INDUSTRIAL property values are expected to ease during 2012, the API (Vic)’s Industrial Update has predicted.
API industrial spokesman and Charter Keck Cramer executive director Phil Cramer said a number of major floor space users are highly exposed to the global economy, and the deteriorating outlook continues to affect the market.
“Sentiment appears to be a major factor, and financial market volatility, the credit downgrade of US sovereign debt, the ongoing Eurozone sovereign debt crisis and weak economic growth in many advanced economies are contributing factors to the uncertainty associated with current market conditions.
“Given the anticipated continuation of volatility and Eurozone weakness, there is an expected impact on the global economy which implies that the industrial market outlook will be negatively affected by strong external headwinds,” he added.
Cramer said investors have adopted a conservative and patient approach.
“They have no urgency to buy but are looking for opportunities to buy distressed property at bargain levels. Owners of good quality assets are currently not in position of being forced to sell and are not prepared to sell at discounted levels.
“The most recent volatility and uncertainty have only strengthened the post-GFC paradigm shift of debt control and fiscal conservatism,” he continued.
Cramer said that over the past year, although values had remained relatively steady and new supply had increased to a limited extent, there were increasing signals of weakness with the renewed onset of global financial market uncertainty with transaction activity remaining slow.
The investment market for properties in excess of $3 million had weakened significantly since August, whilst the owner occupier market for sub-$2 million properties had been the best performing segment.
Cramer said that although national economy had only affected the market to the extent that the economy has been affected by overseas events, the high Australian dollar remains a challenge for manufacturers and other exporters.
“However, the dollar’s high value has benefitted consumers, particularly those buying online from overseas sites, which is positively impacting demand for warehouses.
“Investment in infrastructure to support the mining and resources boom was underpinning some local manufacturers, but the once-imagined spin-offs were not being fully realised,” he concluded.
PropertyReview