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Adelaide’s commercial and residential markets in synch as expats return home

March 31, 2021

Adelaide’s commercial real estate market has hitched a ride to residential property confidence, with most quality industrial, office and retail spaces with good tenant on long-term agreements attracting investor attention. 

“Despite an unemployment hangover from COVID, business confidence in Adelaide is very good, and SMEs are on the move,” said David Ente, Director of Raine & Horne Commercial SA. “The residential market is driving some of this confidence to a point. 

“The residential market is being propelled to an extent by interstate expatriates returning from Sydney and Melbourne. They are selling properties in the eastern capitals for $2-3 million and setting up a home in Adelaide for $1.5 million. 

“There is some evidence a portion of the capital the returnees have freed up is being invested in Adelaide businesses, which is fuelling demand for commercial real estate.” 

David continued, “Consequently, quality assets are selling in Adelaide with 4% yields. I have never seen yields like this before.”

Owner-occupiers purchasing an asset through a self managed super fund are also active. “The biggest issue for investors and DIY super fund trustees is the banks, who are still hard to get along with,” David confirmed. 

Industrial leasing is robust

On the leasing front, industrial properties such as a 547 square metre warehouse at 557 Magill Road, Magill, are proving popular. “Warehousing has been good. Some of the demand for warehousing is emanating from e-commerce businesses. However, SMEs requiring service trade premises such as automotive electricians, air-conditioning specialist, vehicle mechanics, and plumbers also need some office space and a workshop.

“The sweet spot for warehouses is around 500 square metres. However, our biggest challenge is getting stock to meet this demand.”

Raine & Horne Commercial SA also recently leased a number of premises that had previously proved to be a challenge and David concluded, “Industrial leasing has been solid, and rents are clawing back after falling over the past few years.”

For all your commercial sales and leasing needs in Adelaide, contact Raine & Horne Commercial South Australia on 08 8172 1266.