24/08/2004 - 22:00

Strong growth for commercial sector

24/08/2004 - 22:00

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WHILE a cooling residential property sector may have made most of the headlines in recent months, the big news for market watchers has been in the commercial property sector.

Strong growth for commercial sector

WHILE a cooling residential property sector may have made most of the headlines in recent months, the big news for market watchers has been in the commercial property sector.

In the past 12 months commercial property sales in Western Australia have been the strongest since records were first kept in 1990.

The Real Estate Institute of WA quarterly market review found there were 1,126 commercial property sales in WA in the June quarter of 2004, 26.9 per cent more than the previous quarter and 15.2 per cent up on the same quarter in 2003.

The total value of commercial property sales in WA in the 2004 June quarter was $467.4 million, 32.9 per cent more than the previous quarter and 22.2 per cent more than figures for the June quarter of 2003.

Chairman of REIWA’s commercial property agents’ chapter, Steve Carulli, said the strong performance was mostly due to larger numbers of sales of industrial properties, vacant commercial blocks of land and mixed-use units.

“The most number of sales occurred in the industrial property sector, which accounted for 314 commercial property conveyances in the June quarter, “ he said.

“This represents an increase of 24.6 per cent on the number of industrial property sales in the previous quarter.

“However, the largest increase in transactions occurred in sales of other commercial properties, which includes mostly commercial residential properties like motel units, caravan parks and serviced apartments.

“Conveyances of properties in this sector were up 105 per cent in the June quarter to 261 transactions.”

Mr Carulli said the implications of the figures were relatively broad, but indicated a move to commercial property as the residential housing market slowed.

“The activity is coming out of the residential market and the stock market, and reflecting new property coming on to the market and existing property changing hands,” he told WA Business News.

“In the short term this means more activity, but I wouldn’t necessarily say that it will translate into more commercial building.”

Mr Carulli said the rise in popularity of listed and unlisted property trusts was reflective of the popularity of the commercial sector, and represented an opportunity for smaller investors to get into a bigger market.

And rise in sales of mixed-use units during the past year (63.2 per cent) was indicative of planning authorities’ policies to encourage mixed-use lots.

Mixed-use lots have been heavily utilised in the successful redevelopments of East Perth, Subi Centro and Midland.

Knight Frank State director of asset services Ian Edwards said the commercial property market was “healthy, active and eclectic right now”, and that the large amount of sales could be interpreted several ways.

“Investment classes go through peaks and troughs, and that is the best thing that can happen to them,” he said.

“Perth is at the peak of a cycle now, but it could last for several years because of the strong economy, which is buoyed by a net migration of people and funds into the State.

“People sell into strong markets because they think it is a good time to make profits, but likewise, people also sell into weak markets because they cannot afford to retain their property.”

Mr Edwards said there was a significant amount of commercial development currently being undertaken on both a large and small scale, which indicated a good strong market.

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