Commercial real estate investment can generate strong cash flow and equity growth. With the right strategy, commercial properties like office buildings, warehouses and retail complexes can produce excellent returns. This guide covers how to start investing in commercial property in Australia.

Lucrative Commercial Property Types

These commercial asset classes are popular in Australia for investment potential:

  • Office – Strong tenant demand from businesses makes offices attractive. Look for grade A/B buildings in CBDs or business parks.
  • Retail – Shopping centres and standalone supermarkets have resilient niche demand. Well-located strip retail also offers opportunities.
  • Industrial – Warehouses and distribution centres benefit from e-commerce growth. Storage facilities are also worthwhile.
  • Hospitality – Hotels, motels and other hospitality properties deliver tourism-driven income.
  • Specialist – Niche medical, childcare or data centres cater to essential services sectors.

Choosing the Right Location

Location is key for commercial assets. Conduct thorough research to identify:

  • Areas with growing populations, employment and infrastructure
  • Established commercial or industrial hubs
  • Logistical importance – transport links, accessibility
  • Future development and zoning potential

Understand occupational demand drivers like nearby amenities and competitors.

Financing Commercial Purchases

Commercial loans have different requirements than residential loans:

  • At least 30% deposit
  • Debt servicing ratio around 1.25
  • Land value ratio not exceeding 50%
  • Higher interest rates than residential loans

Shop different lenders to find the best rates and loan features.

Maximising Value and Returns

To optimise value and returns from commercial real estate:

  • Target well-maintained buildings with strong occupancy
  • Negotiate lease terms favourable to the landlord
  • Leverage depreciation and tax deductions
  • Add value through refurbishment, development or repositioning

With proper due diligence and financing, investing in commercial property offers reliable cash flow and equity growth. Follow these tips to build a high-performing portfolio of commercial property investments in Australia.