What happened
Following federal budget changes that restricted negative gearing, altered capital gains tax calculations, and halted new SMSF borrowing for existing residential property, investors are turning toward commercial real estate. Commercial property and newly constructed residential assets retain existing tax benefits. According to Mortgage Choice data, industrial assets have outperformed other commercial sectors, with yields firming in every Australian capital city.
Why it matters here
The divergence in tax rules creates a structural shift in property capital allocation. Residential property, long favored by SMSFs and private investors, faces tighter lending and reduced tax efficiency. Commercial assets offer attractive yield profiles but require deeper expertise in tenant quality, lease duration, and sector dynamics, particularly as office markets face ongoing valuation adjustments while industrial property stays in demand.
What to watch
Quarterly lending growth figures across commercial property sectors and transaction volume reports on major commercial real estate listing platforms over the next six months.
Source
mortgagechoice.com.au