Insider Tips to Help You Discover How to Succeed with Commercial Property
Size-wise, as a proportion of Australia’s economy … Manufacturing and Mining contribute more or less the same output.
However, Mining’s investment spend is currently more than three times that being spent by the Manufacturing sector.
All the media attention has mainly been focused upon this disparity. But that doesn’t really tell you the complete story — as you can see from the first of these graphs. [Read more…]
LAST WEEK, I promised to reveal those key Consultants to whom I’d be prepared to entrust my own property deals. So, let’s progress a little further with that.
No doubt you will have experienced your share of problems, when it comes to arranging the finance for a recent purchase you may have finalised.
As you’re probably aware, most vendors are unwilling to enter into a contract in the current market, containing a “subject to finance” clause. Because it would simply tie up their Commercial property, without any certainty of a sale. [Read more…]
AS YOU know, Property Edge Australia is there to help you in identifying and negotiating the actual purchase of your next Commercial property.
However, you still require certain other key consultants, in order to make every deal really work for you.
And those consultants need to be thoroughly trustworthy.
As you can appreciate, I have had the opportunity to work with a quite number of consultants, over the past 40 years. And I’ve quietly put together a close team of those ones, who have really gone out of their way to look after my Clients’ best interests.
Over the next week or so, I will reveal to you who these Consultants actually are — in the vital areas of:
Anyway, let’s make a start on the first one today. [Read more…]
When you’re just starting out, your main aim is probably just trying to secure a worthwhile property.
However, to be truly successful, you actually do need to have a Master Plan.
And to help you, here are 6 Steps towards formulating one for yourself. [Read more…]
Yesterday, the Reserve Bank decided to hold the cash rate steady at 4.75%.
However, it also acknowledged that Australia’s underlying inflation rate will now be running at around 3% for the year — and that’s ignoring volatile items, like petrol and food price spikes.
Economists tend to agree that the high $A has effectively done much of the “heavy lifting” for the RBA.
But as these graphs show, the RBA will most likely be forced into a midyear rate rise. With at least one further rise likely, before the end of 2011.
Put simply: Increasing business confidence (confirmed by improved Business Credit figures) means more investment being undertaken by business … which will in turn will put pressure on wage rates.
So far, the RBA has displayed a bias towards pre-emptive action. And there is no reason to suggest it would suddenly change that approach. As such, many people have been left confused by yesterday’s decision.
However, astute Commercial property investors recognise the time to strike is when the “uninformed” are dithering … due to their lack of understanding.
Most investors fail to properly research the market and understand the relationship each sector (office, retail & industrial) has with the local economy, nearby competition and the marketplace itself.
Many investors fail to thoroughly analyze and research their chosen properties as far as the overall economics, calibre of the tenant and any related risks that may be involved.
Investing in Commercial property requires a reasonable degree of hands-on involvement. Some investors make the mistake of believing they can be absentee landlords. You at least need to be involved at a strategic level.
Negative gearing is fine. But you still need to start with sufficient equity, to ensure that your investment is not over-leveraged. Always keep some funds aside for unforeseen issues that may arise.
The ownership of Commercial property needs a basic understanding of things like … tenancy law, building construction, how to add value, recognising market trends and so on. All of these can be very easily addressed.
Some beginners tend to believe a cheap price means good value and a sound investment. Instead, you need to look behind what is being presented to discover the true underlying value.
To be a really successful Commercial investor, you need to build up a trusted team around you — to provide valuable input in the areas of …
After you’ve purchased your first property, you need to widen your perspective — both geographically, and across the various sectors of Commercial property. Never simply have all your eggs one basket.
Following the global financial crisis, the extent of trade imbalances has eased somewhat between Advanced Western economies and the Emerging Asian economies.
The gap between China’s huge current-account surpluses and America is out-of-control deficits may have temporarily narrowed. But the IMF believes the massive disparity will return, as world economic activity improves.
The ups and downs of exchange rates and capital movements are seen by the US and the Western economies as a method of ensuring a proper allocation of resources.
Whereas, it seems Asian countries view exchange rate movements as an annoying distraction from controlled expansion of their “home” economies. And amassing foreign currencies is seen as the best protection against a re-occurrence of the 1997 Asian financial crisis.
China’s stated goal of 7% growth over the next five years (plus its dependence upon coal, iron ore, LNG and nickel) will provide enormous economic upside for Australia.
On this basis, China’s contribution to global economic output will rival that of the European Union within five years; and even the US, within the next 10 years.
While Australia’s mining boom may help to create a “two-speed economy” … the flow-through benefits will be felt by everyone — to a greater or lesser extent.
Clearly, the growing mining (and mining-related) sector will need to be physically accommodated.
Similarly, the support services and businesses like … accountants, lawyers and the merchant bankers … will all need to engage more staff. And that means we’ll need to construct more office buildings to house them.
Bottom Line: Until we do that (which can take between 3 to 5 years), rentals for both CBD and suburban Office space will continue to escalate those capital cities where the vacancy rates currently sit at around 7%, or below.
Therefore, right now, that means you should be looking to snap up something in Melbourne, Sydney or Perth. And then, ride the current growth cycle through to 2018.
In several recent articles, we discussed the growing health of the CBD Office markets around Australia.
Melbourne still leads the other capital cities with a CBD vacancy rate of 6.2% at the end of March.
And according to Savills’ latest Office Spotlight, the number of whole floors within the city of Melbourne has fallen by some 35% — from 60 to 39 available floors, as at January 2011.
It seems that CBD tenants are scrambling to lock in larger areas, to allow for growth and avoid the expected huge rent increases over the next 5 to 7 years.
As a result, many mid-sized tenants are being pushed out into suburban locations. In turn, this is causing these vacancies to fall and rentals to rise.
As such, Melbourne’s suburban vacancy rate (at 5.8%) is now below that for the CBD.
And Colliers Research believes this could fall below 4% over the next 12 months — through a shortage of new space coming onto the market.
Likewise, Sydney and Brisbane have seen their suburban vacancy rates also decline. And net prime face rents in North Sydney are now up over $600 per sqm.
It would appear only Adelaide’s suburban Office leasing market has remained soft — despite several major sales putting some downward pressure on yields.
Bottom Line: Fundamentally, all the signs are there for continued growth in Commercial rentals and capital values over the next 5 to 7 years — despite the global backdrop creating hesitation for some investors, who are not part of the “Inner Circle”!
Yesterday, the Reserve Bank left the cash rate unchanged at 4.75%. And these graphs will help to explain their current dilemma.
For the time being, the RBA’s focus is upon “inflation excluding volatile items” — mainly because of the various natural disasters, both here and overseas. [Read more…]
Around Australia, Commercial clearance rates at auction are now about on par with Residential property — averaging at around 50%.
Victoria seems to be leading the way, with Commercial clearance rates for some types of property approaching 70%.
New South Wales is running about six months behind at? around 60%, with firming yields. And Queensland is probably a further 12 to 18 months away in its recovery. [Read more…]
With Australia having weathered the global financial crisis, we are now having to cope with the potential after-effects of:
Given all of these so-called “Black Swan” events occurring so close together, certain pundits appear to be jumping to the wrong conclusions.
They are ignoring the fundamentals; and simply encouraging a knee-jerk reaction — driven more by sentiment and (supposedly) an attempt to avoid risk.
Right now, many investment decisions are being based upon incomplete, and often incorrect, information. And this is also being inflamed by sensational headlines in the media.
Without question, the human pain and suffering in these disasters is beyond a full comprehension — whether it be in Japan, NZ, Libya, Queensland or Victoria.
However, history would suggest the adverse economic effects will be comparatively small and temporary.
In all these circumstances, there may be some short-term decline. But the subsequent rebuilding efforts tend to provide an economic boost, well beyond what would have otherwise occurred.
You only have to look at the Victorian bushfire tragedy of several years ago. As truly devastating as that was … the Victorian economy now leads the rest of Australia in so many areas — both economically and in its relative population growth, compared with other states.
With Japan, its $200 billion rebuilding program will consume an enormous volume of steel — and therefore, create huge demand for Australian iron ore and coking coal. Not to mention, the design and construction opportunities for Australian firms.
Bottom Line: Just step back, and view the fundamentals clearly.
While China remains an important influence, the recent disasters in New Zealand and Japan will also actually impact very favourably upon the Australian economy AND the Commercial property market.
Your competitive advantage will be found in buying Commercial property … while others seem to be frozen to the spot.
WITH EVERY NEGOTIATION, you always need to be thinking on your feet. And here are several simple Tips to help you do just that.
WHEN YOU EMBARK on your journey as a property investor, it can be overwhelming – with a flood of information and diverse opinions. To help simplify the process, here are five essential tips for new (and seasoned) investors.
IT DOES NOT MATTER whether you’re an investor or an owner-occupier, there are several important factors to consider when purchasing a commercial property to ensure you make the right choice.
In a previous article, I shared a handy App to assist you in shortlisting potential properties. If you haven’t already downloaded it, simply click on the HiReturn Filter over on the right, to install it on your tablet or mobile device.
THERE IS A BELIEF among many experts that a surge in the stock market typically precedes a recovery in the commercial property market by about six months. And the start of this year saw equity markets gaining some momentum.
I HAVE BEEN ASKED countless times about the secrets to a successful negotiation. And I want to share with you the key elements to help make your negotiations effective.
But first, just watch this short video to gain a quick understanding of these three essential elements that form the foundation of every negotiation.
If you’re new to investing, you might be wondering if it’s possible to manage your own commercial property. The short answer is “yes”, but only if you know what you’re doing.
It’s important to note that owning a commercial property comes with certain legal responsibilities, particularly when it comes to compliance with Essential Services requirements under current Building Regulations.
The current trends in the business have made it clear that office landlords have to cater to the needs and preferences of their tenants. Building owners and managers (who understand and meet these demands) will be able to command higher rents and reduce vacancy rates.
To expand on this, here are four key tips to help attract quality tenants.
