DIY super funds driving Port Macquarie commercial markets

Media release - 10th June, 2016

Strong self-managed super fund (SMSF) demand is proving to be the cornerstone of commercial property markets on the Mid North Coast of NSW.

“It’s a bit like Sydney in towns such as Port Macquarie, with SMSFs driving the sales of quality investment assets,” said Graeme Garrett, Co-Principal of Raine & Horne Commercial Port Macquarie.

“That said, there are also those small business owners who are acquiring properties through a SMSF and then leasing them back to the business, which the current superannuation laws allow.

“SMSFs leasing a commercial property back to a related business is a common trend in the sub-$500,000 market in Port Macquarie.”

In many cases professionals such as accountants, lawyers, engineers, architects and real estate agents are buying commercial properties through a related DIY fund, according to Mr Garrett.

“We’re also seeing SMSFs buying industrial stock priced around $400,000 to lease back to a related business,” he said.

“The trouble is that there’s a shortage of industrial stock in this price range to meet demand.”

Mr Garrett warns members of SMSFs that they would be best served considering a commercial asset that will appeal to future tenants.

“If you occupy it yourself now and then retire, you need to consider what appeal that property will have to future tenants and whether it will be easily let out if it’s part of your future retirement plans.”

Mr Garrett said investors operating outside a super fund are also active in the Port Macquarie market.

“Investors are taking advantage of low interest rates and the fact that commercial properties are viewed generally as an investment safe haven,” he said.

“Sydney investors seeking solid yields are also starting to make their presence felt in Port Macquarie.”

Yields for industrial stock priced below $500,000 range from 8%, while it’s 6.75-7% for retail and 8% for office space, according to Raine & Horne Commercial Port Macquarie.

“We auctioned a retail property to a Sydney investor, who purchased it through a self-managed super fund, and who intends on retiring to Port Macquarie down the track,” said Mr Garrett. The property located at 5/56 Clarence Street, Port Macquarie sold under the hammer for $622,500.

“Our proximity to Sydney and Newcastle is attracting investors from those cities through a combination of our healthy yields and commercial real estate affordability,” said Mr Garrett.

“When you can buy two or three assets in Port Macquarie for the equivalent of a single-tenant property in Sydney, investors see this as value.” 

–ENDS–

For further media information contact:

Graeme Garrett, Co-Principal, Raine & Horne Commercial Port Macquarie on 0417 243 727

Andrew Harrington, National Communications Manager, Raine & Horne on 02 9258 5400