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Now is the time to invest in commercial property
A veteran real estate analyst is urging investors to seize opportunities in commercial property, predicting a surge in values across various sectors.

CBRE's Head of Research, Sameer Chopra, believes it's an "amazing time to buy real estate" despite market uncertainties.

He said rapid population growth, high construction costs, and forecasts for significant interest rate cuts will provide a strong tailwind to the sector.

Mr Chopra points to Australia's recent population boom, with over one million new arrivals in three years, as a major catalyst for demand across all property types. This influx is expected to necessitate substantial commercial development, including logistics spaces, retail centres, offices, hotels, and hospitals.

"We are feeling this demand in the residential market, but it's going to spread its wings," Mr Chopra said.

The analyst highlights that construction costs have risen by 30 per cent, making it challenging to build new assets at current valuations. This dynamic is expected to increase the value of existing properties, particularly those near new infrastructure developments.

Mr Chopra predicts a significant easing cycle in interest rates, predicting between eight to ten cuts by 2026. This could lower the cash rate to between 1.85 and 2.35 per cent.

"We need to change the conversation from, 'Are they going to cut interest rates this year?' to 'How many interest rate cuts will there be in the cycle?'," he said.

While some experts consider Mr Chopra's interest rate forecast optimistic, there is agreement that commercial property investment opportunities exist for selective buyers.

Mr Chopra remains bullish on various commercial sectors, noting that CBD office visitation has rebounded to 75 per cent of pre-pandemic levels and expects return-to-office concerns to dissipate by next year.

In retail, Mr Chopra has turned positive following significant rent resets during the pandemic. He cites positive re-leasing spreads and low vacancy rates as encouraging signs for the sector.

The student accommodation market also presents significant growth potential, according to Mr Chopra.

He suggests the Australian market could expand tenfold before reaching the bed-to-student ratios seen in countries like the US and UK.

Disclaimer: This is general information only and is subject to change at any given time. Your complete financial situation must be assessed before any proposal or product is accepted. Australian credit licence number 384324. CRN 542340 ACN661378801

Six Key Factors to Consider When Choosing an Investment Property This Spring

With Spring selling season approaching, it's an excellent time for buyers to find an investment property. However, choosing the right investment property requires careful consideration of several factors.

1. Capital Growth Potential
Look at median sale prices in your target suburb.
Analyse price trends over the past few years and compare them to changes over the past 20+ years.
Consider future development plans that may boost property values.
2. Rental Demand and Yield
A property's income potential is crucial. Aim for a positively geared property where rental yield exceeds mortgage repayments.
Investigate rental demand, vacancy rates, median weekly rents, and growth rates.
3. Strategic Location
Prioritize properties near public transport, schools, shops, and amenities.
Safe neighborhoods with positive growth indicators are ideal.
Monitor upcoming infrastructure projects or developments.
4. Property Type
Consider the target demographic of the area.
Houses often offer higher capital growth, while apartments have lower entry costs but may include strata fees.
Match the property type to the location and target tenant demographic.
5. Age and Condition of the Property
Newer properties may require less maintenance but offer lower depreciation benefits.
Older properties might need renovations but could have character appeal.
Always conduct professional building and pest inspections.
6. Property Features
Think like a potential homeowner: practical layouts, natural light, ventilation, extra bathrooms, and parking are key.
Features like home office space or modern appliances can make a property more attractive.
By keeping these factors in mind, you'll be better positioned to choose a profitable investment property this Spring.
Disclaimer: This is general information only and is subject to change at any given time. Your complete financial situation must be assessed before any proposal or product is accepted. Australian credit licence number 384324. CRN 542340 ACN661378801.

Maintaining a strong business credit score

We often think about our personal credit score, but business owners often forget that a business credit score is also important.

Here are some tips to help improve your business credit score:

Pay bills on time – Timely payment of bills is essential. Late payments can negatively impact your credit score. Set up reminders or automate payments to ensure you never miss a due date.

Monitor your credit reports – Regularly check your credit reports for accuracy. Errors can hurt your score, so dispute any inaccuracies promptly with the credit bureau.

Manage your debt wisely – Keep your debt levels in check. Avoid over-extending credit and aim to reduce outstanding balances. A high debt-to-credit ratio can lower your score.

Build positive credit history – Establish credit with vendors and lenders who report to credit bureaus. Timely payments on these accounts build a positive credit history.

Maintain a healthy credit mix – Use a variety of credit types, such as loans, credit cards, and trade credit. A diverse credit mix can positively influence your score.

Keep old accounts open – Older accounts contribute to a longer credit history, which can enhance your score. Avoid closing old accounts unless necessary.

Disclaimer: This is general information only and is subject to change at any given time. Your complete financial situation must be assessed before any proposal or product is accepted. Australian credit licence number 384324. CRN 542340 ACN661378801.

Industrial property becomes a prime asset
Demand for industrial property remains at record high levels with institutional investors, however, residential assets are also quietly gaining steam. According to Ray White, industrial property has quickly become the new “prime asset”, as demand for office and retail has fallen in recent years.

Ray White said the industrial sector is currently experiencing limited supply and high demand—particularly as the population grows—leading to values rising. “High demand for institutional-grade industrial assets resulted in significant tightening in investment yields from eight-plus per cent 10 years ago to circa four per cent during 2022,” Ray White said.

They said the strong gains in rents over the past five years were critical in boosting valuations and enhancing the asset class’s perception as a prime asset. “While demand has not dissipated, and limited new supply is keeping occupancy elevated, investment yields have turned a corner in 2023 and 2024 rising in line with increased bond rates and re-rating of the risk profile of these assets,” they said.

“Despite capitalisation rates increasing, the demand and supply profile for industrial is anticipated to keep rates tight, particularly given limited industrial land availability and planning constraints during a time when population and consumption levels are tipped to increase.”

Ray White said the recent increases in rents and values saw unit capitalisation rates overtake industrial, achieving 4.6 per cent in early 2023 when industrial yields averaged 4.2 per cent.

“Industrial yields since this time have increased due to a reduction in capital values, while residential yields have increased off the back of strong income gains during a time of robust capital growth, yet remaining within the long-term band of between 3.6 per cent and 5.2 per cent seen during the last 20 years,” they said.

“These long-term, secure trends in income growth across the residential market, coupled with strong capital gains are now in full view of institutional investors.” Ray White said the reduction in industrial yields over the last five years does make some industrial assets unfeasible.

“Despite this, industrial assets do have similar fundamentals to residential—including constrained land, limited supply, and increasing demand—therefore the outlook for growth is greater than many other commercial alternatives,” they said.

“Institutional investors will continue to seek out strong returning industrial assets which factor in risk appropriately, however, demand will continue to turn a corner for a new era of residential property. making beds and sheds the most sought-after assets for years to come across Australia.”
Disclaimer: This is general information only and is subject to change at any given time. Your complete financial situation must be assessed before any proposal or product is accepted. Australian credit licence number 384324. CRN 542340 ACN661378801