The industrial property sector has suffered massive losses across the east coast over the past 12 months, with prices down 15% from the 2007-08 year according to new data from LandMark Byte.
The sector’s performance will also continue to decline as manufacturing activity declines and unemployment is on the rise, the firm says.
The industry has suffered the biggest declines in Melbourne, where there have been just 21 purchases of properties over $5 million, with total sales figures dropping 85% to just $147.67 million from 2007-08’s result of $1.058 billion.
In Sydney, the total value of sales has fallen 55.34% to just $534.43 million from $1.196 billion during 2007-08.
Vanessa Rader, national research director at LandMark Byte, says industrial property is suffering just as badly as any other commercial property market.
“Like any other market, the demand by the purchasers isn’t there, the vendors aren’t there, and the banks aren’t lending money. There has previously been a lot of institution buying, whereas this year it’s been private investors and owner occupiers and they’re the people who have access to funds.”
The firm says primarily private investors and owner occupiers have been the only buyers active in the market, representing 67.81% and 26.43% of deals, respectively. Last year private investors only represented 12.56% of all purchases made.
Brisbane has been the only market on the eastern coast to record some improvement in sales, with the city accounting for 15 of the 26 transactions above $5 million during 2009.
The total value of sales over $5 million has reached $296.28 million, but LandMark Byte says that “this result is well below the previous financial year when significant activity was still recorded in the second half of 2007”.
Rader says she expects the industrial sector to suffer for the next 18 months as the rest of the economy is hit by rising unemployment.
“We’ve had good results in GDP, but unemployment is still up. The key drivers for this market are industrial production, manufacturing and exports and imports and they are still down. If there isn’t a huge demand for product, there isn’t a huge demand for manufacturing space.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
