Industrial continues as top performerMarch 8, 2018
Industrial property continues to be the New Zealand commercial property market’s top performer according to figures released this week.
The latest Property Council/IPD Property Index, which revalues a $13-14 billion dollar portfolio of property on a quarterly basis, shows that industrial property provided a total return of 10.8 per cent in 2017 — comprising a 6.7 per cent income return and 3.9 per cent capital growth.
This compared with total returns of 9.0 per cent and 6.7 per cent respectively for the other two main sectors of the commercial property market, office and retail.
The index also shows industrial property has been the market’s best long-term performer. Over five years, it provided a total return of 12.2 per cent, comfortably ahead of office at 10.6 per cent and retail at 10 per cent. Over the past decade, industrial property has provided a 9.6 per cent total return compared to retail at 7.6 per cent and office at 7.2 per cent.
Scott Campbell, Bayleys’ national director industrial and logistics, says there has been a noticeable change in the perception of the industrial sector among investors over the past few years.
“Historically regarded as a solid, defensive asset, industrial property has now become the clear market leader in terms of capital growth and is more sought-after by investors as a consequence.
“The sector’s growth is being driven by its strong performance within the New Zealand economy. Manufacturing has shown considerable resilience despite the global challenges posed by our lack of scale; and the logistics and distribution sector is on a real roll. This is likely to continue as the trend towards e-commerce, in retail particularly, increases the demand for distribution premises, big and small.”