The lower Australian dollar is set to provide a positive boost to commercial property returns over the next year, according to a new report by CBRE.
The Australian dollar now sits between 25 per cent and 30 per cent below its peak levels of early 2013, which is a reflection of lower commodity prices and expectations of narrowing interest rate and yield differentials between Australia and the rest of the world, the report said.
CBRE’s head of research in Australia, Stephen McNabb, said the lower Australian dollar would help support many property-occupier segments across the nation, with commercial property tending to perform well after periods of currency decline.
“We expect this to be the case through 2015, with a lower dollar offering stimulus to the economy, in the same fashion as lower interest rates,” Mr McNabb said.
The CBRE report highlighted that the office sector has the weakest correlation with the Australian dollar, while the retail sector has the strongest – especially for sectors that are aligned to discretionary spending.
“The industrial sector benefits through more traditional channels, particularly logistics, with a rise in export volumes and domestic demand supporting logistic's volumes,” the report said.