Thiink Record Low Yields & Your Investment Property
– Typical ‘investors’ seeking leased investments now competing with ‘owner occupiers’
– Record Low Yields achieved in the 4-5% Net range
– Investment grade stock at record lows
– Thiink Commercial in 2 months transacted $22,000,000 worth of investment sales
– Thiink Commercial transacts Norwest largest strata sale of $6,750,000 / 4.7% Net Yield
Investment properties are typically sold on their passing income, or yield ratio to purchase price.
The fundamentals of an investment sale have in some cases changed; with normal methods of valuation sometimes now less reliant. An extreme lack of available stock in the owner occupier market is now forcing buyers to consider leased properties for future occupation, even if the outstanding term is 3 years or more.
The true value of your property can no longer be relied upon with just passing income methodology, especially for a sale where a property has an existing lease of 2 years or less. Whilst the typical yield sought today is between 5-6% yields, rates as low as 4% have been recorded by occupier purchasers.
This has seen a downward compression of yields due to owner occupiers purchasing a leased investment for future occupancy. This category of buyer has less concern about level of passing income and consider income a mere bonus to help cover holding costs until they can take occupancy at the lease expiry.
This has seen owner occupiers creep into the ‘investment’ space driving yields to record lows across the commercial & industrial marketplace.