SMSF trustees should keep an eye on commercial property

The uptick in residential property prices should not deflect self-managed super funds trustees from considering long-term benefits offered by commercial property, according to the specialist commercial property lender Thinktank.

According to the firm’s chief executive, Jonathan Street, the falls in the residential property prices that took places over the last few years served as a good reminder for investors and SMSF trustees that investments in housing presented some risks.

At the same time, commercial property had a place in a balanced investment strategy.

“It’s worth remembering that even at these lower prices for residential housing, yields are typically far less than what the commercial sector consistently offers,” Street said.

VIEW ALL

View all

Thinktank also stressed that office property remained in strong demand, especially in Sydney and Melbourne.

“Although there has been a slight rise in vacancy rates in Melbourne, up from 3.2 per cent to 3.3 per cent, while in Sydney they fell from 4.1 per cent to 3.7 per cent as reported by the Property Council of Australia in their July Office Market Report, the outlook remains very positive, especially for Melbourne,” he said

Other capital cities were also displaying positive signs, with yields tightening in most locations even where the economic fundamentals, such as Perth and Brisbane which remained under some pressure.

“There’s a myriad of options to invest in the commercial space, whether it be AREITs [Australian real estate investment trusts], unlisted property trusts, property securities funds, property syndicates or mortgage funds such as our Income and high yield trusts,” Street said.

“Always invest with caution but the fundamentals and relative yield offered by commercial remain accommodative.”