Sunday 31 January 2016

Buying a Property in Australia? A Quick Guideline


Investment in commercial rental properties in Australia brings easy and huge returns; however, there still are many who would have doubts. The question whether or not to invest or even rent commercial space is tricky for many investors. While some find it safer to invest in residential properties, those who are more into commercial properties find it easier and more profitable to invest in commercial properties. Yet there are some, we call them the smarter ones, will opt to analyse the two to decide on any one.

WHY BUY COMMERCIAL PROPERTY IN AUSTRALIA

Returns:
On an average, commercial property for renting in Australia can fetch as much as 8% to 12% of returns, says a report. To compare with, renting out a residential property it can bring a return of 3.6%.

Leases:
Commercial property for lease can fetch a tenancy of around 3-10 years, where as a residential property can take a turn every 6-12 months. It has also been noticed that tenants stay for longer periods if they would have invested some higher amount in customizing the property as per their requirements.

Outgoings:
Commercial space for rent can mean tad bit of ease for landlords since as per Australian norms, the outgoings like a council, water corporations, etc., are to be paid by the tenants. For residential properties, it is the landlords who have to, though.

Deposits
Commercial rental property in Australia more often than not demand low prices when to compare to residential properties, thus rendering it a small capital investment.

WHY NOT
Well, there are some risks too! Like what, you ask?

Economic conditions
This can be a major risk while investing in commercial real estate for lease or rent. It seems to be flourishing with a strong economy, vice versa when the economy’s not as strong. The demand occasionally comes down falling.

Time:
Generally, commercial rental property would attract long-term tenants. However, what bothers landlords of such properties is when the tenants leave, it takes too long a time to see the next set of tenants coming. And until the time the next tenants don’t take it on rent, landlords will have to pay the dues on their own.

New competition:
Coming up on a new commercial property to let will always mean a threat to the existing ones, which means the older players will need to expand or re-do their properties.

Dropped value
Commercial real estate for lease or rent is more or less correlated to the lease. The value of a commercial property in Australia is expected to fall if it is vacant or if the lease is on the verge of expiry. This, when we talk of residential properties, is not as fluctuating.

WHAT TO BUY!

 Well, the answer to this question after analyzing should ideally depend on your requirements and portfolio. Understand the risks, the initial investment. Do an in-depth market research, ongoing and upcoming market grading.

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