Scott O'Neill

So we're going to actually see a period of strong rental growth.

And I saw some, there was a Finn review article out last week calling industrial property in Brisbane, I think it was related to, it was going to go 50% rental increases over the next five years.

So these are massive figures and it's off the back of bill costs have gone up so much as well.

And like a small increase in interest rates, they're not going to be offset enough by the increase in rents you're going to achieve as well.

But what it will do, I think, is slow some of the rates of growth.

Like obviously, if interest rates are going to get multiple increases in the interest rate, then obviously,

People can't keep paying more and more for the same rent value.

And that's what's been happening the last few years.

Like we've seen yields drop to lower and lower levels because investors are seeing so much value in commercial.

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.