From the AFR:
Australian commercial real estate is overheating, according to some of the country’s most prominent executives, who are starting to heavily scrutinise the market.
…Yields for office towers this year have compressed, 52 Martin Place in Sydney sold at 5.17 per cent. Retail is also showing some heat with Lend Lease’s Real Estate Partners 3 shopping centre fund likely to show about 6 per cent.
Abacus Property Group managing director Frank Wolf, who has made several astute property transactions in the in the last 6 months, has joined the chorus.
“We are very concerned about what I would call a disconnect between the physical and capital markets,” Mr Wolf told the Australian Financial Review.
“The physical markets suggest that values should be decreasing because of the softness in the leasing market. But the weight of money distorts the pricing of assets.”
…“We think the market is very fully priced and it is not cognisant of the risk inherent in the asset class and the illiquidity of the asset class,” he said.
Sensible fellow.
