Commercial property investment isn’t reserved for the wealthy.
With a range of price points and higher-than-average returns than residential property on offer, commercial property is accessible to many investors and is worth considering as part of your investment strategy.
We spoke with Andrew Stabolidis, Director of Urban Commercial Property Group, about the opportunities, risks and considerations when investing in commercial property.
Here’s what Andrew had to say:
- Finding suitable commercial and industrial property to purchase is the most difficult part of investing in commercial property.
- Adelaide is low on good quality sales stock at the moment.
- Quality properties can be hard to come by, especially in the inner metropolitan areas.
Types of commercial property
- There are a lot of vacancies in office properties in the CBD secondary market.
- We’d strongly suggest that investors have certainty over their commercial tenant’s future business contracts before buying an industrial warehouse
- Retail is delivering mixed results for landlords, with retail services strong but retail precincts often struggle with customers shifting towards online shopping.
- A good yield for excellent quality investment properties valued at less than $1 million is approximately 5.5% per annum.
- Similar quality properties valued at $1 million to $3 million should return 6% yield while properties worth $3 million to $10 million should return approximately 6.5% yield. Even higher yields can be obtained for properties with higher risk profiles.
- Yields can differ depending on the type of property – such as commercial, industrial or retail – as well as sales price range, location and quality of lease covenant.
Lending for commercial property investment
- Banks are lending up to 65% at the moment for high quality, leased commercial property investments.
- Dependent on lease and tenant strength, interest rates can be as low as sub 3% for these properties too.
Looking to grow your wealth?
Speak to the team at Affinitas Capital about commercial property and a range of other investment opportunities by contacting email@example.com or (08) 8172 9122.