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What SMSFs really want

November 21, 2018

Raine & Horne Commercial’s latest Commercial Insights report highlights how the yields and values SMSF investors are chasing vary across the country.

Many SMEs are discovering there’s very little difference in the cost of owning versus leasing a commercial property, and of course, buying your premises provides the backing of a solid investment with the opportunity to refurbish according to needs – and let’s not forget the tax benefits too.

John Surian, Principal and Managing Director of Commercial Parramatta says owner occupiers account for around one in three buyers, and SMSFs remain active in Parramatta especially in the $2-3 million price range with a yield of 6.0%. The vast majority (90%) of commercial properties are being sold at auction as opposed to private treaty.

In nearby Penrith, vacancy rates are minimal, typically below 2.0%, and less than 1.0% for industrial assets. Keiran McGarity of Commercial Penrith says SMSFs continue to be active in the area, with a focus on the $1-3 million market. Most SMSFs are seeking yields in the order of 4.0-8.0%.

SMSFs are significant players in regional markets

Outside Sydney, Brad Rogers, Senior Commercial Sales & Leasing Specialist, Raine Commercial Erina reports that SMSFs continue to be active buyers particularly in the under-$1 million price range, and SMSF investors are typically looking for yields of around 7.0%.

In regional NSW, SMSFs are active in the Wagga Wagga region, typically in the sub-$800,000 market, and with a preference for yields of 8.0-9.0%. According to Craig Tait, Director / Commercial Sales & Leasing, Raine & Horne Commercial Wagga Wagga, low-interest rates are a key driver of the market coupled with improving economic conditions, and a greater willingness among owners to negotiate on price following periods of vacancy.

In the ACT, SMSFs are active buyers in the $15 million-plus market, with a particular interest in properties offering yields of 6.0-6.5%, notes Nick Cotis of Raine & Horne Commercial Canberra.

South east Queensland benefitting from DIY super investing

In south east Queensland, John Tamblyn, Joint Managing Director of Raine & Horne Commercial Beenleigh says SMSFs continue to be active buyers with a preference for properties in the $200,000 to $1.5 million price range. SMSF buyers are typically looking for yields of 6.0-8.0%.

Meanwhile, investors account for around 80% of buyers on the Gold Coast. SMSFs are especially active in the $2-3 million market with a preference for properties delivering yields of 7.0%, according to Michael Parisi, Director of Raine & Horne Commercial Gold Coast.

For a comprehensive assessment of commercial property markets around Australia, download a free copy of Raine & Horne Commercial’s Spring 2018 Commercial Insights report.