Industrial Property 2022 is expected to continue to perform strongly this year.
The prospect of a moderating rate of capital value growth may develop as the possibility of an increasing probability in interest rate rises sooner rather than later tempers buyers willingness to continue to accept rapidly rising prices, despite the limited availability of space in Sydney.
This is likely to support the emerging growth of net face industrial rentals during the year for both prime secondary space as purchasers become attracted to the flexibility leasing provides to accommodate growth opportunities in their businesses as they seek to exploit the rebound in economic growth and business confidence from built up demand due to the effects of Covid 19 disruptions.
The sector is also set to enjoy continuing benefits from investment rental cash flows indexed to inflation or greater fixed percentage. This annual rental growth provides investors a defensive hedge against loss of purchasing power in an environment of rising prices such as that we expect the experience this year.
This attractive feature is expected to provide continuing support for the historically low yields of industrial property in the year ahead.