Has Covid-19 Killed The Commercial Property Market?
One of the many effects that Covid-19 has had on the real estate market is that the demand for commercial property has slumped. Zoom meetings, faster internet speeds, and a country with a sizeable office-based workforce have enabled businesses to move their employees to work from home. The for Lease signs on Commercial Properties are popping up all over the place, so does this mean that commercial property for an investment is a no-no?
As is often said, where there is change, be it good or bad, there is often opportunity. While many businesses are taking advantage of the savings in their bottom line by being able to downsize their headquarters and overheads by letting their staff work from home.
Many experts are saying that this will be short-lived. Their reasoning is that while the Coronavirus rocked everyone’s world and we were sent home, we were all on our best behavior wanting to keep our employment in an uncertain time. This meant that productivity did not really take too much of a dip. As working from home becomes more the norm and we pull out of Covid-19, experts are predicting that productivity is going to plummet to lower levels than when big brother was watching in the office.
So pundits are predicting an eventual swing back to working in an office space, as businesses try and get their productivity back up, maybe not to pre Covid levels, but a swing back none the less. This may mean that now might be an excellent opportunity to take advantage of a buyers market where property supply is high and prices are on a downward trend.
The other upside of Commercial real estate is that the tenant pays all outgoings, and there is no stamp duty on a commercial property purchase in South Australia. With the added risk of a commercial property standing vacant, the rewards are higher too, with them generally returning a higher yield in rent than a residential property.
Before we all go out and purchase ourselves our first commercial investment, there is one last hurdle you will need to jump. That is getting the finance. If you are from Adelaide and need good mortgage brokers to help you navigate the finance landscape, Castle Mortgages are experts in this field, and we would love to have a chat with you, so call us today.
While the Coronavirus has negatively affected commercial property and has made lenders look at finance for these investments with a fine-tooth comb, they can still be good solid investments and still be financed with a strong application that is soundly put together. A good finance broker should be able to assist you here, and it is also a good idea to have a chat with your accountant and financial planner if you have one to assist you in looking if this is going to be a good investment and how it is going to affect your financial future. Always speak to an expert in their relevant fields. Lastly, do your due diligence on the property you are interested in and make sure the purchase makes financial sense.
Please note that this is a blog of my own opinions and does not constitute financial advice in any way. Everyone’s circumstances are different, and you should seek out professional advice from the relevant experts in a personal capacity. If you are looking for advice on debt structuring or assistance in applying for finance, Castle Mortgages in Adelaide are ready to help you.