In a recent white paper, Perpetual Corporate Trust explores the drivers of demand for industrial real estate across Australia and unpacks the short-to-medium impacts of eCommerce on future supply / demand.
Key highlights include:
"Investment into the industrial market is expected to increase as the government looks to develop domestic manufacturing and logistics networks, particularly in the Medical Products and Food & Beverages sectors".
"The industrial property market proved to be the strongest asset class in the Australian commercial real estate sector throughout 2020, despite sales volumes and transaction volumes falling slightly".
"The vast majority of the activity in the domestic industrial market is concentrated among the major cities along the eastern seaboard".
"Australian industrial yields have fallen an average of 12bp each quarter from a decade high median rate of 10.7% at the start of 2011 to a record low 6.0% in September 2020".
'The composition of investors within the Australian industrial market has incrementally changed over the past three years with Real Estate Investment Trusts (REITs) and listed companies being the biggest net buyers on a transactional value basis".
"Cross-border investors reversed their trend of net sales over the past three years by acquiring assets with a net value of $232.0m in 2020, despite largely not being able to physically inspect the assets due to border restrictions".
"The boom in eCommerce growth catalysed by the onset of COVID-19 resulted in the retail sector taking up the largest amount of industrial floorspace, contributing 34% (959,738 sqm) of the total demand".
"Industrial investment sales remained stable in 2020 while office and retail investment volumes plummeted due to the impacts of COVID-19. Investment sales in the office sector fell 50% as vacancy rates increased and uncertainty around the shift to working from home complicated asset valuations".
"The Australian industrial property market remains an attractive investment market on a risk-adjusted basis with returns similar to other advanced economies being achieved with lower levels of volatility".
View the full report here.