When talking about properties, the first thing that comes to mind is its value—the same goes for commercial properties.
Australia’sreal estate condition is alarming many, as it seems to be majorly dominated by Chinese buyers. While the bubble started in residential properties, it has also made its way to commercial properties. As almost half of all Chinese investment Down Under is centred on commercial real estate.
What does this have to do with their value? How does the economy play a role inyour commercial property’s valuation?
Quite a lot. McGees.com.au shares just how with the following:
The Gross Domestic Product of a country is vital to real estate. The GDP is taken from economic indicators like employment rates, manufacturing activities and cost of living. So when the economy is at a low, so is the real estate industry.
During times of crisis like recession, the majority of people will lose their jobs and have a hard time finding a stable income. This also affects the state of businesses. If there’s not enough money to go around to sustain or solve the crisis in the economy, goods will sell for much higher and not many people will be able to afford it—especially properties.
For your commercial property, it can mean a huge setback. With the recession and downsizing, more companies and businesses will have close to no need for it at all or have a difficult time affording it. However, selling or leasing your property during a time of progress and prosperity assures you a market and a stable flow of income.
This is when the role of timing comes in—knowing when to sell or lease your property largely affects its value. Putting your property up onthe market during a time of need or decline will hike and lower its value, respectively.
In the same way, the property market also contributes to the economic progress of a nation. In AU, its industry is one of the key factors in doing so—even atthe brink of recession.
All sectorsof society greatly affect one another, the economybeing the greatest of all. Though it affects all aspects of living, knowing how your commercial property’s value is affected during economic trends and phenomenon willhelp you get the most from your assets.