E-commerce drives Goodman gains

The property and funds management company said it is past the initial phase of the e-commerce boom and is increasingly pushing into new areas including AI-enabled centres and fully automated facilities.

Chief executive Greg Goodman says demand for convenience among consumers is unabated and the developer is focused on helping companies deliver to them.

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“There is more technology going into buildings.” he adds, saying this allows companies to go into more expensive locations but also get high productivity.

Unlike a traditional property landlord, Goodman emphasises his company is focused on fast-moving goods and having facilities with predictive AI, allowing supply chains to move quickly.

Goodman Group is undertaking ever larger projects that are more complex but which are keenly sought after by companies seeking a competitive advantage as e-commerce customers demand better service.

The company’s development book is approaching $5 billion and Goodman says it is taking older manufacturing plants and transforming them into new logistics distribution centres.

“It’s a very different game to 10 years ago,” he says.

He points to the potential for further penetration by e-commerce over the next decade, with this to advance despite political instability, including the US-China trade wars, the Hong Kong protests and uncertainty over Brexit

“What we are seeing from our customers is a real desire to get domestically sorted out,” he says.

Goodman says even though political regimes and strategies around trade have uncertainties the group’s big customers are focused on improving their domestic markets and supply chains.

The company is now handling more parcels designed for last mile delivery at centres and has built up a $48.2bn global network, and says it is buying up sites in key urban locations.

The group mainly operates via partnerships and said these had a 3.3% lift in like-for-like net property income growth.

But the real driver is the company’s $4.2 billion worth of development work in progress and its ability to launch new funds to back its growth.

In a first quarter update Goodman Group reaffirmed its forecast fiscal 2020 operating earnings per security of 56.3 cents, a 9 per cent lift on the last financial year, among the property sector’s strongest.

Goodman cites the structural changes that are positively impacting the industrial property sector. “As consumers’ demands increase, our customers are responding by consistently seeking to create more efficient logistics networks,” he says.

He adds that technology advancements are helping to increase productivity and efficiency in global supply chains as customers wanted more immediate delivery.

While consumer spending is subdued, online sales are growing, reaching 14.1% of total global retail sales as at June 2019, a near doubling over the last five years with estimates that it will hit 22 per cent by 2023.

Goodman says the portfolio is producing positive results in key infill markets, with rental growth and high occupancy levels in supply-constrained areas.

There is a race on for new land as e-commerce, data centres and residential developers chase property.

After years of assets disposals to slash debt the company is again expanding its workbook, with Goodman pointing to acquisitions in areas like Los Angeles, as well as South Auckland in New Zealand and Smithfield in Sydney.

Macquarie analysts says it was a “solid” operational update with group-level targets all reaffirmed. “Confirmation of strong embedded returns in the development book was a positive and will underpin development profits into the short and medium term,” the analysts say.

This article originally appeared on www.theaustralian.com.au/property.