The Gold Coast has witnessed a flurry of investment activity in 2015. Renewed confidence by local investors together with increasing competition by off shore groups looking for a “safe haven” investment location has done much to improve market fundamentals. Government investment into the region and the upcoming 2018 Commonwealth Games has been the stimulus the market has needed to move forward after a prolonged period of uncertainty.
While the residential market is showing shoots of improvement, as is the office market with the vacancy level falling to 14.8% (July 2015 Office Market Report, PCA). This has had a positive impact on overall sentiment with new and existing business growing space requirements and is flowing through to reduced incentive levels improving the effective rental position and pressuring yields downwards.
The industrial market has also seen the benefits of this improved market confidence with greater land take up across the greater Gold Coast market. Activity has been strongest in the northern edge of the Gold Coast with Loganholme and the M1 corridor to Yatala showing signs of improved interest. Transaction levels have been robust since 2013 however have heightened during 2015 and the volume of lots sold well ahead of activity seen in prior years. Investment in these locations has been by local businesses and investors looking for an alternative investment during a period of historical low interest rates. With land values still below those achieved pre GFC levels, this location remains attractive as a “value for money” proposition in a market which is showing signs of rejuvenation. Land values in Yatala currently range between $200–$270/sqm for vacant developable land parcels compared to the $360/sqm achieved in 2007.
This northern Gold Coast location has also been very active for developed industrial product also, with both owner occupier and investor activity pursuing investment options at reduced yields in the 7.5% to 8.7% range. This is well down on results of the last couple of years where yields ranged as high as 10.0%. Well located assets within industrial precincts along the M1 corridor have been well received by these investor types and market demand remains consistently high.
The Gold Coast industrial market has gone through various periods of oversupply, most notably pre GFC, however post this period there was a prolonged period of no development allowing for absorption of existing stock. Yatala Enterprise Area being the largest precinct on the Gold Coast continues to be the most active and upon the council’s 2012 initiative Construction Kickstart ensured the next wave of development and investment in the region. In 2015, demand has returned for serviced industrial land continues pipeline is waning.
Looking ahead, there are currently 195 lots of future industrial land within the planning phase, all lots are located within the Yatala/Coomera precinct and expected to enter the market by the end of 2017.