Tougher stance hits home
High hopes for boost in new year
TOOWOOMBA remains “on the map” for investors seeking good yielding commercial properties despite a downturn in transactions across the region in the 2018 calendar year triggered by tougher lending conditions, according to Ray White Commercial Toowoomba.
Ray White Commercial Toowoomba principal Brian Hodges said up until December 1, 2018, there had been $117 million worth of commercial transactions recorded across the Toowoomba region, which was a decrease of 13.35 per cent on the full year result in 2017.
“But we fully expect this year’s investment activity to become more aligned to the 2018 result once settlements complete into early 2019,” Mr Hodges said.
Mr Hodges said over the past two years there had been a remarkable increase in interest in commercial property in the Toowoomba region, with an elevated level of transaction volume in 2016 due mainly to the $185 million purchase of Clifton Gardens Shopping Centre.
“A combination of low interest rates fuelling alternative property investments and interstate buyers seeking good yielding properties has put Toowoomba on the map for investment,” he said.
“Lending practices have tightened up over much of 2018. This has done much to limit investment levels and the urgency and volume of buyers has reduced, bringing sentiment back to a more normalised level which may see yields move back up slightly.
“What has been encouraging is level of interest in this region by local buyers, highlighting the confidence in the local economy as well as the need for space notably in the owner occupier industrial sector.”
Mr Hodges said during 2018 there had been strong interest in retail and industrial premises, with a combination of both owner occupier industrial users together with investor retail/office buyers seeking investment. He said medical property investors have grown in many regions of Australia this year, with investors identifying these premises due to their quality fit-outs and long and secure lease covenants.
“We expect that into 2019 the level of interest in yielding investments to subside as banks have been more vigilant on lending particularly in subprime locations such as regional parts of the state,” he said.
“Some properties including retail and office premises may see some correction in yield. However, a more cautious approach by both buyers and lenders will likely see these volumes reduce.”