Federal Budget an Indirect Winner for Property Owners

Published : 2 June 2015

There was excellent news this month for those selling businesses or commercial land throughout Australia.

According to the latest NAB Australian Commercial Property Survey, things haven't been this good for four years!

However, it suggests the levels of confidence in the market do vary from state to state, with NSW and Victoria by far the most optimistic states for commercial property.

A further enticement for business buyers is the support given to small business owners in the recent Federal Budget.

Businesses turning over less than $2 million can claim 100% of the cost for pieces of equipment valued up to $20,000 each for as many items as they like, until June 2017.

Treasurer Joe Hockey said these tax breaks were about encouraging people to 'have a go', so it's likely a lot more potential buyers will now be flicking through the 'businesses for sale' section!

There continues to be debate, of course, on whether it is better to invest in commercial or residential property. Smart investors will consider both!

The average rental return for residential properties across Australia’s capital cities is 3.6% according to CoreLogic RP Data. In contrast, it’s not uncommon to get anywhere between 8% and 12% gross rental yield for commercial properties.

Commercial property leases tend to be longer term and, of course, the owner doesn't face as many outgoings as they would with a residential investment.

However, commercial properties are more sensitive to economic fluctuations, and it can take longer to find a tenant.

With today's attractive interest rate, and THAT Budget, it might be worth considering in both!