One of Australia’s leading commercial property analysts has given five predictions about what we can expect from the sub-$2 million commercial market in the 2022-23 financial year.
Ray White Commercial Head of Research Vanessa Rader said, first, there would be a lot of buying activity from industrial owner-occupiers. “With vacancies remaining historically low, owner-occupiers will continue to actively compete for assets to give their businesses accommodation certainty,” she said.
Second, Ms Rader said interest rate rises would drive first-time buyers out of the market. “We saw a large increase in first-timers making their first foray into commercial real estate last year, seeking out higher-returning assets to residential while moving up the risk curve. With financing likely to be more difficult over the next year, the spread to yield will see these investors move back to other investment types,” she said.
Third, tenanted investment properties would remain popular in 2022-23, according to Ms Rader. “Over the last few years we have seen the growth in ‘set and forget’ assets transacting, as buyers look for long-term, secure income streams,” she said, adding that “these assets will remain attractive to private investors”.
Fourth, Ms Rader said vacant assets would represent a new opportunity for experienced investors wanting to capitalise on changing market conditions. “Assets which are vacant or could be repositioned will be of interest to investors willing to get their hands dirty albeit at the right price,” she said.
Finally, the trend of both investors and owner-occupiers buying medical assets would continue, Ms Rader forecast. “This has been a growth market off the back of not just pathology and general practice, thanks to COVID-19, but also specialist services such sports medicine, cosmetic surgery and natural health services. Furthermore assets such as aged care and childcare which offer heavy government subsidies will also remain attractive,” she said.
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