Property investment giants chasing e-commerce pot of industrial gold in rising global gateway city of Brisbane
Institutional investors are ramping up their hunt for logistic and warehouse opportunities in the Queensland capital at a rapid pace.
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A BIG shift in the flow of capital into the industrial property sector is on and the timing could not be better for Brisbane’s emergence as a global gateway city.
Institutional investors are ramping up their chase for logistic and warehouse opportunities in the River City at a rapid pace.
Latest research from Colliers International shows there have been an estimated $230 million in sales in Q1 this year (for properties above $5 million) in the growth sector in Brisbane.
Portfolio sales that were an equity buyout made up an estimated $106 million of this total.
The rise of e-commerce, logistics and warehousing activity is influencing property investment giants to increase their exposure in the industrial markets.
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“Investment into the industrial sector has started off strongly this year, with indicative figures showing an increase of 135 per cent on Q1 last year, when sales totalled $98 million, and $27 million was attributed to portfolio sales,” said Colliers’ Queensland chief executive Simon Beirne.
“Institutional investors are dominating, making up about 74 per cent of the sales, with most of the activity occurring in the greater Brisbane south and south west regions.
“Strong investor demand and limited available assets have led to further increase in prices and tightening yields across the board, with average prime grade yields sharpening for eight consecutive years and average secondary grade yields tightening for a sixth consecutive year,”
In the highest settled industrial sale in Queensland so far this year, a portfolio of two significant industrial assets at Acacia Ridge has sold to a Sydney-based private investor for $42.08 million.
The properties at 134-160 Ingram Rd and 220-240 Bradman St span a total of 10.3ha of general industry zoned land and return a combined $3.3 million a year. They are occupied by Austube Mills Pty Ltd and OneSteel Reinforcing Pty Ltd on long term leases. Both companies were acquired by GFG Alliance, an international group of businesses founded and owned by the British Gupta Family.
The Acacia Ridge portfolio was sold via an expression of interest campaign conducted by Simon Beirne and Matthew Frazer-Ryan from Colliers International and Tony Iuliano and Gary Hyland from JLL, on behalf of KordaMentha.
“Throughout the sale process we received substantial interest from major institutions and large syndicates who appreciated the calibre of this large-scale portfolio due to its solid and stable income and the recapitalised tenants covenant following the GFG Alliance acquisition,” Mr Beirne said.
He said infrastructure upgrades, particularly at the Port of Brisbane, were playing a key role in Brisbane’s emergence as a global gateway city and its increased focus from institutional investors.
“We’ve got a port that’s got capacity. The reclamation of land is providing the capacity to increase the number of containers through Port of Brisbane,” he said.
“In Brisbane, we’re also seeing more industrial tenant activity and investment demand is improving on the back of that.”
According to Colliers’ latest Industrial Research and Forecast Report, prime grade yields have tightened in the range of 25 to 50 basis points for the past 12 months, to an average of 6.07 per cent as at March 2019. Lower yields have driven an annual average increase in capital values of 9 per cent to $1799/sq m.
In the secondary market, average yields have compressed 47 basis points for the year-on-year to March 2019, to 7.65 per cent. Consequently, annual average capital values for secondary assets have increased by 2.7 per cent, to $1073/sq m.
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