Traditional wisdom dictates that any given property has one purpose: residential or commercial. A building is a home or a place of business. However, properties that are a combination of both – known as a mixed-use property – are beginning to gain momentum in the real estate market.
The most traditional type of mixed-use buildings have some sort of retail space on the first floor and a private residence above it. These were originally usually occupied by the same tenant – a shopkeeper or barber who lived above their shop – and are found around the world in the central business district of towns and cities. Alternatively, there are homes that have a basement that has been refitted as an office space. These tend to be farther away from CBDs and downtown areas.
Mixed-use properties don’t have to be limited to single-family homes, either. The “live, work, play” movement is gaining popularity, as are larger developments that feature gyms, grocery stores, playgrounds, and coffee shops alongside residential units.
Such properties are gaining traction already in Asia and have been performing well in places like Singapore, Hong Kong, and China. Now they are beginning to appear in Australia as well. Cities like Sydney are facing high population density and mixed-use developments allow for a more efficient use of the space that is available.
If you’re on the lookout for your next investment property, many experts are predicting that mixed-use developments could be a financially savvy venture that can yield strong returns.
One of the top benefits of investing in a mixed-use development is the dissipation of risk. In one property, you’ll have both residential and commercial tenants. Having two revenue streams in one property allows you to diversify your portfolio.
Another opportunity presented by mixed-use spaces is the ability to foster a sense of community that will appeal to residents and encourage them to stay with you for the long term. If you have a larger building with multiple commercial spaces, you can curate what businesses set up there to build a lifestyle that your tenants will find desirable. On-site daycare or a playground will help give families plenty of options for their children. High-end restaurants, a quality coffee shop, and on-site dry cleaners will make life more convenient to career-minded residents.
Beyond the retailers that you can bring in, providing a co-working space can make life easier for those who don’t necessarily go into an office but can’t or don’t want to work out of their homes. A space that offers large tables, plenty of outlets, and strong wireless internet will not only be a convenient option for residents, but charging a small monthly fee for use opens up a revenue stream with relatively low overhead. Plus, it can build a sense of community among users – another incentive to continue living in your building for the long term.
Across Australia and around the world, developers and investors are seeing the value in mixed-use developments. Young professionals are less likely to leave the convenience of a city residence for the suburbs, and it’s a market that should be catered to. But the potential residents aren’t limited to those in their 20s and 30s. One study found that around half of people in their 50s and older prefer to live in walkable communities and would rather avoid a long commute.
If you are interested in learning more about the benefits of investing in mixed-use property management, contact the team at Ray White Surfers Paradise today.