Commercial property sales to hit $20 billion for third consecutive year

by AB16 Nov 2015
Commercial real estate sales in Australia are set to pass $20 billion for the third year in a row, a new report has claimed.

According to a recent report from the Commonwealth Bank, $19.5 billion worth of commercial real estate priced above $5 million had already traded during the calendar year by the end of September.

That figure is 8% below the sales seen in the same period last year, however it is well above the 10-year average of $15 billion. Total sales are expected to be close to $25 billion by the end of the 2015 calendar year.

A combination of the recent construction boom coupled with the stability of commercial real estate is driving the strong period of sales, according to the report.

“One reason for this overwhelming popularity is simply the amount of quality stock available for purchase, boosted by recent construction activity in all capital cities, with new tenants committed to long leases and the potential for depreciation benefits,” the report stated.

“Its stable investment performance is likely to continue attracting investors in a period of volatility in other financial markets.”

But while the report points to an increase in popularity for commercial real estate priced at $5 million or more, Angus Raine, chief executive of Raine & Horne Commercial, told Australian Broker's sister publication, Your Investment Property, that properties valued under that mark are also seeing lots of interest.

“We're seeing plenty of activity in industrial and retail markets priced below $5 million, with assets priced between $1 million and $3 million very popular with yield hungry, self-managed super funds,” Raine said.

“Low cash rates are also helping the smart money find its way into commercial real estate, which is producing some good sales results for vendors.”