Hotels, self-storage and essential services are the likely winners, while things look less certain in retail and office property.
. Most spent more than a decade protecting against it – imposing leases with fixed annual rent reviews that well exceeded the average rate of 2.5 per cent since 2010.
Add to this that since COVID-19, demand has shifted, affected by new trends such as hybrid working, online shopping, regional living and local holidaying.With rents able to be set daily, freehold going concern hotel owners are arguably the most insulated property investors against inflation. Vendors are using it to their advantage too. SPC recently sold a Shepparton factory on an impressive 6.1 per cent yield, largely because of a 30-year triple net leaseback with fixed rent rises of CPI plus 0.75 per cent.At times during the pandemic, this was the best performing sector because landlords suffered no loss to rent.
The latest Property Council occupancy data reveals all major capital cities remain below pre-COVID levels, with Sydney only back to 55 per cent and Melbourne sitting at 48 per cent as of last month.Co-working office owners could be considered more insulated against inflation than a traditional office landlord as they have the flexibility to increase their rents .
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