The recovery underway in domestic commercial property markets is unique in that, unlike past rebounds, it is not reliant on the balance of supply and demand of physical space, according to Australian Unity Investments head of property Martin Hession.
"The pace and the profile of the commercial property market recovery through 2011 is going to depend heavily on events in financial markets and a recovery in investor confidence," Hession said.
The reason why the current recovery will be different is because the preceding downturn was caused by factors not normally associated with a cyclical market low.
"The 2008/2009 real estate arose from the mispricing of risk across international financial and asset markets," Hession explained.
He pointed out the recovery had already started and predicted there would be close to $22 billion of capital allocated to investments in commercial property.
"If you have a look at the transaction activity in 2010 the total value of transactions for retail office and industrial combined was about $12.7 billion. That was the fourth highest on record exceeded only in the boom years of 2003, 2006, and 2007," he said.
"Even so forecasts for 2011 are coming in at above 20 per cent of 2010 levels."
In relation to the different investor groups looking to place funds in commercial property this year, superannuation funds will be the main contributor with a predicted $10 billion allocated to this asset class.
Bank debt is forecast to account for the second biggest fund allocation with $6 billion available to invest.
