With interest rates still moving upward, investment activity continues to take a hit. Both vendors and buyers have been more cautious with their property decision making, and various investors have exited the market due to the greater difficulty and increased cost of financing.
However, there has still been more than $17 billion in sub $5 million sales during the year to May 2023 -
So what have been the assets of choice?
1. Retail Shops
Despite conflicting information about the future of retail, suburban shop fronts with an average price of $1.01 million have remained attractive to investors. The total value of transactions for these properties reached $3.7 billion in the past year.
2. Hotels and Motels
Limited opportunities in the sub $5 million range, but regional assets have seen increased transactions. Older motels are favored by owner-operators and seasoned investors for potential redevelopment, given the high rate of domestic travel.
3. Childcare
Childcare assets offer long-term income streams and tenant-paid outgoings. However, their average price exceeds $5 million. The sub $5 million range mainly includes smaller or regional assets, averaging just over $2 million in transactions over the past year.
4. Pubs
The pub market saw strong investment activity, especially in NSW, making it a highly sought-after investment last year. However, investment volumes have decreased recently, and smaller sub $5 million investments are scarce, primarily found in regional markets.
