LANDCORP has reduced land prices at its major industrial estates in and around Perth by up to 25 per cent, and introduced more generous financing terms to try and encourage investment in the sector.
LandCorp acting business manager industrial, David Lewis, said estates such as the Flinders Precinct at Latitude 32 in Hope Valley and the Pinjarra Industrial Estate had experienced the biggest drop in asking price because they had not yet reached "critical mass."
In contrast, the Australian Marine Complex at Henderson and Northam's Avon Industrial Park have experienced limited reductions in values.
Mr Lewis said strong demand for land at the AMC from businesses associated with the oil and gas sector ensured land values were stable.
Across the eight industrial estates that were revalued, price decreases ranged from 5 per cent to 25 per cent.
LandCorp embarked on the sales strategy review to encourage industrial investment in Western Australia despite the tight economic climate, Mr Lewis said.
Industrial leasing agent Colliers International's manager of research and consultancy, Erwin Edlinger, said privately developed industrial estates were experiencing similar reductions in land values.
"Evidence is there in the market that land values have come off within that range that [LandCorp has] indicated," Mr Edlinger said.
"Agents from our end are indicating a 20 to 30 per cent drop in land values, from the peak of the market, going back 18-24 months."
Any sustained recovery in industrial land values was reliant on an increased availability of finance, Mr Edlinger said.
"Financiers are reluctant to lend on land transactions, which is making it difficult for any market participants who are looking to buy or transact on land because the credits not there," he said.
"That credit needs to be freed up before there's an increase in demand."
Despite the downward pressure, Mr Lewis expected demand for industrial land to increase over the next five years on the back of significant activity in the resources sector, such as Chevron's Gorgon LNG project.
Mr Lewis said LandCorp had a stock of available industrial land to accommodate the expected increase in demand.
"The approval and implementation of planned resource projects such as Gorgon will underpin a period of strong economic activity going forward," he said.
"By ensuring an adequate supply of industrial land to accommodate demand from a diverse range of industries, LandCorp will assist in ensuring WA is well positioned for the next period of economic growth and to help provide certainty to industry that WA is open for business."
Mr Edlinger agreed that LandCorp had been proactive in ensuring WA did not experience an industrial land shortage similar to that experienced in the recent boom years.
"LandCorp's been pretty progressive in trying to address that issue in regards to land supply," he said.
"They've tendered a couple of studies recently to try and indicate the drivers for industrial land so they can identify potential areas for development and address that supply issue moving forward in case we get caught in that boom situation again."
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