Commercial demand heating up

by Adam Smith12 Aug 2014
Business finance has seen a significant jump, as lenders claim the commercial market is heating up.

New figures from the Australian Bureau of Statistics show total business finance commitments saw a seasonally adjusted 12.1% rise for the month of June. The total seasonally adjusted value of commercial lending for the month was nearly $46.5bn.

The result comes as little surprise to Australian First Mortgage director Iain Forbes, who told Australian Broker the commercial market is seeing a boom driven by record-low interest rates.

“Rental income is attractive, and in most commercial leases the tenant pays the outgoings. It is certainly growing and AFM have seen an increase in commercial lending,” Forbes said.

Liberty Financial general manager of commercial finance Suresh Pillai agreed, and said the lender is seeing an influx of commercial customers.

“We continue to see more and more small businesses that have not been getting a fair go from their banks because their needs are quite customised.  We are also seeing strong growth from mainstream customers looking for a more flexible alternative to bank funding at comparable rates,” Pillai said.

The result has also been buoyed by improving business confidence. Roy Morgan Research's latest Business Confidence survey has saw confidence improve by 11 points in July, erasing much of the hit to confidence caused by the Federal Budget announcement.

“The increase in business confidence in July was expected given the generally positive reaction as seen in the improvement in consumer confidence throughout the month. Both business and consumers are obviously overcoming the shock of the Budget and showing increased optimism in the short- to medium-term in the outlook for the Australian economy," Roy Morgan communications director Norman Morris said.