Cheap Sydney CBD offices as potential house alternatives?

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The most inexpensive 10% of houses in Sydney were valued at more than $600,000 each last June. This means that even the cheapest houses in the greater Sydney metro area, including Penrith and the eastern suburbs, are still more expensive than other assets.

There are over 80 offices sold for less than the 10% of Sydney’s cheapest homes in the business centre of Sydney. These strata unit offices cost between $87,000 and $604,000 with an average of $380,363.

King Street, Macquarie Street and Sussex Street have the cheapest office sales in the Sydney CBD. Five out of 10 lowest sales are from a 10-storey building built in 1973, a few minutes from World Square, Town Hall Station and some restaurants. The cheapest sale was a 26 sqm. room in 229 Macquarie Street.

These office spaces are low in value because commercial property investors highly depend on rental yield instead of capital growth.

The lowest tenth percentile of Sydney homes experienced a capital growth of 11.4% last May. Capital growth in commercial properties are usually less especially because the potential for value growth for these small spaces may have been disrupted by increasing remote workforces.

Start-ups and emerging small businesses often find communal office spaces where workers can rent a desk per day and not have to worry about long-term leases.

Commercial properties are now being seen as potential houses or residential units but these strata spaces won’t be rezoned.

The inexpensive office units sold in the Sydney CBD have an average of 47 sqm floor area and are located in high-rise commercial buildings. The cheapest non-strata office property was $4,000,000, which is a 220 sqm building at 66 Druitt Street in the Sydney business centre.

These small low-value offices may have good rents.

The highest rental yield in the year was 6.7% on a 51 sqm unit sold for $475,000 in Pitt street. This property could be positively geared depending on the loan terms. Because of Sydney’s strong economic performance, these offices could be good property investment opportunities.

For more information about property investment in Australia, contact a Specialist to discuss your particular circumstances.

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Chan & Naylor Group has nationwide offices in Brisbane and Capalaba in Queensland, Melbourne and Moonee Ponds in Victoria, East Perth in Western Australia, and Bankstown, Parramatta, Pymble, North Sydney, and Sydney in New South Wales.

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