Loan Purpose

Industrial property leads the way in 2022

After a record-setting few years, industrial property has continued to perform strongly throughout 2022 according to experts.

 Ray White Commercial Head of Research, Vanessa Rader, said industrial assets have continued to be the golden asset class of the last few years.

 “Demand has been growing off the back of logistics, distribution and transport, particularly last mile solutions, together with the growth in small business and local manufacturing,” Ms Rader said.

 “The increased demand by users, coupled with limited supply additions over the past few years, has resulted in vacancies across the country in the sub 1 per cent range, therefore, face rents have seen outstanding levels of increase.”

 Ms Rader said with little supply on the horizon and many markets hampered by tight available land, the future for land values appears favourable.

 “While yields are unlikely to sustain their lows given the pure cost of finance, the longer term prospect of high occupancy and increased returns will see good results for industrial owners,” she said.

 “Those assets well located on major transport nodes or with development potential are likely to continue to enjoy the benefits of this asset class in years to come.”

 According to Ms Rader, medical assets have also been a standout performer in 2022.

 “The medical asset class was gaining momentum well before COVID-19 hit, which shone a light on additional needs in pathology services, GPs and hospital facilities,” she said.

 “The medical sector has been evolving over the years, once considered a segment which catered for the very young or very old, we are seeing greater medical needs across all demographics.

 Specialised services have grown in popularity across the once forgotten age group, particularly in sports medicine, preventative care, cosmetic services, as well as holistic or alternative medicines.”

 With increased demand has come improvements in leasing rates and, with limited purpose-built facilities, the readaptation of other assets such as retail to cater for the growing demand, Ms Rader said.

 “Often secured by long leases with fixed increases, these assets are kept to a high standard given their medical use, which is attractive to the investor looking for a secure, growing income stream,” she said.

 “While yields will see some movement off the lows achieved last year, the long term attraction of medical facilities cannot be underestimated particularly as our population continues to grow.”