11/11/2010 - 00:00

Industrial markets recover

11/11/2010 - 00:00

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ROBUST economic conditions and pricing opportunities have seen Western Australia’s commercial and industrial property sectors at the forefront of a global property recovery, according to industry research.

Industrial markets recover

ROBUST economic conditions and pricing opportunities have seen Western Australia’s commercial and industrial property sectors at the forefront of a global property recovery, according to industry research.

An analysis by CB Richard Ellis of 55 of the world’s leading industrial and logistics markets identified Perth as the ninth most expensive city in the world in terms of industrial rents, trailing only Sydney, ranked seventh, among Australian capital cities.

Five of the top 10 most expensive markets were located in the Asia Pacific region, with four in Europe, according to the report, which also showed industrial rents across Asia increased by 6 per cent since the end of 2009.

CBRE’s Global Industrial Marketview report showed Perth industrial rents for the second quarter of 2010 were $105.75 per square metre, while Sydney industrial rents were $112.90/sqm.

CBRE global chief economist Raymond Torto said the results of the survey indicated industrial markets across the globe were in recovery mode, albeit at differing rates and were at different stages.

“Given the strengthening demand and production levels in the world’s merging markets we anticipate that global industrial rents for prime logistics properties will stabilise and gradually being to increase before year-end,” Dr Torto said.

In terms of land values, the report indicated Perth’s fully serviced industrial sites slipped four per cent in value, from $US354/sqm in the first half of 2009, to $US340/sqm in the first half of 2010.

CBRE regional director, industrial logistics & investments, Joshua Charles, said investor sentiment improved notably at a global level throughout the fist half of 2010, with over $US16 billion invested in the industrial sector – a 49 per cent increase from the same period in 2009.

“It appears capital markets are moving ahead of the fundamentals in some regions of the world,” Mr Charles said.

That sentiment was also reflected in the commercial property sector, with research by analysts at Jones Lang La Salle identifying that investment activity was increasing strongly in Australia’s commercial property markets.

Jones Lang LaSalle Australia chief executive, Stephen Conry said robust economic conditions, driven primarily by Western Australia’s mining boom, meant demand was growing from domestic superannuation funds and foreign investors.

Jones Lang LaSalle’s October Global Market Perspective report showed direct commercial real estate investment in Australia was $US3.2 billion for Q3 2010, up 66 per cent from $US1.9 billion in Q2.

Compared to the previous corresponding period in 2009, direct commercial property investment was up 42 per cent.

The report forecast transaction volumes across the Asia Pacific region were poised to show 15-25 per cent growth on 2009, buoyed by improving business sentiment across Australian markets in particular.

“All reports are that Australia is entering the biggest mining and energy boom since the 19th century,” Mr Conry said.

“The mining boom means Perth and Brisbane markets are likely to surprise on the upside.

“Vacancy will peak well under previous expectations and longer term we expect to see a shift in capital allocations to those markets.

“Melbourne values are to grow strongest in the next few years, followed by Sydney. In 2015 and beyond we expect that ranking to reverse, with Brisbane, Perth and Canberra continuing to strengthen.”

The only potential damper on the burgeoning market in WA, according to the report, could be the ever-strengthening Australian dollar, which is increasing hedging costs and placing pressure on Australia’s cross-border activity.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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