Property

Commercial Property Set for Further Growth in 2022

After a strong 12 months, industrial property is set to see further upside according to a leading valuer.

Nick Barlow, valuer from Suburbanite says industrial real estate will continue to be the standout performer in the commercial sector well into 2022.

 

Mr Barlow believes that with the 2021 lockdowns, landlords were faced with difficult arrangements and many tenants struggled to keep their businesses afloat. He says last year there was huge pressure on industrial land availability which increased growth and put further downward pressure on yields. However, while industrial property will likely again be the standout performer in the commercial sector, growth rates will likely continue to fall as yields are already compressed.

Commercial Property Set for Further Growth in 2022

Businesses classified as essential services are also likely to be the most in-demand tenant for commercial investors in a trend Mr Barlow believes will be in place for a number of years. He says essential services tenants such as medical, food and beverage, fuel and childcare have been standouts and that this positive movement is expected to continue.

However, yields have continued to compress as landlords seek security and a return that is still better than the banks can provide.

In terms of businesses that will struggle in 2022, Mr Barlow feels it’s still going to be a difficult time for CBD offices and retail, with many people choosing to continue working from home. This is contrary to local retail which is actually benefitting from local shopping and the working from home phenomenon.

 

The shift towards regional areas might also finally slow down this year, according to Mr Barlow.

Small regional areas that enjoyed an influx of local travellers during COVID will see visitors returning to normalised levels throughout the year which will impact these markets accordingly, he says.

In particular, serviced apartments and Airbnb’s will also struggle throughout 2022 as they begin to feel the pinch of last year’s downtime and last-minute cancellations.

 

Mr Barlow believes as conditions steady, better-located properties will continue to be sought after and those in secondary locations – which have done well during favourable conditions – are usually the first ones to feel the pinch when some of the heat comes out of the market.

 

Nick Barlow’s top pick for 2022 is Brisbane – it has better value than Sydney and Melbourne with activity ramping up due to the Olympics and continued interstate migration.

By |February 5, 2022|Categories: Property|Tags: , |0 Comments

Investment Property Red Flags

Investment Property Red FlagsWhile we all know that property prices have risen steadily in Australia for many decades, there is a big difference between the top-performing properties and those that have struggled. While the suburb and area are important factors in property selection, many investors fail to identify some of the red flags that might weigh on a property’s potential for growth.

These are some of the most common red flags to look out for:

Hidden Costs

While most investors will pay close attention to the asking price of a potential property, many miss some of the hidden costs. While building and pest issues are usually addressed, there are other hidden expenses that it is important to look for.

If you’re looking at buying an apartment or unit, the costs that come with a strata complex can be very high. In most cases, you will be required to pay strata fees, which are typically higher in newer buildings that offer facilities such as gyms and pools.

Similarly, strata companies generally put money towards things such as sinking funds or even have special levies in place to pay for large capital works. Older buildings can experience a range of expenses relating to maintenance, upgrades, or restoration. Be sure to get a copy of the minutes from the past few strata meetings to see what the board has in mind for expenses going forward before buying a strata-titled property.

Whereas if you own a house or even a block of land, councils can require ratepayers to contribute additional levies for projects in the area. This has the potential to hurt your investment as you not only have to pay the costs, but you’ll also have trouble selling the property until those expenses have been met.

Public Housing

While we all know that suburbs grow at different rates, it’s important to take into consideration things like public housing in the area. If there is a lot of public housing on a certain street, it’s likely that the entire block will be negatively impacted in terms of possible growth.

A Long Listing

If a property has been on the market for a long time, there is likely a reason for this. It could just be that the vendor has unrealistic expectations. However, in certain circumstances, there might be a more serious issue with the property.

This doesn’t necessarily rule the property out; however, if the vendor is unwilling to negotiate, you are well within your rights to walk away. On the other hand, it is important to remember, that just because a property is reasonably priced, doesn’t always mean it’s good value.

Incorrect Listings

While sales agents might be good at selling properties, they are not always property experts. This is often the case when it comes to things like the development potential of property. These days, if you can subdivide a property, it will likely be marketed as having that potential.

A property with development potential will often be priced higher than a comparable property that can’t be subdivided. The issue with these properties is that not all sales agents are experts at property development. Just because an area has been rezoned to encourage development doesn’t necessarily mean that every property will be a viable one.

It is always best to do your own due diligence on a property before making an offer. Or, at the very least, include in your offer some key clauses that protect you.

By |August 17, 2021|Categories: Finance, Property|Tags: , |0 Comments

4 Negotiation Tips When Buying a Property

Most people will only ever buy one or two homes over the course of their lives, which means you don’t always get much practice at the skills of negotiation. When you are buying a home, you will often find yourself dealing with a sales agent who is a professional negotiator.

Here are some ways you can improve your position when the time comes to negotiate.

Substantiate your Offer

Most sales agents and valuers will price a property based on the method known as comparable sales. What this means is that they will use similar types of properties that have sold recently as a gauge to value your property or the one you’re interested in buying.

The good thing is that you can do this same research ahead of time to get a clear understanding of what a property is worth, and you can take this evidence to the sales agent when the time comes to make an offer or negotiate.

Look at similar properties, in terms of age and land component in the same suburb, that have sold in the past six months. This will give you a good understanding of what the property is realistically worth and will help dramatically with your negotiation.

Get Pre-Approved

One of the most important aspects of buying a property is knowing not just what you can spend but how much you can borrow.

Getting a pre-approval with the help of a mortgage broker will not only give you clarity around what that number is but can also be used as a negotiating tool.

If you really want a property, but you have reached your ceiling, tell that to the sales agent. If they have no competing offers, they will likely communicate this to the vendor to broker a deal.

Understand the Seller’s Motivations

Arguably, the most important part of a negotiation is knowing why the vendor is selling. You should do everything you can to find out why they are selling, including questioning the sales agent. The more information you have, the stronger your position will be.

If a vendor is unwilling to negotiate on price, perhaps you can get more favourable terms or vice versa. If a seller needs to sell quickly for personal reasons, a low offer with short settlement terms can be very appealing.

Use your Building and Pest Inspection Report

It’s important to understand that the offer you submit to a vendor is not finalised until the terms are also met.

If you make an offer subject to a building and pest inspection and it comes back less than satisfactorily, that doesn’t mean you have to walk away. In fact, you’re well within your rights to go back and negotiate a lower purchase price, factoring in any repairs that are required and the inconvenience.

By |August 6, 2021|Categories: Property|Tags: |0 Comments
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