Commercial property is king, says Young Rich buyer’s agent

“All the capital city housing rental yields still have a ‘3’ of ‘4’ in front of them, and to us it doesn’t make a lot of sense to go in at a yield lower than the average home loan rate, unless you’re a cash buyer betting on capital growth.”

Mr O’Neill said many of the tenants in the type of commercial properties favoured by Rethink wanted to sign 15-year leases with annual increases linked to the consumer price index, delivering an income security that he said was still highly prized among mum-and-dad investors. “Australia has the tightest industrial market in the developed world – CBRE reckons the vacancy rate nationally is 0.6 per cent – and the rental growth has gone crazy,” he said.Industrial rents are up an average 24.9 per cent over the past 12 months, and though Mr O’Neill expected that growth rate to reduce over the next year, he expected it to remain elevated.

However, Mr O’Neill said a countercyclical case for guiding clients toward offices again would not arise until national CBD vacancy rates fell below 10 per cent from 14.3 per cent now.

Source: Real Estate Daily Report (realestatedailyreport.net)

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