Resource sector mood has flow-on effect

OPTIMISM in WA’s resource sector, generated from announcements of major projects, has spilled over into the property sector, with sales of industrial land increasing markedly in the last quarter.

Figures from the Real Estate Institute of WA show that, in the June quarter, industrial property sales accounted for 32 per cent of all commercial property sales, up 6 per cent on the previous quarter.

REIWA public affairs director Lino Iacomella said the recent rise was linked to WA’s resource sector, which had strengthened in recent months.

The increase was a reversal in fortunes for the industrial property sector, as sales of industrial land have fallen steadily for the past two years.

“What has occurred over the past two years is a decrease in the proportion of industrial sales from almost half of all commercial property sales to being less than 30 per cent,” Mr Iacomella said.

“A lot of work done on industrial properties services the (resource) sector, so the previous slowdown in sales of industrial properties can be partly attributed to a lessening in the activity in resource and exploration.

“And when the sector is strong, there will be plenty of work created, which means expansion in businesses that service that sector, and they will need more space.”

Mr Iacomella pointed to the expansion of the North West Shelf LNG project and modifications to BHP’s hot briquetted iron plant in Port Hedland as examples of projects that could result in major benefits to the industrial property sector.

Figures from the Australian Bureau of Statistics showed WA miners spent $724 million on new capital equipment and buildings in the first three months of the year.

Chesterton International industrial agency director Wayne Chorley agreed sales of industrial properties had increased but said that, while there was a strong link between the resource sector and industrial property sales, a major reason for the jump in sales was the release of more land.

“The increase in sales can definitely be attributed to resource projects, as well as all those announcements of public works, such as rail line,” Mr Chorley said.

“But sales also dropped off in the past because there was not much new industrial land … we’ve just seen the release of land in Forrestfield but prior to that there was no new industrial land released for some time.”

However, CB Richard Ellis industrial executive Rocco Demaio said while inquiries had picked up, sales had remained relatively flat in the past quarter.

He said most inquiries had related to smaller lots close to the city in suburbs such as Canning Vale and Belmont, however there was also much interest in Access Park.

Mr Demaio believed many industrial businesses were still struggling and were not necessarily looking at expansion or relocation.

LandCorp chief executive Ross Holt also said the overall number of inquiries into the developer’s industrial estates had increased, but this had not yet translated into sales.

However, the newly released Access Park in Forrestfield was proving popular with transport and distribution companies, with land selling at an average price of $80 per square metre. Other areas generating interest were Robb Jetty, Wangara and Canning Vale.

During past financial year, LandCorp developed 144.5 hectares of industrial land with a market value of nearly $37 million.

This included 43.4 hectares of general industrial land and more than 100 hectares of special and heavy industrial land.