Canberra Blog

This Valentine's Day, we want to give you a little gift… 

We want to play Cupid and help you fall in love… with commercial property investment! 

When it comes to property investment, the spotlight often shines on residential real estate, overshadowing the hidden gem that is commercial property. However, savvy investors are increasingly turning their attention to the commercial sector and reaping the rewards.

So, are you ready to SWIPE RIGHT on Commercial Property Investment?

Here Are 7 Crucial Considerations…

1. Diverse Sectors & Asset Classes: Commercial real estate encompasses properties primarily used for business purposes and comprises three key sectors: retail, office, and industrial. Within each sector lies a spectrum of asset classes, each with its own unique cycle, presenting diverse risks and rewards.

2. Yield Variances: While some commercial properties boast yields comparable to residential ones, around 4%, others can soar to an impressive 10%.

3. Extended Lease Terms: One standout advantage of commercial property investment lies in its longer lease terms compared to residential properties – typically spanning three, five, or even ten years. These leases often include fixed or CPI annual increases, with the tenant often covering all outgoings, fit-out and/or refurbishment costs to suit their business.

4. Balancing Act of Risks and Rewards: Of course, as with all investment sectors, the commercial property market is not without risks and challenges. Commercial property markets carry the possibility of extended vacancy periods and challenging resale scenarios for some specialised assets. Economic factors such as unemployment rates and consumer confidence can also impact this unique marketplace.

5. Stricter Lending Conditions: Additionally, breaking into the commercial property market may pose challenges due to stricter lending conditions, often necessitating buyers to secure a substantial 30 to 50% deposit.

6. Strategic Considerations: For the average investor venturing into commercial property, there are several crucial factors to ponder. Location, much like in residential investments, remains a pivotal consideration. Choosing a strategically located commercial asset involves scrutinising zoning restrictions and exploring the development potential of both the site and the building, especially in scenarios where the current use becomes obsolete.

7. Diverse Investment Options: Diverse commercial investment options abound in the commercial property world, ranging from mixed-use dwellings like retail shops with dwellings (offering a dual income stream!), to small industrial factories, strata-titled offices, retail strip shops, fast-food outlets, and service stations. Each comes with a unique set of advantages and challenges, which is why seeking expert advice is absolutely crucial.

Exploring the world of commercial property investment can be a rewarding endeavor, but it requires a careful evaluation of risks and rewards, advantages and challenges. By considering location, property types, and economic factors, investors can unlock the vast potential that commercial real estate has to offer.

If you're ready to fall in love with commercial real estate, let us play cupid! Get in touch today with the expert team at Raine & Horne Commercial Canberra.

02 6236 9526 | [email protected] | www.rhc.com.au/canberra