Australian buyers dominate Sydney industrial sales
Local investors are fighting back in Sydney’s industrial and logistics real estate market.
Overseas buyers accounted for less than 4% of the $318 million worth of industrial sales in the harbour city during the first quarter of 2016, with Australian investors paying $306 million.
The local resurgence comes amid a Sydney industrial boom, with a CBRE MarketView report showing a 40% increase in industrial property sales in the three months to March, compared with the first quarter of last year.
CBRE senior director of industrial and logistics – capital markets, Matthew Lee, says the lack of foreign investment in Sydney this year is the result of diminishing opportunities in that market.
“While Sydney‘s industrial and logistics market continues to be a sought-after market from an international perspective, the limited availability of larger assets is driving investors to chase opportunities in other markets,” Lee says.
Owner-occupiers are also using the opportunity to sell antiquated sites and upgrading into more modern/purpose-built facilities
“Meanwhile, we anticipate the transaction volume going to local buyers to also continue increasing across the market, with particular strengthening in the $10 million to $50 million price bracket.”
And the local demand is showing few signs of slowing in the second quarter of the year, CBRE NSW director of industrial and logistics, Michael O’Neill, says.
“We are experiencing extremely strong owner occupier demand in all markets and size ranges for both existing and turnkey developments,” he says.
“Purchasers are increasingly prepared to search outside their local precinct, given the shortage of stock and relative value in certain areas. This demand is fuelling benchmark rates for both land and existing options.”
We are experiencing extremely strong owner occupier demand in all markets and size ranges for both existing and turnkey developments
The positive outlook for owners is despite a significant pipeline of new industrial and logistics stock expected to hit the market this year. About 765,000sqm of new industrial space is due for completion in Sydney in 2016 – a 94% jump on the previous 12 months.
O’Neill says owners are already taking advantage of the hot market by offloading underperforming leasing assets.
“We expect that some landlords will continue to make the most of the conditions and consider divesting assets that are not being well received by the leasing market,” he says.
“Conversely, owner-occupiers are also using the opportunity to sell antiquated sites and upgrading into more modern/purpose-built facilities.”