Interstate and those from capital cities wanting to invest in commercial real estate should turn their eye to regional towns like Wagga, according to real estate agent Craig Tait from Raine and Horne. 

“There’s still plenty of investors looking for properties and there’s a high property demand in regional areas, as capital cities are only achieving a 5-6 percent yield,” Mr Tait said. 

“Wagga is a great option for capital city investors.

“I think commercial property investors are looking for a higher return, as opposed to investing on the share market which is more riskier. 

High demands in commercial property are leading rental yields to decrease and therefore leading to a lower value. 

Yields are a measurement of expected income on an investment, but is not a guarantee. 

They are based on the property’s cost or market value, annual income and running costs and calculated as a percentage. 

Commercial properties typically return much higher yields than residential, generating yields upwards of 7 percent compared to yields of 4-5 percent in residential. 

Mr Tait said a low risk would be a bank tenancy in a building on Baylis Street, whereas a higher risk would be a larger industrial site in Bomen with short tenancy. 

”If you’re looking at net returns, it all depends on the quality of the tenant, the lease terms and generally the quality of the building and the location,” Mr Tait said. 

However independent property valuer, Chris Egan cautioned investors to be wary of interest rates increasing and tightening credit policies following the banking royal commission, as some investors might not have budgeted or factored this in. 

“This could see some lender stress in the market,” he said. 

Mr Egan said Sydney prices rocketed because interest rates were so low, giving an opportunity for people to buy more. 

“This has meant that the share market has been increasing at a rapid rate, so investors are looking at where to put their money and there’s demand to put that into commercial property,” he said. 

“The interesting thing in Wagga is that advertised leasing long term is being sold to capital investors in Sydney as they’ve got deeper pockets to project in regional areas and therefore make a higher return.”