Raine and Horne Commercial

WA - Commercial Anthony Vulinovich of Commercial Western Australia says a pick-up inmining and residential activity - and the flowon effects, are the key drivers for the WA commercial market. In Perth, commercial properties across the spectrum– retail, industrial and office, are delivering average yields of 6%. While Anthony is seeing shorter leases across the retail and office market, he says there is a huge increase in activity across industrial propertymarkets, leasing and sale. As a consequence, industrial yields are expected to further compress, while land values and rent to rise. An excellent example of the demand for industrial real estate was the sale of a food processing plant inMalaga, about 11 kilometres from the Perth CBD. Previously occupied by Goodman Fielder, the plant sold for $8.45million to food services operator Bidfood Australia, who intends tomove into the propertywith a full redevelopment planned. Anthony said the propertywas marketed for three months. “Before the sale, we had three genuine offers, while the winning offer was an unconditional cash offer with a 30-day settlement. Signalling the heat in Perth’s industrial market, Anthony said that after the buyer signed the contract of sale, two separate buyers indicated theywould have paid 5%more for the asset. “This is a typical example of demand being greater than supply. At present, we haven’t seen large capital increases. However, without a doubt, across the board, we expect rents and values to rise 10-20% in the premiumWA industrial market over the next 12+months due to this tilt in favour of vendors.” 36 - Anthony Vulinovich anthony.vulinovich@rhc.com.au