Raine and Horne Commercial

INSIGHTS SPRING 2018 | 30 NSW | Southern NSW Craig Tait of Commercial Wagga Wagga says yields are 7.0-7.5% for retail assets, 8.0% for office space and as high as 8.5% on industrial property. These yields, and overall property values, are expected to remain stable for the remainder of 2018. SMSFs are active in the region, typically in the sub-$800,000 market, and with a preference for yields of 8.0-9.0%. According to Craig, low interest rates are a key driver of the market coupled with improving economic conditions, and a greater willingness among owners to negotiate on price following periods of vacancy. Craig adds, “Investors have been seeking higher returns in general, they are risk adverse and prefer fully tenanted properties with secure lease covenants. The banks have tightened on their lending and this has affected the capacity for some investors to borrow against commercial property, particularly new developments. Owner occupiers are still present in the market, but they are only willing to purchase property that really suits their requirements. Many are opting to build, even though the cost can be considerably higher than purchasing an established property.” In the current market, Craig says industrial assets are a good choice. “The light industrial sector is growing at a steady pace and secure tenants are available. Owners have achieved good increases in capital value, representing an excellent return on investment.” Wagga Wagga “ Low interest rates are a key driver of the market coupled with improving economic conditions, and a greater willingness among owners to negotiate on price following periods of vacancy. ”