Until now, Tasmania’s commercial property market has long been the nation’s underperformer.
But the Apple Isle’s investment legacy is fast being peeled away to reveal healthy opportunities for buyers.
Helped along by booming tourism and relocating tree-changers from the mainland, sectors of the Tasmanian economy are bumping along nicely.
Interstate and overseas property purchasers have followed suit, pouring in investment dollars in record volumes to chase value, higher returns and opportunities no longer available on the mainland.
Recently, key foreign investor Fragrance Group has put its faith in the state’s prospects by committing to develop multiple hotels and residential projects.
The Singapore-based company is just one of several investors spending hundreds of millions of dollars on private and public developments, according to agency Burgess Rawson.
Burgess Rawson research reports that Hobart is seeing a surge in tourism, with an increase in visitors of more than 9 per cent last year compared to the previous 12 months.
Pristine wilderness, gourmet foods, historical architecture and iconic landmarks such as Hobart’s Museum of Old and New Art, are pulling in the tourists.
On the residential front, Hobart is also leading Australian capital cities.
A recent REA Group report by chief economist Nerida Conisbee found “demand for Tasmanian homes remains the highest in the nation”.
“The April Property Demand Index showed buyer demand easing nationally.
But in Tasmania … demand is soaring upwards by 58.2 per cent compared with a year ago,” Ms Conisbee said.
In fact, Hobart was the only capital city to record a positive gain in residential prices for the period, research shows.
Launceston has also been performing well, with more than 9 per cent annual house price growth, putting to shame the slumps in Melbourne and Sydney.
Combined with a growing population, this heightened appetite for Tasmanian residential property will translate into opportunities for commercial property investors purchasing in Hobart and Launceston, said Burgess Rawson Victorian chief executive Ingrid Filmer.
“Tasmania has flown under the radar in property investment terms and this is changing rapidly.
Property investors making the comparison of Launceston and Hobart to the mainland are attracted by the bang for buck the market offers.
“The city has a major university and is blossoming as a destination.
“This means commercial property investors from the mainland can scoop up opportunities with better returns on investment than major capital cities offer,” she said.
“Commercial investors have to think outside the square to maximise their returns.
They need to stop obsessing about major capital city investments and look to markets where they can save money on stamp duty and benefit from potential for long-term growth.
“This means they need to look towards markets such as Launceston and Hobart where the fundamentals point towards major gains for landlords.
“The gains for landlords are not just in higher yields and lower price.
“The less onerous retail leasing legislation is a major drawcard whereby landlords can still recover land tax from retail tenants”.
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Written by Olga Galacho for Herald Sun