining $612 to a new average of $5,352 per square metre.

Retail Sales Figures for Q2 2019. Source:REIWA.

Showrooms saw for a 14.6% decline while office spaces took a big hit with only 44 spaces being leased or sold across the three month period. While the average prices of rent per square metre declined across all four areas, it was warehouses which suffered the smallest loss of the four, only having a decline of 11.6% growth in the market.

Commercial property developer for Luxem Retail Group Michael Stevens believes this period has been one to forget.

“Lots of factors contributed to an awful quarter for the commercial property market,” he says.

“The biggest factor was the federal election. Creating large uncertainty, the biggest influence was the fact the Labor opposition wanted to increase the amount paid by property owners through capital gains tax.

“Labor had proposed increasing the tax, meaning owners would need to pay more tax when their properties sold or became leased. So this left owners in a tight situation.”

Mr Stevens also believes factors such as public holidays and Easter did not provide the market with much support, due to this year’s long breaks. But another major factor during this period was due to Australia’s bank climate, and the ability to obtain funds became more difficult.

“Obviously the West Australian market is not just affected by events occurring only in West Australia, so the market is influenced by global and national events also,” he said.

“Increases in unemployment, decreases in growth and consumer confidence saw banks put a tighter threshold on the banking climate.

“Although interest rates remained the same, it became far more difficult for individuals and businesses to obtain financial capital due to stricter conditions and requirements being set by lenders.

“With experts saying a variety of things about interest rates, it created unrest and uncertainty, which contributed to this major decline in growth.”

For Fonge Photography Director Daemien Lim, slow growth was not only a hindrance to the market, but a decline in growth for all.

“Last quarter was not amazing,” he said.

“I went from having around six shoots a day to averaging two to three shoots last quarter, so it was definitely slow.

“Because properties were not selling or being leased meant agents were not booking me as they were not getting many new properties come up on the market.”

77 St Georges Terrace, one of many currently on the market. Image: Anthony Matteo.

According to Mr Lim, not only does growth decline have an impact on the number of properties sold, but on others within the business sector.

“It has a major knock on effect.

“If people are not buying properties, it means investors are not acquiring new spaces as people do not require them in a market flooded with options.

“As a result, not only does the market slow, but it affects people like me, who make a living off the market being busy.”

But it does not appear to be all doom and gloom. According to Mr Stevens, this current quarter has shown strong signs.

“Property sales this quarter currently are almost at what they were at the end of last quarter, and leasing figures have also dramatically increased.

“Following the conclusion of the election, business and consumer confidence has improved and as a result of no change being made to the capital gains tax, confidence has somewhat improved.

“Coupled with that, business growth is on a slight increase, with sales increasing, businesses and corporations are starting to demand space, which is a great sign for the economy.”