Industrial land one of Sydney’s biggest winners

Industrial land values have more than doubled across Sydney in the last five years according to new figures that show booming infrastructure projects are driving demand. 

Colliers International’s latest Research and Forecast Report reveals that rapid population growth is also pushing prices up.

The report found Sydney’s industrial capital values ($3258 per sqm) and land values ($1261 per sqm) are the highest in the country, representing an 8% and 4% increase on the previous six months respectively.

Commercial Insights: Subscribe to receive the latest news and updates

Melbourne claimed second price with a capital value of $1975 per sqm for the same period, followed closely by Brisbane ($1874).

Perth notched up the nation’s second highest land value ($438 per sqm), followed by Melbourne ($393 per sqm).

Colliers International managing director international Malcom Tyson says the prices are being determined by transport infrastructure projects, which play a critical role in shaping the dynamics of how a country uses its labour force and capital.

“The Australian transport infrastructure network has entered an era of transformation and renewal, with an estimated $133 billion of committed projects under construction, and over 65% of this investment scheduled for completion in the next three to five years,” he says.

“There can be no doubt that the current transport infrastructure investment is set to transform the outlook of the industrial market for operators, developers and investors alike.”

Several infrastructure projects currently under construction on Australia’s East Coast are expected to have a significant impact on the way the county’s industrial market operates.

They include:

• THE $16.8 billion Westconnex project in Sydney;
• THE  $6.7 billion West Gate tunnel project in Melbourne;  and
• THE $10 billion Inland Rail project which will expand and connect supply chains across Melbourne and Brisbane international and domestic markets.

The report also highlights how the value of industrial land is being driven by rapid population growth.

Sydney has reported an increase in industrial land values in the range of 85% and 215% for the past five years.

Melbourne’s land values increased between 25% and 105%. Brisbane was around half that.

Colliers International head of industrial valuations Simon Andreatta says: “Rapid population growth and high population density in the east coast underpin the increase in land values throughout the largest capital cities, as land availability for industrial development becomes limited and its use is restricted to other purposes, particularly in proximity to the CBD.

“As more than half of the Australian population remains heavily concentrated in Sydney, Melbourne and Brisbane, industrial land values in these capital cities will continue to trend upwards, with the transition from bricks and mortar retail to ecommerce retail becoming another key driver of industrial activity.”