The commercial property investors have taken their investment game a notch higher as the housing market seems a bit precarious in the current scenario. With banks lending a limited amount for home buying, things have cooled down in the dwelling market. However, the office, industrial and retail property sector is still in high demand as the commercialised cities and suburbs are on the top of their trade game in 2019-20.
The burgeoning economy and stable political environment have further enhanced the confidence of commercial property buyers who are now looking at the top-performing suburbs. With Melbourne and Sydney CBD becoming overcrowded and out of reach for some buyers due to their skyrocketing prices, the city fringes have come up as a viable investment option.
If you too are planning to invest in commercial real estate in Australia, then this is the best time to shift your focus towards the suburbs. In the recent past, many suburbs have been identified as fast-growing areas with increasing population and various job opportunities. If you wish to find out the investment-grade suburbs from the top-performing suburb’s list, then follow the steps mentioned below.
Look For High Rental Yields And Price Growth
A significant reason for investors making a beeline for office properties outside the CBD is that there are very few places available right now in the bustling capital cities. Many big foreign investors have already pumped in millions of dollars into the upcoming projects. Also, the suburbs are growing from strength to strength.
From St Kilda to Hawthorne and Carlton North, all the Sydney and Melbourne suburbs have become the talk of the town because of their high rental yields and rising capital values. Many students and working professionals are now opting to live in these suburban areas as they are affordable and are close to the commercial hubs.
There has been a deluge of high-net-worth individuals shifting base to the suburban areas like Parramatta, Fitzroy, South Yarra, etc. With more people moving in, the infrastructure is improving, the public transport is increasing, and better wages are being paid to the workers.
Another advantage of relocation for young families is the active community lifestyle and quality of schools. With so much happening in the suburbs, the prices of office buildings and rentals have gone up, which prove decent capital growth.
Don’t Go For The Overnight Stars
Lately, it has been witnessed that many unknown areas have made it to the list of high profile suburbs. These are mainly farmlands divided into smaller chunks of sites for homes, offices, schools etc. These suburbs are developed in a short span of time, and in just a few months, you can find them equipped with all the amenities.
However, their distance from the CBD makes them less than an ideal proposition for smart investors. The poor quality of infrastructure and accessibility to public transport leaves little room for capital growth in these areas. Although they may seem like an excellent opportunity because of the low cost, the probability of the prices going up in the future is dim.
With lower wages being offered in these hinterlands, the highly skilled population is less likely to move into these suburbs and will prefer the suburbs close to the CBDs. So when you are thinking about where to buy your next investment property in Australia, it is better to stick to the common names rather than the overnight stars.
Invest In The Industrial And Commercial Suburbs
Many investors are aiming to own warehouses which are rented out by big business conglomerates for stocking and storage of materials. Warehousing has also become a highly popular service after e-commerce companies started making big money a few years back. Since they do not have retail shops, the products are dispatched directly to the recipient from the warehouse.
Many advanced logistics facilities have become worthwhile assets for their owners with online retailing gaining momentum in Australia. It is a flourishing investment opportunity, and there are a plethora of options available in South Sydney, Western Sydney and Eastern Creek.
Similarly, in Victoria the buyers can go for commercial real estate in West Melbourne and Docklands which have been developing at a fast pace and provide the convenience and consumption levels which are perfect for high returns.
Supply Is Building Up In The Future
Since the vacancy rates have dropped drastically in the Sydney CBD region and other areas, the supply pipeline will boost its offerings in 2019-20. Both Sydney and Melbourne will witness a growth in the net supply, which will increase the vacancy rates, and the rents will take a downward turn. A similar supply boost will be visible in the top-performing suburbs like Macquarie Park and Parramatta.
On the other hand, the supply rate will slow down in Perth, Brisbane and Canberra, but it will not affect the vacancy rates much. Additionally, with co-working spaces becoming sought-after leasing criteria, many owners are increasing the use of their office space as a flexible workplace.
Another significant change that will occur in 2019 is the introduction of 5G network in office spaces, which will improve communications and enhance the suitability of suburbs as locations with technically advanced properties.
Markets That Will Experience Growth
While New South Wales and Victoria suburbs are the obvious choices for buyers, Western Australia and Queensland also promise a positive growth. Investors who are unable to find an affordable building in other cities are going for Perth and Brisbane properties. The value for money offered by these regions is way better than Sydney and Melbourne.
All office, retail and industrial real estate are growing at a faster pace than expected, with demands rising for each of them. Adelaide industrial property is expected to perform even better over the next five years and purchasing property now would be a good idea for investors looking for long-term returns.
Commercial property for sale in Australia has become a hot investment opportunity for buyers as the dwelling prices have continued to fall in 2019. The growth in job opportunities, development and demand for commercial spaces in top-performing suburbs can help you in recognising the best investment options effortlessly.
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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