Investing money in Australian commercial real estate market is one of the best ways to secure your investment strategy for a long run. It is always good to buy an office space that can help you yield higher returns and keep your business growing the way you want.
But, if you want to get the most out of your investment, make sure you keep all the influential factors in mind while developing commercial property in Australia. You can’t take a risk at this stage when you are spending a large part of your capital on a particular property.
You have to understand the latest real estate market trends and fluctuating economic aspects as they always play a vital role in stabilising your investment strategy. Also, keep yourself updated with changing scenarios in the existing commercial real estate market.
However, it is pretty clear that the commercial real estate market in Australia has been witnessing tremendous growth with the constant upsurge of infrastructure projects and increasing demand for modernised office spaces. Over the past five years, the industry revenue has increased by 10.6 % and this growth is reflected due to the strong demand from commercial property operators in 2017. This boost has led to solidifying yields and high property prices.
Besides the high demand for offices spaces, the diverse range of properties available in the commercial real estate has made it easy for potential buyers to explore suitable and high-rise commercial properties for sale in Australia that can give them high returns and scope for amplified success. This means your one decision could make or break your investment strategy. So, here are the factors that you should consider while developing or buying a commercial property in the hotspot cities of Australia.
1. Estimated Budget
Investing in commercial property is a complicated undertaking. Whether you need it for your business purposes or want it for a long-term investment, everything should be considered in order to make the right decision.
Instead of opting for an expensive and lavish property, it is good to estimate your budget and choose a property that can help you run your business operations smoothly and efficiently. There is no use of buying space where the lack of transportation facilities, security and other infrastructure factors are the source of concerns.
Therefore, it is good to stay close to your realistic goals and evaluate your budget before getting into any deal. In case, you are looking for commercial property for lease in Australia, make sure you read the agreement thoroughly and finalise the deal when you have enough money at least 20 % of deposits.
Whether you want to invest a large commercial space or want a small office, it completely depends on your estimated budget and investment needs.
Location is one of the key factors that play a pivotal role when it comes to investing a commercial property for your business. No matter what type of business you are running, choosing a suitable office space in the prime location can make huge a difference when you start earning revenues. Look at the existing market before finalising the location.
In Australian real estate market, metropolitan cities like Sydney, Brisbane, Melbourne and Gold Coast are doing pretty good. In fact, Sydney and Melbourne are considered as the two fastest growing cities for all types and sizes of commercial properties.
According to Skyscraper Index, the demand for Sydney’s rental commercial properties has increased by 3.4 percent in the last year with rents at $1470 per square metre/per annum. Despite being an ideal location for commercial real estate investment, Sydney is witnessing a great downturn. The stock availability has declined in the city because of Metro rail project and increased number of residential developments. Even, the leasing incentives have reduced with the fall of vacancy rates. Around 411,906 sq m of commercial buildings have been withdrawn – which is equal to 8.1 per cent of total stock in the starting of 2016 till now.
While the withdrawal of existing stock is significant, the rising demand for newfangled commercial properties have been creating adverse scenarios. If you are looking for a profitable and well-located commercial property for lease in Sydney, then do thorough market research and take a considerable decision after analysing your specific requirements and financial resources.
In 2017, the demand for commercial space was moderate in this metropolitan city of Victoria. Since then, the total amount of office space has been declined in the Melbourne’s business district. This has led to the shortage of supply while increased the prices of property. Notably, prospects buyers are facing difficulties in buying commercial properties on rent to satisfy their business needs.
However, there is a strong prediction that the new supply of commercial properties, including the three major sectors: office, retail and industrial will be added to the market in between the second quarter of 2018 to 2019. In addition, the two most anticipated developments totalling 88,200 sqm are expected to complete in 2019. So, if you are planning to invest your capital in your business, then discover the commercial properties for sale in Melbourne. There is a good chance of getting high returns.
Brisbane is one of the leading cities of Queensland that has increased the number of potential commercial developments in the last few years. This year you will see more supply of offices spaces –which will bring more opportunities for potential property buyers and tenants.
The hottest development project in the pipeline is Shayher Group, located at 300 George St that will deliver 47,000sq m. of commercial space.
However, no official announcement has been made, but we are looking for a significant amelioration in the current commercial development market.
3. Infrastructure facilities
There is a good chance to gain higher returns if your commercial property is positioned in a highly-developed area. A well-located office, close to the public transports, highways, hotels, hospitals, railways, subways, airports, shopping centres and other entertainment hubs will always remain the topmost priority for potential investors.
It is important to choose a business location that has a strong scope to run the operations quickly and smoothly without any interruption. Even, if you are buying a property for investment purposes, make sure it can give you good returns.
If your investment strategy is for a long-run, you can invest in Sydney’s commercial real estate market. The NSW State is one the verge to introduce one of the long-term infrastructure plans in Sydney, known as The Future Transport 2056 Strategy.
The strategy is focused on boosting the economy, communities and social infrastructure sector for the smooth running of commercial, industrial and retail sector. So, make your decision accordingly and get the most out of your real estate investment.
4. ROI matters
Most of the potential investors or commercial property buyers forget about this factor and then end up with paying extras while buying office space in the prime location of Australia. Always remember that the increased rate of interest not only affects the rent but also increases the cost of the property, which declines yields.
On the other side, if the interest rate decreases, then it becomes easy to stabilise finances, which reduces the prices of commercial property and boosts yields.
5. Current Market Condition
It is imperative to understand the current economic and real estate market condition before putting your money in the Commercial property for sale in Brisbane, Sydney, Melbourne, Gold Coast or Australia wide. This will help you know whether it is the right time to invest in the commercial property or not.
Since you are pouring a huge part of your capital, make sure you take every decision carefully after evaluating the market condition, real estate property and its prospects.
It is good to invest in a property when the market is at a low. So, make a wise decision after analysing every single aspect of the existing commercial real estate market in Australia.
A prompt approach and in-depth research are very crucial when it comes to putting your capital in a commercial property for sale and lease in Australia. It is important to consider all the possible key factors while investing in a commercial real estate market. You one decision could change your destiny!
Sophie Barrett is an experienced real estate marketing professional with a specialisation in commercial property market. She has a Masters degree in marketing from the esteemed Melbourne Business School and has several property management certificates to her credit. Her shrewd marketing policies and business acumen have led to the most rewarding property deals in the major capital cities of Melbourne, Sydney and Perth. She is a popular name in the real estate market and has been serving the industry for almost two decades now. CommercialProperty2Sell is proud to partner with her for some astute discussions and advice on the booming sector.
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