Commercial property will reach the peak of its cycle and outperform the equity market over the next year, according to a survey by the Australian Property Institute.
“The survey indicates a strong outlook for the next two years for commercial, industrial and retail property markets in Sydney, Melbourne and Brisbane,” the Australian Property Institute NSW Division senior vice president Ian Muir said.
But the good news will fizzle out in three years when the cycle takes its usual downturn and the commercial property performance will be on par with equities. In five years, equities will once again outperform the sector.
Sydney and Melbourne are ahead in the cycle, with Brisbane lagging, according to most survey respondents.
Most believed commercial rents will be stable in Sydney and Melbourne over the next six months but will fall in Brisbane.
The majority of respondents still see moderate-to-strong investment growth for Australian listed and unlisted property trusts and syndicates over the next year, but not as strong as in 2014.
Business confidence is on the rise for the next three years, just as interest rates and inflation will also increase.
The survey is based on responses from major investors like Charter Hall Group and the DEXUS Property Group, from real estate agents, and from the banks.