3 Reasons you should look closely at Adelaide warehouses

When I first came to Australia a couple of years back my plane stopped over in Adelaide to refuel. It wasn't supposed to but after flying across from Shanghai non stop for what seemed an eternity, I welcomed the opportunity to step out and stretch. Plus this was the first time I was stepping on Australian soil and I intended to make this country home. I was excited, eager and half expected the exotic.

But the experience was anti climatic. Adelaide airport is as tiny as they come and there is nothing in the neighborhood, for miles across the airport windows there was only parched yellow grass and some gum trees in the distance. In the next few months I heard jokes about how Google plus is the "Adelaide" of social media.

My wife has cousins over in Adelaide, so last Christmas we visited them. We saw the city but did not think much of it. It is clean and devoid of the unsightly Melbourne graffiti but did not seem to have much going for it apart from the large number of old people milling around its streets. After four days when we returned to Melbourne, I was happy to be home.

Of late the news continues to be grim, manufacturers like Holden are shutting shop and the submarine project seems to be going nowhere. But there have been a few developments which have caused me to take another look at Adelaide.

1) The rental yield on commercial property in Adelaide is a good 100 to 150 basis points higher than rest of the country. So it is already an attractive investment.

2) Changes in the Significant Investor Visa mean that investors (yes, most of them are Chinese) can no longer use investments in residential property to secure their visas. Commercial property is still fair game though. The government has rightly concluded that foreign investment should move away from overheating residential property and move towards infrastructure and business development. Hence the focus on commercial property and startup investments.

3) The South Australian government has decided it has to get out of the way. They are phasing out stamp duty on commercial properties over the next 3 years. This is a big deal and can significantly reduce the transaction cost of investing in commercial property in Adelaide and South Australia.

All in all it looks like smart policy making could potentially turn a grim stagnation into a potential growth hotbed. Sleepy Adelaide could yet defy the odds and see a gush of money flowing in over the next few years.

So start looking closely at that warehouse in Adelaide. Perhaps you might find a few such opportunities to invest in commercial property at estatebaron.com