Leading Australian valuer Knight Frank believes the sharp growth we’ve seen in industrial assets is set to continue in 2022.
Industrial assets have seen growth of around 15% over the course of 2021 and Knight Frank believes this is a trend that can continue for years to come.
Ben Burston, chief economist at Knight Frank Australia, forecasts capital growth at 6% in 2022, as well as a rent rise of 6% in Melbourne, 5% in Sydney, 4% in Brisbane and 3% in Adelaide.
Mr Burston suggests the recent growth we’ve seen in industrial assets has come about from investors being prepared to pay more for the same streams of income. He believes this is going to change with price growth likely to come from tighter supply and upward pressure on leases, with demand starting to drive up rents.
According to Mr Burston, leasing take-up volumes are 31% above their long-run average on the east coast, pre-leasing activity for new buildings grew by 11% in the year to October 2021 and demand from large users for industrial real estate is likely to exceed supply in 2022.
Knight Frank also notes, that there is likely to be an increasing shift towards local manufacturing on the back of the ongoing supply chain issues faced throughout the past 2 years.
Mr Burston also believes the office market is set for a turnaround in 2022 after a long period of high vacancy rates. He says that pent-up demand for office space will boost absorption rates and drive market recovery, with the flight to quality indicating that premium and upper A-grade space will be at the forefront of the resurgence in demand.
Many businesses that require office space have been waiting for conditions to improve and with the opening of international borders and lockdowns likely to have ended, there will be a push for companies to upgrade their space and return to their respective CBDs.
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