Deciding where to invest should involve looking at what stage you’re at in life and what investment goals you have in place.

With so many options available it can be tough knowing which investment vehicle is right. Investing in commercial property is one asset class that many investors might not normally have considered, mainly as it had been seen as the domain of the super-rich, but there are a number of entry points to suit everyone from the high net worth individuals to investors with around 200k, in property syndicates. 

The top super performers of 2018, as listed by Chant West, didn’t come close to matching commercial property returns.

The best growth super fund gave 2.80 per cent returns in 2018, while office and industrial property in Australia gave investors respective annual returns of 13.7 per cent and 14.8 per cent according to the Property Funds Association.

Commercial property overshadows these super funds, which have most of their investment tied up in shares.

Commercial real estate yields are typically 6 to 8 per cent and far higher than the 1 to 3 per cent yields from residential property investment.

That’s because commercial tenants pay much higher rent for the space they occupy than tenants living in a house on the street.  

Because yields are higher than the interest a bank charges, commercial property is generally a cash flow positive investment.

This stable income stream is ideal for those in their twilight years, who have reduced ability to earn an income from working.

Commercial leases typically run between five and ten years and allow investors to forecast income with a degree of certainty.

Plus, annual rent increases are usually built into your commercial lease agreements. So, inflation and interest rates shouldn’t eat away at your annual rental income.

There are now over one million self-managed super fund members in Australia (close to 600,000 SMSFs) and for some, commercial property is an attractive investment option.

SMSFs offer tax benefits for investors which they couldn’t receive as an individual investor.

After a property sale, SMSFs send less profit to the taxman than they typically would if investing as an individual.

Capital gains (the difference between the property’s cost and its sale price) are taxed at only 10 per cent for an SMSF. Compare this to when a property is sold by an individual, where capital gains could be taxed by up to 30 or 40 per cent.

Commercial property might be the right investment for you if you’re comfortable playing the long game.

There’s an element of time needed to see strong capital growth in your asset, which allows land values to increase, tenant’s lease agreements to be extended and the surrounding locale to evolve for the better. 

Sure, unlike shares, your money won’t double overnight in a commercial property investment – but it won’t disappear overnight, either. 

Commercial property syndicates are a great vehicle for those with a small amount to invest.

The entry-level can be around $200,000, or less in some circumstances.

This allows investment into a property of substantial value bracket and the potential for high returns. 

Syndicates also give time-poor investors a set-and-forget investment.

They can have comfort knowing their capital is working for them while they’re working for the man (or working on their short game).

From retirees to first-timers, commercial property is increasingly becoming an investment choice for many Australians.

As always, you should consider the risks and talk to your financial adviser or accountant before undertaking any new investment.

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