Melbourne Industrial Sales Best Since GFC

Melbourne industrial property sales have topped $1 billion in the year to June – more than the 2011/2012 and 2012/2013 years combined - in the best result since the GFC, according to

Savills Australia research.

The Spotlight on Melbourne Industrial: July 2014 report compiled by Victorian Head of Research, Glenn Lampard, found a total of 70 sales were reported with a value of $1.053 billion, almost double the level recorded over the previous twelve month period when $533 million of sales were reported.

The figure was the best recorded since the collapse of Lehman Brothers in September 2008 sent the global economy into a tailspin.

In that year industrial property sales had hit nearly $1.5 billion however the fallout from the Lehman Brothers bankruptcy declaration saw sales take a dramatic dive to just over $400 million to June 2009.

Savills Victorian Industrial Director, Greg Jensz, said it was just a matter of time before the market saw a correction but the scale of the correction had been "a little surprising""It was obvious that the sales market had picked up over the last 12 months and would continue to gain strength over time, but the size of the pick-up has been more than most pundits might have expected.

"Having said that there have been some significant individual sales such as the $121 million acquisition of the Somerton Logistics Centre by Charter Hall, the Montague Cold Storage sale in Truganina for $47.64m  and the Murray Goulburn sale and lease back in Laverton North for $92 million which have helped to boost the overall numbers.

"These transactions simply didn’t happen during 2008-2011 as a large number of institutional investors sought to reweight their portfolios and pay down debt rather than be overly acquisitive. The aggressive return of investors as a whole is a very positive sign for the market," Mr Jensz said.

He said the returns that industrial property was currently offering suggested that we should be seeing these sort of figures more often.

"You simply cannot get that sort of yield with other asset classes at the moment," Mr Jensz said.

He said while we may not see sales reach the giddy heights of 2006/2007 in the short to medium term, all indicators pointed to a steady upswing in industrial investment.

"Strong yields will continue to drive sales while the lack of alternative investments with comparable returns, and perhaps to a lesser degree the foreign competition for office and residential property, will also drive the industrial investment market," Mr Jensz said.

He said he expected low interest rates should also ensure strong owner-occupier demand at the lower end of the market.

Mr Lampard said Savills Research had forecast industrial yields would average 8.5 per cent over the next ten years while global asset manager Standard Life Investments has also forecast a positive industrial market with 8.8 percent annual returns, according to reports.