Should you consider commercial property investment?
With so much of the real estate market discussion focused on residential, it’s sometimes easy for people to forget that there are lucrative investment opportunities in other sectors. While it’s true that huge growth has been seen in housing, some industry commentators are beginning to speak of an impending downturn.
In October 2015, QBE’s Australian Housing Outlook forecasted that the booming residential markets in Australia’s capital cities would begin to taper off and ultimately decline into 2018. For those interested in real estate investment, perhaps it’s time to talk to a mortgage broker about commercial property financing.
The commercial property market
Just as median house prices have experienced a period of intense growth – as much as 77 per cent since 2008, according to Tim Lawless of CoreLogic RP Data – Australian commercial real estate has also been bubbling along nicely. This year marks the third consecutive year with over $20 billion in total commercial sales, and before the end of 2015 Commonwealth Bank of Australia expects more than $25 billion worth of property will have changed hands.
Unlike the residential market however, there are few indications that commercial sales are going to ease any time soon. The Australian Property Institute’s (API) October 2015 Property Directions Survey predicts that the upswing will continue for the immediate future, only reaching its peak in Sydney and Melbourne in 2017.
“The view is that there’s still a bit of growth into the rental rate and that will drive increased value,” says George Vallas, API’s NSW president, in an interview with AAP.
What should you look for?
Buying commercial real estate obviously comes with its own challenges, which first-time investors will need to be aware of. It pays to speak to an expert before getting too deep into any potential deals, and even those who have experience in the housing market may find themselves easily overwhelmed. You’ll need to consider a lot of areas unique to the sector, such as:
Form of asset (office, retail or industrial)
Historical performance
Maintenance
Leases
Regardless of the size or location of the investment you’re interested in, it’s imperative that you carry out the necessary research before making any offers. Once you’re ready to jump into the world of commercial property, talk to a trusted mortgage broker about acquiring the necessary property investment loans, and you’ll be on your way.
