According to a leading Perth commercial agent Raine & Horne Commercial WA Director Anthony Vulinovich, now just a few months into 2022, positive sentiment among investors and owner-occupiers is a dominant feature of WA capital’s commercial property markets.
Anthony added, “The low interest rate environment is however, creating some missed opportunities and limited prospects for purchasing.”
The competitive building/construction market has seen price increases, which has also been fuelled by the growth in land values, noted Anthony in addition to a lack of land supply across Perth’s industrial market.
Building costs are rising
Rising build costs are prevalent in many new developments that Raine & Horne Commercial WA has been involved in. “Our agents are reporting construction costs have substantially risen over the past 18 months, which has led prices having to be at a certain level to achieve proper margins for the developer,” Anthony said. “Hence, the Perth industrial market is very much aligned with the general market as far as building issues, the low interest rate environment and price increases.”
Pandemic supply chain challenges
WA has not been immune to supply issues caused by the COVID-19 pandemic, Anthony noted. “They have been significant, and the shortage of materials and supply chain delays has hit our state.
“The market has not been able to perform at its usual momentum, and the labour affected market has also become a ‘materials affected’ market. This has impacted supply, and in turn has led to significant price increases.”
The more traditional industrial hot spots of Perth, such as Kewdale, Welshpool, Bayswater, and Canning Vale, Bibra Lake and Wangara have very limited available stock for land, or buildings for sale.
Anthony said, “Investors and owner-occupiers are now looking further afield, further north to Neerabup, and in the south, to Rockingham, Hope Valley, and Forestdale. These areas were once seen as secondary but are now looked upon favourably for relocation.”
Affordable Perth attractive for investment
There has been a cross section of investors looking to Perth as a favourable opportunity. “Nationally, Perth is the most affordable market across the board and that is attractive to investors locally, nationally and internationally,” Anthony said. “WA was fairly subdued up until the five years prior to the pandemic, when other markets in the country were very active.
“After the initial shock of the pandemic, all the markets across the nation picked up but here in WA the market was restrained previously, so relatively speaking, WA is more affordable and likely to have growth opportunities going forward.”