August 2018 :: Latest News
Residential Property Might Be Slowing But Industrial Is Booming!
It’s interesting to me that there seems to be very little connection between the residential and industrial property markets.
From 2008 to 2016, residential property overall consistently outperformed industrial. In fact, during that period it’s fair to say residential was “booming”. Strange isn’t it that it was straight after a global financial crisis? The key was low interest rates and banks lending money freely (under direction) to bolster the economy. During this same period industrial property struggled. Why? Industrial property follows business performance. When businesses are performing well, confidence in future growth is strong and companies start to move which turns the wheel in the industrial property market.
Since early 2016 we saw confidence in future business/the economy return. In mid-2016, we were experiencing a volume of enquiry that mirrored pre-GFC times. By the end of 2016, the values had started to increase. Since then, land values have doubled, incentives have decreased, and the price increases continue right around Melbourne.
Residential property seems directly affected by the question “How much can I borrow?” Industrial property is affected by “What’s my business going to perform like in the next 3 to 5 years?” This creates different time cycles for residential and industrial property.
So it’s a great time to be investing in industrial property in Melbourne…
