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The
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Hear the latest weekly insights into the property market via podcast by Rich Harvey, CEO and founder of Propertybuyer.

 
Fri 24 May '24 with Rich Harvey Granny Flats: Boost Your Yields & Faster Mortgage Repayments
 
 
Fri 3 May '24 with Rich Harvey Unpacking the Northern Beaches with Incredible Agents
 
 
Fri 29 Mar '24 with Rich Harvey How to build a $7 Million Property Portfolio from scratch
 
 
Sat 16 Mar '24 with Rich Harvey Why Invest in Melbourne?
 
 
Mon 26 Feb '24 with Rich Harvey Sydney’s Inner West – Hotspots and Outlook for 2024
 
 
Mon 12 Feb '24 with Rich Harvey Decoding Sydney’s North Shore Market – Outlook and Opportunities.
 

 

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Office space the place to be in Sydney

August 26, 2015 / Written by Rich Harvey

 

By Rich Harvey, CEO, propertybuyer.com.au

When you're looking at property investment in Sydney, it's easy to get tied up in the residential market. It tends to dominate the headlines, especially once misguided talk of alleged property bubbles gets going. However, this overlooks one type of investment that can end up being very lucrative if you do it right: Buying commercial real estate.

House hunters looking for positive cashflow would do well to pay attention to this market, especially once you consider the demand that Sydney is currently experiencing.

CBD cash grab

The Property Council of Australia's Office Market Report shines a light on commercial activity across Australia, and at the moment the Sydney CBD is a real hot spot. Vacancy rates went from 7.4 per cent to 6.3 per cent over the first half of 2015, and net absorption reached a total of 60,405 square metres.

Is the sky the limit for new office spaces?Is the sky the limit for new office spaces?

Prime commercial real estate was the most popular acquisition, with vacancy rates in premium assets dropping from 7.2 per cent to 5.2 per cent.

"Sydney's economic momentum continues to fuel the market and is feeding into strong demand for office space," said NSW Executive Director for the council, Glenn Byres. Clearly, the demand for office space in the city makes investment in commercial property in Sydney an attractive option. But it has to be done right.

Find the right yields

A lot of people are chasing stable positive cashflow property at the moment, and looking at commercial investment to achieve this goal. It can be an excellent way forward, especially coupled with the use of SMSF property investment, but you have to be careful where you buy.

This heightened demand has actually compressed rental yields on commercial real estate in recent months. Areas where you could once see yields above 8 per cent are now returning figures of less than 6 per cent. This isn't going to change anytime soon either.

The pipeline for ongoing commercial development looks steady for the next 18 months, and if demand remains high then it's always going to be possible to see excellent cashflow out of this type of investment. However, the advice of a professional advocate and careful market research is going to be necessary if you want to avoid those compressed yields. You don't want to end up tying your money into a piece of Australian property that doesn't give you the returns you deserve.

The Propertybuyer
Podcast

 
Fri 24 May '24
with Rich Harvey
Granny Flats: Boost Your Yields & Faster Mortgage Repayments
 
 
Fri 3 May '24
with Rich Harvey
Unpacking the Northern Beaches with Incredible Agents
 
 
Fri 29 Mar '24
with Rich Harvey
How to build a $7 Million Property Portfolio from scratch
 
 
Sat 16 Mar '24
with Rich Harvey
Why Invest in Melbourne?
 
 
Mon 26 Feb '24
with Rich Harvey
Sydney’s Inner West – Hotspots and Outlook for 2024
 
 
Mon 12 Feb '24
with Rich Harvey
Decoding Sydney’s North Shore Market – Outlook and Opportunities.
 

 

Listen to many more
podcasts on our
Podcasts page.