Distressed sales at low level

There is further evidence that the commercial property sector is on an upwards trajectory as the number of distressed properties advertised for sale across national newspapers are at the lowest level for many years.

The LandMark White Forced Sales Monitor says only 43 distressed properties were advertised in the March quarter this year, the lowest number of the series so far. The corresponding quarter last year had 62 distressed sale advertisements.

The series has covered ads run in metropolitan newspapers since its inception in 2011.

The fall in the amount of receivers appointed to sell land, offices and shops, is due to the relaxing of strict guidelines from banks and financiers, higher demand for the space from residential developers and a rise in the use of empty shops by internet groups, looking to expand out of the garage or spare room in to bricks and mortar.

Already, companies are scouring suburbs to open shops with lockers as a collection point for goods bought over the internet.

Australia Post is looking to convert older post offices that in the past few surveys were listed by receivers as forced sales.

Since the beginning of last year, the total number of properties advertised in the national press has fallen. However, this has been outpaced by the fall in the number of distressed listings which has resulted in the distressed ratio steadily falling from 22 per cent to 14 per cent in the past 12 months.

The majority of the listings remain outside major metropolitan areas and are primarily zoned industrial. But that is changing as this land is now being snapped up by housing developers.

The survey says that in Victoria, the distressed ratio fell slightly from 12 per cent in the December quarter 2013 to 11 per cent in the March quarter 2014. In the year-to-date, Victoria averaged an annual distressed ratio of 10 per cent compared to the previous year’s average of 17 per cent.

In NSW, the distressed ratio rose from 10 per cent in last year’s December quarter to 13 per cent in the March quarter this year. Overall, the year-to-date distressed ratio was 14 per cent compared to the previous year’s average of 20 per cent

Robert Wilson, the managing director of LMW, said nationally, the total number of commercial properties/development sites being advertised in the national press continued to fall, the year to date total down 21 per cent compared to the previous year.

Distressed sales are more likely to be advertised in the national press than general listings as receivers and mortgagees seek to maximise exposure to relevant markets. However, receiver sales have fallen as only 19 per cent of listings were distressed assets in the year to date compared to 28 per cent in the previous year.

Research manager at LMW Max Gran said although one in five commercial properties advertised in the national press was receiver sales, trends show that this number was falling.

”Our view is that their effect on the market is diminishing and will continue to do so in the absence of any economic shocks or a major increase in the cost of borrowing,” Mr Gran said.

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