Investors spark frenzy on Brisbane’s commercial property market

According to its commercial division, astute investors and owner-occupiers taking advantage of the low interest rate environment are turbo-charging higher than normal sale volumes in Brisbane’s northern suburbs.

“Record-low interest rates mean that investors have to look for alternative places to park their funds, so quality assets with good tenants are in red hot demand,” Trent Bruce, managing director of Raine & Horne Commercial Brisbane North, said.

Mr Bruce revealed that some of the best-performing suburbs in the north were Albion, Chermside, Strathpine, Bowen Hills, Stafford, Hendra, Lawnton and Geebung, with investors from Sydney and Melbourne also said to be showing considerable interest.

“This interest is undoubtedly a result of the current strong interstate migration to Queensland following the impact of lockdowns in the southern states,” Mr Bruce said.

Joseph Grasso, director of Raine & Horne Commercial Brisbane Southside, agreed that poor cash returns are driving investors to Brisbane commercial real estate.

“Money in the bank is generating returns of 0.3-0.4 per cent, if you’re lucky, on a term deposit over 12 months.

“In comparison, the returns that commercial property provide are very attractive, while investing in the stock market is still a volatile ride,” Mr Grasso said.

He revealed that in the south of Brisbane, it is the warehouses and logistics that are becoming increasingly popular.

“Reflecting some residential markets around Australia, there is an element of FOMO (fear of missing out) driving some investors to snap up warehouses in Brisbane’s southside,” he said.

Consequently, Mr Grasso noted, since September last year, the yields for industrial warehouses have fallen by about 1 per cent in Brisbane’s southern commercial precincts.  

“In April 2020, it was possible to buy industrial property in Brisbane’s southside for 6.5 per cent net. Now it is closer to 5.5 per cent,” he concluded.

Moreover, Mr Grasso pointed out, non-listed fund groups are making their presence felt in Brisbane’s southside markets.

“They are even playing in markets under $5 million that are usually the domain of private investors, and this activity is adding to demand levels.

“It’s a sellers’ market, so the savvy investors are trying to lock up assets with off-market sales,” he concluded.