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SUB $2MILLION ASSET CLASS ACTIVITY HAS SLOWED INLINE WITH INTEREST RATE MOVEMENTS
Vanessa Rader Head of Reserach Ray White
Commercial investments vary in price considerably and for new entrants the affordability of these properties with solid rental returns were quickly realised causing a large uptick in investment activity. However as interest rates started their upward movement last year, we were quick to see many buyers, in particular mum and dad investors and first time buyers exit the market leaving more experienced buyers behind. This has had a significant impact on volumes with results from the 1Q 2023 highlighting a 60.8% decline in asset sales in the sub $2million price point compared with the same period in 2022. 1Q 2022 was however the peak of activity, this period recording $3.06billion in sales up from 1Q 2021 where activity During the COVID-19 period we saw across the commercial market an influx of new buyers enter the arena. Low interest rates, rising residential prices and uncertainties in the stock market making commercial property an interesting prospect for diversifying investors.
started to ramp up as interest rates bottomed out recording $2.64billion in the quarter. 2021 overall was a busy year for this smaller investment class as buyers flocked from across the country, eager to pursue assets regardless of borders with income growth potential in particular in the industrial market. For the first quarter this year, there has been $1.99billion in commercial sales completed in the sub $2million price range. While this is down on the prior two years, it still represents close to 2,000 transactions across the country. NSW remains the most active asset
8 – May / June 2023
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