Now is the time to invest in commercial property
Better Loan Solutions in Mornington Peninsula • Learning Centre • Insights
Better Loan Solutions in Mornington Peninsula • Learning Centre • Insights
A veteran real estate analyst is urging investors to seize opportunities in commercial property, predicting a surge in values across various
sectors. CBRE's Head of Research, Sameer Chopra, believes it's an "amazing time to buy real estate" despite market uncertainties.
He said rapid population growth, high construction costs, and forecasts for significant interest rate cuts will provide a strong tailwind to
the sector.
Mr Chopra points to Australia's recent population boom, with over one million new arrivals in three years, as a major catalyst for demand
across all property types. This influx is expected to necessitate substantial commercial development, including logistics spaces, retail
centres, offices, hotels, and hospitals.
"We are feeling this demand in the residential market, but it's going to spread its wings," Mr Chopra said. The analyst highlights
that construction costs have risen by 30 per cent, making it challenging to build new assets at current valuations. This dynamic is expected
to increase the value of existing properties, particularly those near new infrastructure developments.
Mr Chopra predicts a significant easing cycle in interest rates, predicting between eight to ten cuts by 2026. This could lower the cash
rate to between 1.85 and 2.35 per cent.
"We need to change the conversation from, 'Are they going to cut interest rates this year?' to 'How many interest rate cuts will there
be in the cycle?'," he said. While some experts consider Mr Chopra's interest rate forecast optimistic, there is agreement that
commercial property investment opportunities exist for selective buyers.
Mr Chopra remains bullish on various commercial sectors, noting that CBD office visitation has rebounded to 75 per cent of pre-pandemic
levels and expects return-to-office concerns to dissipate by next year.
In retail, Mr Chopra has turned positive following significant rent resets during the pandemic. He cites positive re-leasing spreads and low
vacancy rates as encouraging signs for the sector.
The student accommodation market also presents significant growth potential, according to Mr Chopra. He suggests the Australian market could
expand tenfold before reaching the bed-to-student ratios seen in countries like the US and UK.
Consider a balanced property portfolio including both residential
and commercial investments based on your goals. We're here to
assist with your lending needs.
For many Australians, purchasing an investment property first – known as 'rentvesting' – can be a smarter financial strategy.
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