Foreign buyers and businesses seek regional commercial opportunities

December, 2017

The latest issue of Commercial Insights found that regional commercial markets around Australia are enjoying a purple patch due to a combination of price affordability and decent yields.

Michael Parisi of Commercial Gold Coast says yields are ranging from 5.0% on retail assets to 8.0% for office and industrial properties. He believes these yields will remain stable for the remainder of 2017. Gold Coast vacancy rates vary according to location but broadly, range from as low as 5.0% for retail and industrial assets to 10.0% for office properties.

Foreign investors are showing interest in the Gold Coast, accounting for between 25% and 30% of property sales, typically in the $2-20 million price range. Self-managed super funds are also active buyers though with a focus on the sub-$2 million market and a preference for retail strip assets.

Nick Koenig of Commercial Toowoomba says yields on retail and office assets are currently in the order of 7.0-8.0% rising to 8.0-8.5% for office assets. According to Nick, “Generally there is an oversupply of commercial and retail space, and this has affected lease pricing. Landlords are offering generous incentives, and this makes now a great time for businesses to relocate to Toowoomba and the Darling Downs or Surat Basin regions. Some great lease deals are available.”

The region is benefiting from several infrastructure developments including the $1.45 billion Toowoomba Bypass and the $8.4 billion National Inland Rail Link/Interlink SEQ, which will lend support to the local economy and commercial property market.

In Southern NSW, “Commercial buyers are reasonably active. Properties with good tenants and long leases in place are selling at lower yields. A multi-tenanted bulky goods site situated near the Wagga Wagga CBD, with national tenants including The Good Guys and BCF recently sold for a 7.5% net yield,” said Phillip Thompson of Commercial Wagga.

In terms of which segment of the market holds good prospects, Phillip points to retail assets saying, “Retail has always been reasonably strong in Wagga Wagga, particularly in the main street surrounding the two central shopping centres. These properties demand a good rental and yields are reasonable. Good stock is tightly held and therefore limited in supply.”

To find out more about the state of play in many of Australia’s biggest regional population centres, download a copy of Raine & Horne Commercial’s latest property market report, visit http://www.imags.com.au/rh_commercial_insights/

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