Lack of Construction Underpins
Demand for Office Space

Available Full CBD Office Floors are quickly vanishingThe Commercial property market is driven mainly by supply and demand — especially Offices.

And therefore, with …

  • falling vacancies,
  • positive net absorption and
  • few new projects in the pipeline …

… this means a looming shortage of Office space around Australia — with rentals poised to rise sharply. [Read more…]

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…]

Why Do Some Investors Fail at
Commercial Real Estate Investing?

 

Reason #1: Lack of Research

Doing your homework will ensure Commercial property success 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.

Reason #2: Poor Analysis

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.

Reason #3: Lack of Commitment

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.

Reason #4: Over Borrowing

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.

Reason #5: Lack of Understanding

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.

Reason #6: Price vs Value

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.

Reason #7: Over Estimating Your Skills

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 …

  • Analysis and due-diligence,
  • Negotiating the purchase,
  • Vetting the documentation,
  • Ongoing property management,
  • Determining the time to sell.

Reason #8: Lack of Diversity

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.


Space Shortage Looming?

Office Vacancy rates around Australia are falling — albeit faster in some capital cities, than others.

The chart below shows you where things currently stand.
[Read more…]

Your Baby-Boomer Opportunity!

Whenever you go through a major structural change within society or the economy … opportunities will always emerge.

But you’ll find that Baby Boomers won’t be retiring — well, not in the conventional sense. Most will leave their long-time employment, to establish some type of small consultancy business.

In the past, many well-known firms simply evolved as a result of one generation following the next into the family business.

Traditional Family Business

Traditional Family Business

Invariably, sons (and even daughters) left school to join their parent’s firm. It was a handy way to ensure easy succession; and stood Australia in good stead throughout the 1900s. [Read more…]

Your Opportunities Moving Forward?

There has been much written already about the global financial crisis.

But in layman’s terms, it occurred as a result of capital imbalances occurring throughout the world. And nowhere more so, than in America.

The principal cause can be found with the high levels of US debt-funded consumption. And in order to better understand this distortion, you might care to consider the following figures …
US Share [Read more…]

Biggest Economic Threat For Australia

It might surprise you to hear this, however …

h3. A Strong US Recovery

… would probably be the worst thing to happen for Australia in 2010.

If that occurs, the US Federal Reserve would be forced to quickly raise interest rates, from zero to around 3%. And that would cause the collapse in the Australian dollar from its current level of around US90c.

Up until now, Australia has been shielded from inflationary pressures, with a high dollar holding down the cost of imports.
[Read more…]

Your Handy Economic Clock

Over the years, you have probably seen various economic clocks explaining the different phases, and their relative timing.

Economic Clock

Economic Clock

Anyway, I came across this rather useful one the other day.

As you’ll see, it is actually a “Multi-asset Investment Clock” — in that you have all the sectors displayed together: Shares, Property, Resources and Interest rates.

Furthermore, if you click on it … you’ll see the clock confirms Australia is midway through its Recovery phase.

h3. And the timing for Commercial property? [Read more…]

State of the Commercial Market?

CBD Office Vacancies

CBD Office Vacancies


As you would expect, the financial turmoil worldwide has had a significant effect on most property markets. However, the effect has not been the same across the board.

The current state of the various CBD office markets is probably your best barometer of future activity for two reasons. First, the Property Council of Australia (PCA) conducts six-monthly surveys to establish the CBD vacancy rates right around Australia.
[Read more…]

Sentiment is Strong … Despite the Economy

Looking Up

Looking Up


These graphs are painting a very encouraging picture.

As you can see, the Westpac-Melbourne Institute consumer sentiment index increased strongly by 9.5% for June.

And that means it has now leapt by some 23% since May — the largest 2-month increase for over 30 years.

First-home buyers have also been active, accounting for nearly 30% of all loans during May.

And this overall level of confidence follows an increase in retail sales, for three months in a row.
[Read more…]

The “Fund Gap” Threatens …
Higher-Priced Commercial Property

Earlier this year, you read about a funding crisis pending for Property Trusts and Institutional buyers. And this is not helped by the RuddBank failing to materialise.

With a surge in the Share Market since March, several recent capital raisings have helped some of these larger property owners.

However, with the latest hiccup in Share Market confidence, you’re unlikely to see much more capital raised in this way.

Capital Gap

Capital Gap

As such, Quadrant Real Estate Advisors have concerns with the high debt levels for these owners of Investment-grade property.

As you can appreciate, the financiers are proving to be rather difficult.

Therefore, over the next two years, you could see a gap of up to $30 billion emerge, between properly valuations and what bank are prepared to fund.

But these problems seem to relate mostly to commercial properties worth more than $20 million.

Because, for properties less than $10 million … the market appears conservatively geared, and is experiencing strong demand — especially for properties in Melbourne, priced under $5 million.

So it is somewhat a two-tiered market … with a number of good opportunities starting to emerge.