Australian CBD Office Market

THE PROPERTY COUNCIL of Australia recently released their Office Market Report for the six months ending January 2019.

Both the Sydney and Melbourne markets have been the strong performers. Although, most capital cities have also seen an improvement in their vacancy rates. [Read more…]

6 Key Pillars for Commercial Property Success

AS YOU WILL APPRECIATE, there is a fair amount of information you need to know about Commercial property. Although fundamentally, all that rests upon just six Pillars.

Once you understand that, everything else starts to make a lot more  refrainsense.

So, let’s perhaps take a few moments to briefly explore those Pillars.

1. Ensure your Principal is Safe

You see, most investors appear to be mesmerised by “return ON capital”. And of course, that’s important – because it’s probably the main reason you are investing in Commercial property in the first place.

However, what’s really vital is … safeguarding your return OF capital.

Simply chasing extra income (or growth potential), while possibly putting your hard-earned equity at risk … is not very smart. Therefore, with any investment, your first consideration (as an absolute minimum) … is being satisfied that your initial equity will be returned, when you finally sell.

And if your gut tells you that could be in doubt … then, simply don’t proceed – no matter how appealing the Commercial property may be.

2. Control your Liabilities

There are two schools of thought, but my preference would be to fix your interest rate when borrowing.

Sure, it may cost you an extra 0.5% per annum … but that is tax-deductible and most importantly, you get to sleep at night.

The other suggestion would be to avoid personal guarantees wherever possible – by only borrowing on a non-recourse basis. That will probably limit you to a 65% loan-to-value ratio. But it also helps to reduce your overall exposure.

3. Always Seek to Add Value

Merely buying a property at market value and sitting on it, means your only source of growth is through inflation, or the automatic annual rent increases.

Throughout the period of your ownership, you need to think creatively. Simple things (like a cosmetic upgrade 12 months before a market rent review) could help you extract additional rental, when the review actually takes place.

If the property is reasonably large, you may have the opportunity to subdivide it into one or more smaller titles. This alone can add up to 10% to the value of the property, with minimal outlay on your part.

4. Property is Long Term

As you already know, I recommend a 4-year mandatory review of your Commercial property. However, that doesn’t necessarily mean that you should sell it.

The important thing is that you make a formal decision to retain ownership – based upon the remaining period of the lease, the current Commercial property market and where you are in the economic cycle.

Ideally, the plan is to hold the property for 10 years or more. And that will give you the opportunity to add value; plus you can also use it as collateral to periodically release equity, and acquire further Commercial properties.

5. Never Become Complacent

You need to realise that it only takes one mishap to go broke. Therefore, you should seek to fully protect your property that all times – constantly keeping an eye on the market, while you actively looking to add value.

And also, ensure you maintain your property in ready-to-sell condition.

6. Your Tenants are your Partners

Always be responsive to their requests – and make that clear to your managing agent as well.

Plus, it’s important for you to try and anticipate their needs – because that will create a more-responsive frame of mind, when rent-review time comes around.

Bottom Line: As you can see, none of this is exactly moon-landing stuff – it’s basically all just commonsense.

However, I can’t tell you how many would-be investors fail to observe these six Pillars; and end up with poorly performing Commercial properties as a result.

Anyway, if you’d like to explore this further … simply click on the eBook image on the right, to download this short report.

Where in the Cycle are the CBD Office Markets?

EVERY INVESTOR would like to be in a position to pick the top and bottom of each Cycle, when it comes to commercial property.

And if you had followed things closely during last century, you would know forecasting this used to be relatively straightforward  with all the various Office markets following a fairly predictable sequence, as shown below. [Read more…]

Capital City Office Markets Around Australia

AS I EXPLAIN to my Mentor group, there is a certain rule of thumb for Office market vacancies around Australia.

And it’s really quite simple: For an office market to be “in balance” you really need to have a vacancy rate of between 6% to 8%.

It’s a bit like the unemployment rate. You see … a 5% unemployment rate – effectively means FULL employment – because anything lower than this … is starting to put pressure on wages. [Read more…]

Previously Hidden Markets Are Starting to Emerge



A RECENT SURVEY conducted by CBRE has revealed growing investor demand for industrial property – at the expense of the retail sector.

This would appear to be mainly driven by the increasing need for warehouse space by online retailers – and in particular, Amazon. [Read more…]

The Manifesto of a Truly Motivated Investor

… 

LAST WEEK, I was in touch with a number of my current subscribers – simply to confirm whether they would like to take their interest in Commercial property to the next level.

This was not intended to involve my personal Mentor Group. Rather, it was an invitation for those of you who might not be quite ready to invest … but nonetheless, are serious about investing.

And more importantly, motivated to learn as much as possible – to ensure your success, when you feel you’re ready to invest in Commercial property. [Read more…]

Do You Understand Common Commercial Property Terms?

IT SURPRISES ME just how often I get asked to explain some of the more common terminology used with Commercial property.

For the experienced investor, this short article might seem a little ho-hum. Therefore, here is a link for you to download a rather comprehensive list of over 160 Common Terms Used by Commercial Property Investors.

[Read more…]

Why Do Politicians Pay Such Scant Regard to the Truth?


SURELY THE GENERAL PUBLIC aren’t that gullible? Maybe they are.

Everyone knows politicians tend to massage the truth to suit their purpose. However, it seams Bill Shorten is once again trying to mislead people – in much the same way as he did with the “Medi-scare” campaign, in the lead up to the last election. [Read more…]

Latest Information on the CBD Office Scene


LAST WEEK, the Property Council of Australia released its 6-monthly update on the national Office Market to January 2018. And a few interesting things emerged. [Read more…]

The Importance of Due Diligence When Buying Commercial Property


FIRSTLY, LET’S DEFINE what Due Diligence really means. And then, you need to understand when you should actually consider an in-depth Due Diligence study. [Read more…]

How the Economic Machine Really Works

.

MY BACKGROUND TRAINING is as an economist. And yet, trying to explain such things in an easy-to-understand way can often prove rather difficult.

Australia has been more fortunate than most countries emerging from the GFC. And yet, there seems to be a certain complacency regarding our economic well-being. [Read more…]