November 2016 – Melbourne Industrial Monash LGA

7 November, 2016 / Vanessa Rader and Ryan Amler

As 2016 is drawing to a close, sales volumes look unlikely to reach the highs achieved over the past three years. This more limited transactional volume is a reflection of a lack of stock available in the market rather than subdued demand levels.

The improvement in the economy has seen employment levels increase as well as a number of relevant indicators such as industrial production and exports; as such owner occupiers together with a vast range of investors are now pursuing these types of investments. Low interest rates and limited returns from other investment types have motivated this new class of investors which has kept values and yields competitive.

Across the Monash LGA interest remains well split across the owner occupier and private investors, given the affordable access to funds. Investment has predominately been in the sub $1.5 million price point however this year has seen a greater increase in the smaller asset price point of sub $800,000 which suggests growing range of investors looking to diversify funds.

Sales volumes across Monash LGA have shown subdued results during the first three quarters of 2016; this period has represented $103.52million which is less than half the total turnover recorded in 2015. Sales volumes have been at their highest during the 2013 to 2015 periods as owners looked to capitalise on capital value growth and sell stock during a time where buyers have easy access to funds, coupled also with the increase in investment demand from overseas buyers. These trends have now turned, as owners look to hold onto assets due to their higher returns compared to other asset classes which have witnessed recent strong capital growth such as residential and retail. Low yields of these alternative asset classes have also driven demand by private investors into this more affordable market where they may not of otherwise had an interest. The leasing market also has been robust with face rents showing some increases across South East Melbourne which has put pressure on owner occupiers to also shelter from these increases and purchase accommodation.

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