Investment Fundamentals

Why Invest in Commercial Real Estate

7th December 2022

Amidst the recent stock market volatility, private real estate investment has emerged as a favored choice among affluent investors. Commercial real estate, known for its attractiveness during various market cycles, has a well-established track record.

The Australian commercial real estate market has witnessed an impressive influx of private and institutional capital, reaching near-record levels, totalling $71 billion in transactions during 2023, as reported by JLL. This heightened interest from both domestic and international investors reflects their confidence in Australia as a safe haven to preserve investments while generating positive returns.

Direct real estate investment offers an array of advantages, including stability, portfolio diversification, consistent cash flow, and appreciation potential. Let's delve into some key reasons why commercial real estate investment is gaining popularity and attracting a wider range of investors:

1. Attractive Returns: Investors, both institutional and private, are currently drawn to real estate investments due to the allure of higher yields compared to other alternatives like stocks, bonds, or commodities.

2. Steady Cash Flow: Real estate investments are typically structured to deliver regular cash flow through dividends distributed to investors on a monthly, quarterly, or annual basis. These investments can take the form of equity or debt investments.

3. Equity Investments: The RealRaise Marketplace facilitates passive commercial real estate investing by offering minority ownership stakes in hard assets such as industrial warehouses or office buildings. High occupancies and increasing rents contribute to stable or rising cash flow over time.

4. Debt Investments: Another option involves investing in real estate loans, backed by assets like land or buildings. Debt investments are often structured to deliver fixed returns.

5. Equity Upside: With equity investments, investors have the opportunity to enhance overall returns by capitalizing on property appreciation or capital gains upon asset sale. Timing the exit strategy becomes crucial for maximizing returns.

6. Depreciation Benefits: Apart from appreciation and capital gains, depreciation offers a favorable incentive for real estate ownership. While the accounting value of a property's physical structure declines over time, depreciation does not affect its market value. This accounting benefit allows investors to offset other passive income, resulting in higher after-tax yields. It's advisable for investors to consult tax advisors as tax benefits depend on taxable income.

7. Tangible Asset Backing: Real estate investing diversifies portfolios with tangible assets that investors can touch and feel. Unlike shares in companies that may be volatile, real estate assets provide a sense of security and stability over time.


The strong appeal of commercial real estate investment lies in its promising returns, steady cash flow, potential for appreciation, depreciation benefits, and tangible asset backing. As investors seek to navigate unpredictable market conditions, real estate continues to stand out as a reliable and resilient asset class, offering a path to long-term wealth preservation and growth.

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