Now could be a good time for SMEs with SMSFs to acquire their business premises, a commercial lender has suggested.
Thinktank director Per Amundsen said that there are a number of well-known financial benefits of using self-managed super funds (SMSFs) to acquire commercial premises, including tax minimisation and wealth creation.
But on top of these, the commercial lender suggested that market conditions are “ripe” for SMEs with SMSFs to purchase property.
“The secondary market for commercial property can be closely linked to the primary market,” Mr Amundsen explained.
“Rising prices in the latter, in many circumstances, will have a flow-on effect on the former. In particular, tighter vacancy rates in Sydney and Melbourne are pushing prices up across both primary and secondary markets.”
The director cited figures from the Property Council of Australia which show improvements in vacancy rates across all CBD markets due to strong demand, with Sydney and Melbourne expected to have vacancy rates below 4 per cent.
“Falling CBD vacancy rates help underpin commercial property prices right across the market. 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,” Mr Amundsen said.
He added that there are similar opportunities for SMEs in the manufacturing and construction sectors.
“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 [by] 4.4 points to 63.8,” the Thinktank director explained.
“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.”
Mr Amundsen said that this “paints a positive picture for industrial property”, further reinforced by stable rental rates in most cities (except Perth) but with yields continuing to tighten Australia-wide.
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