Infrastructure projects are driving the industrial and logistics sector, with increased investment in developments across Australia.
According to CBRE’s Q3 2017 Industrial and Logistics MarketView report, the Australian industrial and logistics economy continued to see some positive indicators for growth despite a slowdown in residential development. Jobs growth was solid at 1.1% y-o-y, with the infrastructure boom playing a significant part in this. Key projects currently being developed include Melbourne Metro Rail, Sydney’s WestConnex and the Sydney Rail project. These projects are ongoing, supporting growth in the medium term.
The increasing importance of e-commerce to the industrial and logistics sector was also evident, with continued growth in wholesale trade, up 1.4% y-o-y, and transport and warehousing, up 0.7% y-o-y.
The report states that land values continued to grow for the 15th consecutive quarter, with average prices for 1.6ha parcels up 10% y-o-y. Sydney and Melbourne are again the drivers in this growth, with Sydney recording 27% y-o-y growth and Melbourne 16% y-o-y. Perth’s land values have declined by a further 3.5% y-o-y but this trend is abating with developer concerns easing around the large amount of existing vacant space amid stabilising demand and sustained lower levels of new supply.
Matt Haddon, CBRE Pacific Senior Managing Director, Industrial & Logistics and Retail, said that the sale of high quality industrial and logistics assets in Q3 helped drive down yields and reinforced the continued demand for high value assets.
“The September quarter showed continued interest for Australian industrial and logistics assets from offshore investors, with 49.7% of total industrial sales in Q3 to offshore buyers,” Mr Haddon said.