Best Commercial Buying
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What recent event impacted Scott O'Neill's life?
It's the Real Estate Podcast, brought to you by Ray White, the largest real estate and property group in Australasia. And welcome to another episode of the Real Estate Podcast. And we're talking with Scott O'Neill from Rethink Investing. G'day, Scott. G'day. Good to be back. Thanks for having me. Since we last spoke, there's something that's happened which I think you should really sort of come clean and tell the listeners a little bit about. You broke your arm, and how did you do it?
I was down on a little surfing trip in Melbourne of all places. They've got this urban surf, they call it. It's like a man-made wave in like an industrial area near the airport there. And in between sessions, I was just rushing and I thought I'd take a little shortcut over a fence and then... It slipped on the fence, landed straight on my arm and it ended up sending the ball and socket through each other. So it shattered it down the elbow and yeah, pretty painful. I thought I just popped the elbow. So I was trying to like Google tutorials of how to unpop your shoulder and sorry, not shoulder, the elbow rather. And yeah, it definitely didn't work. And three days later I had surgery and they put a carbon fiber elbow in there now.
So yeah, strange few days, but I wasn't expecting that.
Was that a typical Aussie male where you didn't go to the emergency department straight away?
No, because it popped out sideways and I thought, oh, it's just come out of the socket. It didn't feel like a break and I thought, I've seen lots of movies where they've unpopped things and to be honest, I didn't really want to wait 90 minutes to get into the ambulance and I thought there's got to be a shortcut here, but definitely not.
Yeah, typical Aussie, typical Aussie, it's coming through. We should also mention that we've got a brand new podcast series with you and it's called Let's Talk Commercial Property. And this is going to be a good one because lots of people sitting on the fence kind of thinking about commercial property. We're going to really sort of take some deep dives, sort of unravel this. And I think this will be quite educational for the listener.
Yeah, and I think it's quite topical at the moment as well. Mostly because the residential markets have got so hot and in many cases unaffordable and the yields are at record lows. Commercial, in my opinion, makes more sense now than ever. And they're not as good value as they used to be. So for the value investor who wants cash flow, this is a good alternative. It's just about understanding the markets. There's risks in it. There's obviously some massive opportunities as well. So we can deep dive into all of those.
Yeah. Okay. Well, looking forward to it. So what happens, Scott, to commercial real estate if interest goes up? I think that's probably quite a good first up question.
Yeah. So this is a big thing at the moment because there's obviously talk about high inflation, which leads down to, I guess, an eventual RBA rise in interest rates. And reading the latest headlines, they're talking about an August increase sometime in August for the RBA to raise their interest rates. So Naturally, you think as an investor, what's going to happen to commercial property or residential as well in that matter? And my opinion is I actually think it could be a relatively good thing for the market because when you get high inflation, which is a precursor. to interest rate rises, you're actually getting rental increases. And commercial property, a lot of the leases are attached to CPI incremental annual increases.
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.
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