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The global credit crunch has dealt the industrial market a heavy blow, with the value of industrial land declining across all markets in the 12 months to March 2009
According to CB Richard Ellis’ (CBRE) Industrial MarketView, Brisbane recorded the biggest decline for 0.25 hectare lots, with values dropping 25.8 per cent. In the case of 1.6 hectare lots Melbourne recorded the greatest decline, with values falling 21.4 per cent.
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CBRE regional director of industrial and logistics services Joshua Charles said industrial land values had been hit by both the economic downturn and the difficulties developers were facing in securing finance to complete projects.
But Mr Charles said certain markets were performing better than others and there was continued demand for land close to major infrastructure projects, such as the soon to be completed Perth-Bunbury Highway.
“While industrial property and land prices have fallen, new and improved infrastructure will provide a future stimulus for the market,” he said.
There were also “very positive signs” the market may have bottomed out, Mr Charles added, particularly on the eastern seaboard.
While land values have been doing it tough, industrial rents have remained relatively stable. Across Australia, Grade A industrial warehouse rents recorded positive growth in the year to March 2009 to average $108 a square metre, according to CBRE.
Perth was the standout with Grade A rents rising by 7.9 per cent to $125 a square metre. All other markets remained firm with rents softening only in Melbourne, Brisbane and Canberra.
INVESTORS DRIVE COMMERCIAL SALES BUT VOLUMES DOWN
Private investors and syndicators accounted for two-thirds of all sales in the first half of 2009, market analysis from CB Richard Ellis (CBRE) has found.
More than 47 per cent of all purchases in the first half were made by domestic private investors, an increase on the 38 per cent recorded this time last year.
Foreign investors were the other key purchasing group, accounting for 12 per cent of all activity.
“Both of these groups are using mostly equity in transactions, at a time when banks remain reluctant to lend on either commercial property investment or development," Kevin Stanley, CBRE executive director of research and consulting, said
"They are likely to remain the key purchaser groups for the balance of 2009, while purchasing competition from local institutions remains limited."
According to CBRE, just $2.4 billion of commercial property valued at over $5 million changed hands in the first half of 2009, a 45 per cent decline on the volume of sales recorded in the same period in 2008.
The number of sales above $5 million declined 22 per cent over the same period, falling from 155 to 110.
Mr Stanley said despite the fall, the sales tally remained high given the effects that the global financial crisis has had on the industry.
