Gold Coast: Is commercial property a good investment?

A huge crowd attended Ray White Surfers Paradise Group’s The Event auctions at RACV Royal Pines on January 23 where commercial property was hotly contested. Picture by Richard Gosling

COMMERCIAL property is in hot demand on the Gold Coast as investor buyers seek to versify their portfolios and chase better returns.

Steve Clark, managing director of estate agency Clark Property Partners, said diminishing returns in the residential market were pushing people to look for more lucrative alternatives as part of their long-term strategy.

REA data has revealed that warehouses are the new property type of choice, dominating a list of most-viewed commercial properties in 2021.

REA Data has revealed warehouses are the new property of choice, dominating a list of move-viewed commercial properties on the Gold Coast in 2021. 28 Greg Chappell Drive, Burleigh Heads was in the top 5 most viewed on the Glitter Strip.

Mr Clark said increased funding costs for banks could mean higher interest rates for residential property borrowers this year, despite the RBA keeping the official cash rate at a historic low of 0.1 per cent.

“The good news for investors is banks tend to look favourably on commercial property investments, especially if there is a strong leasing covenant in place,” he said.

“I’m seeing more first-time commercial property investors dipping their toe in the water and looking for commercial properties between $1 million and $3 million, particularly if it offers a strong yield,” he said.

The Vault 10 Logistics Place, Arundel was of the most-viewed commercial properties on the Gold Coast in 2021.

Many investors are abandoning residential property because of changes to the tenancy laws brought in last year by the State Government, which included the acceptance of pets.

One investor commented: “As a landlord I sold my properties on when the State Government forced us to accept pets. We have had houses ruined by pets, so it was just not worth it anymore. I presume many landlords have done the same. We have now moved to commercial buildings, no pet problems.”

REA data has revealed that warehouses are the new property type of choice, dominating a list of most-viewed commercial properties in 2021.

An industrial warehouse at 17A Ern Harley Dr, Burleigh Heads, took out the top spot.

Mark Eaves, of Black & Young Commercial Burleigh Heads, marketed the property which included 12 strata-titled factories.

17A Ern Harley Dr, Burleigh Heads dominated a list of most-viewed commercial properties on the Gold Coast in 2021.

“The advantage of an industrial/commercial property is the tenant pays your outgoings – your rates, water, body corporate and insurance,” he said. “You can sit back and get the benefits of the net rent and outgoings.”

However, like the residential sector, low commercial stock is increasing buyer competition.

“It’s very tight out there and it’s very competitive,” he said.

Ray White Surfers Paradise Group’s CEO Andrew Bell at The Event on January 23. Picture by Richard Gosling.

Several bidders fought it out for commercial sites on the Glitter Strip at Ray White Surfers Paradise Group’s auction bonanza The Event last week.

The smattering of commercial sites in the line-up attracted some of the most heated bidding.

A deceased estate, including two lots of 90sq m of retail space in the heart of Surfers Paradise caused a bidding battle, with buyers upping one another until a two-horse race to the end.

The hammer came down at $1.49 million.

1/25 Orchid Avenue, Surfers Paradise sold last month for $2.725 million.

A shop and retail block at 1/25 Orchid Avenue, Surfers Paradise, was also fought over vigour, with several bids placed before the hammer fell at $2.725 million.

Helen Tarrant, a commercial property agent and founder of buyer’s agency, Unikorn Commercial Property, said the commercial property market would remain strong in 2022 across the Gold Coast.

“Ordinary investors look for properties with a long five-year lease and no defects, so a way to secure the best deal is to buy a property that has a shorter lease and is potentially a bit more run down,” she said.

“If you then take the time and spend the money on capital works, you will actually increase that property’s value in a shorter amount of time, thus leading to capital growth and enabling you to expand into further properties, while your typical investor just has to sit on the one.”

Top 5 most-viewed Gold Coast commercial properties on realcommercial.com.au in 2021

17A Ern Harley Dr, Burleigh Heads

4 Wrights Place, Arundel

The Vault 10 Logistics Place, Arundel

28 Greg Chappell Drive, Burleigh Heads

3 Rina Court, Varsity Lakes