What will impact industrial property in 2022?
Better Loan Solutions in Mornington Peninsula • Learning Centre • Insights
Better Loan Solutions in Mornington Peninsula • Learning Centre • Insights
Industrial property has been one of the best performers over the past
two years and its record run should continue, according to a leading
expert.
Herron Todd White Commercial Director David Walsh said he expects
industrial property to withstand any pressure that comes from higher
interest rates.
“Substantive falls in property values in response to increased interest rates are unlikely, but market activity could certainly ease off
from its heady highs, with yields stabilising closer to current levels,” Mr Walsh said. “I also think some types of industrial property will
perform far better than others.”
“The market – both for rentals and investment – will simply be more discerning in 2022.” Mr Walsh said higher fuel prices will also likely
benefit certain industrial assets. “Facilities closer to population centres should benefit.”
“If businesses can reduce the cost of moving goods from their warehousing to their customer base by being physically closer to consumers, then they’ll be willing to pay a premium for that. Therefore, infill style industrial should do well. Prime locations within easy reach of population centres should remain strong. Even better if they have easy access to major transport corridors. These properties can expect rents to rise and yields to hold firm.”
Land scarcity will also be an important factor in the next 12 months according to Mr Walsh. “There’s simply too little land to satisfy
current demand,” he said. “Land take-up in the last 12 months has been extremely strong, as has price growth with some locations achieving
eye-watering rates per square metre. This story is evident across all major cities and regions.”
“But look at that in conjunction with the other big constraint – the one around construction – and you can see why I remain reasonably
bullish about industrial in 2022.” Mr Walsh said high construction costs, because of material and labour, will help keep pressure on
established property.
“What I am certain of is that with these two pieces of the construction pie challenging the feasibility of projects, we are likely to see a
third piece – rents – experience a long-awaited increase,” he said.
“So, while the overall view is that markets may be a little more challenged in 2022, well-chosen assets will continue to be a savvy
investment.”
How we can help.
SMART Business Solutions is a registered financial services provider. We can team up with you to help you purchase a property at the best interest rates, understand rate-locking and on the most reasonable terms possible. We are here for you every step of the way, providing regular check-ins to ensure you stay on track to property.
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