Australian commercial property market notches up FY gains of up to 30%

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December, 2017 by

Raine & Horne Commercial with the help of Australian radio legend Ray Hadley, has launched the latest edition of Commercial Insights, a comprehensive look at how commercial property markets are faring across the nation. 

Commercial Insights describes the three main factors driving commercial property: low interest rates, infrastructure projects, and a tightening supply of commercial assets.

Low commercial lending rates

Angus Raine, Executive Chairman of Raine and Horne Group, says, “Low interest rates are giving small- to medium-sized businesses a real opportunity to own their premises and enjoy security of tenure. As the asset is often held by the proprietor’s self-managed super fund, businesses can benefit from off-balance sheet financing while fund trustees have greater control of yields on their retirement savings.”

The positive impact of infrastructure

Angus explains, “The impact of infrastructure on the commercial property market is not just significant, it can also be surprisingly far-reaching. Raine & Horne Commercial Erina (Central Coast NSW), for instance, is receiving enquiries from investors as far away as Western Sydney, who are hoping to capitalise on the NorthConnex project linking the M1 to the M2 in Sydney.”

Tight supply of stock

In state capitals such as Sydney, strong returns on residential property have seen several commercial assets earmarked for redevelopment as residential dwellings. This trend is especially notable in Sydney’s inner west and south, where values are being driven higher. As a guide, Raine & Horne Commercial South Sydney/Marrickville recently managed the sale of 401-405 Illawarra Road, Marrickville, achieving a sale at auction for $350,000 above the reserve price.

FY2017 capital growth of up to 30% 

Commercial property is delivering varying gains around the country, and Sydney is recording particularly buoyant conditions. Angus said, “Commercial values in North Sydney are expected to rise by 15.0% for FY2017. Commercial assets on Sydney’s Northern Beaches could see an uptick in value of as much as 30.0% for FY2017.”

To download a copy of Raine & Horne Commercial’s latest property market report, visit http://www.imags.com.au/rh_commercial_insights/

Foreign buyers and businesses seek regional commercial opportunities

Foreign buyers and businesses seek regional commercial opportunities

December, 2017 by

The latest issue of Commercial Insights found that regional commercial markets around Australia are enjoying a purple patch due to a combination of price affordability and decent yields.

Michael Parisi of Commercial Gold Coast says yields are ranging from 5.0% on retail assets to 8.0% for office and industrial properties. He believes these yields will remain stable for the remainder of 2017. Gold Coast vacancy rates vary according to location but broadly, range from as low as 5.0% for retail and industrial assets to 10.0% for office properties.

Foreign investors are showing interest in the Gold Coast, accounting for between 25% and 30% of property sales, typically in the $2-20 million price range. Self-managed super funds are also active buyers though with a focus on the sub-$2 million market and a preference for retail strip assets.

Nick Koenig of Commercial Toowoomba says yields on retail and office assets are currently in the order of 7.0-8.0% rising to 8.0-8.5% for office assets. According to Nick, “Generally there is an oversupply of commercial and retail space, and this has affected lease pricing. Landlords are offering generous incentives, and this makes now a great time for businesses to relocate to Toowoomba and the Darling Downs or Surat Basin regions. Some great lease deals are available.”

The region is benefiting from several infrastructure developments including the $1.45 billion Toowoomba Bypass and the $8.4 billion National Inland Rail Link/Interlink SEQ, which will lend support to the local economy and commercial property market.

In Southern NSW, “Commercial buyers are reasonably active. Properties with good tenants and long leases in place are selling at lower yields. A multi-tenanted bulky goods site situated near the Wagga Wagga CBD, with national tenants including The Good Guys and BCF recently sold for a 7.5% net yield,” said Phillip Thompson of Commercial Wagga.

In terms of which segment of the market holds good prospects, Phillip points to retail assets saying, “Retail has always been reasonably strong in Wagga Wagga, particularly in the main street surrounding the two central shopping centres. These properties demand a good rental and yields are reasonable. Good stock is tightly held and therefore limited in supply.”

To find out more about the state of play in many of Australia’s biggest regional population centres, download a copy of Raine & Horne Commercial’s latest property market report, visit http://www.imags.com.au/rh_commercial_insights/

Newcastle super auction scores booming hit

November, 2017 by

A private Sydney developer paying $1.75 million for a 2,000 square metre site in the heart of Nelson Bay was a highlight of Raine & Horne Commercial Newcastle’s Super Action held on September 14 at Fort Scratchley.

Auction coordinator Steve Dick, Director of Raine & Horne Commercial Newcastle, told the Newcastle Herald that six of the nine commercial properties on offer sold under the hammer and the event attracted more than 60 interested parties and 22 registered bidders, including several “big guns” from Sydney and Newcastle.

“Six of the properties sold under the hammer, a result that confirms the health of commercial real estate markets in Newcastle and the Hunter region,” said Steve. He said the market’s vigour was exemplified by the auction of a small shop at 207 Cessnock Road, Abermain, which sold for $335,000 to a Sydney investor.

Victorian retail selling on record low yields

November, 2017 by

Retail assets in Melbourne are selling on yields as low as 5.0%, sometimes as low as 3.0-4.0% if a quality long term tenant is in place, according to Jason Beveridge, Principal of Raine & Horne Commercial Victoria.

Industrial property and office assets are generating yields of around 6.0% – 6.50% depending on location. While these yields are expected to remain stable, Jason says they could rise if interest rates change. Vacancy rates in Melbourne are low – around 2.0-3.0%, contingent on stock levels. “Industrial vacancies will most likely remain tight as new construction is about 20% down on longer-term averages,” said Jason. “Of the new development activity, a significant amount is slated for Melbourne’s north, with the balance shared by the city’s eastern and western regions.”

Self-managed super funds (SMSFs) are a key driver of the market, typically in the sub-$500,000 range. A typical example of this is the recent sale of a small unit complex at 4, 5 Turbo Drive Bayswater for $285,000. This small warehouse comprised of 130 square metres with two car parks is in a good location, running off Canterbury Road. Jason says, “It was a cash purchase, and the investor quite rightly felt the asset was a better option than leaving money in the bank.”

Lack of stock contributes to record North Sydney sale

November, 2017 by

A significant shortage of stock is the central theme for commercial properties on Sydney’s Lower North Shore, according to Nick Moloney, Sales Director, Raine & Horne Commercial North Sydney.

“This is directly related to the large number of off-market transactions that have occurred in the last few months,” said Nick. “At the same time, the auction clearance rates for commercial real estate in Sydney were 72.3% compared to 68% for residential property. In other words, commercial clearance rates are 4.3% higher than residential, which is very unusual.”

These results underpin the message that demand is strong and the proof is in the pudding with Nick Moloney brokering some excellent recent sales. This includes the $8513/sqm rate achieved for Unit 604/83 Mount Street, a record for a commercial strata office in the North Sydney CBD. “We’re only getting good results where the vendor prices and markets the property correctly to ensure buyers attend auctions.”

Anthony Vulinovich named WA’s best commercial sales agent

November, 2017 by

Anthony Vulinovich, Director of Raine & Horne Commercial WA was recognised as WA’s leading commercial property sales agent at the 2017 REIWA Awards for Excellence announced recently in Perth.

“There are many hundreds of commercial sales agents in Western Australia, so this is a terrific win for Anthony and testament to his hard work and strategic commitment to selling commercial real estate over many years,” said Terry Menage, Director, Raine & Horne Commercial WA. “Anthony’s point of difference is that he has undertaken a great deal of pre-sale work to secure buyer interest on behalf of land developers and as far as possible, de-risking the land subdivision before development.

Mr Vulinovich’s strategic approach has been vindicated with his significant pre-sales to market large numbers of industrial lots within Northlink Industrial Estate at Wangara, Canning Vale’s Swan Brewery Estate Canning Vale and Tonkin Highway Industrial Estate in Bayswater. “We sold pre-title over $45 million worth of land in the Tonkin Highway Industrial Estate, Perth, which is the city’s latest inner metropolitan industrial opportunity,” said Mr Vulinovich.

Other significant sales in the last 12 months included a 35,500 square metre industrial site at 10 Craft Street, Canning Vale, which was purchased by Sigma Healthcare for $11.5 million. Raine & Horne Commercial WA also sold 9 Brewer Road, Canning Vale to St Vincent De Paul Society WA Inc. for $5.4 million.

Central Coast industrial is hot with Sydney buyers

September, 2017 by

In a sign of the times, two affordable industrial warehouses located at West Gosford on the Central Coast of NSW have been snapped up by Sydney buyers.

The first warehouse located at 5/13 Dell Road, West Gosford sold in less than 2 weeks for $450,000 to a Sydney businessman, who is seeking to expand his operation to the Central Coast. “There was so much demand for the warehouse that we contacted the owner of nearby 2/13 Dell Road, West Gosford, who sold his warehouse for $490,000 to a Sydney investor,” said Andrew Dunn, Commercial Sales & Leasing Executive, Raine & Horne Commercial Erina. The properties were sold by Andrew’s colleague Ben Purdue.

The industrial warehouse at 2/13 Dell Road, West Gosford last sold for $355,000 in 2013. “This is great growth for industrial property on the Central Coast,” said Andrew. “The dollar per square metre rate for leased space hasn’t moved much in 4 years. This result reflects the fact that the risk appetite of many buyers is lower, given the poor returns of other asset classes. The yield for 2/13 Dell Road is 6.28%, which is much better than cash in bank, noted Andrew.

Newcastle industrial vacancies fall to lowest levels in 4 years

September, 2017 by

The latest Raine & Horne Commercial Industrial Average Index has revealed industrial vacancies in the Newcastle region of NSW fell 1% between January and July 2017.

The Raine & Horne Commercial Industrial Average Index measures the vacancy rates of major industrial centres in Newcastle and the Lower Hunter, and was launched in 2011. The reduction in industrial vacancies is a result of the leasing, or sale, of 30,000 square metres of floor space since the beginning of 2017, noted Steve Dick, Director, Raine & Horne Commercial Newcastle, the architect of the index.

“The average has fallen to its lowest level since January 2013, just before the commodities market collapsed. Low industrial vacancy rates correlate to more industrial sector jobs in the region, which is good news for NSW’s second biggest city,” he said.

Industrial vacancies fell most significantly in Carrington, with the rate slashed from 15.3% in January to 3.8% in July. The other big improver was Mayfield West, where industrial vacancy rates dropped from 11.2% – 3.2%.

“The reduction in Mayfield West can be attributed to the leasing of some of the suburb’s biggest buildings, together with the occupation of space in several older buildings on Tourle Street near the old Sandvik Building. These vacancies have been filled with an assortment of tenants,” said Steve.

Raine & Horne Commercial WA is now the biggest industrial land selling agency in the west

September, 2017 by

Raine & Horne Commercial WA is now the biggest industrial land selling agency in Western Australia and it represents three active industrial estates in the inner Perth metropolitan area.

“These estates include the Swan Brewery Estate in Canning Vale, the Tonkin Highway Industrial Estate in Bayswater and the Northern Industrial Park in Wangara,” said Anthony Vulinovich, Director Raine & Horne Commercial WA.

“We have sold pre-title over $40 million of land in the Tonkin Highway Industrial Estate, Perth, which is the city’s latest inner metropolitan industrial opportunity,” said Anthony. “Land parcels range from 1,100 – 15,000 square metres and titles expected in Stage 1 in early 2018.

“The estate sales reflect the strength of Perth’s industrial base, the unique locations of the three estates and the quality of the product.”

Other significant sales in the last 12 months for Raine & Horne Commercial WA include a 35,500 square metre industrial site at 10 Craft Street, Canning Vale, which was purchased by Sigma Healthcare for $11.557 million. The firm also sold 9 Brewer Road, Canning Vale to St Vincent De Paul Society WA Inc. for $5.454 million.

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