Investors look to direct property for reliable income
Investing in property is not new to Australian investors. Residential property is something we know and trust and has provided solid returns for many investors. Non-residential property, on the other hand, is less familiar to the average investor, largely because it has been out of reach for smaller investors. But this is changing and it’s well worth looking at the options.
The concept of investing in residential houses and apartments is well understood by most investors and is easily accessed and, in most cases, can be sold in a reasonable timeframe. In Australia, a long run of capital growth in the residential sector has strengthened its appeal, particularly for self managed super funds and individual investors.
Non-residential property such as shopping centres, industrial warehouses and office towers was until recently the sole domain of large super funds and institutional investors.
But commercial property is now becoming more accessible to smaller investors through managed property funds and syndicates. This has broadened the property investment options for individuals and SMSFs and opens up some good opportunities, particularly in the current low interest rate environment.
Why invest in Australian property?
The major categories of commercial direct property include:
These property categories have varying characteristics but there are a number of advantages for investors common to them all, including:
The major attraction of Australian property for investors is the stability of income it provides. Australian commercial property also has a solid track record when compared to the rest of the world, as can be seen in the chart below, which shows the returns from Australian commercial property compared to those from global property over the 10 years to 30 June 2014. While the capital growth component of the income varied, income from rent was very consistent over the 10 years.