Commercial property continues to provide long-term benefits and remains a good option for SMSF investors, despite the recent recovery in residential property prices, according to a specialist commercial property lender.
Thinktank chief executive Jonathan Street said: “Falling residential property prices over the past couple of years has been a good reminder to investors and SMSF trustees that housing has its risks and that commercial property, in terms of yield, security and capital gain, has a place in a balanced investment strategy.
“It’s worth remembering that even at these lower prices for residential housing, yields are typically far less than what the commercial sector consistently offers.”
Street said office property remained in demand, citing the Property Council of Australia’s recent “Office Market Report”, which revealed vacancy rates remained low in Sydney (3.7 per cent) and Melbourne (3.3 per cent).
“In Melbourne, it’s estimated that the vacancy rate will remain below 5 per cent for the next five years and if this proves to be the case, then rents are likely to grow by 30 to 40 per cent over this period and values to rise by 25 per cent,” he added.
Demand in Melbourne extended beyond the central business district to the suburbs, where the current vacancy rate is estimated at 4.6 per cent, with commercial property in cities such as Perth and Brisbane also showing positive signs, he noted.
He also pointed to the “myriad of options” available to investors looking to invest in commercial property, including Australian real estate investment trusts, unlisted property trusts, property securities funds, property syndicates and mortgage funds.
“Always invest with caution, but the fundamentals and relative yield offered by commercial remain accommodative,” he said.''