Specialist commercial property lender Thinktank Group has said market conditions are attractive for small-to-medium size enterprises (SME) to acquire their own premises, commercial or industrial, via their SMSF.
Thinktank director Per Amundsen said the financial benefits of SMEs using their fund to acquire their business premises are well known, including tax minimisation, asset protection and building wealth for retirement.
“But what is often less understood is that the secondary market for commercial property can be closely linked to the primary market and that rising prices in the latter, in many circumstances, will have a flow-on effect on the former,” Amundsen explained.
“In particular, tighter vacancy rates in Sydney and Melbourne are pushing prices up across both primary and secondary markets.
“As the latest Property Council of Australia (PCA) figures showed, there has been an improvement in all CBD markets’ vacancy rates, with demand as the key driver, especially in Melbourne.”
He said Sydney landlords are predicting vacancy rates of “well below 4 per cent” with the latest PCA figures showing it feel from 4.8 per cent to 4.6 per cent in the six months to July.
The Melbourne market is even tighter, with the vacancy rate hitting a 10 year low at 3.6 per cent.
“Falling CBD vacancy rates help underpin commercial property prices right across the market,” Amundsen said.
“There’s a ripple effect flowing out from this CBD activity so for SMEs, it’s an ideal opportunity to either sell their commercial premises to their SMSF or use their fund to acquire premises.”
He added a similar opportunity exists for SMEs in the manufacturing and constructions sectors of the economy.
“The industrial property market – where Thinktank has 43.6 per cent of its loan book at $363 million – is benefitting from a stronger manufacturing sector with the ACCI-Westpac Survey of Industrial Trends for the June quarter rising 4.4 points to 63.8,” he said.
“Manufacturing continues to benefit from local apartment and infrastructure projects that are still boosting demand, with 37 per cent of businesses expecting the general business environment to strengthen over the next six months.
“This paints a positive picture for industrial property, with the commercial and industrial real estate agent Savills highlighting stable rental levels across the country, except Perth, but with yields continuing to tightening everywhere, including Perth.”
