assets have gone through much change over the past 12 months, but post-election confidence meant commercial investments and alternative asset classes would be more popular once again, according to Ray White’s latest Between the Lines
“Once the hottest alternative investment asset, demand reduced as banking regulation made it difficult to obtain lending, resulting in an increase in days on market and some growth in investment yields,” said Ray White’s Head of Research Vanessa Rader.
“While volumes maintained a strong rate, the limited competition resulted in assets without strong occupancy or in sub-prime locations attracting higher yields; although quality establishments continued to achieve sub-five per cent yields.
“While volumes have been limited early in 2019, many buyers were in standby mode waiting on the outcome of the State and Federal election and its impact on the property market.
“Post-election, we’ve already seen APRA relax serviceability on home loans, which is likely to improve confidence surrounding the investment into commercial investments and alternative asset classes.
“With yields showing some uplift over the last year, we anticipate this may recover during the remainder of the year as sentiment shifts.
“The slowdown in development activity in this space will also subdue concerns around oversupply, with many projects notably in regional locations now more cautiously demand-led, keeping occupancy elevated.”
Ray White Commercial NSW Director Michael Ajaka said NSW’s strong population growth would ensure that childcare assets would remain at high occupancy.
“This heavily government subsidised income stream will continue to be attractive to private buyers, which is likely to result in downward pressure on yields,” Mr Ajaka said.
“We’ve seen a slowdown in development of new childcare centres over the past two years after a long, high supply period, in line with the Sydney housing boom.
“Currently there are 399 projects at various stages of planning throughout NSW, of which 78.2 per cent are located within the greater metropolitan Sydney area.
“There are 33 projects currently under construction with completion expected over the next 12 months, of which 24 are located within metropolitan Sydney in long-established suburbs, catering for growth in population in the more traditional, long-standing suburban locations.”