DIY super funds driving Port Macquarie commercial markets: Raine & Horne

Commercial properties in NSW’s Port Macquarie are attracting self-managed super funds (SMSF) because of the Mid North Coast’s affordability and healthy yields.

“It’s a bit like Sydney in towns such as Port Macquarie, with SMSFs driving the sales of quality investment assets,” said Graeme Garrett, co-principal of Raine & Horne Commercial Port Macquarie. 

SMSFs leasing a commercial property back to a related business is becoming a common trend in the sub-$500,000 market in Port Macquarie, added Garrett.

Several small business owners too are buying properties through SMSFs and then leasing them back to the business, which the current superannuation laws allow, he said.

In many cases, professionals such as accountants, lawyers, engineers, architects and real estate agents are buying commercial properties through a related DIY fund. Properties around the range $400,000-$500,000 are in particularly in demand.

“The trouble is that there’s a shortage of industrial stock in this price range to meet demand,” said Garrett.

Investors operating outside a super fund are also active in the Port Macquarie market because of the low interest rates and the fact that commercial properties are viewed as an investment safe haven, he added.

“Sydney investors seeking solid yields are also starting to make their presence felt in Port Macquarie.”

Yields for industrial stock priced below $500,000 range from 8%, while it’s 6.75-7% for retail and 8% for office space, according to Raine & Horne Commercial Port Macquarie. 

“We auctioned a retail property to a Sydney investor, who purchased it through a self-managed super fund, and who intends on retiring to Port Macquarie down the track,” said Garrett. The property located at 5/56 Clarence Street, Port Macquarie sold under the hammer for $622,500.

Garrett said members of SMSFs would be best served considering a commercial asset that will appeal to future tenants.

“If you occupy it yourself now and then retire, you need to consider what appeal that property will have to future tenants and whether it will be easily let out if it’s part of your future retirement plans.

“Our proximity to Sydney and Newcastle is attracting investors from those cities through a combination of our healthy yields and commercial real estate affordability. 

“When you can buy two or three assets in Port Macquarie for the equivalent of a single-tenant property in Sydney, investors see this as value.”