Insider Tips to Help You Discover How to Succeed with Commercial Property
Most people seemed taken by surprise, when the RBA chose to raise the cash rate to 4.75% on Cup Day this week.
However, with Oaks Day being held yesterday, I thought today would be better timing for this post.
Price Pressures
However, with industry facing capacity constraints and the mining boom heading towards previous levels … inflation is poised to accelerate during the December quarter, as wages start to rise.
[Read more…]
In several recent postings, I have given you an overview of where Australia’s economy currently sits within the overall global scene.
The Worm Turns
The IMF has recently trimmed its overall global forecast — down to 4.2% from 4.3%, for 2011.
The emerging and developing economies are tipped to grow by 6.4% (with China’s growth being over 9%).
Whereas, the various advanced economies are expected to grow by a subdued 2.2%, on average.
However, any double-dip recession is considered most unlikely — as investment and domestic consumption has replaced the building up of inventories.
According to the IMF: “Investment in machinery and equipment is already showing strength in a number of advanced economies.”
Nonetheless, spending and investment in most advanced economies will be constrained by households replenishing their savings; and banks remaining reluctant to lend freely to businesses. Plus, the US housing market still languishes.
Overall, the lack of business investment (and therefore employment growth) will adversely impact on tax revenues. And thereby, make government debt reduction programs a slow process.
On all counts, Australia will continue to enjoy solid growth — relative to other advanced economies. And this will provide ongoing pressure for interest rates to rise, over the next three years.
All the more reason to lock in your interest rates long-term … for any Commercial property investments you intend to make.
On Wednesday, I put up this post about whether or not to fix your interest rate, when purchasing a Commercial property. Only to find there was a problem with streaming of the Video.
Hopefully, that’s now been resolved; and so let’s try Take 2.
The simple answer to the question of timing is … when most Investors are not giving it much thought.
Like right now!
Anyway, here’s a short Video to explain my logic for saying this. Hopefully, it will give you a “helicopter view” of where things will head, over the next 5 years. [Read more…]
The US Federal Reserve is concerned that consumption is still being underpinned by government funding.
And so, even though stimulus measures may be winding down … the Fed has decided to maintain interest rates at their historically low level.
It seems that households and businesses are preferring to repay debt, rather than spend to encourage investment and growth.
In Europe, there is still simply not enough trust between Banks to lend to one another. And that means credit is extremely tight. Right now, Central Banks are stepping in to lend to private banks, in an attempt to free up funds to boost economic activity.
China still remains the bright light with its growing demand for of the commodities Australia exports.
The IMF actually predicts that the Asian economy (which includes Australia) will be 50% larger within five years.
And it will then represent about a third of the world’s trading activity.
h2. The Implications for Commercial Property
Already, major Asian sovereign wealth funds and property trusts are starting to target Office towers within Australian capital cities.
In fact, foreign buyers have invested around $1.7 billion during the past 12 months — representing about 70% of the purchase is made.
While this won’t directly affect the smaller private buyer … it will force everyone to move down a price bracket ought to — looking for better value.
Therefore, as yields quickly firm at the upper levels … this will soon have a ripple effect down through more modestly priced Commercial investment property.
Couple this with rising rentals, as the supply of Office space starts to fall around Australia … and now would be the perfect time to position yourself, ready for the next growth cycle.
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.
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.
[Read more…]
With house prices solid or rising everywhere except in Sydney, household debt is now almost out of control.
In the late 1980s and early 1990s, you saw the highly-geared Business sector collapse as interest rates rose. But now, you’re finding it is households with the high levels of debt.
In 1990, households had (on average) borrowed only 65% of their disposable income. By 2005, that figure had rocketed to 155% of their annual disposable income. And today, it stands at nearly 170%.
[Read more…]
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But first, just watch this short video to gain a quick understanding of these three essential elements that form the foundation of every negotiation.
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