6
*JANINE HELLYER
is a Director of
BDO Tauranga Chartered
Accountants, specialising in
property investment services
A
n investment in commercial real estate, as with
any investment, is a bet on future events and
circumstances, since the value of the acquired
property can change if its location’s demograph-
ics and economy shift over time.
That’s why it is critical to determine at the start of your
search how much and where to invest in order to hedge your
real estate bet. There are certain basic factors that real estate
investors generally consider when assessing the viability
of an investment in a specific property or region. A proper
assessment of these factors will result in a determination of
where to invest and what type of property to invest in.
One of the factors to consider is the investment time
horizon, or holding period. Over time, markets change and,
therefore, so will investment returns. The investment strategy
will dictate the holding period and will lead investors to
specific markets.
The holding period assessment naturally leads to a number
of other factors to consider, such as continuing urbanisation.
The population shift from rural to urban areas has a sig-
nificant impact on the prospects for commercial real estate.
Urbanisation factors will dictate the types of properties that
will perform better in a given market at and over a given time
period.
Likewise, demographics and projected demographic shifts
also play a role. Factors such as education levels, income
levels, age and family composition, have a specific impact on
the types of properties that will perform in a given market.
Another key factor to consider is how saturated a given
market is at present, or is projected to become. Put another
way: how quickly vacancy in a given property type will be
absorbed by a given market. As a rule of thumb, commercial
real estate investors (and developers) generally seek proper-
ties in markets that will be able to better absorb the available
space or that will benefit over time from the factors discussed
above.
As one seeks to make an investment in commercial real
estate and searches for the perfect property and market, the
key is developing a reasonable prediction of future events
and circumstances.
Trends are clearly important to commercial real estate
investing; specifically to identifying the appropriate market
and property type to achieve the investment objectives within
the investor’s specific time horizon.
Roger Norton and Sandra Johnson from
The Dry Dock cafe welcome the changes
By Janine Hellyer*
“Proud to support a great team”
For your nearest store visit
bunnings.co.nz/stores
or call
0508 BUNNINGS
You’ll find all you need for any job at your
nearest Bunnings. We’ve got the widest range
from frame and truss to painting products.
Bunnings is proud to support
Tauranga & Rotorua Property
Investors Association.
DANA,
TEAMMEMBER
ENJOY BOWLS WITH US
“the friendly club”
e Domain, 37 Cameron Rd, Tauranga
P: 578 9369 E:
TAURANGA BOWLING CLUB
BUYING INTO
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