The lure of property investing
The long-term value of commercial property in Queensland is underpinned by population and economic growth. This remains true regardless of higher interest rates, inflation and property cycles. The “littoral drift” of higher income interstate economic migrants north from southern states further supports the trend.
Investors recognise this and have been undeterred from investing in commercial real estate. We saw this in the high level of interest received in closing our latest Natgen Investment Trust, which included commercial real estate on the Gold Coast and in Cairns.
These assets were offices, which the media has been happy to beat up around work from home trends. But this “lack of love” presents an opportunity to acquire good assets with strong tenants, such as the Commonwealth Bank, with largely unaffected back to work dynamics, at below replacement cost.
Natgen investors are primarily high-net-worth individuals and sophisticated investors that tend to deal directly with us. It is this unique position that gives a good perspective of what they are looking for when investing.
They understand property, it is a real asset, and it is something they have had experience with their entire life. They appreciate rent is collected, which means income is consistently generated; the asset has potential for capital appreciation; and there are tax advantages, depending on their individual circumstances.
Our investment strategy is built on buying mispriced commercial assets with good tenants in great locations.
We see opportunities in areas such as regional convenience retail, non-capital city CBD office assets, industrial assets with rental reversion opportunities, specialist assets, and development. Natgen is the largest developer of self-storage on the Gold Coast.
From a selling perspective, we have been approached to divest existing assets, even though some are only halfway
through their holding period or investment strategies. The indicative offers confirm prices for well-located assets are holding up. There is enduring interest in the commercial property market, but as always it comes down to the asset type, its size, location, amenity, tenancy profile, and the type of buyer. For Queensland property investors, the opportunities are abundant.
Steven Goakes is managing director of Natgen