The Australian Prudential Regulation Authority (APRA) recently changed the way banks finance residential investment loans – no longer limited to a 10% growth cap each year. But with more people given access to investments, just how will this impact the commercial industry? 

The balance between investment and commercial property is likely to stay the same, with those who haven’t made up their mind about whether to buy residential or commercial likely to pick the former. 

“Those who invest in apartments and houses rarely dip their toes into commercial property – it’s never been available in the same way. Commercial investors tend to be professionals with medium-to-large portfolios, because there simply isn’t enough commercial stock to convince smaller investors to make the switch,” says CVA CEO, Charles Cini.

Having a smaller pool of investors means that commercial property is, naturally, a competitive space and always has been. The demand still exists – and is growing – so prices will continue to rise, and yields remain tight…fantastic news for sellers.

As a nation, we are accumulating more wealth, largely through superannuation, and this requires a home so the demand for quality commercial assets is rising. In addition, there has been a steady rise in investors taking an interest in the Australian market – local property prices are low by global standards.

CVA’s tip for smaller investors looking for high-yielding properties? Research outer-city suburbs.

“Commercial property yield currently ranges between 4.5-6% in the typical office/industrial assets – still a better deal than investing in cash. If you are aiming for the higher end of the yield range, you will find them in typical suburban buildings that are throughout metro Melbourne,” adds Charles. 

There is no doubt that property investments – both residential and commercial – remain a safer option that others, despite the new APRA changes. 

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