Investopoly
Investopoly is a twice-weekly podcast designed to help you make better financial decisions and build wealth with clarity and confidence. Hosted by Stuart (tax adviser, financial adviser, and mortgage broker) and Campbell (senior financial adviser), each episode delivers concise, practical insights grounded in real-world strategy, research, methodologies, and case studies.
You will get two episodes each week: a main episode that deep-dives into a single wealth-building topic, and a Q&A episode that answers listener questions and real scenarios. Send your questions to questions@investopoly.com.au
We also writes a weekly blog, and many podcast topics build on those ideas and frameworks. Stuart's forthcoming book, Wealth by Design, will be available in July 2026.
Investopoly
Ep 412: Beware: Commercial property values look stretched
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Commercial property is being actively promoted as a compelling alternative to residential investment, particularly as higher interest rates reduce borrowing capacity and tighter tenancy laws make residential property less attractive. On the surface, the pitch is appealing: higher rental yields, tenants paying most outgoings, and the potential for capital growth. But in Stuart's assessment, current valuations make the risk hard to justify.
This episode examines commercial property through a valuation lens, explaining how cap rates work, why current pricing looks stretched relative to historical norms, and how the spread between commercial yields and the 10-year government bond rate has compressed to levels last seen before the GFC. At recent auction prices, some properties are selling on cap rates below the risk-free rate, meaning investors are accepting less income than a government bond while taking on substantially more risk.
The analysis models what happens to investor equity if cap rates revert toward their long-term average of 3.5% to 4.5% above the bond rate. The results are stark: at 70% leverage, a reversion to historical norms could wipe out most or all of an investor's equity.
Stuart also explores why cap rates have stayed compressed despite rising bond yields, and why the structural forces holding valuations up may not last. Commercial property can be an excellent investment, but only at the right price.
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Do you have a question for the podcast? Email us at questions@investopoly.com.au.
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IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.
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