Why government-leased properties are a safe bet

As Australian investors search for safe places to ride out the current global pandemic, increasing numbers are seeking the security of government-leased commercial property.

While other industries and investment sectors are facing challenges amid the financial downturn, properties tenanted by federal and state governments and agencies are experiencing almost unprecedented demand.

Although asset classes such as childcare, medical and retail fuel are also experiencing strong interest, in times of crisis; government-backed assets are a smart play as they prove to be a non-discretionary asset.

Investors are seeking industries with stability. Put simply, services that are essential, especially at times like these, making them somewhat ‘defensive’ asset classes.

For the commercial property we specialise in, government leases underpin a significant portion of offices, and it’s these properties that are supporting government functions that are among the best-performing.

Recent commercial property results highlight the heavy investor demand for government-leased assets, headlined by the sale of four properties leased to Centrelink on long-term agreements.

Burgess Rawson sold the Centrelink at Hamilton in regional Victoria earlier this month for $6.75 million, while another at Kings Meadows in Tasmania traded for $4.5 million.

A property tenanted by both Centrelink and the NSW Government at Bega in NSW achieved $5.025 million, and the Centrelink at Bairnsdale sold in February for $2.6 million.

Buyers are already eyeing future opportunities in the government property market as government tenants are arguably more important now than they ever have been.