The Australian property market appears to have softened in most areas. This has followed a long period of growth for the residential as well as commercial property market. Many property commentators are predicting further real estate falls. Many are even mentioning an overheated property bubble for residential properties. Therefore, possibly affecting commercial investment property, which can react closely in the long term. The question is – how do you price commercial Real Estate for the current property market.
The Commercial Property market is always changing
When the property market was much stronger a few years ago asking the right price for your real estate was not as critical as it is now.
Things appear to be different now. Setting the correct right price for today’s real estate market is as vital as ever. Above all, investors know it is a buyer’s market. As such, a property needs to be attractively priced and appear like a good deal to attract attention. Alternately, if the property is overpriced, they would most likely ignore it.
With this in mind, if the owner has the attitude of listing the property at a high price and simply lowering it later could be in for a difficult time.
In the current market, commercial or retail property is considered overpriced if sitting on the market for months. This can create a negative stigma in the market. Above all, potential buyers could be asking themselves the following. “if this property is such a good deal why is still available on the market” even after the vendor has agreed to reduce the asking price.
Lending policies affect demand for Commercial Real Estate
With the recent tightening of lending, investors have to have more substantial deposits to get approval for loans. Valuation methods have changed slightly with the uncertain market. Subsequently, comparable sales for comparable properties sold in the local market 6 or 12 months ago may not be relevant today. In other words, valuers tend to factor in further future falls on values.
This is despite cap rates and therefore higher return on investment for the current period. Many valuers factor in likely rental income falls when leases are renegotiated.
Price Commercial Real Estate well to create buyer excitement
With this in mind, what is the solution? Having a realistic price on your property as soon as it hits the market is more likely to attract immediate interest. Therefore, when a new property listing comes on the market, there is often curiosity and excitement in the air when priced right.
Property investors start to think about some swift action before other investors attract interest on the property. This kind of excitement can easily lead to the type of activity required to achieve the highest possible price in the current marketplace.
How much is your Commercial property and/or business worth in the current market? Like a free market appraisal and/ or confidential discussion on how we can help you make the best timely decision on your terms? Feel free to contact Con Tastzidis on 02 9882 2221 at CST Properties or email at firstname.lastname@example.org