13 March 2008

Interest Rates Hits DIY Super Fund Commercial Property Investors

The interest rate pain that is placing hundreds of thousands of Australian home owners under mortgage stress is also hitting many people investing in small commercial properties through their superannuation funds.


A small block of apartments are often part of a
superannuation funds' investments

Archicentre, the building advisory service of the Royal Australian Institute of Architects says some people are suffering the 'Double Interest Rate Whammy', being hit by housing interest rate rises whilst at the same time copping a second hit through loans for commercial property investments which are common in DIY Superannuation Funds.

A small block of apartments, retail premises, offices or a factory is a common superannuation investment.

Archicentre General Manager David Hallett said that in 2006 Archicentre was undertaking one or two commercial building pre-purchase or pre-leasing reports a month for businesses. Archicentre Commercial has now experienced strong growth and we are now completing eight to ten commercial reports a week.

"People recognise that buying a commercial property as an investment is more complicated than a residential property as it involves different construction standards, health and safety regulations and depends on the business success of tenants."

Mr Hallett said the demand is being fuelled by high prices for commercial property and the continual rising interest rates with people ready to purchase and investors requesting property status reports as they get ready to sell.

The Commercial Pre-Purchase Reports provides comprehensive inspections and reports covering the building, its structure and services for purchase or due diligence purposes.

Mr Hallett said that any commercial building that has structural or service faults in the power, water, air-conditioning or air quality can result in major costs to repair. Until the faults are repaired the building owner may find it difficult to lease the premises and gain a financial return.

"Investors buying commercial properties without thorough inspections also run the risk of legal issues with new or existing tenants whose business operations are disrupted by failing infrastructure, especially where health and safety issues are involved."

Archicentre also conducts Maintenance Reports on commercial properties providing comprehensive inspections and reports providing detailed information to help the business owner plan for periodic maintenance of the property.

Mr Hallett said that Archicentre Commercial also provides small businesses with a service that can investigate the suitability of a property for their business operations. An Architects Advice Report outlines the potential refurbishment and fit out opportunities of the premises for a potential business owner considering leasing a property.

Some Archicentre commercial inspections have uncovered a range of issues including:

"Many small business owners are using Archicentre Commercial Reports to negotiate with landlords and agents to have issues fixed before they committed to signing a new commercial lease. The reports also provide business owners with details of the water and energy efficiency of the building."

With a network of nine hundred specially trained and qualified architects Archicentre is the largest supplier of building inspection services and design concepts in Australia, providing reports on property valued at $7 billion in 2007.

Archicentre Commercial

www.archicentre.com.au
Commercial Reports; Building Status Reports; House Inspections; New Homes; Home Renovation;
Home Improvements; Design Concepts; Pest Inspections; New Housing Reports; Pre-Purchase Inspections; Building Progress Reports.

Media Enquiries:
David Hallett General Manager Archicentre (03) 9819 4577 Mobile: 0439 439 115
 Ron Smith Corporate Media Communications (03) 9818 5700 Mobile: 0417 329 201