6 | SYDNEY OFFICE UPDATE
THOUGHT LEADERSHIP
TO RENT OR TO BUY ? THAT IS THE QUESTION .
Over the last two years hundreds of tenants in Sydney ’ s CBD have been forced to vacate buildings marked for demolition for conversion from commercial to residential , as well as offices acquired in Sydney for the metro train line .
For many businesses that have been through this predicament , the security of buying an office has become a real consideration . There might be a location you need to be near to , such as law courts or a financial hub . You might have staff who value security and create their lives around their workplace - buying property to be close to work , choosing daycare centres and schools that are easy on the commute , even things as simple as joining a gym nearby or enjoying the ferry to work . Or your address on paper might be critical to your industry , such as an office on Martin Place or near Circular Quay .
Whatever your driver , when making your decision to buy or lease , is buying better than leasing ?
BENEFITS OF BUYING
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You don ’ t need to answer to a landlord on lease terms , make goods and options The property will become one of your major business assets over time
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As the property increases in value you can borrow against your equity in the premises You can claim depreciation of fixtures and fittings You can use the asset as part of your superannuation scheme
Ability to add value to the office by improving fitout .
Owning gives you a sense of security and stability
PITFALLS OF BUYING
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Banks will usually require 20-30 % equity to buy the property , or more if you ’ re buying in a superannuation fund Banks usually want a personal guarantee , which can put assets such as your family home at risk You become sensitive to interest variations , as opposed to fixed rates in leases If the sales market falls , your investment falls as well Having no landlord means you ’ re liable for expenses including rates and repairs If you have to relocate , selling the premises could be difficult Purchasing a property makes you liable for stamp duty when you buy and agents fee when you sell .