Boxing clever
Property chief on where smart money is
The rise of e-commerce and the pandemic has prompted one of the world’s largest property investors to expand its development base by A$1.5 billion in the last year, Kiwi investors heard.
And they got an insight into where the smart money is headed these days for the best returns.
Sydney-based Greg Goodman, a director of the manager of NZX-listed Goodman Property Trust, told the AGM which was staged online: “Fifty to 60c of each dollar going into property wants to go into industrial.”
Australian-headquartered Goodman owns and manages properties worth around A$48b ($51b), the ASXlisted business has a market capitalisation of around $30b and is Australia’s largest listed real estate business.
Goodman was referring to a global chase for logistics and industrial land, buildings, tenants and development sites. That was because so many people were buying goods online, hence more storage space is needed.
Goodman is spending A$5b-plus internationally developing. It was spending A$1.5b more developing now than this time last year, Goodman told the meeting.
Trust chief executive John Dakin told the meeting: “Retail and tourism are challenging and the jury is out about demand for offices. People with money who want to invest are heading towards industrial and values are holding up pretty strongly.”
Goodman told the meeting of structural changes and trends in the sector being “overwhelmingly in favour of e-commerce around the world and we’ve seen that in regards to the A$50b of assets we own and manage around the world in Asia, Europe, USA, Australia and New Zealand. We’re seeing the infill sites we own strongly in demand where we’re building more warehouses to date than we were pre Covid-19.
“That is primarily assisting customers with more technology, better efficiencies, ultimately trying to get costs out of their business but also creating a new way of doing things in Covid-19 which is about more convenience where location of your warehouses is obviously more important and that convenience leads to the warehouse becoming the retail front,” Goodman told the meeting.
After the meeting, Dakin explained how the business had only two vacancies when level 4 lockdown began. Those were in warehouses. It leased space to food operators for online deliveries and one new tenant was a supermarket owner, he said.
“We’ve since leased more space to NZ Post, to deal with rising parcel volumes,” Dakin said of Goodman’s Wiri industrial estate.
Goodman was working on further development opportunities, he said. Globally, Goodman’s biggest tenant was Amazon, Dakin said.
“Ten years ago [Amazon may have been in the top 10 tenants]. Today being number one, well that tells you about the growth of online retailing.
“Retailers will be investing in online platforms more to ensure they can meet the needs of customers who want their goods delivered within a day. Once someone starts delivering in a day, everyone else has to do that. In order to do that, you have to have sites close to consumers,” Dakin said.
“I thought prices of good industrial property would come off with Covid but we’re not seeing that.”
The biggest property Goodman owns is Highbrook at 150ha including parks and reserves. “We’re about 90 per cent done. There are around 4000 people working there now.”
The southern area of Auckland remained the most attractive for the business, he said.
Goodman bought Foodstuffs North Island’s existing headquarters at Mt Roskill “which we regard as an infill site, close to consumers. We’re looking at either re-leasing that or redeveloping it, but they don’t move out till next year”.
“It’s a great site and we’ve got good interest in it,” he said.
Only one question was asked yesterday and that was around how negative valuations would be in the next 12 months.
Dakin said Goodman’s properties would be revalued and those figures released next in its yearend in March, 2021. But he doesn’t see values falling.
“Values are at pre-Covid levels, if not slightly higher in some places, because interest rates are falling so yields for industrial property are looking pretty attractive,” Dakin said.