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By: Kate Miller
Banks are starting to show more confidence in approving loans for commercial property purchases.
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Carlo Abate, national business and commercial manager at Loan Market, said yesterday that stricter commercial lending policies implemented as a result of the global financial crisis, were starting to lift, resulting in an observed revival in commercial enquiries.
“There’s a lot more activity in commercial lending after a long period of hibernation,” he said.
Mr Abate said Loan Market had experienced an increase in business/commercial lending enquiries of more than 400 per cent in June, compared to June last year.
“Banks are still cautious, but they will lend to the right type of client with a good proposition,” he said.
“With growing confidence in the economy, they are happy to lend money again to people with a sound commercial property investment proposal and with a solid financial history.”
According to Mr Abate there had been an increase in demand for commercial loans and prospective investors were showing interest in purchasing good quality office, industrial and retail premises priced from $300,000 upwards.
”These sorts of properties can offer tremendous long term yields, especially if there is an established government or national corporate tenant in place,” he said.
Mr Abate said a lot of investors saw advantages in commercial property over residential units and houses.
“Commercial property can often offer much better returns for investors than residential property and the tenants are usually on long term leases of three years or more,” he said.
“The yields can start at around six per cent, which is double what you would expect from a residential investment unit. Tenants also pay most of the outgoings such as council rates and maintenance.”
