The Value of Working with Multifaceted Investment Advisors
When you’re seeking advice for your self managed super fund property investment or developments, you’ll want to be speaking with someone who has widespread experience across a range of property management services. Here’s why it’s important to work with an advisor with comprehensive experience across a range of investment types.
They have a clear overview of the market
It’s rare that an investor will know everything that’s going on in the real estate market in an area they’re looking to buy or sell in. For a property advisor, their sole focus is to work within and understand the local property market thoroughly. Our advisors are aware of what is available and in demand at any one time. That means fewer missed opportunities, better connections to potential bargains and a greater awareness of future demand.
They’ve seen it all
The risk of working with a specialist advisor is that they can have a micro perspective rather than a macro one. It’s worth finding an advisor or an advisory team with experience across residential, commercial and industrial properties; self managed super funds property investment; and infrastructure developments and the development of projects such as hotels, medical centres and apartment blocks if this is something you’re investing in. With this wide awareness, an advisor can provide a neutral reality check when you need it and advise on the best times to buy or sell.
They have access to the necessary tools and networks
Your valuations and advisory team should be able to access industry and market information to consistently have a clear view of demand and supply. Ours use state of the art technology and current real estate data to help you make fully informed decisions. The goal is to find the true value and potential risks of the avenues you’re pursuing.
They know how to target the necessary demographics
If you’re developing a project aimed towards a specific demographic, it’s imperative you’re working with a project or property manager that knows how to appeal to them. A new apartment block for young city dwellers, for example, will require a different approach to a retirement community development. Choose development consulting services with a team that has their finger on the pulse of what these target groups are looking for in a home.
They think outside the square
It can often take some lateral thinking to find and capitalise on unique property opportunities. Quality advisors will know when to recommend changes to your property presentation or styling to optimise your returns, as well as having the necessary networks to carry them out.
Contact a Burgess Rawson advisory team in your city to speak with experienced and informed property advisors today about your SMSF property investment portfolio.
What is a Retrospective Property Valuation?
If you’re new to the world of commercial property investment there may be a few terms you are unfamiliar with. One term our team is asked about from time to time is retrospective property valuation, so we thought it might be useful to provide an outline of this service and when this might be required.
So what is a retrospective property valuation?
Put simply, a retrospective (or backdated) property valuation is a price based on a previous point in history. One of the most common reasons it might be required is for Capital Gains Tax for investment properties that were acquired after 20 September 1985. Your CGT liabilities will depend on the property’s increase in value from the time it was purchased or first used as an investment property to the time it is being sold. Our role as professional valuers is to accurately identify the original property price at the date in question.
The process of calculating a retrospective valuation
Developing a figure for a retrospective commercial property valuation is usually not a straightforward process and it requires the resources and expertise of an experienced valuer for a precise result. Generally the older the property, the more difficult valuing commercial real estate can be. Our valuers access databases with historical market value data and will research market conditions of the original transaction. While the actual visit to the property may not be a lengthy process, the knowledge and information required for a valuation in this respect is what enables valuers to produce an accurate figure.
What will be taken into account?
The following considerations are taken into account when developing a retrospective valuation for commercial property:
- The year that the property was purchased
- The price in the original sale agreement and whether this is deemed as an accurate valuation
- Information from a number of sources in order to reach a historically correct valuation
- In some cases, the property in question may have had extensive works completed at the premises which can affect the current valuation figures in contrast to the original date. The valuer will take into account any major changes to the property into their property valuation services.
Accuracy is key
When a retrospective property valuation has such a significant impact on your tax obligations, it’s critical that you choose a certified practising property valuer you can trust to make an accurate and informed valuation. Contact the Burgess Rawson property valuation team today for any questions or services to do with your commercial real estate valuation.
Creative Ways to Fill Your Vacant Retail Space
While retail leases typically give you years of assured rental income, they can also pose the risk of longer vacancy rates depending on the market when those leases end. If that happens, some lateral thinking could make the difference between your space sitting empty, and earning you a return. Here are some creative methods to filling your commercial properties for lease until a suitable long-term tenant can be found.
Consider short term leases
If the market isn’t working in your favour it doesn’t mean there aren’t willing tenants in the shorter term. You could become a patron of the arts, so to speak, by renting your retail space out short term to pop up shops, seasonal stores and startups. The Empty Spaces Project has fostered creative spaces for artists and creators across Australia with great success, while Popupshopup connects landlords to businesses looking to test out the market in Perth. You never know: it could just lead to a long term commercial property lease.
Think about non-traditional tenants
While it’s obvious to search for long-term retail tenants for your retail space, there may be a hidden and untapped market to take advantage of. There may be churches, schools, training organisations and other non-traditional tenants who would find your space to be just what they need. These groups can be particularly interested in taking up an offer to lease commercial property for open floor, multi-use spaces with plenty of parking.
Offer smaller units of space
If offering your space isn’t working for you, you might think about subdividing it into smaller spaces for startup businesses or co-shared retail spaces. You may well find that there is more of a market for smaller businesses in outer suburbs or regional centres as opposed to a national franchise. Obviously, any changes you intend will be dependent on the zoning of the area and any council limitations.
Opportunities can come up in the most unexpected of places. You may be surprised by the situations that could arise from simply mentioning your commercial property for lease to business contacts and social networks in conversation. There could be someone, or someone they know, who is looking for exactly the type of space you have to offer.
Burgess Rawson’s teams across Australia have a thorough grasp of the commercial lease market in your area. Our friendly and experienced leasing agents are available to discuss what the right next step is for your commercial property investment, so contact us today.
Proven Property Performance
Everyone is by now familiar with the daily headlines trumpeting surging home prices, affordability crisis and potential housing “bubble”. Amongst all of this media attention a similar increase in the price of commercial property has by comparison almost escaped notice. But the phenomenon of rapid growth in property prices is by no means confined to the housing markets of Melbourne and Sydney.
Commercial property markets have similarly experienced a period of rapid and consistent price escalation over recent years. Escalating prices in the commercial property sector stem from rental income growth and/or yield compression. The present cycle is being driven by yield compression, often against a background of little or no income growth.
Burgess Rawson’s Raoul Holderhead identified a number of factors influential in this trend including:
- Interest rates sitting at their lowest point in fifty years, contributing to the yield spread on direct property investment becoming more attractive;
- The low interest rate environment has caused some investors to move from the security of cash and bonds to higher yielding direct property investment;
- Property is perceived as offering sound security in uncertain times;
- The availability of attractive depreciation benefits which some assets offer can make the income stream particularly tax effective;
- The weight of domestic funds from both private and institutional sectors seeking limited opportunities in commercial property markets; and
- Australian property markets have experienced an unprecedented inflow of foreign capital encouraged by attractive yields, a sound currency and stable economic and political environment.
The growth in commercial property values is perhaps best illustrated through Burgess Rawson’s successful marketing, on three separate occasions, of the Bunnings hardware in the Victorian regional centre of Warragul. The buyers were a mix of domestic and offshore investors, which is indicative of the present composition of the market in the highly competitive sub $10.0 million price bracket.
Selling agent Raoul Holderhead said “Bunnings Warragul is subject to a Fifteen-year lease term from March 2007, and offers the certainty of annual 2.5% rent increases and an attractive Net lease structure. The property remained unchanged between three successive sale dates, save for application of the fixed rental increases and a reduction in the remaining lease term (WALE). Each of these sales was secured under competitive bidding at a Burgess Rawson Investment Portfolio Auction, surely the best test of market appetite on any particular day”.
The property achieved a healthy value increase of 38.7% in barely more than a three year period, whilst the rental income grew by a much more modest 7.7%. Clearly the majority of the growth can be attributed to a near 2.0% reduction in yield between the first and last transaction dates. “These sales represented outstanding outcomes for each of our vendors” noted Mr Holderhead.
These transactions have not occurred in isolation with commercial markets across the board demonstrating the contracting yield expectations of investment buyers. Some further transactions indicative of the prevailing low yield market environment include: