Investors who are unconvinced Brisbane’s industrial property market is on the road to recovery will find few to share their opinion with by 2020.
The QLD industrial property market is set to boom as national investment sales rise 18 per cent since last year and the state records three asset sales over $100 million, according to JLL. The hefty transaction sizes and volumes support the numerous stats indicating Brisbane’s industrial market is finally strengthening.
Brisbane’s industry-first sales record
Already in 2019, Brisbane has recorded three industrial property sales with price tags over $100 million:
- 105-137 Magnesium Drive, Crestmead (sold for $183.6 million)
- 40 Schneider Road, Eagle Farm (sold for $102.5 million)
- 99 Sandstone Place, Parkinson (sold for $134.2 million)
“Institutional groups are seeing value in the Brisbane market compared to other states,” says Gary Hyland, JLL Senior Director of Industrial in QLD. Mr Hyland notes long WALEs, increasing tenant demand and well-located logistics facilities has whet the big guys’ investment appetite.
Large sums of inbound capital can indicate the future interest in a market. Investors should take note – if they haven’t already.
Industrial sales volumes soar in Brisbane
Last year, QLD accounted for 15 per cent of the $3.2 billion national investment sales above $10 million. But already this year QLD’s portion of national investment sales has risen to 33 per cent.
QLD has almost doubled investment sales since 2018 and that’s largely thanks to offshore investors, accounting for 27 per cent of total industrial asset transactions in the 12 months to June 2019.
Yields remain above the 5-per cent market despite compressing 60 basis points in the year to June 2019. The tightening reflects the competition for the little stock available, as offshore buyers are prepared to pay a premium to get into the Brisbane industrial market.
Deep networks and eyes on the ground in QLD will give a huge leg-up to budding investors in the state’s industrial property market.
What’s the outlook for Brisbane industrial market?
Brisbane recorded negative 6.1 per cent growth in logistics job advertisements in the 12 months to April 2019. Given the large portion of assets in QLD’s industrial market are logistics, logistics job advertisements growth is typically thought of as a leading indicator of the market’s future.
But important to consider is the increasing popularity of automated facilities among logistics providers, food manufacturers and distributions centres. These drag the need for additional employees.
As a result, a better indicator of future market performance could be leasing transactions. And in the 12 months to June 2019, they soared 49 per cent compared to the previous year.
Market yields continue to tighten. And this is likely to continue, as more investors enter the market and values begin to rise.
Land values have already seen steady growth, Savills reports in their latest Brisbane Industrial Briefing Notes, with values growing by 32 per cent in the 12 months to June 2019.
We expect the market will continue to bolster, with solid investment in road infrastructure, as well as population growth, supporting the positive demand fundamentals needed for a booming property market.
Mr Hyland holds the same sentiment.
“With two strong years of leasing take-up above 500,000 sqm, limited land supply and increased infrastructure spending, we are expecting investment activity to continue in the Brisbane industrial investment market.”
For more information on investing in industrial property in Australia, get in touch with Properties & Pathways today.