When comparing commercial, residential, and off-the-plan investments, understanding the financial impact of each strategy is critical. Across Melbourne’s Bayside and Kingston markets, Lewin Real Estate is actively working with buyers in all three categories—each offering very different income profiles, tax implications, and growth potential.
Residential Property
Residential real estate remains the most accessible entry point for investors, particularly in high-demand suburbs like Mentone, Cheltenham and Hampton East, where Lewin Real Estate continues to handle strong-performing homes such as 19 Harpley Street Cheltenham, 2/152 Balcombe Road Mentone and 205/336 South Road Hampton East.
Financial Advantages:
- More affordable entry price, making it easier to leverage and build a portfolio
- Strong long-term capital growth driven by owner-occupier demand
- Negative gearing benefits may be available, helping offset taxable income
- Consistent rental demand reduces prolonged vacancy risk
Financial Considerations:
- Lower rental yields (typically 2–4%) compared to commercial assets
- Ongoing costs including maintenance, repairs, insurance, and management fees
- Vacancy periods and tenant turnover can impact cash flow
- Interest rate rises can significantly affect holding costs
Residential is often a growth-focused strategy, ideal for investors looking to build equity over time rather than maximise immediate income.
Commercial Property (Malcolm Road, Braeside)
A standout example is 12/20–30 Malcolm Road, Braeside, highlighting the financial strength of industrial assets within tightly held precincts.
Financial Advantages:
- Higher rental yields, often ranging from 5–8%+, delivering stronger cash flow
- Long-term leases (3–10+ years) providing income stability and predictability
- Tenants typically pay outgoings (council rates, maintenance, insurance), reducing landlord expenses
- Annual rent reviews (CPI or fixed increases) support income growth
Financial Considerations:
- Higher entry price and larger deposit requirements
- Potential for extended vacancy periods, which can significantly impact income
- Leasing costs (incentives, fit-outs) can be substantial when securing new tenants
- Greater exposure to economic cycles and business conditions
Commercial property is typically an income-focused strategy, suited to investors prioritising yield and cash flow over pure capital growth.
Off-the-Plan Investments
Off-the-plan opportunities continue to gain traction, particularly with developments like Off The Plan Apartments for Sale Murrumbeena – Murrumbeena Place in Murrumbeena, offering modern living in a well-connected growth corridor.
Financial Advantages:
- Secure at today’s price with potential capital growth before settlement
- Lower upfront costs (deposit now, balance later) improving cash flow flexibility
- Stamp duty savings may apply depending on timing and structure
- Brand-new properties offer strong depreciation benefits, improving after-tax returns
- Minimal maintenance costs in early years
Financial Considerations:
- Market fluctuations during construction may impact valuation at settlement
- Risk of valuation shortfalls, requiring additional capital at completion
- Construction delays can affect financial planning
- Rental income is deferred until completion
- Limited ability to assess final product quality before purchase
Off-the-plan is a future-focused strategy, balancing tax advantages and growth potential with timing and market risk.
The Financial Takeaway
Each property type serves a different financial objective:
- Residential: Lower yield, stronger long-term capital growth and leverage potential
- Commercial: Higher yield, stronger cash flow, and structured income growth
- Off-the-Plan: Tax-effective, lower upfront commitment with future upside potential
The right strategy depends on whether your priority is cash flow, capital growth, or tax efficiency—and in many cases, a balanced portfolio may incorporate all three.
With qualified buyers actively seeking opportunities across all sectors, now is the time to act. If you’re considering selling or investing, contact Lewin Real Estate—there’s every chance we’ve already met your buyer.
Disclaimer
Lewin Real Estate is a licensed real estate agency and does not provide financial or investment advice. The information in this article is general in nature and should not be relied upon as financial guidance. You should seek independent advice from your financial advisor, accountant, or lending institution before making any investment decisions.