Scott O'Neill

And to sort of illustrate that, a cap rate of 7%, for example, means you need $70,000 to pay a million dollars on a property.

but then that market may have turned to a five percent cap rate so that means people are paying a million dollars for now fifty thousand dollars of value of rent so you can see how the uh the rent value depending on how large it is will have a major impact on price and significant capital growth is is happening right now and if interest rates go up i still think it is going to grow but probably not at as fast a rate and it's probably a good thing for investors because it is it's a little bit mad out there at the moment

No, exactly.

And the commercial property market is tied to rent a lot more in terms of its capital value.

So when rents go up, you are almost automatically getting a value increase to your property.

So if your CPI

Next year is 4.5%.

Your value of your property, your commercial property is generally at least 4.5% higher.

There might be further yield compression on top of that.

So that might turn it to a 10% overall growth rate.

But these are the types of figures we're seeing.

It is overall double digit returns at the moment.

I'm finding it's becoming a bit of a capital growth platform.

Like historically, commercial property has been viewed as more of a cash flow asset.

But, you know, there's a lot of people storing wealth just like they do in residential into commercial.

And, you know, if that trend continues, then that might set a new precedence on capital cap rates for areas all over the country.

These are one of these, I guess, myths that I've heard over the years that commercial doesn't grow as fast as residential.

And

At the end of the day, it all comes down to supply and demand.

That's how capital growth is achieved for any asset class.