Australia an expensive prospect for property


Sydney, Perth and Brisbane in the top 10 most expensive logistics rental property markets

By Rob McKay | November 3, 2010

Sydney, Perth and Brisbane have ranked in the top 10 most expensive logistics rental property markets, according to research released today.

Real estate firm CB Richard Ellis’s first-ever international survey also showed that freight-related property worldwide has recovered to pre-global financial crisis levels.

The most expensive industrial logistics property was to be found in Tokyo, followed by London and Sao Paulo, Brazil.

Sydney ranked seventh at an average of US$9.72 per square foot, with Perth at ninth at US$9.14 and Brisbane on US$8.91. Adelaide and Melbourne ranked at 23 and 24 respectively.

Asked about globally high rentals rates in certain Australian cities, CBRE Global Research and Consulting Executive Director Kevin Stanley says: "In Sydney, Perth and Brisbane, land prices are the highest in the country and this tends to be passed through in the rental cost."

He says land prices are higher in the three cities because of land shortage or the cost of servcing the land with infrastructure.

Stanley says the performance of the Australian dollar against the US greenback is also playing a role in pushing up property market prices.

Five of the top10 were in the Asia-Pacific region. Tokyo’s rental cost per square foot was US$22.09 and London’s US$19.51,

"The contraction in demand for industrial and logistics properties in 2008 and 2009 led to a more than 10 percent decline in our Global Rent Index, bringing rents back to 2003-2005 levels," CBRE Global Chief Economist Raymond Torto says.

"The US and EMEA [Europe, the Middle East and Africa] had the most significant reduction in rents during the period, with declines of 14 percent and 12 percent, respectively, while the Pacific Region and Asia weathered the storm better with rental declines of 5 percent in both regions."

The decline in industrial rents eased throughout EMEA, the Americas and the Pacific region in the second quarter of 2010. Rent growth is now well underway across Asia, with rents having increased by over 6 percent since the end of 2009.

"Given the strengthening demand and production levels in the world’s emerging markets we anticipate that global industrial rents for prime logistics properties will stabilise and gradually begin to increase before year-end," Torto says.

Stanley believes consumer sentiment, increased saving patterns, tighter credit restrictions and the curbing of speculative development will influence the logistics market and the demand for industrial real estate in the future.

"While the demand for property may remain weak in some regions such as the US and EMEA, stable and growing demand levels and limited supply in Asia, Pacific, Latin America and Canada will underpin rental growth in prime locations," Stanley says.


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