Issue 10 March 2009
Industrial Property Commercial Property Property Management
In this issue:
Market updates Pages 4 - 12
Property Management Page 13
Expert advisors Pages 13 - 15
A message from Glen Wright Page 16
Opportunity Everywhere in 2009 for sale. It would appear that they are not getting out of the market altogether, as most have significant land banks and will be continuing to develop new buildings for corporate tenants.
2009 is the year money invested in other asset classes will move back into property, chasing good returns and the security of bricks and mortar. Investment As 2008 drew to a close, the investment trust sector sold off property at new record levels as they looked to reduce debt. This trend will continue for most of 2009. In the industrial market, the majority of property being sold was in the $5m to $20m price bracket − mostly single tenancy type properties, with a few larger multi-tenancy complexes. We expect to see more properties of this type come onto the market in 2009. The majority of last year’s sales were to wealthy private investors who have taken advantage of yields between 7.5% and 9%. The coming year brings a great opportunity to buy “generational type property” – something you would buy and give to the next generation. By this we mean quality property in an excellent location, with good longterm tenants and very cheap borrowing costs. Those able to buy in the $5m to $20m bracket should keep an eye on the larger institutional players and what they choose to release
For the smaller investors, it is certainly time to leave the stock market behind and stick with bricks and mortar in what will be a low interest rate environment. Developers who have vacant stock and newly leased stock are also willing to look at attractive deals. We expect to see a great deal of activity in the $1m to $5m price range as owners look to reduce debt and sell some property. In this price range, we expect to see yields maintained at 7.5% to 8.5%.
Owner Occupiers The market towards the end of 2008 was still very strong for owner occupiers as people who were confident with their businesses moved to owning rather than renting (Wright Property was one of these in 2008 – see separate article page 3). We believe this market will hold up well and expect to see a steady stream of business owners continuing to invest in their own properties. The banks are certainly still willing to lend money for property and generally the loan to debt ratios are in the area of 30% to 40% equity, 60% to 70% debt. Continued next page
Industrial Property | Commercial Property | Property Management