Here’s an analysis of the total purchase price, business price and property price for 32 projects (graphic 3) currently listed in the market as of oct’22 between AUD 2m-5m (with 1 exception) - listings data off theonsitemanager.com.au
From purely annual yield perspective, higher business price / purchase price % usually yields higher ROI, as capital deployed is optimized for the higher yield business portion of the investment as compared to the property.
Having said that, property in areas primed for growth has significant advantage on exit for property capital gains, as well as valuation multiple premium inflation due to the location premium.
At APM, we target the high business / purchase % projects, in high grow areas. In an attempt to capture the higher yield and also, the potential for higher premium through valuation multiple on exit because of location.
As a very brief example, the projects above 75%(graphic 1) or more business price / purchase price would be prospective projects for further due diligence as acquisition targets.
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