Four reasons there may be diamonds in industrial property

Four reasons there may be diamonds in industrial property
Four reasons there may be diamonds in industrial property

GUEST OBSERVATION

Growth can be hard to find in the property market. However, a hidden jewel could be dug up in the industrial sector. 

A secret missed by many investors is the strong historical correlation between house prices and industrial land prices.

While house prices get all the publicity, the industrial sector may be a useful long-term bet.

Here are four reasons why industrial property is Australia’s sweet spot:

  1. Industrial is the hidden growth market 

    As cities continue to sprawl, industrial land becomes increasingly useful.Companies like Goodman Group are converting industrial sites into apartment blocks, sometimes quadrupling property value.

  2. Warehousing laps up a confidence boost 

    People are confident during housing booms and strong consumer spending correlates with increased imports, increasing activity in distribution centres.

    While consumer confidence may still be low now and keeping some buyers out of the market, it will not always be that way.

  3. Industrial property can be a relatively reliable investment 

    Major developers will not undertake new projects without commitment from tenants.

  4. Market dynamics are good 

    Supply is kept relatively low, rents have been rising and vacancy rates remain muted at the high end.

Julia Forrest is REIT Portfolio Manager at BT Investment Management.

Listen to BT Investment Management’s webinar to find out more.

Tags: 
Industrial

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