In the current commercial property market characterised by tight rental yields, investors facing interest rates ranging from 6% to 8%, and banks adopting stricter lending requirements, the significance of conducting thorough Due Diligence before making property acquisitions has never been more relevant.
The careful examination of commercial property purchases has become critical to determine whether an investment thrives as a high-yielding opportunity, falters as an underperforming asset, or, in the worst-case scenario, necessitates early divestment.
Beyond the conventional procedures of sourcing title searches, body corporate disclosures, and registered plans, we advocate for a holistic approach to Due Diligence. We recommend that investors broaden their evaluation process to include scrutiny of building compliance and financial performance.
Delving into aspects such as gross vs nett rents, annual rent review inclusions, and the alignment of outgoings budgets with actuals is crucial for a comprehensive understanding. Additionally, vigilance is required to uncover hidden incentives within leases, anticipate upcoming capital works and maintenance, and assess potential site valuation increases that may impact rates and land tax obligations in subsequent years – especially pertinent for properties within the Brisbane City Council LGA given the substantial surge in site valuations observed in 2023.
Additionally, we encourage a thorough review of documents such as asbestos reports, management plans, and Certificates of Classification. Neglecting these critical components may lead to unforeseen and costly building works or, worse, render the property uninsurable.
Benn Woods and the team at RWC Bayside can help buyers to navigate these intricacies with confidence. Our seasoned professionals are well-equipped to provide comprehensive insights, to help ensure your property acquisitions are not just sound investments but resilient assets in the face of market challenges. Don’t hesitate to reach out to our team for expert assistance in navigating the complex landscape of commercial property transactions. Call us today on (07) 3245 7199.
Benn Woods | Sales & Leasing Agent | 0408 689 651