Broader commercial market in Queensland could be subdued for years, expert warns
Commercial properties impacted by the Queensland floods could see a loss in value of up to 20%, while the overall market will be subdued for the next three years, an expert has predicted.
Professor Shaun Bond, of the University of Queensland Business School, said that while the floods were not as widespread as those of 2011, industrial, retail and office properties will “take a hit” from the flood damage.
“The broad evidence we have found [shows] that following a disaster, values can be subdued for up to three years after the event,” Bond told The Australian. “Our research shows that depending on the type of property and the extent of the damage, values can be impacted anywhere between 10 to 20%.”
And it’s not just properties that were directly impacted by the floods that will be affected, Bond said.
“What we’ve also found is that disasters can sometimes also have an impact on the broader area because of a spillover effect, even on properties that have not been damaged,” he said.
The Queensland flooding hit industrial areas of Rocklea, Archerfield and Acacia RIdge and inner-city areas like Albion, Rosalie, Milton and South Brisbane, as well as the CBD, The Australian reported. The floods have caused millions of dollars in damage to commercial properties.
Bond, who has been researching the impact of natural disasters on commercial property in the US, told The Australian that many businesses have already suffered because of the pandemic, particularly those in the retail sector.
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This has been compounded by continuing supply-chain disruption, which impacts businesses’ ability to replace equipment and obtain building materials – a problem compounded by the shortage of tradespeople available to help rebuild.
“Many businesses will have a variety of contingencies in place to deal with some of this, and we will see businesses capable of coming back more quickly than others,” he said. “But because of the unusual set of circumstances, particularly in regard to supply-chain disruptions, it will impede businesses rebounding because they can’t bring machinery in or get spare parts or rebuild. That will impact on whether tenants can keep on paying rent, which is important for landlords and in turn affect property values.”
