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Think outside the box: The opportunity of alternative property investment

Buying a house or apartment to rent out is a popular way to invest in Australia. But you don’t have to become a landlord to reap the benefits of property investment. There are plenty of alternatives that can help build your wealth.

Commercial property

One of the greatest benefits of investing in commercial property (that is offices, shopping centres or industrial properties) is its comparatively high return. According to research, the average return on commercial property is 8-10 per cent compared with a 3.6 per cent average return on residential property.

Commercial properties are also known to secure long-term leases and demand fewer ongoing expenses.

“Commercial property is well suited to all types of investors, and probably more so to those who are approaching retirement or are in retirement, because it provides a steady income with low capital volatility, and that income is backed by some well known tenants,” says Mark Lumby, Head of Commercial Property at Australian Unity.

Data centre property

While it’s tempting to think of ‘the cloud’ as a pie-in-the-sky concept, the reality is that all that data is stored in tangible, bricks-and-mortar data centres. As more and more businesses transfer their data to the cloud, the demand for this real estate is increasing, and 15 to 20 year leases are becoming the norm.

Petrol and convenience centre property

Petrol is one of the biggest expenses in your weekly budget, but you can also earn money from your local service centre.

One of the latest property investments is in the big convenience centres that line highways and major roads. The latest figures report that these can yield around a 6.37 per cent return per annum.

Childcare property

Childcare centres are in high demand all over the country, and not only for places for children. The property they inhabit is now also seen as a solid investment.

The tenants are known as high quality, taking responsibility for the required health, safety and maintenance standards. In 2017, Sydney childcare property was returning an average of 4.85 per cent and in regional areas just over 6 per cent.

Healthcare property

The world of property investment has seen a new wave of interest in healthcare property.

This includes hospitals, medical centres and other medical related buildings such as aged care, pathology labs and office buildings in major health precincts.

“Healthcare property tends to have long lease terms of about 20 years and the tenants are very stable,” says Chris Smith, Head of Healthcare Property at Australian Unity. “Tenants have quite a sizeable capital investment and don’t move between buildings; they tend to stay where they are and grow.”

Investors have seen solid growth in healthcare property. “Over the last year it’s seen a 10.63 per cent return, and 12.94 per cent over five years,” Chris adds.

 

Think outside the box: The opportunity of alternative property investment
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