What is core plus real estate?

Updated: 28 August 2025

Property investors often favour “core” real estate for its consistent, low-risk cash flow. These core assets typically deliver stable returns with minimal work. Investors seeking higher returns with controlled risk may consider “core plus” real estate. Core plus strategies offer reliable income with added upside potential. So what exactly is core plus real estate?

Core plus investors generally seek assets that deliver:

• Long-term, secure tenant income
• Clear opportunities to add value
• Potential for capital growth through active asset enhancement

Let’s explore what “core” and “core plus” real estate mean—and how they could fit your strategy in 2025.

What does core mean in real estate?

In investing and real estate circles, the term core relates to income.

Core real estate suits investors looking for passive income from long-term, high-quality tenants in low-risk locations, with minimal management required.

Core property is usually a set-and-forget investment. That means little hard work for you and little chance of things going awry.

What is core plus?

Core plus real estate offers the best of both worlds: stable rental income plus potential capital upside once value is unlocked.

Investors focused on value-add opportunities often target core plus properties—they buy with a plan to upgrade while maintaining reliable cash flow.

Value-add investors may purchase a property at a discount due to deferred maintenance or below-market rents, and then renovate, re-tenant or reposition it to unlock capital growth.

Core vs core plus

Core assets lean towards low risk, while core plus offers higher returns and upside, for investors prepared to execute improvements.

You can hold your core asset with guaranteed returns and little work to do.

Or you can take the guaranteed income and add capital value (through a bit of hard work) with a core plus real estate investment.

What is a good core plus real estate return?

Core plus real estate can provide returns of 5 per cent to 10 per cent.

If you’re a commercial real estate investor, you might be familiar with these returns, with the typical commercial property in Australia generating returns between 5 per cent and 10 per cent, and sometimes much higher.

Want more information on commercial real estate returns? Check out our blog post What is a good return on a commercial property?

Skilled investors executing value-add repositioning on core plus assets can sometimes achieve total returns up to 40 %, though this requires deep market insight and disciplined execution.

Just ask us.

How to add value in commercial real estate

In commercial real estate, you can add value in many ways:

• Lease agreements can be extended, so the investment guarantees you a particular income for a longer amount of time.
• The tenant profile can be enhanced, by upgrading the occupant of your property to a business that is more established, much larger, or more profitable.
• Physical attributes can be improved, like a new pylon sign out front of the building, an upgraded air conditioning unit, or a new coat of paint.
• Better covenants and interest rates on your bank loan could be negotiated with the bank. A lower interest margin means a bigger net profit at the end of the day.

Core plus assets can create very successful outcomes for those invested. But can be difficult for the average investor to find – and even tougher to manage. Another option is to take out the guesswork by investing alongside the experts.

We’ve been in the property game for decades. And there isn’t a single property investment we haven’t added value to. Whether upgrading tenants or increasing visibility with new signage, our strategy is about maximising an asset’s potential.

At Properties & Pathways we don’t just invest for income. We actively enhance assets—whether through tenant upgrades, physical improvements or strategic leasing—to maximise value for our investors.

For more information on investing alongside a trusted commercial property investment business with a proven track record, get in touch with Properties & Pathways today.

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