WA MARKET OVERVIEW
WESTERN AUSTRALIA
WA Market Overview with Dav id Lamb How does the property market in WA compare to other states at the moment and what are some key trends that are occurring?
What sectors are most in demand? Industrial property continues to be one of the most sought-after asset classes. Perth’s industrial market is experiencing extraordinary levels of demand across the first half of 2022, fuelling transactional activity, rental growth, capital appreciation and further yield compression. Rents have continued to grow rapidly in the last 12 months. Our core suburbs of Welshpool, Kewdale and Canning Vale are achieving net face rents averaging $110 - $120/sqm, with modern purposed built facilities attracting over $120/sqm, reflecting growth of 15% to 25% year-to-date. The growth in rents has been driven by increasing tenant demand combined with a limited supply of both built form product and vacant land. What do you see as the biggest challenges that face buyers and sellers in today’s market? The biggest issue is stock! We have seen huge demand for properties over the last 12 months. Current stock levels are low, and we are not seeing the stocks replenished. Even with the current and predicted rate rises the market is still reacting positively and some properties are selling within 24 hours. Both investors and owner occupiers are keen to lock away their investments, taking advantage of the
Currently the property market in WA is offering a higher yield than other states within Australia. The demand for leased investments remains buoyant, with several recent sales by MLV Real Estate reflecting yields in the order of 5.5%, which are historically unprecedented in the context of the Perth Industrial market. Due to the higher yields, we are attracting Buyers from the east. Yields have also compressed across all stock with prime yields having contracted to 5.00%-5.75%, reflecting approximately a 50bps compression year to date. We believe this demand has been driven by the low cost of borrowing combined with more favourable yielding investments compared to the Eastern seaboard. Secondary stock yields have also firmed in the order of 6.00%-6.75% and again these are still better than the yields being achieved in the eastern states. The opening of WA boarders has brought more certainty to businesses who have struggled in previous years with skills and materials shortages during the lockdowns and boarder closures. This factor has also contributed to the buoyant market conditions that have arisen across the Perth industrial market in the last 12 months.
DAV ID LAMB Director MLV Commercial & Industrial Real Estate, WA Partner of Industrial Commercial Partners
106 – September / October 2022
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