Still a buyers market
BETTER industrial outlook yet to be seen in industrial property prices.
Wednesday 01 February 2017
From Gladstone to Townsville the industrial property market remains at or near cyclical lows, despite the improving coal prices and industrial outlook that has ensued.
In its latest monthly report, valuers Herron Todd White says the only buyers in the industrial property market at the moment, are the odd owner-occupier looking to capitalise on low interest rates and prices, and sophisticated investors looking for properties selling at the bottom of the market that have exceptional tenants and rental income.
Perhaps the most pessimistic outlook by HTW is for Gladstone Industrial property.
“There has been no appeal of vacant industrial properties to investors in recent times and we consider this will carry through into 2017,” they said.
“Even in light of recent improvements in commodity prices, until there is strong market evidence to suggest that the Gladstone market has reached the bottom of the property cycle, conditions will continue to remain volatile.
“We consider that buyers will remain cautious throughout 2017 and there will be little sales activity.”
As usual, in Rockhampton where there is a more diverse economic base the outlook is slightly better.
“We have seen a sharp rise in commodity prices, most notably coking and to a lesser extent thermal coal,” HTW reports.
“This has renewed interest in property generally and industrial property in particular, however it is too early to determine whether this commodity price increase is sustainable and too early for it to have a significant impact on property prices.
“ It is, however, a good lead indicator.”
For Mackay - arguably the centre hardest hit by the mining downturn - HTW says the value of Industrial property in 2017 will depend on whether stronger coal prices at the end of 2016 prevail.
“In 2017 we expect that industrial properties leased to major national or multinational tenants with lease terms of greater than five years will continue to attract sound demand from the national investment market,” they reported.
“By contrast, the sale market for vacant industrial properties has recently undergone a severe downward correction as evidenced by a number of sales in the later half of 2016 where owner-occupiers exploited countercyclical market conditions.
“We expect that the owner-occupier market will consolidate around this new level throughout 2017.
“While the recent spike in coal prices is encouraging to market sentiment, it will be the longer term coal price levels that will ultimately determine mining related industrial activity and the subsequent demand for industrial property in Mackay.”