Investors find way to the Bay

It’s always been a steady industrial performer popular with local buyers.

Now Brisbane’s Bayside region has started to capture interest from further afield.

Located south-east of the CBD, the Bayside commercial property market known for the stability of its industrial asset class is now on the radar of a growing number of small-scale investors seeking good returns — and being prepared to look further to get them.

“These buyers have been instrumental in creating competition and urgency around transactions and aiding in reducing yields, for both prime and secondary assets,” Ray White Commercial head of research Vanessa Rader says.

New Ray White Commercial data reveals interest in Bayside industrial property was at its highest in the fourth quarter of 2017, when $18.58 million changed hands in 17 deals. The average selling price was just over $1 million.

During the same period of the previous year, $6.57 million sold with an average price of just $547,500.

A number of significant sales achieving attractive yields in both Redland Bay and Manly West have brought retail property to greater prominence.

The childcare centre asset class also appeared in Bayside commercial property data for the first time over the same period.

“While only three transactions have been recorded, these assets have been sought after nationally due to their strong, government subsidised income streams and quality requirements to adhere to regulations and standards,” Vanessa says.

“Many savvy investors are seeking the security of these properties, which is underpinned by our growing population and the set-and-forget nature of the asset class.”

Less than $10 million changed hands in the first quarter of 2018, which Vanessa says is considered typical of investment activity early in the year.

“However, tighter lending criteria imposed across many investors and assets could mark the start of a more sluggish investment period, particularly if buyer and seller expectations are not aligned,” she says.

Ray White Commercial Bayside principal Nathan Moore says the past year has been positive for the three key Bayside submarkets — Capalaba, Cleveland and Wynnum-Manly.

“Demand and sales volumes have been up, most notably in the core industrial market, while non-local interest remains in markets such as retail and childcare,” Nathan says.

“The rental market has seen consistent demand across industrial, office and retail assets although ranges in rents are broad as they are highly dependent on quality, access, location and lease conditions.

“There is growing interest from construction-type tenants for industrial space, and from professional services for office and retail assets.

“This is likely to continue throughout 2018 due to the broader demand for these services.”

Bayside snapshot

  • In Capalaba, more than 85pc of turnover is for industrial assets. Just under $25m in sales were recorded over the past year, with an average sale price of $933,000.
  • The Cleveland region recorded transactions in excess of $53m over the past year, driven by large retail transactions. More than 25pc of sales are industrial; average sale price is $1.17m.
  • Retail investment in the Wynnum-Manly area has propped up sales volumes, with deals totalling $37.15m recorded — two-thirds devoted to retail.

This article was first published in Ray White Commercial’s Portfolio magazine. Read the latest edition here.

Up to Date

Latest News

  • Where are the bright spots for the commercial property market?

    Capital growth is in negative territory for nearly all asset types and locations across the country as the revaluation of assets puts the spotlight on cost of financing, returns and the rapid escalation of prices over the last few years. Risk premiums have re-emerged for most properties as bond rates … Read more

    Read Full Post

  • Brisbane CBD now home to Australia’s most expensive parking

    Parking in Australia’s CBDs has seen significant changes over the past ten years. Reduced parking allowances for new office and residential development, together with increased levies on spaces in some markets, has put pressure on occupancy, which caused parking rates to increase. Therefore, demand to invest in parking structures was … Read more

    Read Full Post