12 Fundamentals You Need to Follow … When Buying Commercial Property

There are 12 Rules you need to follow to successAS YOU WILL appreciate, being able to sleep at night is one of the key objectives for any Commercial property investor.

And that’s what many property investors refer to as staying below your “Threshold of Insomnia”.

There can be several things that might cause you to lose sleep. One is over-borrowing; and the others are making a poor assessment of the market and the property itself. [Read more…]

Commercial Property to Benefit From Structural Changes Within the Economy

Industry Restructure is necessary for Australia's long-term growth.IN CASE you missed the lead story in last Friday’s Financial Review … the Treasury secretary (Martin Parkinson) was outspokenly critical of the government’s recent handouts to the car industry.

And more particularly, given the recent strong growth in the unemployment figures.

In his view, taxpayers ought not be subsidising so-called “strategic industries” — when these represent inevitable structural changes, which need to occur in order to make Australia more productive in the long-term. [Read more…]

How Commercial Property Investors Benefitted From The Past 7 Days?

The Reserve Bank believes things are on the up.LAST TUESDAY, the RBA left the cash rate on hold — much to the surprise of most pundits. And yet, only the week before, that’s exactly what I suggest would happened.

You might also remember I suggested that you lock in a fixed rate mortgage — because it was then about 1% below the variable mortgage rate.

Many scoffed, and said that rates will continue to come down. Well, the past 7 days have certainly put paid to that theory — with the big 4 Banks raising their rates, quite out of step with the RBA. [Read more…]

Your Success in Commercial Property Begins With The Correct “Investment Vehicle”

Your need to choose the right Investment Vehicle from the outset

BEFORE YOU purchase your next Commercial property, you do need to take some advice on which purchasing vehicle is right for you — because it’s definitely not ‘one size fits all’.

Tax Considerations

The Australian Tax Office is quite happy for you to arrange your affairs so as to minimise the tax you pay. In other words, it is quite legal for you to avoid tax — you simply cannot evade it. [Read more…]

National Office Market Shows Steady Improvement

LAST WEEK, the Property Council of Australia released its Office Space survey, for the 6 months to January 2012. And this will have some interesting implications for the Commercial property market.

National Vacancy Rates have fallen over the past 6 monthsAcross the 26 markets depicted in this chart … demand was up 20% up and supply 30% down, on the 20-year average for the six-monthly period.

As you can see, total vacancies fell from 9.0% to 7.9% — the lowest since January 2009. And perhaps a quick summary of the CBD Office markets would be worthwhile. [Read more…]

What Will Happen to Interest Rates
When The RBA Meets Next Week?

THE GENERAL consensus seems to be that the RBA will further reduce rates by 25 basis points. But can this view be fully justified; and what does all this mean for Commercial property investors?

The RBA faces a real DilemmaMost pundits would point to the recent CPI figures and say “Yes”! And on the surface, an underlying inflation rate of 2.5% per annum is plumb in the middle of the RBA’s stated target zone.

Yet despite what seems to be a rather hesitant mood by consumers, inflation in the service sector actually surged by massive 4.4% per annum. And some other sectors (not affected by overseas competition) also finished the year strongly, growing by 3.9% per annum. [Read more…]

Commercial Property: Global Influence?

Things are picking up within the US EconomyTHE LAST quarter of 2011 saw a definite improvement in the US economy — with consumer spending up, and companies finally replenishing their inventories.

GDP increased by an annualised 3%, with improved sales for durable goods and new homes.

Petrol prices have been cheaper, since mid-2011; and the US jobless rate was the lowest in nearly 3 years.

Therefore, with improved employment figures, consumers have felt more comfortable spending — which represents around 70% of US economic activity. [Read more…]

Commercial Property: What Makes for a Balanced Office Market?

EVERY capital city has both a CBD and suburban Office market. And as you can appreciate, keeping tabs on all the various suburban markets is almost an impossible task for most investors.

But generally speaking, the health (or otherwise) of the CBD Office markets within each capital city will provide you with a fairly good gauge of the overall Office scene around Australia.

Accordingly, this graph will provide you with a clear picture of what has occurred over the past 4 years.

As a rule of thumb, Office markets are said to the “in balance”, when their Vacancy Rate lies between 5% and 7%. [Read more…]

Is There a Credit Squeeze Looming?

WILL COMMERCIAL property investors and businesses be starved of ready funds during 2012?

Is there a Credit Squeeze looming?The banks seemed to be protesting about the increased cost of offshore borrowing. And using that as their excuse for not wanting to pass on any future RBA rate reductions in full.

But are they really telling you the whole truth? [Read more…]

Trusted Consultants ~ Part 4
Validating Your Purchase

MY ADVICE to clients is to always accept whatever the vendor is telling you about his or her property, as being “true”.

Then simply “reserve your right” within the Contract, to validate all the wonderful things you’ve been told about the Commercial property you’re about to purchase.

You see, most vendors believe their property to be perfect. And will therefore raise little objection to the final contract giving you a Due Diligence period … to confirm the overall status of the property.

Nash Logo [Read more…]

Success in Commercial Property Comes with Consistent Economic Growth

ACCORDING to consulting group SGS Economics and Planning … Australia’s economy grew by 38% during the 1990s; and by 34%, during the 2000s. However, it has only grown by just over 2% since then.

Australia's GDP Growth by Capital CitySo let’s delve into the reasons behind this decline?

If you study the accompanying graph, you’ll notice that Sydney contributed around 27% of Australia’s GDP growth during the 1990s. But then that nearly halved to 14.5%, between 2000 and 2010. [Read more…]