Commercial property markets around the Australian capital cities are set to boom through the middle of the decade, with corresponding strength of investment returns. City by city, our forecasts are for internal rates of return of between 10 and 24 per cent. As usual, however, we will not know where to stop. Once again, the boom will bring oversupply and a subsequent bust. This will be an interesting decade.
Retail property faces quite different challenges.
For us, retail property is less property and more the capital stock required to operate the business. It is highly management intensive. Retailing has changed dramatically with the advent of a network of regional and sub-regional centres forcing the obsolescence of many strip and older centres. The new centres are extremely competitive-between centres, with other forms of retailing and between shops within centres. We are all shopping in much better facilities than we were 10 years ago and that has been paid for by the centre owners.