Commercial property investment in regional areas on the increase

Blog post courtesy of Peta Stewart Conveyancing

When it comes to a bargain, it isn’t necessarily that price tag that counts, it’s the value.

Small investments can turn big, if you know where to look. Currently the trend for small-time investors is in regional commercial properties is showing up as an indication of true value.

While entering the commercial property market is somewhat tricker than the residential side there is a growing interest in small commercial property investments among Australians, particularly those who are looking for a safe investment for their superannuation funds.

While there are a number of factors to consider when buying a commercial property, the best bet for entry-level investors could very well be a strata-titled property in regional NSW.

In regional areas of NSW it’s possible to purchase tenanted commercial buildings that have big brand value, longevity, such as Target, BWS, Telstra, Pizza Hut, or NAB for low cost and high return.

The sweet spot for investors is properties between the $1 million and $3 million mark.

A big brand central strip property, such as a NAB Bank Building can be purchased for as little as $1.5 million in Tahmoor, NSW, returning around $100,000 a year, compared to a similar returning investment in the city of Sydney costing $4 or even $5 million. If you are looking for an industrial property it can even be possible to enter into the commercial property market for as little as $500,000 in regional NSW locations.

Upcoming in Albury is the auction of a new BP service station, sitting between McDonalds and Bunnings, it is tenanted for 15 years (until 2032). A solid investment, for sure, with an expected sale price of $4 million when it goes to auction later this week. While most commercial properties do go to auction it is also common for them to be sold prior.

As well as a sturdy investment, regional commercial buildings come with more perks than city properties with ample car parking for staff and customers, larger land size, gardens and street presence, all with the high-quality tenants and long term rental that make commercial property in the city so worthwhile.

It makes these types of commercial properties hot buys for investors Australia wide looking to invest their superannuation funds or holding the investment until they are ready to tenant it themselves. While most long-term tenants are ready to stay on, usually with five-year leases with an added five-year option, the big blocks of land do also give investors the option of levelling and rebuilding a modern retail facility, or sub diving to multiple stores, either now or in the future.

Rural NSW townships are flourishing with property prices holding a steady increase over the past 18 months. Fast growing rural townships, such as Yass, Goulburn and surrounding areas are ripe picks with more and more people looking to make a tree change and jump to a country lifestyle with the ability to be in easy reach of Canberra and Sydney.

Economic strength is another factor that plays well for commercial property value in NSW. NSW towns are quickly increasing in interest for residential purchases. Interest in regional NSW property purchases tops the nation with all but two of the top ten most searched areas for rural properties being in NSW, with the exception of Mildura in Victoria coming in at #3 and McLaren Vale in South Australia coming in at #6.

Those looking for small farm or a rural property with sweeping views can do so at affordable prices thanks to recent Local Environment Plan changes that now allow subdivision of land down to as small as 40 hectares. That provides more flexibility for those looking to own and run a hobby farm or Bed and Breakfast.

The growing popularity also means these towns are able to sustain essential services including schools, medical facilities, aged care and banks that other rural areas may not have while still maintaining that rural feel, a single strip main street that places commercial properties in the spotlight for both local residents, visitors and those travelling the highway.

If you are thinking of entering into the commercial property market then it really pays to think outside the box and look off the Sydney map.