Industrial market fails to excite listed trust sector

PERTH’S industrial market ranks as the third largest in Australia, with more than 11.4 million square metres of industrial zoned land, but it remains largely ignored by the listed property trust sector of the market, according to research by Savills. Savills recently surveyed listed industrial property trusts, which hold a total of 294 properties Australia wide. Of those properties, only four are in Western Australia. Savills research manager Belinda Nowland said listed trusts were surprisingly underweight in industrial property in WA. “In 2003 and 2004 there was $192 million worth of industrial property in Perth purchased by unlisted trusts and funds, but no activity from listed trusts,” she said. Despite being ignored by the LPT sector, Savills WA director of industrial sales and leasing, Max Jones, said industrial property was currently benefiting from investors shifting their focus towards the industrial market. “This is due to a lack of investment-grade stock in other classes and their higher levels of returns industrial property can provide,” Mr Jones told WA Business News. Analysis of industrial sales in 2004 over $500,000 showed $372 million worth of property sold, of which over 80 per cent was bought by private investors or owner occupiers. From the research findings Savills has concluded that industrial sales activity will remain strong throughout 2005 in WA, due to the burgeoning economy, particularly for properties up between $500,000 and $1.5 million in new industrial estates in the north and south of Perth. “With the decreasing availability of stock in the Melbourne and Sydney markets we expect the current difference in yield gap between Perth and other markets to narrow, particularly in the upper price range of more than $10 million,” Mr Jones said. He added that there were also signs of upward pressures on rental growth as new developments are reflecting higher rental levels.

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