By Rich Harvey, CEO & Founder, propertybuyer.com.au
For decades, the New South Wales Central Coast region was in a property market holding pattern. It was flying under the radar of homebuyers and investors alike. But COVID’s significant upheaval brought the region into the limelight. Now, a raft of drivers across the political and economic spectrum will deliver exciting times to the Central Coast – and those who own property will be among the biggest beneficiaries.
Anthony Knight, Principal buyers’ advocate for Propertybuyer on the Central Coast, has lived in the region for decades. We recently chatted about the region and why he’s excited about what’s to come.
Regardless of what property you invest in, the buying and selling of real estate comes with sizeable costs. There will be commissions to agents and advertising outlays, through to taxation and compliance charges.
But South Australia has a unique offering for commercial property. You see, in South Australia, there is zero stamp duty applied when purchasing a commercial asset.
That’s right… stamp duty of zero, nada, nix.
This means anyone looking to participate in the impressively robust South Australian commercial sector can immediately wipe stamp duty off their balance sheet.
So, how did this come to be and what’s been the impact?
Well, according to Adelaide-based Propertybuyer expert, Jonathon Moore, it’s piquing the interest of many investors, particularly those from interstate.
The zero-stamp-duty history
The removal of stamp duty from commercial property transactions in South Australia started in July 2018.
It was a bi-partisan move according to Jonathon. A ruling Labor Government wanted to boost economic activity and saw removing commercial property stamp duty as part of the solution.
While that Labor government was voted out in late 2017, the incoming Liberals retained the policy as part of their platform… and it’s remained in place ever since.
It was reasoned that a reduction in commercial property stamp duty would free up more funds for owners. This could include investors spending more on upgrades to their properties, or even owner-occupiers devoting the saved dollars to their businesses.
No matter what, it could help even in some small way to boost employment and improve services for locals.
That said, zero-stamp-duty savings can be substantial.
Recently, Jonathon helped a Sydney-based investor acquire a $3.5 million off-market commercial property in Adelaide. If that investor had purchased a residential property of the same value, their stamp duty obligation would have been around $175,000. In fact, the zero-stamp-duty scheme is part of the reason this investor decided to increase his original buying budget.
Of course, zero stamp duty is not the sole reason a savvy buyer should choose to invest in South Australian commercial. There are a range of factors that influence an investment decision.
A strong sector
According to Jonathon, Adelaide’s commercial property market is showing strong performance across key sectors, driven by high demand and favourable conditions. Industrial properties have experienced significant capital growth, with rental yields averaging between five and seven per cent, underpinned by increased e-commerce activity and demand for logistics hubs. Office spaces, particularly A-grade tenancies, are maintaining steady demand, with vacancy rates among the lowest in the country for this asset class. Additionally, capital growth for well-located commercial properties remains robust, supported by Adelaide’s affordability and the ongoing investment in major infrastructure projects like road upgrades and urban renewal in areas such as Bowden and Tonsley.
One of the big drivers of commercial performance is that there’s more demand for floor area in our post-COVID world. Businesses are striving for less density, along with improved wellness for staff and customers. Jonathon said that businesses who leased 100 square metres before the pandemic are probably considering 300-square-metre tenancies now.
However, Jonathon said anyone eager to add Adelaide commercial to their portfolio must take certain considerations into account.
Firstly, build quality is absolutely tied to current value and future growth potential. A thorough inspection of the structure is imperative. This ensures your asset has lower running and ongoing maintenance costs. It will also denote a property with better functional longevity.
It’s key to think about ESG (Environment, Social and Governance) principals like energy efficiency and wellness too. Businesses are keeping ESG at top of mind when looking to lease space.
Also, if buying an already tenanted building, then understanding tenant quality is vital for correctly assessing value. You want tenants with longevity and solid financials. The quality of the tenant has a direct impact on not just cashflow and current value but can even help drive capital growth prospects depending on the terms in the lease.
And finally, look for properties in gentrifying locations. Adelaide is a city where choosing the right asset in a transformative suburb can yield excellent returns.
Future Growth Drivers
We also think Adelaide’s commercial property market is poised for more growth, supported by several key drivers that reinforce its appeal to investors. These include:
1. Economic Stability and Growth
Adelaide’s steady economic growth is underpinned by its diverse industries, including healthcare, education, defense, and renewable energy. These future-proof sectors ensure long-term stability and make the city an attractive destination for investors seeking a secure environment for their capital.
2. Affordability Compared to Eastern States
Adelaide’s commercial property market offers a more affordable entry point compared to Sydney or Melbourne. Investors priced out of larger markets are increasingly turning to Adelaide, where they can secure high-quality assets at comparatively lower prices with strong yield potential.
3. Significant Infrastructure Investment
Ongoing infrastructure upgrades, such as improved road networks, enhanced public transport systems, and the expansion of Adelaide Airport, are driving increased connectivity and economic activity. These projects not only boost the city’s appeal for businesses, but also fuel demand for commercial spaces.
4. Population Growth
Adelaide’s population is steadily growing, driven by interstate and international migration attracted to the city’s affordability and quality of life. This growth creates heightened demand for goods, services, and the commercial properties needed to support them, ensuring a robust pipeline of tenants.
5. Innovation and Technology Hub
Adelaide is emerging as a hub for innovation, with projects like Lot Fourteen fostering a vibrant ecosystem of startups and tech-based businesses. This evolution is driving demand for modern, high-quality office spaces, particularly in the CBD and surrounding areas, positioning Adelaide as a forward-thinking city for commercial investment.
These future drivers, coupled with Adelaide’s zero-stamp-duty advantage, reinforce its position as a compelling choice for commercial property investors.
Quality commercial assets in South Australia can be a smart way to diversify and grow a portfolio, particularly in this proactive zero-stamp-duty environment. Of course, trying to source and secure commercial property at the right price without the assistance of an experienced and well-connected local professional is challenging.
To ensure you make the most of your commercial purchase, contact Jonathon at Propertybuyer in Adelaide. He has the depth of knowledge and comprehensive industry networks to ensure you get the best possible outcome from your commercial real estate acquisition.
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