Investors continue to target industrial property

Investors continue to target industrial propertyIn these uncertain times, industrial property on Australia’s eastern seaboard has become a magnet for investors looking for long-term and secure yields, according to research by Savills.With Savills sales data revealing that the eastern states have racked up $4.46 billion in industrial property sales over the 12 months to June 2015, an increase of 45 per cent over five years, it is becoming evident that investors see the sector as a safe haven.Nowhere is this increased demand more pronounced than in some of the major deals currently being negotiated, including the $1 billion GIC portfolio sale. “Buyers are willing to pay a premium for large volume portfolios or properties with long-term leases, with yields to 75 basis points sharper than the going rate, to secure these types of industrial property,” says Greg Cohen, director Industrial & Business Services – NSW at Savills Australia.”Savills is currently marketing two data centres leased to an ASX listed company for 15 years. Interest in the first week is in the mid 6 per cent yield range, which demonstrates the desire for long term rental streams,” he says.Geographically, buyers are increasingly focussed on the eastern seaboard, with many looking at properties in Melbourne and Brisbane, because of the tightly held Sydney market where owners are sitting tight.According to the latest Savills research, while Sydney was the standout sales performer for industrial, the Brisbane market recorded $647 million in transactions for the year to June, with funds the most active buyers at 24 per cent. In Melbourne, 144 industrial properties sold in the same period for a total of $332 million. Private investors led the charge purchasing 30 per cent.Nationally, says Cohen, there is increased interest in B grade industrial, particularly priced under $30 million, which is in hot demand from local buyers including private investors, AREITs and institutions. “Yields in this sector are in the 8 to 8.5 per cent vicinity,” says Cohen.For more market data and information visit www.savills.com.au