What’s commercial property giving back to investors?
Australia’s commercial property gave investors a 9.3% return in the 12 months to March, a new report shows.
It shows the industrial sector was the standout performer, returning 11.3% for the year. The retail and office sectors each gave investors a 9.1% return, while for hotels the figure was 8.8%.
The Property Council/IPD Australia All Property Index also shows the value of green buildings. They outperformed the rest of the office market, giving investors returns of 9.7%.
Distribution centres led the strong performance of the industrial sector, posting returns to investors of 13.1%. Warehouses delivered 11.6% and industrial estates 10.4%.
Melbourne offices lead the way
Across the capital cities, Melbourne led the way in the office market with returns of 9.9% – though that was down on last year’s 10.5%.
Sydney’s office market posted the most improvement on last year – 1.2% – to deliver investors returns of 9.3%. And in Perth, office market returns fell from 14.6% last year to 8.2% in the year to March.
Neighbourhood shopping centres were the best performers in the retail sector, delivering returns of 12.6%. For sub-regional centres it was 10.8% and for regionals it was 10.3%.
Green works in commercial property
Green Building Council of Australia Chief Operating Officer Robin Mellon says that with green buildings outperforming the rest of the market, the business case for green building stacks up.
Mellon says research shows Green Star-rated buildings also deliver a 12% ‘green premium’ in value and a 5% premium in rent, compared with non-rated buildings.
Read more: Why green stars matter for office performance
He says they also use 66% less electricity and 51% water than the average Australian building – making them much cheaper to operate.
“Green Star-rated assets are also more attractive to tenants,” he says.
“Colliers International’s most recent Office Tenant Survey found that 95% of tenants want to be in a green building, up from 75% two years earlier. And a Green Star rating provides a competitive advantage in a crowded market place.”
