The COVID-19 pandemic has brought about significant changes in the commercial office and retail property landscape, with work-from-home and home shopping becoming the new norm across the globe. The occupancy rates of commercial properties in central business districts have been heavily impacted, with cities like Melbourne and Sydney reporting occupancies rates of 47% and 61% respectively (as of February 2023, according to Property Council members). This, combined with the sudden rise in interest rates has led to a significant increase in debt servicing costs for these properties. As a result, the valuations of large CBD offices and other commercial properties are expected to decrease in value.

Back in our March 2021 newsletter we commented on the $1.9 trillion US stimulus package and a decline in bond prices. Central banks around the world kept interest rates at near zero in spite of rising inflation telling everyone to keep calm there is nothing to see here.