In the early part of 2010, the eProp CPCI index showed some early signs of improvement having reached a level of 47 as at February/March 2009. With 50 being neutral, the reading was still largely negative, but certainly an improvement from the levels of 36 and 37 registered in the preceding bi-annual periods.
The bi–annual eProp Commercial Property Confidence Index (CPCI) Survey is based on a mix of ten equally weighted variables comprising both ‘hard’ and ‘soft’ business conditions; the index reflects a six month forward projection for the commercial property sector.
From a sector perspective and on a net balance basis (ranging from +100 to – 100 with 0 being neutral), all sectors improved marginally. The Office sector’s net balance reading was zero i.e. precisely neutral on aggregate, closely followed by industrial with a reading of -1, and retail at -23. This was the fifth consecutive negative outlook for retail albeit up from its lowest level of –42 reached a year ago.
In terms of the ten issues constituting the index, seven issues remained negative and three held a positive outlook on aggregate (see graph): these include the number of leases and sales, where 30 and 20 percent of respondents respectively believed these would improve; 3 percent expected sale prices to pick up and this is notwithstanding that a net balance of 10 percent of respondents expected capitalization rates to rise. 17 percent anticipated that staff levels would reduce. True to form, the factor considered as most negative remained the outlook for the management of the public environment in which assets are located in. The next most negative outlook was for vacancies at -23 percent, although this was up from the -67 percent recorded six months earlier. Net operating income was anticipated to come down as evidenced by a net balance of 10 percent of respondents.
What does the market feel about the next 6 months?
