The Gold Coast’s industrial market is again becoming an attractive investment option for developers, according to Colliers latest commercial market report.
Steady population growth coupled with pent up investor demand has seen a surge of buying activity across industrial, office, retail and residential development site sectors.
Rising capital values and sharper yields supported by an increase in demand with a total of $903 million of commercial assets exchanging hands in 2019, with investments in industrial assets lifting by nearly 55 per cent over the year.
The Gold Coast’s northern growth corridor has been a hot spot of investment over 2019 with industrial deals in the Yatala Enterprise Area seeing an average land values increase of 33 per cent in last three years.
According to the report, Logos logistics Hub in Arundel also experienced an increase of nearly 20 per cent over the last two years while City Link Industrial estate in Carrara is currently marketing smaller lots at its industrial park for up to $600 per square metre.
The result is encouraging, compared with a year ago, when the decline of the housing sector from mid-2018 to late 2019 underpinned a slowdown in the city’s GDP growth from 4.6 per cent in June 2018 to 2.6 per cent in June 2019.
The report also highlights renewed interest in residential development sites, which accounted for 32 per cent of sales volumes or $285 million, with the southern beaches precinct recorded the largest number of new apartment sales.
Behind those figures lies the continued surge in population across the Gold Coast with an estimated annual increase of circa 12,000 residents expected to drive an increase in demand for upwards of 4,500 residential dwellings a year.
According to Urbis’ latest apartment report, the Gold Coast’s southern apartment markets clocked their best performance in six years.
Late last year, developer Nielson Properties moved ahead on $350 million two tower project in Burleigh heads, signing a heads of agreement with a five-star hotel brand for a 242-bed hotel.
Meanwhile, Brisbane-based developer Spyre Group has plans for a neighbouring 18-storey apartment tower.
Colliers International director of Gold Coast Steven King said investment opportunities in the office market were also forecast to remain tightly held across 2020 on the back of the exceptionally low bond yield outlook.
“Potential yield compression due to the large spread to other markets is now on the table for 2020, particularly for assets holding a long-WALE or the potential to reposition and add value to the investment.
“Investment confidence from developers is returning to the office market as we forecast an increase of new development supply in 2020 after five years of experiencing very limited construction activity.
“New development supply and refurbishments with expected practical completion in 2020 is estimated at 10,600 square metres.”
Colliers noted that office leasing demand is forecast to hold steady despite an increase in enquiry and movement across the Gold Coast office market in recent months.
“Due to the flight-to-quality trend, the new development supply will create backfill space of secondary buildings, opening the opportunity to add value to vacant stock by repositioning the asset,” Colliers associate director of research Karina Salas said.
“We expect the office market will enter into an era of redevelopment and renewal of secondary stock, and incentives are expected to play a more active role engaging occupiers’ interest on new developments.”
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