Investors set to spend more on commercial property

Investors spent A$492 billion on commercial property around the world in 2013 and it’s tipped to rise 11% this year.

The United States, London and Australia are key destinations for commercial property investors looking for diversification and higher yields.

And billionaire developer Lang Walker believes activity-based working and hot-desking will change the face of Australia’s commercial property market.

Those are just three of the takeouts from Knight Frank’s Wealth Report 2014, which looks at wealth and property from the perspective of the world’s richest people.

It surveyed almost 600 private bankers and wealth advisors, representing the views of more than 23,000 ultra high net worth individuals (UHNWIs) worth on average A$73m and in total about A$1.62 trillion.

The report found commercial property is in favour with the world’s wealthiest people, who plan to increase their investment in the sector this year.

Knight Frank Australia Head of Research Matt Whitby says investment yields in Australia “look comparatively high to investors from the US, Singapore or Hong Kong”.

“Also the motivation for buying here goes beyond just basic pricing to include portfolio diversification, securing long-term income streams and wealth preservation.

“So the investment market is defying the slowdown in the occupier market with sales volumes across the commercial sector far outstripping 2012 levels.”

Property developer Lang Walker owns Walker Corporation and is on the Wealth Report 2014 panel.

He says “more efficient use of office space” is likely to be a dominant trend in Australia.

Read more: The hot desk office comes of age

“Over a year, how often does a workstation sit vacant? Bigger users say they can save 30% of occupancy costs by doing things smarter,” he says.

“You’ll go to work and be given a workstation, rather than having your own desk with pictures of your wife and kids.”

Walker believes many old office buildings will never again be used as offices, with increasing numbers converted into residential units.

Read more:  5 factors that make an office building right for apartments