How do I invest in commercial property?

There are three typical ways individuals in Australia can invest in commercial property:

1. Investing in a direct property fund: Here, individuals contact a fund manager such as Charter Hall about their funds open to investment, and choose one that is suitable.
2. Investing in A-REITs: Here, individuals contact a stockbroker or online broking facility and identify listed commercial property trusts they wish to invest in. There are also managed funds that invest in A-REITs.
3. Purchasing your own asset: Be it in your own name or through your SMSF, you can purchase commercial property in a similar way to residential property. You will put down a deposit on a commercial property loan and use that to purchase a piece of real estate. Then, you manage it yourself or use a specialist property manager.

What are some of the advantages of a managed fund?

1. Simplicity: When investing through a direct property fund, property management is undertaken by the manager. In this way, you get to own part of a property or portfolio of properties without the burden of purchasing decisions, finding tenants and organising maintenance.
2. Accessibility: One big drawcard of direct property funds is the market these investment options open up for investors. By pooling funds together from multiple parties, managed funds and trusts have vastly greater purchasing power and can offer investors access to institutional-grade properties otherwise inaccessible to them. The minimum deposit required to invest with in a Charter Hall Direct Fund is $20,000 - far lower than the typical deposit needed for a commercial property venture.
3. Diverse building portfolio: In the same way that a diversified investment portfolio spreads risk across asset classes, a diverse property portfolio spreads risks across multiple assets. Many fund managers, including Charter Hall, combine multiple assets into a single investment option. When investors purchase units in the fund, they are purchasing shares of sometimes hundreds of properties.