Commercial property ripe for investors

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While the outlook for residential property investment may be uncertain, the commercial property market last year was the strongest it's been since 1989, according to Investment Property Databank (IPD).

Speaking on commercial property trends, experts at a 'Hot Property' forum held by National Australia Bank (NAB) last November said small- to medium-sized enterprises (SMEs) should consider investing in their own premises.

Representatives from Deloitte Touche Tohmatsu and property consulting firm Charter Keck Cramer predicted the commercial property boom would continue. Business property has long been known as the domain of institutional investors or wealthy individuals, but the panelists agreed the market was opening up to smaller investors and business operators.

"There may be benefits for some businesses to diversify their assets into commercial property," said George Frazis, NAB's executive general manager for business and private banking.

Speaking at the forum, Frazis said that the business property outlook is strong, particularly for quality premises leased to good tenants on secure leases. "The volatility of returns experienced in the 1990s has also declined, making it a more attractive investment option," he explained.

Frazis added that SMEs in city and regional areas should consider their business plans and assess the various investment options available to them.

Deloitte Touche Tohmatsu's property tax partner, Joe Galea, agreed the time was ideal for business property investment since new tax opportunities make it particularly attractive to SMEs. "Mirror trusts, the new threshold for net assets in small business concessions and changes to superannuation tax rules announced in the 2006 Federal Budget, may impact upon decisions," said Galea.

He said this was in addition to widely known tax incentives such as negative gearing, capital gains concessions, and tax depreciation and capital works deductions.

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