Archives for May 2010

Commercial Property Yields?

Exactly How Do They Work?

Recently, I was invited to conduct a Workshop at a 3-day Conference for some 1200 delegates.

My role was to provide some insight into the main Commercial property sectors. And explain just how the combined returns for each sector relate to one another.

So what I’ve done is to create a short Video for part of my address — and just thought you might find it helpful.
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Distortion Guaranteed?

While the Rudd government may have moved quickly to provide guarantees for the major Banks during a financial turmoil … the impact of doing so has been disastrous for borrowers.

Right now, these major Banks seem to account for virtually 80% of all owner-occupier loans for property.

As such, the margins they are charging have never been higher — despite the Banks’ protestations of being “squeezed”.

RBA's Dilemma

RBA's Dilemma


Therefore, overall borrowings borrowings have been slowly trending downward over the past six months — because the major Banks have effectively amplified the rate increases handed down by the RBA.
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Is Negative Gearing for You?

Buying and negatively gearing a Commercial investment property is not forever in one — particularly, with interest rates on the rise.

And if you already have high personal debt … adding to that wouldn’t be a smart move on your part.

Make Borrowing just one of your Tools

Negative Gearing

Negative Gearing

Any gearing you decide to take on, should be viewed as part of your overall strategy — and not there simply to minimise your tax bill.
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Interest Rate Rises …
Are they a Good Sign?

The RBA’s decision on interest rates yesterday came about because of what’s happening here in Australia, rather than in Europe.

It has been made against the backdrop of our exporters having recently extracted massive price hikes for iron or in coal, as a result of China’s strong growth.

Since the global turmoil started in 2008, the $A has climbed by nearly 55% against the $US — and just over 40% against our other key trading partners.

RBA Logic

RBA Logic

This has more or less offset the rise in Australia’s local retail prices, through a sharp decline in the cost of imported items — like electrical goods, clothing, footwear and furniture.

As a result, the NAB’s business confidence index stands firmly positive for the third consecutive quarter. And even more importantly, actually improved throughout the last quarter.

h2. How will this affect Commercial Property?
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