Is It Time to Rethink Your Property Investment Strategy?
- Posted By David Brown
Commercial property is emerging as an increasingly attractive opportunity for Australian investors. At Meridien Invest, we have been closely navigating the market to identify the right entry points, structures and opportunities to help our clients build greater financial resilience.
For generations, residential property has been a cornerstone of Australian wealth creation, providing both a place to live and the potential for rental income and capital growth. However, changing tax rules, rising interest rates and increasing operating costs mean investors are now reassessing traditional strategies and looking more closely at yield, performance and diversification.
For SMSF investors in particular, changes to residential property lending have created a need to consider alternative investment pathways.
Why Commercial Property?
For investors reassessing their next purchase, the key question may no longer be:
“Which Property has the most growth?”
It may be:
“What property gives me the best balance of income, risk, cash flow and long-term growth for my portfolio?”
That shift in thinking could be one of the most important investment decisions to make in the current market.
Frequently Asked Questions
How do commercial property contracts differ from residential contracts?
Commercial contracts generally provide greater detail around the financial and operational aspects of the property. Key differences can include:
- Explicit GST treatment.
- Limited cooling-off rights, with due diligence periods more commonly used.
- Settlement adjustments for items such as rent, GST, land tax and rent-free or incentive periods.
- More detailed treatment of tenancy status.
- Going-concern provisions, which can have implications for GST treatment.
What is the minimum deposit required?
A typical minimum deposit is 10%, excluding GST, although funding requirements can vary depending on the property, lender and purchaser.
Can an SMSF purchase commercial property?
Yes. Commercial property can potentially be acquired through an SMSF, subject to the relevant rules and the structure of the investment. Professional advice should be obtained before proceeding.
Can a commercial property be purchased through a trust or company?
Yes. Many commercial properties are held through trusts or companies. The appropriate ownership structure will depend on the investor's individual circumstances and should be determined in consultation with their legal, tax and financial advisers.
How long does it typically take to lease a commercial property?
Current market feedback suggests that three to five months of vacancy can be typical, although this varies significantly depending on location, property type, tenant demand and market conditions.
What are the key risks?
As with any property investment, commercial property carries risks. These can include longer vacancy periods, higher upfront costs and changes in zoning, tenant demand or market conditions.
The potential benefits of commercial property are one reason diversification matters. A well-structured portfolio can help investors manage exposure across different property types and income streams.
Can investors claim tax deductions?
Commercial property owners may be able to claim deductions for eligible expenses such as interest, maintenance and insurance. Depreciation deductions may also be available for eligible building components and fittings through an appropriate tax depreciation schedule.
As always, taxation outcomes depend on individual circumstances and investors should seek advice from their qualified advisers.
A Changing Property Landscape
Property remains an important part of the Australian investment landscape, but the way investors approach property is evolving.
For investors looking beyond traditional residential property, commercial property can provide another pathway to income, diversification and long-term growth.
Meridien Invest continues to assess the market to identify quality opportunities and appropriate entry points for our clients.
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