We all know the opportunity that exists when we invest our money wisely, and I’ve seen my fair share of investors in the real estate industry. The difference between a residential and a commercial investment however is significant so I’d like to take a few minutes to explain what the key ingredients are for buying and selling commercial development and accommodation sites – because that’s what I do!
My name is Diana Mitchell, and being a real estate salesperson that specialises in commercial development and accommodation sites, I have an extensive insight into how investors, both mum-and-dad investors and big corporations capitalise on these types of investments.
Firstly there are accommodation sites such as backpacker hostels and hotels, which are highly popular with mum-and-dad investors looking to put their superannuation into something tangible. These investors often purchase these types of properties to run the business themselves, but there are cases where the investor buys the site to have it looked after by a professional management company or on site manager.
Next there are the corporate investors which I’m seeing more often in the inner city radius of Brisbane lately. Companies, especially overseas companies are investing in accommodation sites that can house people arriving on working holiday visas. This strategy is becoming more and more popular, especially within the Asian market..
On the development front, whether it’s commercial land or an accommodation site, the most attractive features include the land potential, zoning and capital growth. Whilst investors generally look for an 8 to 10 per cent return on a property, this is not the most important part of the investment. The most important part of any investment is the future capital growth which from my experience, many people, including some accountants don’t always seem to fully understand. This is where it becomes vital that investors or would-be investors be educated or at the very least consult an expert in property investment. The ongoing return of an accommodation or commercial investment is of course something that needs to be considered, as with any development that is to take the place of an existing business, income is generally a necessary part of keeping the cost of holding the property reasonable whilst waiting for a development application to be approved, which can often take up to two years.
Lending on the investment front is down to about 60 to 65 per cent so raising the capital can take a while for investors. I’ve seen in recent times, the banks foreclosing on a number of commercial and accommodation sites, which has meant the availability has been good until now. As the liquidated stock dwindles though I’m finding that there is a shortage of sites for developers to choose from.
The most highly sought after areas for commercial development and accommodation sites include West End, Brisbane City, Fortitude Valley, Spring Hill, Wooloowin, Kedron, Bowen Hills and other suburbs within the 8 to 10km radius of the CBD. Each suburb is unique in that some have requirements to maintain the heritage style of the property, whilst others are completely open to modern and new buildings. Demographics and target markets change from suburb to suburb and of course the value and zoning of land changes with the area as well. These are all things to consider when researching the right type of accommodation site or commercial land investment for you or your company.
I am happy to share my knowledge of this specialised real estate market with you, and will gladly help you with your buying or selling requirements. If you’d like to have a confidential chat please don’t hesitate to call me on 0416 020 202 or visit our Harcourts Solutions office in Spring Hill (ph: 07 3839 5000).