Big price jump for some industrial properties as the Hunter sees strong results across all property sectors, says Raine & Horne

Media release - Newcastle, NSW (10 April, 2017) 

Big price jump for some industrial properties as the Hunter sees strong results across all property sectors, says Raine & Horne

  • Prices for owner-occupied industrial strata units rose 15% in the 6 months to March 2017.
  • SMSFs seeking investment opportunities believed responsible for increased demand.
  • Lack of bank financing for new industrial developments may be putting the squeeze on supply.

Newcastle’s commercial property values have seen big gains in the industrial strata unit market in the past 6 months, according to Steve Dick, Co-principal, Raine & Horne Commercial Newcastle.Steve Dick

Data show that prices for owner-occupied industrial strata units increased by more than 15% from September 2016 to March 2017. Mr Dick cited a combination of factors for the jump in values.

“The banks currently prefer to finance residential rather than commercial property, and that’s making it tough for developers to fund new commercial property developments,” said Mr Dick.

“Meanwhile, we’ve seen the rise of self-managed super funds, which are seeking investment opportunities. As they acquire industrial units, they’re driving up demand, and with limited new developments in the pipeline, we’re seeing prices push higher.”

Vacancy rates in the industrial property sector are lower than this time last year, which Mr Dick says is reflected in the regions lower unemployment levels.

“There is still some potential to be absorbed in properties greater than 5000 square metres, but properties up to 500 square metres in size are leasing quickly if priced correctly,” Mr Dick said.

On the industrial property sales front, Raine & Horne Commercial Newcastle has noted a strong level of buyer enquiry for fully leased investment properties priced up to $5 million.

Looking at the broader commercial property market, much of the activity has essentially been a “shuffling of the decks”, as existing tenants relocate within the area.

“As predicted, tenants are looking for quality space on the edge of the city to avoid the looming light rail disruption.

“Vacant or partly leased city buildings are still in very high demand, with fully leased investment properties attracting record low yields,” said Mr Dick.

All sectors of the property market in Newcastle and the Hunter have recently seen strong results and improving prices, according to Mr Dick.

“This is in part due to the state of the local economy, with very low unemployment, increased spending by the coal companies and growth in sectors such as health services,” Mr Dick said.

For further media information contact:

Steve Dick, Co-Principal, Raine & Horne Commercial Newcastle on 0425 302 771