I am hearing about the residential market having almost run out of steam. I am considering switching some residential into commercial in a high usage/growth area. It would be useful to know where we are in the commercial cycle. Your valuable feedback on this subject would be appreciated.
Best regards,
One brick
I think the commercial market has moved in tandem with the residential market. I’ve noticed the yields in commercial market have fallen quite substantially. Before, 10% is the minimum. Most are now advertising around the 9% range, with lots around 7%. However this is for the Perth market. I am not familiar with the East Coast market.
Hi One brick
I subscribed to Gardner and Lang’s eBulletin and have found it good reading in relation to commerical property. They are biased towards CP but their discussions on the cycles are interesting.
Find them at http://www.gal.com.au
Look at their eBulletin specifically 2001-01.I have nothing to do with this site or gal but found it an interesting site.
Cheers
Josie[
]Hi Josie
I see a statement on their home page stating “You see, from mid-2003 to 2007, you’ll enter the tail end of an 18 year cycle in Commercial Property” I will get their news letter thanks for the lead.Trueblue I appreciate your comments on WA. I guess that the rentals have not been able to keep up with recent valuations. Does anyone have info on CP yields on the east coast?
Regards,
One brick
East coast CP has also been a victim of the current boom albeit without the frenzy in some pockets.
In the good old days, a rough rule of thumb was 5% for residential and 10% for commercial.
However yields are now down to 6%-7% in a lot of areas because of increased prices where the rent hasn’t kept up.
Quality property such as in Chapel St, South Yarra sells on yields of about 5%.
I think shop tops are always worth a second look because of the dual income streams available from the shop and the seperate residence.
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