Moving forward is a law that is universally applicable. We do not wish to be in the same place/ position we were in the past, regardless of our origins. Yearning for a better tomorrow, we are in continuous approval of ways to maximise our wealth and assets; that can guarantee a good return in terms of finances and prove to be rewarding shortly.
The commercial real estate market presents itself as a rich investment across major Australian cities such as Melbourne, whereby investors can strengthen their financial position. Investing in commercial real estate has been a means to catapult fortune for individuals/ groups for years, and only by accessing key drivers of this market can investors generate a strong real estate portfolio; a smart move.
Investing in commercial property in Melbourne entails a significant investment for all; medium-scale businesses or corporate businesses. If you enter the market through guess-working, your success is primarily short-lived, or your endeavour is doomed right from the start. You want to rely on facts and stats if you’re an investor.
Axis Property‘s research on the 2022 commercial real estate market offers investors some key points on why Melbourne’s commercial property market is rewarding and how one can secure a smart investment with minimum risks in the current market.
Myriad factors are known to impact the performance of a commercial real estate market inside a country; national economy, investment capacity of investors, interest rates, the population of a city, and supply and demand. If you are contemplating investing in commercial property, investing in a Melbourne-based commercial property is a smart move. Here’s why.
Population Density
In Melbourne, where population density is high compared to others, the commercial property yield is overwhelming. Higher population density translates into higher job opportunities and larger corporate areas. The number of potential customers also goes higher in places with larger populations; a burgeoning business always looks to add a working facility which increases the demand for commercial property in that area.
Immigration
Immigration has a direct effect on the real estate market in Melbourne. Victoria is a major attraction for immigrants entering Australia. Concentrated immigration in cities across Victoria stimulates demand for office spaces and industrial spaces creating demand for commercial property. The price of commercial property in Victoria goes high with increased demand for property. If you are listing your commercial property for sale in Victoria, you can expect better yields compared to places with fewer immigrants.
Low-Interest Rates
Interest rates between commercial banks in Australia have hit an all-time low from Jan 2018 to Jan 2022 with a 0.1% in cash rate (market interest rate for financial institutions). This record-low cash rate is expected to remain constant, and it is beneficial to investors. A low cash rate implies lower interest rates on commercial and residential loans. Less residential and commercial loans will create a net cash influx in the real estate property market.
According to CBRE’s 2022 market outlook, investment in commercial real estate property across Australia is likely to see a domestic capital investment of $68 billion from 2022 to 2024. The next three years can be a fruitful year for commercial real estate investors looking to invest in commercial property in Melbourne, Hampton, and other major cities.
Better Yields
Both residential and commercial properties are viable real estate investment options in Melbourne. The yield for commercial property across Australian capital cities is assuring, with commercial property subjected to generate 8% to 12% of total investment. When you invest in commercial properties, better yield is a certainty.
The commercial property market experienced a traumatic radio silence from 2019 to 2021 due to COVID restrictions. Work from home mandate saw the closure of office spaces creating a void in demand for commercial property across Australia. Australia is slowly recovering, and so is the commercial real estate of the country.
Unemployment is likely to reduce by 0.5 %, with GDP predicted to grow between 3.5 to 4.5% in 2022. With more hiring, businesses will be looking for more office spaces. Commercial real estate can see more work in the next two-three years, and considering this current market, your investment is unlikely to go sideways.
If you are an investor, you can get professional help in managing your commercial real estate for sale, lease, or rent in Melbourne with Axis Property. Their services extend to cities like Hampton, Bentleigh, Armadale, Collingwood, and several others.
