Australia's hotel boom is masking tanking sentiment in the commercial property market

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Confidence in Australia’s commercial property sector surged to an all time high spurred by the hotel boom.

National Australia’s commercial Property Index in the fourth quarter has risen five points to 21, its highest level since the survey began in early 2010.

The surge will reverse if one take out the hotels, with retail and industrial segments seeing a drop in confidence and office towers scraping out a modest increase, according to the survey.

This chart encapsulates the commercial property sentiment out there.

“Confidence has also wavered in all sectors, except CBD Hotels where it rose sharply among very strong expectations for occupancy, capital and revenue per available room growth,” Alan Oster, the chief economist at the NAB said in a statement.

Australia is in the midst of hotel construction boom. About 120 new hotel projects are in the pipeline across the country, which will help boost room capacity by as much as 30% over the five years to 2021, according to Tourism Accommodation Australia.

Property experts in Office, Retail and Industrial are now reporting lower levels of confidence, the NAB said.

The survey also said office property is expected to provide the best income returns over the next one or two years, led by strong growth in New South Wales. Retail and Industrial rents are predicted to grow “modestly” everywhere except Western Australia.

The previous survey from the NAB revealed a different picture with confidence and outlook waning for commercial property. Then retail and industrial sectors were positive though dips in office towers and hotel dragged the index lower.

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