Advisers and accountants considering commercial property for portfolios must ensure they know the ins and outs of the asset class before advising their clients on its opportunities or undertaking any investments.
“Commercial property is now such a compelling argument at the moment,” Spencer Property Group chief executive Kel Spencer told the Institute of Public Accountants Tasmanian Congress in Strahan last week.
“The management of commercial property can be delegated to third parties or you can do it yourself, but it does require specialist knowledge.
“With direct property, it doesn’t come without its risks, so you do need expertise around it and certainly you need to be quite hands on.”
Spencer said commercial property had some exclusive features, such as being an asset class that enabled value to be added.
“You can change the use of a property and turn a two-tenant property into a three-tenant property or you can go through zoning changes, which allows you to have different use of the property,” he said.
“That’s one of the delightful aspects of commercial property and we’re also all still learning – I drive past properties that come on the market and then 12 months later it’s changed and I couldn’t [comprehend] how that was dreamt up and … they made money just from manipulating the property.”
An increase in property value also created leverage opportunities for investors, he said.
“They can go out and use that extra equity that was created through time or through adding value to the property and go purchase other properties by using it as collateral,” he said.
