Commercial Real Estate Investing in 2018
With strong market conditions and finite inventory in 2018, the search for high quality and secure commercial property investments, with good long-term prospects, can be challenging. While there remains value in the current market, a keen eye, skilled research, sound investment strategy and expert asset selection are required for the best chance of success. Here are some insights from the team at Peak Equities.
Don’t be blinded by the appeal of inner city projects
Many Real Estate investors focus their attention on same-city Real Estate opportunities, assets they can see, drive past or visit with ease. It is worth keeping in mind however, that proximity can limit one’s perspective, reduce the range of available opportunities and ultimately make a sound investment decision more difficult. Melbourne and Sydney Commercial Real Estate markets have been strong for some time with yields as low as 3% being achieved by vendors. Accordingly, it is prudent to consider alternative regions with strong demographic trends, robust growth or centres with multiple economic drivers before an investment decision is made.
Understand the value of secure tenancies
Buying commercial Real Estate for investment purposes requires consideration of the ‘entire story’. The strength and reliability of an asset’s income stream is the major driver of an investment grade assets value. In pursuit of value creation and preservation, getting to know sitting tenants, taking an active interest in their business and supporting their success where possible are all significant areas where value can be added to the relationship and by extension, the asset. Additionally, based on an investor’s expected holding period, the longer WALE (weighted average lease expiry) that can be achieved at the point you intend to sell the asset, the more valuable the income stream will be considered.
Ongoing repairs, maintenance and capital improvements are critical
For preservation of equity, sustainability of income, tenant satisfaction and ultimately the saleability of the asset, investment decisions should include consideration of, and comprehensive planning for capital expenditure requirements. This is especially pertinent in the context of new constructions coming to market and in the planning stages which are often accompanied by significant incentives for tenants prepared to move.
Seek support from experts
Wherever possible, learn and benefit from the experience of professionals. It is always recommended to seek the advice of a licensed Financial Planner or Advisor before making an investment decision. It is also recommended to consult an experienced accountant as part of the process. Professionals of this kind can assist with finance, structuring, gearing, tax, risk management and investment decisions. Post purchase; diligent financial management, budgeting, reporting as well as compliance with all relevant fire safety, mechanical, OH&S and building codes are also critical to being successful in this space. With a proven track record expertise in these areas, Peak Equities offers confidence and peace of mind for those looking for a passive and secure investment.
Off-market opportunities can be found through property syndicators
Before deciding how to structure and manage your commercial Real Estate investment, you are invited to speak to the team at Peak Equities. As commercial property syndicator and investment specialist, Peak Equities not only offers participation in passive investments not usually available to private investors, but also often gains access to off-market deals and high-level opportunities.