Industrial property the first-half leader

Industrial property was the topperforming real estate type in the first half of 2017, as the sector continued to beat traditional leader retail, thanks to investors being able to lower the cost of managing warehouses and light manufacturing factories.

According to MSCI’s IPD SA bi-annual property index, overall vacancies in the industrial sector also fell.

Direct and indirect industrial property, combined, achieved a 7% total return in the first half of this year, while combined, direct and indirect retail, managed a 6.7% return.

The index also showed that in 2016, industrial property had recorded a total return of 13.6%, while retail managed only 12.6%.

MSCI executive director Phil Barttram said the industrial sector’s outperformance in the first half of 2017 was driven by an encouraging decline in its total vacancy rate from 4.9% to 3.5%.

“Active management also played a positive role in the industrial sector’s fortunes, as the ratio of operating cost to gross income declined by more than 2%, to 32.6%, which resulted in the sector’s net income growth improving from -0.1% to 3.3% as at June 2017.”

Greg Nafte, co-director of Nexus Property Group, said that the top-performing segments for the first half of this year were warehousing and light manufacturing.