Ex-premier Campbell Newman has warned property investors to be ‘very, very careful’

Former Queensland premier Campbell Newman has issued a warning to Brisbane investors, saying they are “paying too much” thanks in part to the knock-on effects of record-low interest rates.

Arcana Capital managing director and former Queensland premier Campbell Newman.

FORMER Queensland premier turned property player overseeing a $110 million portfolio Campbell Newman has warned investors that it is a “time for absolute caution”.

Mr Newman said record low interest rates had led to a surge of capital into the property investment market resulting in higher asset prices and lower yields.

“Prices are becoming quite high and yields are getting tighter and tighter,” said the managing director of Brisbane-based syndicator Arcana Capital.

“We believe it is the time for absolute caution on the part of people acquiring assets. They have to be very, very careful.

“Our view certainly is that there are people who are paying too much at the moment.

“Yes, interest rates are low and there are no signs of them going up in the short term, but one day they will go up.”

Record low interest rates have led to a surge of capital into the property investment market.

Mr Newman said although it was an “increasingly difficult time to be buying” there were still “good deals out there, if you’re careful”.

As part of its latest acquisition, Arcana Capital has pumped up its portfolio — strategically aimed at providing a “stable investment platform” — with three service stations, two of them in Brisbane and the other on its rural outskirts.

It has paid $9.8 million for the fuel-based convenience retail assets leased to Puma Energy, reflecting a net yield of 7.42 per cent.

The properties have been divested by the APN Property-run Convenience Retail REIT.

They include service station at 216 Preston Rd, Wynnum West; 1380 Boundary Rd, Wacol; and 1965 D’Aguilar Highway, D’Aguilar.

Puma service station at Wacol.

Puma service station at D'Aguilar.

Campbell Bowers from JLL, who brokered the deal, said it reflected the strong demand in the market at the moment for fuel-based retail assets.

“It has definitely picked up this year as a result of the double rate cuts and the record cheap levels of debt that are around,” he said.

Occupying land holdings totalling 21,575sq m, the assets have a weighted average lease expiry (WALE) of 14.5 years and combined passing income of $726,716 a year on triple net leases with 3 per cent fixed annual reviews.

Mr Newman, who co-owns Arcana Capital with Dominic Condon and Peter Eccleston, said the syndicator also was in the “early stages” of getting two other south-east Queensland assets under contract.