Regional NSW suburbs top statewide list of best investor locations

Investors in NSW looking to grow their wealth despite the ongoing inflation stressors, are turning to regional areas with a positive cashflow.

Positive cashflow suburbs generally have higher yields and returns for investors across all types of properties.

According to Unikorn Commercial Property founder and buyer’s agent Helen Tarrant, buyers should turn to NSW suburbs such as Wagga Wagga, Albury, and Maitland for a successful commercial venture.

Undeveloped or immature holdings could hold strong potential in regional areas.

Ms Tarrant said she prioritised suburbs across NSW with a higher commercial yield where there is more cash coming into the business than going out – enabling sustainable long-term growth for investors.

“Wagga Wagga is an incredibly stable town to place a commercial investment with a 6.5 per cent to seven per cent yield. It’s got a military base and is a transit hub for many out of town investments,” Ms Tarrant said.

“This high yield actually outperforms Sydney – you’d have to look towards Newcastle or the Northern beaches for five or six per cent yields – many of the office and retail spaces in the Sydney CBD have high vacancy rates.”
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Wagga Wagga is currently experiencing a 6.5 to seven per cent yield on commercial investments, outperforming many areas of Sydney’s CBD.

Albury was considered an economic bubble for the commercial property investor, as one of the state’s largest regional towns attracted a high number of health professionals.

High profile commercial trades like Harris Markets and SuperCheap Auto had also set-up shop in Albury to cater to the growing population and occupy a shrinking available land space.

“A lot of commercial investors are out there chasing the magic seven per cent yield, but its only really possible in regional towns with small populations. Places like Broken Hill that receive eight per cent yields are the outlier, not the norm.”

Albury is considered an economic bubble for commercial investors.

While Tarrant herself started small, she used the equity in her existing portfolio to purchase more properties, renovate and refurbish them to add values in order to make the most of her investment.

Tarrant’s own portfolio now consists of 80 per cent office and retail space, with the remaining 20 per cent invested in industrial spaces.

“It’s not about whether you should buy it today versus tomorrow or next month. It’s actually about where you want to buy and the kind of return you want.”

Ms Tarrant advises commercial investors to diversify their portfolios and have property in both regional and metropolitan areas.

“Diversifying your commercial property portfolio could mean having a property in regional and in metropolitan areas.”

“It might also mean buying retail, office space and even a warehouse. Once you have the right mix, they balance off each other.”

“You can leverage each other over the years to come and continuously get cash flow and growth and then you can continue refinancing pulling out the equity to do more deals in the future.

Despite being one of the best performing commercial suburbs in the state, Maitland’s overall yields fell slightly in 2022.

Experiencing the highest growth of any region during the pandemic, Maitland fell slightly from seven per cent to six per cent this year.

The mining and defence industries have driven production in this area, with returns going down as commercial buying prices went up.

Ms Tarrant believes more big brands should invest in Maitland in order to avoid large contractions in the commercial market.