Business Daily Media

what COVID is doing to commercial property it is about to do to super funds

We’ve heard a lot about what the present crisis will do to home[1] prices[2], less about what it will do to commercial property[3] prices.

Commercial properties include office buildings, shopping centres, hotels and warehouses.

They account for 8%[4] of the assets of Australian super funds.

what COVID is doing to commercial property it is about to do to super funds Melbourne’s Wesley Place commercial precinct is owned by a property trust.

If their values drop (and they are falling) it will affect all of us, especially those about to retire or already retired.

Until COVID-19, commercial properties were widely regarded as safe investments. They offered both reliable income streams and capital gains as population growth increased the value of scarce real estate.

With the return on government bonds falling below 1%[5] they ought to be becoming more attractive, but offices are empty, their future uncertain, high end shopping centres are receiving less traffic, and hotels have entire floors unused.

what COVID is doing to commercial property it is about to do to super funds Brisbane’s 1 William Street is owned by a superannuation fund.

In July the number of mobile phones active in Sydney’s central business district was down 52%[6] on January and February. In Melbourne’s CBD, before the stage 4 lockdown, mobile phone traffic was down 65%[7].

Data centres[8] are among the few commercial property bright spots – we are moving more data – along with distribution centres and regional shopping centres[9] – we are shopping online and closer to home.

Over the course of the year the values of commercial property trusts listed on the Australian Securities Exchange have slid 29%[10], 32%[11], 34%[12],48%[13], 52%[14], and 69%[15].

what COVID is doing to commercial property it is about to do to super funds Share price of GPT Group. GPT owns and manages retail, office and logistics properties. Source: ASX[16]

For super funds with 8% of their assets in commercial property, a decline of 25% in values knocks 2% off their assets — A$54 billion across the industry as a whole.

In the only other big downturn since the advent of Australia’s superannuation system, the global financial crisis, commercial property offered the funds stability while shares were volatile.

Not so this time. The value of the commercial property is diving along with the stock market with just as uncertain a future.

References

  1. ^ home (propertyupdate.com.au)
  2. ^ prices (www.theguardian.com)
  3. ^ commercial property (www.commercialrealestate.com.au)
  4. ^ 8% (www.superannuation.asn.au)
  5. ^ below 1% (theconversation.com)
  6. ^ 52% (www.roymorgan.com)
  7. ^ 65% (www.roymorgan.com)
  8. ^ Data centres (www.smh.com.au)
  9. ^ regional shopping centres (www.smh.com.au)
  10. ^ 29% (www.asx.com.au)
  11. ^ 32% (www.asx.com.au)
  12. ^ 34% (www.asx.com.au)
  13. ^ 48% (www.asx.com.au)
  14. ^ 52% (www.asx.com.au)
  15. ^ 69% (www.asx.com.au)
  16. ^ Source: ASX (www.asx.com.au)

Authors: Theodore Connell-Variy, Lecturer, School of Property, RMIT University

Read more https://theconversation.com/warning-what-covid-is-doing-to-commercial-property-it-is-about-to-do-to-super-funds-143824

Business Daily Media Business Development

How Microsoft's Activision Blizzard takeover will drive metaverse gaming into the mass market

Ready Player 1,000,000,0001?Sergey NivensMicrosoft was positioning itself as one of the pioneers of the metaverse even before its US$75 billion deal to buy online gaming giant Activision Bli...

Theo Tzanidis, Senior Lecturer in Digital Marketing, University of the West of Scotland - avatar Theo Tzanidis, Senior Lecturer in Digital Marketing, University of the West of Scotland

Some of the super-rich want to pay more tax – but society cannot afford to depend on them

Shutterstock/PilgujDemands for the super wealthy to pay more taxes are not new. But they don’t usually come from billionaires or millionaires.Yet on January 19 2022, around 100 of the ...

Peter Bloom, Professor of Management, University of Essex - avatar Peter Bloom, Professor of Management, University of Essex

A killer app for the metaverse? Fill it with AI avatars of ourselves – so we don't need to go there

Ready avatar one?Athitat ShinagowinBig numbers coming. Microsoft’s US$75 billion (£55 billion) acquisition of Activision Blizzard has landed – true to Call of Duty vernacul...

Alex Connock, Fellow at Said Business School, University of Oxford, University of Oxford - avatar Alex Connock, Fellow at Said Business School, University of Oxford, University of Oxford

Labelling Equipment; Prayers Have Been Heard and, Answered

If you are an instrumental part of a management team for a business that now requires labels for their products or goods, then traditionally you’d have had one of three choices, if the...

Business Daily Media - avatar Business Daily Media

Leading Australian Microsoft partner Satalyst acquired by Canon

Satalyst, one of the leading Microsoft cloud and security partners in Australia, has today announced that effective immediately it has been acquired by Canon Australia. Satalyst will joi...

Business Daily Media - avatar Business Daily Media

How Timeline Maker Helps Business Owners On Their Targets

With many businesses today, the challenge is to make the audience know what you are all about. You can never go wrong with a website or an online presence for it is one of the most effecti...

Business Daily Media - avatar Business Daily Media



NewsServices.com

Content & Technology Connecting Global Audiences

More Information - Less Opinion