With the JobKeeper support coming to an end, to help give retailers a lift, the Real Estate Institute of New South Wales has called for standard retail leases.

Retail lease negotiations can be a bit lengthy at times, but don’t let this put you off considering commercial property as an investment opportunity. There are plenty of other types of commercial buildings, and industrial and office commercial properties can also make great investments.

Furthermore, The Hunter is the largest regional economy in Australia, ranking above Tasmania, the Northern Territory and the Australian Capital Territory in terms of economic output. It drives around 28% of regional NSW’s total economic output and is the largest regional contributor to the State’s gross domestic product. The NSW government Plan for the area aims to strengthen the region’s economic resilience, protect its well-established economic and employment bases and build on its existing strengths to foster greater market and industry diversification.

Commercial properties can sometimes be misunderstood, and in our experience, are frequently underestimated, but they do offer different, and often lucrative investment opportunities; plus, they are a great way for the canny investor to diversify their portfolio, and can even be a way for investors to take the first step on the property ladder.

Here are some reasons why you should consider investing in commercial property:

Potential for higher returns on investment

Commercial property can attract between 8-12% gross rental yield while residential often sit at less than 4% per annum.

Lease agreements

• Commercial property leases can be anywhere between 3 and 10 years. Residential are usually up to a year at a time.
• Leases are often transferable
• Structured rental increases are often included in the lease agreement

Fewer outgoings

The business usually plays the council, water and body corporate rates.

Affordability

Commercial property can be cheaper for still reasonable returns. However, the downside is banks usually require a 20 – 40% deposit (or the equivalent against another property).

Tenants add value

It’s within the tenant’s interest to maintain the property as the property reflects on their business; for instance, many people aren’t comfortable shopping in a dingy shop, and not many people enjoy working in a run-down office.

Commercial property does offer some fantastic investment opportunities, and we know investors who diversify their portfolio by investing in both residential and commercial.

However, just like investing in residential property do your homework. Find out about the area and get to know the commercial market. While there are some great bargains to be had, you need to fully understand the type of tenants you’ll be attracting and really know what’s planned for the area.

Talk to your financial advisor and other experienced professionals so you can fully understand what is involved with investing in commercial property.

As one of Newcastle’s longest established real estate offices, we’ve helped hundreds of people realise their financial dreams through both commercial and residential property. Having been in the area for over 40 years, we know the area very well, and can point you in the direction of where to find the right information to help you make informed decisions. If you’re interested in finding out more about the opportunities commercial, or residential properties offer, get in touch by giving us a call on 02 4956 9777.

Or send us an email to mail@newcastlepropertymanagement.com.au or pop into our Cardiff office for a chat.

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