Earlier this year, you read about a funding crisis pending for Property Trusts and Institutional buyers. And this is not helped by the RuddBank failing to materialise.

With a surge in the Share Market since March, several recent capital raisings have helped some of these larger property owners.

However, with the latest hiccup in Share Market confidence, you’re unlikely to see much more capital raised in this way.

As such, Quadrant Real Estate Advisors have concerns with the high debt levels for these owners of Investment-grade property.

As you can appreciate, the financiers are proving to be rather difficult.

Therefore, over the next two years, you could see a gap of up to $30 billion emerge, between properly valuations and what bank are prepared to fund.

But these problems seem to relate mostly to commercial properties worth more than $20 million.

Because, for properties less than $10 million … the market appears conservatively geared, and is experiencing strong demand — especially for properties in Melbourne, priced under $5 million.

So it is somewhat a two-tiered market … with a number of good opportunities starting to emerge.

And Rentals are Set to Rise …

The recent boom period saw prime Office rentals in Brisbane, Sydney and Perth hit the $1,000 per sq metre mark. However, they have fallen dramatically from that peak, since mid-2008

Meanwhile, Melbourne has remained steady at around $750 per sq metre — mainly because most of its new development has occurred in pre-committed medium-rise buildings, within the Docklands precinct.

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Depreciation is probably the most under-used weapon to legitimately shelter a significant portion of your property income.

And as a Commercial Investor, you really do have an unfair advantage over somebody investing in only residential property.

Therefore, let’s now set about dispelling a few of the common Myths concerning Depreciation.

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In an earlier article, I gave you a bullet-point comparison of how things are NOW … compared to the early 1990s … in relation to Commercial property.

Anyway, here are some very revealing graphs — based upon figures from the RBA.

Back in the 1990s, the banks were burdened with a heavy corporate exposure; and interest rates were up around 18% pa.

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Despite what the IMF has to say this morning … the World Bank expects China’s economy to start growing by mid-year, as a result of its massive stimulus package (some $A800 billion).

Overall growth for China has become more certain, as activity moves from state-funded projects into housing and improved consumption.

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Private Investors continue to dominate the Melbourne Commercial Office market.

Right now, sales around $20 million are slow; and over $40 million are few and far between.

However, the suburban market for properties under $3 million enjoy solid demand from cashed-up private Investors.

Research by Knight Frank shows that last year saw $240 million recorded in suburban Office Sales. And already this year, they have totalled some $100 million.

And 97% of those sales have been to Private Investors.

Over the past weeks, I’ve posted several articles suggesting things are starting to improve — and more particularly, here in Victoria.

Since the low point on 6 March, the Australian stock market has enjoyed roughly a 20% improvement. And that has also been reflected on Wall Street.

However, we then received the recent announcement of unemployment reaching 5.7% for March — the worst for 5 years.

On the one hand, the Bulls are claiming the stock market is now confirming a turnaround. And on the other, the Bears are using the rise in unemployment to support their case as to how bad things are.

Surely, these two indicators can’t both be right?

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If you’re like most people you are probably trying to second guess whether or not the RBA will reduce official interest rates by 0.25% or 0.5% over the next month or so.

So, should you fix your rates on your Commercial property now, or wait a while?

Realistically, you need to study what is actually happening around you. And I would counsel you to view things over the long term, rather than merely the short term.

Let me explain why.

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As a result of the global financial crisis … sales of Melbourne CBD Offices fell in 2008 (to $425.2m) from the level achieved in 2007 (of $850.9m) — according to research released by CBRE.

Institutional buyers and REITs have virtually withdrawn from the market … leaving private syndicates, wealthy families and overseas buyers to transact most of the deals.

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The question has been raised as to whether you could bring along a “significant other” with you to attend the full-day Workshop on Saturday 4 April?

And over the years, I’ve found some of the most successful results have been achieved when people act as an Investment team. So, the answer is a resounding … “Yes!”

But given the turbulent times, I’m happy to play my part in helping you out.

Simply enrol yourself and you can then bring along your “Investment Partner” absolutely FREE.

That’s how serious I am about seeing you gain the upper hand in the current market.