What are the pros and cons of investing in a commercial property?
What are the pros and cons of investing in a commercial property? Read on to learn more. ...
Investors have been warned that Australian property is in a “strange place right now”, with a few key battles on the horizon.
Charles Tarbey, CEO of Century 21, recently told The Smart Property Investment Show that the marketplace is changing, and investors need to make sure they’re ready for the potential challenges and opportunities that lie ahead.
“I mentioned this to a group of our sales agents only the other day. If you’re in the eastern suburbs of Sydney in recent times – and I say recent times because I can see a change coming through – you feel like you’re on the Greek island of Mykonos: you’ve just got the deck chair out and you’ve got the cocktail in your hand, and the sun’s shining and people are walking past throwing money at you because they want to buy that property,” he said.
“If you’re over in, it’s like being in Afghanistan – you’re in a war zone. You’re having to battle with buyers, you’re having to battle with sellers, you’re having to battle with valuers, having to battle with banks.”
However, Mr Tarbey said such markets present more opportunities for negotiation, and are perhaps more sustainable than what’s been occurring in some Sydney markets.
He cautioned that while the real estate market moves in cycles and can be a bit of a “rollercoaster ride”, investors need to make sure they ride the “kiddies’ rollercoaster” to minimise the ups and downs. To do so, he said, they need to buy within their means, and keep an eye on stock levels.
“The flood of stock that could come through if we have an overseas collapse in China or the US and those investors don’t complete transactions here in this country of off-the-plan sales – [then] there could be a dumping of stock,” he said.
This could be of particular concern for inexperienced investors who have bought multiple off-the-plan properties, he said.
“All agents like to talk the market up, we like to think it’s okay – but the reality is we’re in a very strange place right now. I think that those people who bought their homes and they settled in them – great, stay there, you’re not going to lose money unless you sell.
“Those who have been playing the investors’ market out there that are not experienced, that have been buying properties – some have been buying two, three, four properties off-the-plan … They’re probably going to be sitting there a little bit nervous right now.”
He said savvy investors will find opportunities as the reality of the new marketplace takes shape.
“I think those investors [who have been waiting] are probably the smartest ones, because if they’re starting to cash up, there may be some good opportunities for them in the year to come.”
Mr Tarbey cautioned, though, that being indecisive as the market shifts could be problematic.
“If you’re sitting on the fence, you’re probably going to get splinters in your backside,” he said.