Brisbane’s industrial property market is seeing boom-like conditions. Investors have three major drivers to thank.
You don’t have to look hard for good news on Brisbane’s industrial property market. Property values are headed skyward, investment sales in QLD are accounting for 32 per cent of the nation’s total (compared to only 18 per cent in 2018), and land rates are up by as much as 21 per cent over the last 12 months.
“We’ve seen strong yields, with prime yields in the 5 per cent range, take-ups have been over 500,000 square metres and we’ve seen land-value increases in some markets of 20 per cent.” JLL’s senior director of industrial in QLD Gary Hyland says these positive conditions can be expected to stick around.
So, what’s producing these huge wins for QLD industrial property owners? Here are three chief reasons Brisbane’s industrial property market is booming.
1. Strong population growth
In the year to March 2019, QLD’s population saw the second highest growth in the country at 1.8 per cent (behind VIC at 2.1 per cent); 10 basis points above the national average.
More east coast residents are flocking to Brisbane to avoid a pricier Sydney and Melbourne. One interesting trend is existing Sydney and Melbourne homeowners cashing in on high property prices in their bustling city and heading to lifestyle-focused Brisbane. There, they can purchase bigger homes, with enough cash leftover for renovations.
A low payroll tax, over three years of economic growth and job opportunities are the other reasons Brisbane is seeing new faces in town.
Australia’s third most populated city is tipped to be the size of Sydney’s by 2056, which means its outer suburbs will triple in size by that time. It’ll be all hands on deck to accommodate the new masses.
2. Infrastructure projects
Brisbane’s huge list of infrastructure projects is great for manufacturing businesses who occupy industrial property. The uptick in leasing transactions and tenant demand is evidence of this.
Infrastructure doesn’t only stimulate business activity. These projects are triggering tenant’s propensity to move into certain precincts, especially those with improved road access.
“Now that the $500 million Logan Enhancement Project has been finalised, it’s improved access into the precinct and helped occupiers to manage and new tenants are more willing to go there,” said Matthew Frazer-Ryan, national director of industrial at Colliers International.
The Logan Highway upgrade is one of many major infrastructure projects both completed and in the works for Brisbane. Others underway include the $5.4 billion Cross River Rail project and the duplication of the airport runway. These projects should pull around 15,500 news jobs to Brisbane, with more expected thanks to that rising population.
Logistics centres and distribution nodes in core QLD precincts are a hive of activity. It’s predominantly thanks to online retails sales.
QLD has a 1.85 million square kilometre area and a population of 5.07 million. So, there’s a huge need for logistics and transport hubs to service such a widespread population, more of who are committing to online sales for their retail consumption.
Online retail sales account for only 11.9 per cent of Australia’s total retail sales. But all indications point to e-Commerce consuming more of the retail pie as the years go on, and demand for logistics facilities and distribution hubs will increase with it.
Industrial property investment sales in QLD are tipped to beat last years’ total. Investors are jumping on board Brisbane industrial property, taking advantage of Brisbane industrial property market’s boom-like conditions. Even with yield compression evident, alternative investments such as government bond yields, remain unimpressive against Brisbane’s industrial property market performance.
For more information on how you can take advantage of industrial property investment, get in touch with us today.