Commercial property investment hotspots generally follow areas of growth, although it can be difficult to get the experts to agree on where growth is about to occur!
While rumour or even self-interest can often play a part in creating a ‘buzz’ about a particular area, there’s no denying that the presence of state government-funded capital works or business incentives can be a strong sign of impending growth.
Then there’s the evidence of investment. When a Chinese firm buys two $100 million-plus commercial properties in Sydney in the space of a few weeks for example, it’s hard to dispute the level of interest in the city.
Here are three areas that just might be prime for commercial property investment in 2016.
1. Sydney metropolitan area
This one isn’t much of a surprise, and it’s due in part to Chinese interest in the city. It’s predicted that Chinese investment in Sydney will increase in the coming years, thanks in part to Australia’s low interest rates and weak dollar. According to a 2015 KPMG Australia report, Sydney has actually already overtaken New York and London in terms of Chinese investment in commercial property. Investors have been increasingly looking beyond the CBD to suburban areas, and this trend is expected to continue.
2. The Sunshine Coast
This beautiful Queensland destination, famous for its white sand beaches, is undergoing a period of growth. The driving force is the combination of four major projects in the works – the Sunshine Coast Public University Hospital, the Maroochydore Principal Development Area, the proposed expansion of the Sunshine Coast Airport, and the development of the residential area of Aura. The population growth, the influx of workers and the expansion of the airport means retail, industrial and office spaces will likely be in demand on the coast.
3. Tasmanian opportunities
Recent transactions in Australia’s most southerly state indicate that commercial property investors are looking beyond the mainland to Tasmania for opportunities. A Melbourne-based investor purchased the Woolworths supermarket in Burnie for $18.1 million, while the Woolworths in Launceston’s CBD went for $22.5 million. Another retail complex in Hobart – a Woolworths supermarket plus nine shops – was sold by Burgess Rawson to an overseas investor for $14.2 million with a yield of 7.39%.
Graeme Watson, a director of Burgess Rawson, commented: “Astute investors seeking quality retail property, especially those that include substantial taxation benefits, recognise Tasmania as providing safe and productive investment opportunities.”
Real estate investment can run on rumour and ‘talking up’ an area for self-interest, but the best property consultants work off statistical data and industry knowledge gained through experience. There’s a skill in monitoring and processing the reams of information that are available to investors. If you’d like assistance with finding the right area for your next commercial investment property, contact us.