Commercial real estate in regional Australia is back in favour.
Demand for office space is surging in most major CBDs.
This has caused overflow into regional office demand.
Would you be surprised if I told you Wollongong is among the most popular regional centres for private investment?
You see, Wollongong is only about 100kms from Sydney CBD and unlike Sydney, it is affordable.
It makes complete sense. I have previously discussed the maths of property investment.
Our mission as real estate investors is to make a return.
Affordability is a huge driver of the increased investment around regional centres. Private investors see Sydney and Melbourne as overpriced.
Regional centres provide many opportunities for private investors who are using self managed super funds to acquire property.
The other thing going for Wollongong is population growth. It is expected at least 6,000 people will move into the CBD in the next 10 years.
All these people need to work somewhere. Their employers also need space to accommodate them. This is driving commercial real estate values.
Growth in new business and growth in employees, equals growth in real estate values.
When investing in regional centres, it is important to look for a few signs that highlight a possible goldmine.
Firstly, look for towns with a big population and a growing population.
Next, look for towns with diverse industries. This should limit your risk if a particular industry falls of a cliff, like mining.
Lastly, look at cities and town with large national tenants. These can be federal government tenants like Centrelink or large public institutions like hospitals.
The willingness of government to invest in regional towns is a sure sign that there is a future worth investing in.
Other businesses also move to regional centres were national tenant are present.
In the case of Wollongong, the federal government has pumped money into local infrastructure projects that has made the city more accessible and more attractive to small and medium businesses.
Infrastructure investment is a key driver of growth within regional centres.
Regional locations with large or very strategic infrastructure projects should be watched carefully and there exist opportunities that rise from these projects.
Infrastructure projects and population growth flow on to all types of commercial property types.
These include Fast food, petrol stations, supermarkets and child care centres.
Let's take a look at another regional town booming on the back of infrastructure projects.
We are heading to the great town of Toowoomba. Beauty in the Darling Downs.
These infrastructure projects are also bring new employers into the region. Just think of the flow on effects that these new people provide.
New employees with disposable income, need a supermarket, need a bank, need a car wash, need a petrol station (or a few) … shall I go on.
As an investor, it should be easy to see the potential that population growth provides.
As a real example of this, a private investor in Toowoomba paid $16 million for a motor dealership!
While you might not be in that range for your first investment, there are plenty of opportunities within your own budget.
So to set you on your way to a first investment in regional Australia, here are some places to start.
Check out Newcastle and the central coast in New South Wales.
Check out Barwon, Geelong and Ballarat in Victoria.
Check out Toowoomba and Newtown in Queensland.
Check out Geraldton and Bayswater in Western Australia
Regional Australia is a great place to start your commercial property portfolio.
Big on population growth and affordability makes a great mix to get into the market.
As I mentioned, there are so many opportunities around the country.
It is a great time to invest in regional Australia.
So next time you are on that road trip up or down the coast, stop into some regional centres and check out the investment market.