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Commercial Property for SMSF investors

There has been much investor interest in commercial property over the past three years, and with good reason. The Sydney and Melbourne office markets are experiencing solid capital growth due to yield compression, rising rents, along with strong tenant demand which has led to record low vacancy rates.

In particular, Melbourne’s CBD commercial office space has gone from strength to strength on the back of the most solid economic indicators in the country, while forward indicators point to continued out-performance and have provided the impetus for business expansion and accommodation upgrades. At the time of writing, Melbourne’s vacancy rate is at an almost record low of 4.6% and, given the strong demand and soft supply conditions, continued rental growth is expected to trend well above average for 2018 and 2019.

Such robust performance can be attributed to growth in white collar employment, as well as the broadening of the office occupier base to include a greater proportion of the booming health and education sectors. Health and education will continue to be key demand drivers for the commercial market, with job availability in these sectors increasing by 57 per cent over the last three years.


Why Commercial Property makes a great SMSF investment

Unlisted commercial property (office, retail and industrial) and infrastructure have had strong returns this decade. For commercial property, since 2010 total returns including capital growth have averaged nearly 11% p.a.

Given the strength of the commercial property market, direct unlisted commercial property fund yields remain attractive. This is particularly so compared to residential property. In the 1980s, the rental yields on residential and commercial property were broadly similar, but today commercial property has a far higher average rental yield. With the affordability of Australian residential property becoming more of a concern for many, direct unlisted commercial property investments are a more viable alternative means of gaining property exposure.

Direct property funds, such as property syndicates are professionally managed, and accessible to many investors, including self-managed superannuation funds (SMSF). With reliable and regular income, and the prospects for capital growth, unlisted direct property funds have become a very attractive addition to many SMSF investment portfolios.


Invest in commercial property with Placer Property

Placer Property has a strong track record of creating commercial property investment funds tailored for SMSF, sophisticated, wholesale, and retail investors, and was recently named as a finalist in Money Management’s prestigious Fund Manager of the Year awards for its fully subscribed NewActon East Property Fund.

Following the success of its past funds, Placer Property recently launched a new commercial property investment, 333 Exhibition Street Property Fund, which owns the commercial office component of the building located at 333 Exhibition Street in Melbourne’s highly prestigious and desirable Parliamentary precinct.

333 Exhibition Street Property Fund provides SMSF investors with an attractive property investment opportunity offering:

  • 6.5% p.a. forecast income distribution yield for FY18 and FY19
  • Secure, stable income flowing from The University of Melbourne, the building's sole tenant
  • A low volatility investment with quarterly income returns
  • A rare opportunity to invest directly into a CBD commercial real estate asset
  • Significant co-investment by the investment manager
  • A managed debt strategy
  • A high starting NTA
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Placer Property Limited is the issuer of units in 333 Exhibition Street Property Fund (Fund). The Product Disclosure Statement (PDS) offering units in 333 Exhibition Street dated 1 March 2018 is available from http://www.placerproperty.com.au/investment-funds/333-exhibition-street-property-fund/.  Potential investors should consider and review the PDS when deciding whether to acquire units in 333 Exhibition Street. This information has been prepared by Placer Property Limited (ACN 164 635 885) for general information purposes only. It does not constitute financial product advice and does not take into account any potential investor's objectives, financial situation or needs. Before deciding whether to invest in 333 Exhibition Street, potential investors should: (1) consider their own objectives, financial situation and needs; (2) consider obtaining financial, legal and taxation advice; and (3) obtain and read a copy of the current PDS for 333 Exhibition Street Property Fund.

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