Have you considered investing in commercial real estate?

By Greg Bell

Plenty of people, at one point or another, make the decision to invest in property as part of their long-term financial planning. When you're putting away money for retirement, for example, it makes sense to invest in real estate – your holdings will likely appreciate in value over time, and even if they don't, you can make significant income from renting out your place to tenants.

Typically when people pursue this strategy, they first think to invest in residential properties such as houses and apartments. It's worth noting, however, that commercial real estate can be just as valuable. In fact, if you're able to buy an office and lease it to a reliable tenant for the long haul, it might even be an easier way to bring in steady cash.

What are the pros and cons of investing in commercial property in Australia rather than doing something else with your savings? This merits an in-depth discussion.

Commercial property has real value today

If you're considering buying commercial property in Surfers Paradise, or anywhere else in Australia really, there's both good news and bad to consider. The bad news first: Prices are high at the moment. According to The Australian, the cost of buying an industrial facility or office building have steadily risen in recent years, which has made it daunting for investors at home and abroad to buy real estate.

The good news is that if you are able to buy, you're likely to get a pretty good return on your money over the long haul. The Australian also reported that yields on Australian commercial property are higher than they are in other asset classes or in overseas markets. Buying an commercial building in Australia is one of the best financial decisions you can make.

This has been increasingly true over the last decade. There was a downturn in the value of commercial property almost 10 years ago, when the global financial crisis hit and prices for real estate fell by almost 30 per cent, but they have been steadily rising since then as the economy overall has strengthened.

Weighing risks against rewards in real estate investment

So when you invest in commercial real estate, how much money can you make, and how much do you risk losing? These are key questions to answer. Fortunately, commercial property offers a potentially big reward compared to other kinds of investments. On average, renting out an industrial facility will give you an 8 per cent ROI, versus only 5 per cent for a residential apartment building.

The challenge, though, lies in finding someone willing to lease your commercial property. This doesn't always happen overnight. Housing is always in high demand, and it's never hard to find someone willing to rent a flat; commercial tenants are often a little bit tougher to find. When you do find one, though, it's easier to keep them for five years or even more. Hence the risks are big and the rewards are too.

Getting some help with property management

One of the toughest parts of getting involved with office leasing on the Gold Coast is preparing for the challenges inherent in managing a property for the first time. Fortunately, at our Gold Coast Property Management Centre, we have a team of experts who are willing to help with that.

When you're a landlord, your property is a cherished asset, and you're committed to getting as big a return as possible on your investment. We have the wisdom and experience necessary to help you do that. Contact us today to find out more.

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