Opportunities abound
RWC eyes industrial sector, undeveloped land and education in 2024
“The need for land for residential and industrial uses, in particular, has not reduced and the requirement for serviced subdivided land will grow in line with our population.
Vanessa Rader RWC head of research
Following a year that provided some difficulties, the commercial property market will offer savvy buyers a chance in 2024 to unlock opportunities in a cyclical market, a Ray White Commercial head says.
Vanessa Rader, head of research for the national group, said 2023 saw reduced sales volumes and rising finance costs, resulting in upward pressure on yields.
“While these pressures will remain for much of 2024, opportunities will emerge,” she said.
Ms Rader said the industrial sector – in which construction cost rises had put the viability of new projects under the spotlight – could offer one of those opportunities.
“Assets which offer a chance to reposition or renovate may be a clever way to get into the industrial sector,” she said.
“Vacant assets with potential may be an affordable means of entering the market via income growth opportunities.”
Ms Rader said englobo - or undeveloped - land, while diminishing in volume, was expected to continue to be a clever way to capitalise on market pressures.
“The need for land for residential and industrial uses, in particular, has not reduced and the requirement for serviced subdivided land will grow in line with our population.
“With construction costs continuing to increase and pressures on labour further growing the cost of development, the ability to on-sell the land component, leaving the construction risk with the end user, may be an attractive opportunity for some savvy investors.”
Ms Rader said education could offer “outside the box” investment opportunities.
She said the sector, along with the medical and childcare areas, had been a strong performer in recent years.
“However, like many alternatives, a growth in buyers and a fear of missing out saw volumes spike and values reach sometimes unsustainable levels. Education, notably the tertiary sector, is an emerging sector ripe for investment.
“In recent years, we have seen universities take up space within office buildings as an alternative to campus-style facilities.
“Many institutions sit on large land parcels, which they could partner with the private sector to develop and value add.”