Commercial vs. Residential Property: How they compare

In general, commercial property is seen as a defensive, high yielding, low capital growth investment. Whereas, residential property is generally viewed as a more speculative, high growth and low yielding investment. 

 Residential propertyCommercial property
Effective cash yield2-4% paAround 5-7% pa
Property typesHouses, apartments, flats and townhousesOffice, retail, industrial, healthcare, hotels and storage facilities
LeasesShort term (typically 1 year)Long term (typically 5+ years)
Rental reviewsUpon lease renewal, determined by local market conditionsMost lease contracts have locked-in rent reviews linked to fixed rates or CPI
TenantsIndividualsBusinesses, ASX-listed companies, government bodies
Legal protectionVarious States' Residential Tenancy Act favours the tenantGenerally, the legislation is balanced between landlords and tenants
Property costsCosts are largely borne by the landlordMajority of costs are borne by the tenant

Source: APN Property Group - 'The little book of Big Property: An essential guide for commerical property investing'