Industrial Property Investment Returns
REGIONAL PROPERTY RETURNS When comparing industrial property investment returns, it is important to look at all the factors that impact on your net return. For example a new industrial property will have higher depreciation tax deductions than older property. Also if you are borrowing at 8% and earning 10% net this will have a big bearing on your financial gain, notwithstanding that you will be paying interest. Therefore the initial yield on the total project may be misleading when comparing properties if you do not take the above factors into account i.e. “after tax/after loans.” It is nigh impossible to do this comparison calculation accurately without the aid of feasibility software. Industrial property investment returns vary along the eastern states. The most common returns quoted are net rentals expressed as a % of purchase price which are referred to as Capitalisation Rates or “Cap Rates”. As pointed out above,
whilst they are a good valuation tool they do not reflect what happens in your bank account.
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