The US Federal Reserve is concerned that consumption is still being underpinned by government funding.
And so, even though stimulus measures may be winding down … the Fed has decided to maintain interest rates at their historically low level.
It seems that households and businesses are preferring to repay debt, rather than spend to encourage investment and growth.
In Europe, there is still simply not enough trust between Banks to lend to one another. And that means credit is extremely tight. Right now, Central Banks are stepping in to lend to private banks, in an attempt to free up funds to boost economic activity.
China still remains the bright light with its growing demand for of the commodities Australia exports.
The IMF actually predicts that the Asian economy (which includes Australia) will be 50% larger within five years.
And it will then represent about a third of the world’s trading activity.
h2. The Implications for Commercial Property
Already, major Asian sovereign wealth funds and property trusts are starting to target Office towers within Australian capital cities.
In fact, foreign buyers have invested around $1.7 billion during the past 12 months — representing about 70% of the purchase is made.
While this won’t directly affect the smaller private buyer … it will force everyone to move down a price bracket ought to — looking for better value.
Therefore, as yields quickly firm at the upper levels … this will soon have a ripple effect down through more modestly priced Commercial investment property.
Couple this with rising rentals, as the supply of Office space starts to fall around Australia … and now would be the perfect time to position yourself, ready for the next growth cycle.
