Investors urged to buy commercial property

Diversifying portfolio pays off, says Adelaide broker

Investors urged to buy commercial property


By Jayden Fennell

It has been an interesting year for the commercial property market across the nation.

Following consecutive interest rate rises and falling residential property prices, commercial broker and director of Adelaide brokerage Finance Prospects, Jessica Arabia (pictured above), said there was still a lot of opportunities in the South Australian market.

“There are certainly deals to be had for the astute investor and there are more players in the market who are trying to diversify their investment portfolio,” Arabia said. “I have many clients who in the past have just invested in the residential space who are now looking at branching out into the world of commercial property which is an exciting trend.”

Arabia said COVID-19 affected the commercial property market as many people worked from home and abandoned their commercial workspaces for an unprecedented period of time.

“As a result, many people turned to renting out their commercial spaces,” she said.

“I am speaking to many clients now about the prospect of investing in commercial property and letting them know that it is not necessarily a scary option. The Adelaide market has gone from strength to strength this year, so by aligning yourself with a strong commercial broker who knows where to find good local opportunities can help you because vacancy rates are at an all-time low and listings do not hang around for long here.”

Arabia said her area of speciality was self-employed clients and SMEs who were using the economic challenge of the past few years as an opportunity to grow and diversify their portfolios.

“It is exciting seeing more business owners buy commercial property and move into the space rather than renting the space out.

“My clients can buy a space and pay the rent back to themselves and see the tax benefit. A good accountant can educate someone on the importance of this, so the client will financially be much better off. For example, I had a client who worked in transport and purchased a block of commercial vacant land and used it as a holding yard for their equipment and paid the rent back to themselves. Opportunities like this helps grow an investment portfolio.”

Arabia said many of her clients took advantage of financial repayment holidays during the pandemic as many businesses were unable to trade.

“These clients are now scrambling to illustrate income to service debt if they are looking to make another purchase. They might be able to diversify their portfolio, but have limited income to prove that they can,” she said.

“Moving these clients forward is challenging because they need to step back before stepping forward. Many people took their foot off the accelerator during the pandemic, which was a detriment to them now when trying to apply for finance. These payments got people through the unknown, but it was not a long-term solution, so it will take a while to wash out.”

Arabia said she had a positive forecast for the commercial market in Adelaide in 2023.

“I see more opportunities for first home buyers who are entering the market as it cools down from a prolonged peak bubble. For those who can’t get into the residential housing market, I believe they will look into commercial property opportunities as more people return to the office in the new year.”

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