Brisbane is a huge market full of opportunities for those considering investing in property as it poses all the right factors to suggest decent to strong capital growth over the next couple of years. Actually, capital growth can be even noticed over the few months. Where you invest in Brisbane definitely depends on your budget, economics knowledge and your investment strategy, but in every market there are always suburbs that achieve much stronger capital growth. When it comes to investing in a property, no one has a crystal ball. However, through understanding the fundamentals of demand and supply and what pushes the property market forward, we can make a far more sound decision. By making sound decisions, you can lead your Brisbane business properly.
Supply and demand
That said, supply and demand is probably the most important factor when assessing where to invest as this primary economics law decides both capital growth and rental growth. Keep in mind that property prices move in response to changes in supply and demand. That said, if the supply is low and demand is high, prices will go up – this is a most important law of economics.
Flat rental return
For investors who are seeking constant cash flow, commercial property can be an excellent investment. For example, an investor who owns a residential property in Brisbane would consider himself lucky if he could get a rental return of 5% p.a. on a house and 6% p.a. on a flat or townhouse. On the other side, commercial property can provide for much higher rental returns.
Commercial investment returns
In the real estate business, it’s not uncommon for a retail property to earn 7% and in some cases, industrial properties can provide the investor with a return of over 10% p.a. However, the rental can greatly vary depending on a number of factors and conditions, such as location and age of the building.
Ongoing infrastructure projects within an area is an important factor to positive capital growth and will ensure the much needed growth for many years to come. By investing in a property in an area where is a major infrastructure investment, you can count on that particular area increasing in value. This definitely increases the value of property through making that particular area much more interesting and desirable to live. Since the Brisbane economy is growing, you need to find a growing area that attracts many investors.
Greater return, greater risk
As far as investment is concerned, a greater capital growth and greater return is always associated with a greater risk. Probably the main risk with renting a property is vacancy. For example, if you lose a tenant from your flat, it will probably take a month to find a new tenant. On the other side, if you lose a tenant from your industrial or commercial property, it may take months, or even years, to find a tenant. You may even need to ask your Brisbane chauffeur to help you find a new tenant. That’s why it’s a good idea to buy commercial properties only in Brisbane industrial zones and areas. That way, the risk is slightly less. That said, residential property has a better capital growth, but commercial or industrial property has a better cash flow.