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Demand For Industrial Property Drives Building Approvals North




trial building approval values grew by more than 15 per cent in the year to February 2018. Photo: Supplied

Unprecedented demand for warehouses and a renaissance in some areas of manufacturing have driven industrial building approvals through the roof.

The increasing reliance on online shopping from traditional retailers, as well as the rise of online-only e-tailers like Amazon, have pushed up demand for distribution centres, especially in locations linked to key motorways and transport hubs.

Many investors are looking north to Brisbane for better returns, as Sydney becomes more land-constrained and yields continue to tighten.

More than $535 million worth of approvals were granted nationally for industrial developments in February alone, the latest Australian Bureau of Statistics data, released on Wednesday, shows. That figure had surged by more than 100 per cent from the previous month.

Total industrial property, including factories and warehouses, recorded an uplift in approval values of more than 15 per cent in the 12 months to February 2018 – the strongest growth across the commercial asset classes.

Leda Holdings has paid $36 million for a 1.85-hectare industrial site in Sydney’s Banksmeadow. Photo: Supplied

AMP Capital chief economist Shane Oliver said the strong interest in the industrial property sector “comes back to e-commerce activity”.

“I think rents are rising very strongly so that’s encouraged a pick-up in approvals for industrial complexes or warehouses.”

While most industrial construction approvals were for warehouses, it was factories which saw the most dramatic uplift in approval values, with year-on-year growth of 117 per cent – with a 300-per-cent surge from January to February.

Colliers International’s head of industrial research Sass J-Baleh said the Australian food manufacturing and cold storage sectors have and will continue to see strong growth in the next few years, thanks to expansion in the food sector.

“It is important to note that there are many sub-sectors within the overall manufacturing industry and that although historic headline figures have shown an unfavourable trend in manufacturing, there are definitely sub-sectors that have demonstrated recent growth,” she said.

This aligns with the Australian Industry Group’s latest Australian Performance of Manufacturing Index, which hit a record high of 63.1. A PMI above 50 indicates an expansion in overall manufacturing activity.

The value of all non-residential building approvals grew by 4.4 per cent in the 12 months to February 2018 – to more than $3.58 billion worth of approvals. It climbed back by 14.8 per cent in February from the previous month.

Master Builders Australia’s Matthew Pollock expects non-residential building activity to grow by 14.6 per cent in 2018, with an estimated $41.5 billion worth of projects to be completed.

“(The upswing in approvals) confirms the strongest outlook that commercial construction has enjoyed in years and that the long awaited upturn in the sector is underway,” he said.

Brisbane “riding upswing” market

An industrial site at 14-26 Commercial Road, Kingsgrove is tipped to fetch about $15 million. Photo: Supplied

Research released by Cushman and Wakefield on Thursday reveals that the volume of investment in industrial property has increased nationally by 38 per cent to $982 million in the three months to March 31.

Cushman and Wakefield’s head of research Dominic Brown said that Brisbane had been the strong performer in the past few quarters, where more investors were looking at the recovery in that market.

The combined three-year investment volume for Brisbane – at $1.1 billion – is at its highest level since the third quarter of 2015.

“In Queensland, it was still in negative territory until about two years ago and it’s only in the past couple of years that it’s returned to positive economic growth,” he said.

“If you think of where pricing is at in the three cities, investors are now looking towards Brisbane as they see it as a growth opportunity, whereas pricing in Melbourne and Sydney have moved forward quite a long way over the past couple of years.”

While Mr Brown’s outlook for Brisbane remains positive, he noted that discrepancies between vendor and buyer price expectations could limit future investment activity.

Sydney has recorded the lowest three-year investment volume of $869 million among the three eastern seaboard capital cities because of limited stock and declining returns.

The highest result was achieved by Melbourne, where $1.2 billion worth of deals went through in the past three years. But the Cushman and Wakefield report noted that transactions in that market “has been largely flat over the past 18 months… due to lack of available stock”.

Despite this, capital values of vacant land in Melbourne shot up 36 per cent year-on-year.


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Queensland Puts Hand Up for Google HQ



Queensland Puts Hand Up for Google HQ

Operation “Get Google” has begun following news the tech giant’s proposal for a Redfern-based hub was rejected by the New South Wales government this week.

States are vying for Google’s attention in the hope it might broaden its headquarters search, expected to create 19,000 jobs, beyond Sydney should the harbour city not follow through in sealing the deal.

Queensland Premier Annastacia Palaszczuk said she’d welcome Google to establish its headquarters in the sunshine state.

“If there was a move afoot, and if there were plans to move, of course we would be right in there to give it a go,” she said.

“But my understanding is they have no plans at this stage to move their staff from Sydney to Queensland.”

Palaszczuk confirmed the QLD government had made contact with Google on Wednesday.

Related reading: Mirvac Pulls Out of Showgrounds Development Following Rezoning Concerns

Adelaide’s Lord Mayor said the city “would welcome” the tech giant establishing its Australian headquarters in the CBD.

“The State Government has been in contact with Google to further explore its Australian intensions and requirements, and will be promoting South Australia as an attractive place to invest,” a spokeswoman said.

Google is currently based in Sydney’s Pyrmont, where most of its Australian workforce is based.

State Opposition leader Luke Foley has questioned the government’s commitment to securing tech jobs for NSW.

“My fear is that Victoria will sneak in under our state’s guard and attract these jobs,” Foley said.

“This is a missed opportunity for Sydney, we should be attracting the high-tech jobs of the future but the government seems disinterested.”

The NSW government has decided to move forward with a competitive tender process for its 12 hectare Redfern site, set to begin in the coming months.

The decision will mean Google and developer Mirvac, who submitted the proposal, will need to enter the competitive process against other prospective bidders to ensure their plan of a Redfern tech headquarters comes to fruition.


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QUT Buys $84m Kelvin Grove Office Building



QUT Buys $84m Kelvin Grove Office Building
Queensland University of Technology has snapped up an A-grade office tower in the heart of Kelvin Grove’s Urban Village.

The seven-storey building is a cornerstone building of the inner north Brisbane business hub and has gone unconditional to the main tenant, QUT, with settlement due in April 2018.

QUT leased 9,474sq m from the Queensland-based Cromwell Property Group in the building prior to the acquisition.

In an ASX statement Cromwell chief executive Paul Weightman said Musk Avenue had been a strong 10-year investment.

“Musk Avenue is another example of Cromwell’s ability to invest wisely and actively manage our assets. We continuously review our property portfolio to deliver optimal returns for our investors,” Weightman said.

At its half-yearly results in February, Cromwell announced pro-forma gearing of 38.9 per cent exclusive of the contracted sale of the property.

The office building comprises ground floor retail, six floors of office space and 217 basement carparks.

The 14,144-square metres of net lettable area is leased to QUT, Boral Resources and three ground floor retail tenants.

The building has a 5-Star Green Star Rating and a 5.5-Star NABERS Energy Rating.

On Thursday, Singapore-based ARA Asset Management Limited picked up a 19.5 per cent stake in Cromwell in a deal worth $405 million.

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Iconic Queensland Pub the Normanby Hotel Up for Sale



Iconic Queensland Pub the Normanby Hotel Up for Sale
One of Brisbane’s iconic pubs, The Normanby Hotel, has hit the market for the first time in nearly twenty years with price expectations north of $20 million.

Located at the high profile Normanby Fiveways in inner-Brisbane’s Red Hill it has been co-owned by Michael Dempsey and Otto Wilhelm since 1999.

Built in 1890, the heritage-listed hotel consists of an enormous 3,655 square metre site incorporating the multi-level heritage listed pub and a huge car park. It was added to the Queensland Heritage Register in 1992.

Dempsey said he was selling the hotel in order to concentrate on his core business of property technology through real estate property management software, Console.

He sold his electronics payments business Ezidebit for $305 million in 2014.

The Normanby Hotel freehold and pub operation is being offered for sale by CBRE Hotels.

“The hotel boasts huge underlying value with 35 gaming machines on site offering significant gaming upside potential,” CBRE Hotels’ Queensland director Paul Fraser said.

“On top of this, the prime location of the hotel and the huge expanse of land this asset offers makes it an obvious development play in the future.”

In 2016, a proposal by The Normanby Hotel to build a 15-storey development and underground nightclub next to the hotel was rejected by Brisbane City Council’s City Planning Committee.

The building, which would have contained 14 units, a hotel, short-term accommodation, a nightclub and a shop, was planned to be built on the Normanby Hotel’s car park. The committee voted unanimously in favour of opposing the plans on the basis of the height and size of the proposed hotel tower.

The Normanby Hotel also used to house one of Brisbane’s most well-known trees, a 100-year-old fig tree, that had to be removed from the site in 2016 after a severe storm knocked it over.

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