Raine and Horne Commercial

10 A Valuers Perspective Brisbane Industrial Market This has been demonstrated through ongoing yield compression resulting in increases in capital values across the sector. An example of this yield compression trend can be evidenced by the sale history of 1 Sulphur Street, Narangba, which initially sold in June 2017 for $10,565,000 as part of a sale and lease back transaction to Varley Group who signed an initial 10 year lease term. The sale reflected an initial yield of 7.59%. This property transacted again in February 2021 subject to the same lease for $16,685,000 reflecting an initial yield of 5.25%. This increase in value of $6,120,000 indicates a 13.25% Compound Annual Growth Rate (CAGR). A summary of these transactions is displayed below: The Brisbane industrial market continues to perform strongly as good quality assets with strong cash flow fundamentals and lease covenants remain well sought after. Yields for industrial investment properties are at unprecedented historically low levels. Any increase in interest rates and ultimately the cost of credit is likely to result in investors seeking higher investment returns, which will result in a softening of yields and in turn capital values of investment properties. In the most recent October board meeting, the Reserve Bank of Australia remained commi ed to maintain the current Cash Rate 0.1% (10 basis points) until 2024. There appears to be a clear divergence between the market consensus and the RBA’s commitment. If the team at Acumentis can assist you with any of your industrial or commercial property needs reach out for a chat with one of our commercial experts on 1300 882 401 or email mailbris@acumentis.com.au . Sale Date Sale Price Initial Yield $/sqm (le able area) WALE CAGR June 2017 $10,565,000 7.59% $1,540 10.00 years - February 2021 $16,685,000 5.25% $2,432 6.25 years 13.25%