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Australian commercial property values have followed house prices upwards, with growth in some areas last financial year of as much as 30 per cent.
According to the Spring 2017 Raine & Horne Commercial Insights report, commercial property values have benefited from low commercial lending rates, booming infrastructure investment (particularly in Sydney) and low stock volumes on the market.
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“Commercial values in North Sydney are expected to rise by 15.0 per cent for FY2017. Commercial assets on Sydney’s Northern Beaches could see an uptick in value of as much as 30.0 per cent for FY2017,” said Raine & Horne Group executive chairman Angus Raine.
Strong yields and low vacancy rates in other east coast metropolitan areas are also proving attractive to investors, both overseas and domestic.
“Raine & Horne Commercial Brisbane North, for instance, reports yields of up to 7.5 per cent for A-grade industrial assets,” Mr Raine said. “High-quality office/commercial property is generating yields between 7.0 per cent and 7.5 per cent.
“Vacancy rates in Melbourne can be as low as 2 per cent, and this is giving reassurance to investors looking for income-generating assets.”
One of the major factors of low supply, Mr Raine said, has been the boom in residential property in east coast markets, as commercial buildings and sites are rezoned for residential or mixed-purpose use.
“This is reducing the pool of commercial assets available, and restricting the development of new commercial projects. The end result is a noticeable tightening of the supply of commercial assets,” the executive chairman said.
[Related: 1 in 4 Choice brokers writing commercial]
