Real estate franchise group Raine and Horne Commercial has warned that property confidence could suffer a blow because of political uncertainty, hence reversing the recent strong rental performance in the city.
“We’ve been inundated with calls from our interstate and local owners concerned about how the ongoing political indecision will impact their office assets in Canberra,” said Nick Cotis, director for sales operations at Raine and Horne Commercial Canberra.
He added that one of the biggest concerns of their clients is the possibility of public service jobs being relocated to regional areas, as touted by deputy prime minister Barnaby Joyce during the election campaign.
“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 with minor parties and independents,” Cotis 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.”
Vacancy rates have been on a steady downward trend in Canberra since Malcolm Turnbull assumed office last year, moving from 15 per cent to 12 per cent, due to a surge in business confidence. Canberra office yields currently sit at six per cent for properties with a commonwealth government tenant on long-term lease, and seven to eight per cent for properties leased to private sector businesses.
“Wherever you are in Australia, you need business confidence,” Cotis emphasized. “However, political instability significantly impacts the Canberra commercial property market.”