WA MARKET OVERVIEW
WESTERN AUSTRALIA
Scott Lowe - General Manager -First National Hedland
- Market activity accelerated out of COVID and the rapid increase in rents has only now begun to stabilise, especially in residential. This is all relative though, when we talk about rent movements in Hedland when the market is moving, we tend to use increments of $ 100’s/wk, not $20 or $50/ wk (or smaller) used in Metro areas. Buyer demand in our market is strong as the returns are attractive, especially with the run-up in prices in Eastern Metro markets, which has reduced yields for investors and made investment properties in those markets relatively expensive. We see a good mixture between owner-occupier buyers escaping the high Pilbara rents and investors (local and interstate) looking for yield. Commercial/industrial properties are still seeing increases at each market review, with the exception of long leases coming off legacy rates, although these are less common now. - The Pilbara market demand is resources industry-driven. The legacy of the late 2000’s resources investment boom is that we now have an industrial base of a significantly larger scale that needs a different level of ongoing operational activity to sustain it. In the mid 2000’s Port Hedland was shipping around 100m tonnes of bulk cargo annually. Today, this is more like 630m tonnes. When you are literally mining, moving and shipping out mountains, the level of commercial activity and investment required to sustain that is significant. The Iron ore miners are also advancing their plans to decarbonise the industry. That investment is going to be significant, and it’s not dependent on the vagrancy of the daily commodity price movements that commentators often like to focus on. All that is before we even start talking then about the next wave of industries set to be accommodated in areas such Boodarie Strategic Industrial Area. With renewables, hydrogen, lithium, and POSCO’s green steel potentially coming over the next decade, there should be significant flow through from these projects to the supporting business economy. - Higher interest rates never help, but it’s build costs that are the problem. We have had periods where significant development occurred, and interest rates were higher than they presently are. Currently, the development costs and even finding builders to undertake the work are what’s making feasibility difficult. The Pilbara has always been a challenging place to build, and like elsewhere in Australia, those problems have been exacerbated by post-COVID labour and material shortages. - I don’t think our market is overly interest-rate-sensitive. The run-up in interest rates since the RBA’s tightening cycle started coincided with a period of strong demand. We can’t know the
SCOTT LOWE
98 – April / May 2024
Powered by FlippingBook