Archives for August 2011

Commercial Property: 5 Key Decisions To Help Guarantee Your Investment Success

 You need to make certain Decisions to Succeed with Commercial property
Investing in Commercial property is not “rocket science”.

Nonetheless, there are certain key steps you do need to follow. And those involve you in making a number of simple (yet vital) decisions.

DECISION #1: Your Goals for the long and short term?
In other words, are you seeking Income on Capital growth — or both? Maybe you are after some good Tax savings — through negative gearing or Depreciation? [Read more…]

Industrial Property
Stages a Strong Surge

The market for Industrial property in Melbourne has remained strong over the past 12 months — enjoying a solid demand from tenants, owner occupiers and potential investors alike.

According to Savills Australia, leasing activity for the twelve months to 30 June this year was up by more than 7% on the five-year average for Melbourne.

The dominant tenants clearly came from the retail and logistics sectors — with over 740,000 square metres being leased. And of that amount, just over 200,000 square metres was by way of pre-commitment.

And according to recent research by Colliers International, the current level of rentals and capital values showed increases of between 5% and 18% across the Metropolitan area, during the last financial year. [Read more…]

Commercial Property Looking Forward

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Is there a Future for Offices?

The last couple of articles have talked about all the misplaced doom and the gloom.

Plus, you also covered the various reasons why Australia overall is well placed to flourish (and not just survive) the current global distress.

A recent report on the Australian Office scene (by Morgan Stanley property research) would only tend to confirm that view. Their only concern would be the Sydney market, due to its heavy exposure to the financial sector. [Read more…]

Why All The Panic?


Are we really heading for GFC Mark II?

Well, not here in Australia anyway! And even overseas, things are vastly different this time around.

In 2008/09, it was private debt causing the problems … because nobody was too sure which banks were overly exposed to the sub-prime mortgage problem. [Read more…]

Let’s Stop The Doom & Gloom! How About Some Good News?

For the past few weeks, the world’s media seems to have been dominated by two unfolding dramas:

  1. The extraordinary and rather amateur performance in Washington, as the US government lurched towards potential default.
  2. The concerning spike in euro-region yields, against the backdrop of their apparently insoluble sovereign debt issues.

However, as Amy Auster reported in Saturday’s Financial Review, there was also a really positive development last week (certainly for Australia), which seems to have simply “snuck under the radar”. [Read more…]

Commercial Property Fundamentals
Continue to Improve for Investors


The mid-year report from the Property Council of Australia (PCA) has confirmed a tightening of all major Office markets — except for Sydney and the Gold Coast.

As you can see from the graph, Sydney’s vacancy rate actually increased from 8.3% to 9.3% during the six months to July 2011.

For the remainder of Australia’s office markets, there was an overall improvement — as demand for space exceeded supply, and yields began to firm.

According to Peter Verwer (PCA’s chief executive): “This is a good result, especially now with a lot of uncertainty about Australia’s economic resilience … demand and absorption are well above the historical average, except for the orphan Sydney.”

From this second graph, you will also notice that the Melbourne Office market has been consistently outgrowing Sydney, since about July 2004.

Furthermore, because of Sydney’s heavy dependence upon the financial sector … this growth trend is unlikely to change any time soon.

Melbourne, on the other hand, has its Office demand spread across a wide number of sectors. And therefore, has been far less exposed to the recent global turmoil.

Bottom Line: Despite all the stock market gloom, the underlying fundamentals for Commercial property are strong — particularly in Melbourne.

And historically, it is in times like these when shrewd investors have laid the foundation for their extraordinary fortunes in Commercial property.

 

Commercial Property & NABERS:
What is it all about?

Yes, I know it is rather confusing. But this is merely an acronym for the … National Australian Built Environment Rating System.

Effectively, it benchmarks existing buildings against one another — where ZERO means a “Poor” rating … and FIVE indicates an “Excellent” green-rated building.

This rating system currently covers Offices, Homes, Hotels and Retail Centres — although the actual criteria do vary between the different types of buildings.

For Offices, they include aspects like … Energy, Water, Waste and the Indoor Environment. Whereas for Hotels, Retail Centres and Homes … it is only Energy and Water efficiency, which is rated.

Mandatory Disclosure

Since November 2010, owners of Commercial Offices have been required to disclose their building’s NABERS rating — whenever they sell (or lease) any space larger than 2,000 square metres.

Their NABERS rating needs to be displayed in all advertisements; and appropriate documentation is to be available upon request.

Some Exemptions are available

The common exemptions would include …

  • Mixed-use buildings with less than 75% Office space;
  • Buildings constructed or renovated within the past two years;
  • Lease deals for periods less than 12 months;
  • Strata-titled property ownership; or
  • Sale of a partial interest in a property.

Bottom Line: The penalties for non-compliance can be up to $110,000 for the first day; and then $11,000 for each further day of non-compliance.

However, it does provide you with a great opportunity to capture a strategic advantage … if your building holds the highest possible rating — given its age and condition.

Therefore, this system is important to ensure your property manager is fully ‘up to speed’ on all the various requirements. And if you would like to study any of this in more detail, simply go to the government’s website.

 

Smart Investor Seminar

Just quickly …

On Saturday 27 August, I have been asked to take the Session on Commercial Property Investing … at this Smart Investor Seminar.

And I simply thought you may have some interest in knowing what’s also being covered at the same time. [Read more…]

Foreigners Seem to Love
Our Commercial Property

Australia’s dollar may be considered high compared with other countries, but that hasn’t dampened overseas Investors who are clamouring to buy up our Commercial property.

And this only serves to confirm Australia’s “safe-haven status”, being closely aligned with the Asian region. [Read more…]