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Vol 12. No.5

Landsburys Independent Accreditation Reports

Economic Overview

	Current	+/-	Movement
$AUS/$US	99.41	-0.13
Cash Rate	4.75	Steady
90 Day Bill	5.01	+0.02
10 Year Bond	5.515	-0.078
ASX 200	4712.3	+7.3

National Property

• The Australian Industry Group and Housing Industry Association’s performance of construction index found the boost to engineering construction helped to slow the rate of contraction in the sector during December.
• Stronger demand from the resources sector helped the engineering construction sub-sector expand for the first time in six months.
• The trend looks likely to continue with some of Australia’s largest miners (BHP Billiton, Rio Tinto and Fortescue Metals) all tipping further construction spending during 2011.
• Business owners from other construction sub-sectors – commercial, apartments and home building – have witnessed a drop-off in activity due to reduced demand, poor weather and a diminishing level of work from school building projects.
• Industry experts say the reduced number of projects under the government’s Building the Education Revolution scheme would hurt the sector this year.
• Despite a lift in engineering construction and slightly more activity in other sub-sectors, overall the industry was weaker, ending with a disappointing second half of 2010.
• Businesses and home buyers are still not committing to new projects with expectations of interest rate rises a likely factor.
• Home building remains an underperformer with activity in the sector falling for the seventh consecutive month in December, although the pace of contraction is moderating.

• Rental growth in shopping centres in 2011 is expected to surpass last year’s healthy levels, as retail trade is set to grow despite current uncertainties.
• The long-term correlation between retail vacancies and employment levels also signals a promising 12 months ahead.
• According to analysts, retail vacancy has fallen moderately over the past 18 months in line with improving prospects in the labour market.
• More slight falls in unemployment were expected in the next 12 months.
• It is anticipated retail vacancy rates will remain relatively stable at their currently low levels through 2011.
• Retail trade figures for November last year, released yesterday, confirm how volatile conditions remain, with the seasonally adjusted sales estimate rising 0.3% in November following a fall of 0.8% in October and a rise of 0.1% in September.
• Regional or primary centres experienced rental growth last year that was well ahead of inflation, while secondary and tertiary shopping were more in line with inflation.
• 2010 was also the year for some significant transactions in the retail property market.
• CFS Retail Property Trust was involved in the biggest retail property deal since the September quarter 2007 – acquiring four DFO centres for less than $500 million.
• With about $10 billion of Australian property owned by Centro Properties Group, Centro Retail and a number of Centro’s unlisted funds up for grabs, 2011 could see the heaviest sales volumes in years.
• Smaller centres and portfolios area also expected to be up for grabs, partly as financiers clear out some of their loan books.