Lost in space: Office return key to economic lift-off, property sector says

Confidence in Victoria’s COVID-ravaged property industry is roaring back, according to its peak lobby group, but the slow return of office workers to their desks is holding up the recovery of the $42-billion-a-year sector.

The Property Council’s quarterly confidence survey, to be published on Thursday, shows expectations for building, hiring and economic growth has bounced back from the depths of pessimism that were plumbed during the pandemic among the state’s builders, commercial landlords and other industry players.

Matthew Kandelaars at the Property Council's empty offices.
Matthew Kandelaars at the Property Council’s empty offices.Credit:Eddie Jim

The latest quarterly ANZ/Property Council industry sentiment survey has found confidence in the Victorian property industry rebounded from 64 to 115 index points in just three months.

The upbeat survey results coincide with data from the Housing Industry Association showing new home sales in Victoria surged more than 22 per cent in the three months to November.

.Credit:Illustration: Matt Golding

But with most office workers still doing their jobs from home, empty buildings remain a serious problem for the sector with just 13 per cent of Melbourne CBD floor space occupied, compared with Sydney at 45 per cent and Brisbane at 61 per cent.

The Property Council’s Victorian interim executive director Matthew Kandelaars said that the industry had been buoyed by the gradual lifting of restrictions and November’s state budget.

“Across nearly every measure and every sector, the industry is optimistic about growth potential in 2021,” Mr Kandelaars said.

“This is a significant jump in confidence in just a single quarter and bodes well for the property sector to lead Victoria’s economic recovery in the new year.”

Mr Kandelaars said confidence has been bolstered by state government stimulus including stamp duty waivers, support for the emerging build-to-rent sector and the pledge of record social housing spending.

But the Property Council executive warned that the rate of return of Victorians to their workplaces “will have a significant impact on the state’s economic recovery and future confidence levels”.

Office workplaces are capped at 25 per cent capacity, which will increase to 50 per cent from January 11, subject to the state government’s public health advice, with the 50,000-strong public service to ramp up to 50 per cent in early February.

The City of Melbourne, backed by the broader business community, has been campaigning to get workers back to city as soon as possible and Mr Kandelaars was also calling on Wednesday for progress.

“The property sector is keen to see continued progress in reactivating Melbourne’s CBD, which accounts for a quarter of the state’s economy,” Mr Kandelaars said.

“If Melbourne’s pattern of office return mirrors comparable cities across the globe, the CBD would not see a return to full occupancy until early 2022.

“The quickest way to supercharge Victoria’s economic revival and boost industry confidence is to support the continued safe return of workers to Melbourne’s CBD.”

A government spokeswoman said the return-to-work timetable was a cautious and steady one.

“We’ve always taken a cautious and steady approach, making way for the private sector to begin their transition back to the office first,” she said.

“The Victorian Public Service is preparing to gradually return to the office from January.”

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