It’s no secret that Australia is richly endowed with natural resources. Our nation remains the world’s largest exporter of iron ore and coal, and has huge reserves of gold, zinc, nickel and copper that have fueled economic growth and facilitated infrastructure development all over the world.
But like all market cycles, the commodities cycle has had its ups and downs, and when volatility in the economies of giant consumers China and India struck, demand for Australian product slowed, with mining company key players putting projects on hold.
The flow on effects saw unemployment starting to bite in many of the regional centres previously buoyed by the boom, property prices plummeted, and the wealth of once prosperous mining townships began to dwindle.
While this downturn claimed the fortunes of many investors, it has also provided the next wave of opportunities.
When it comes to property investment, our Managing Director Philip Ryan believes strongly in timing, and with the resources sector showing signs of recovery, he is one prudent property participant standing ready to strike on behalf of investors, here’s why:
1. Market stabilisation
“We’ve seen stabilisation in the economies of a number of Australia’s key trading partners – the US, China, India, Japan – and rapid growth in emerging markets,”
“There has been downward pressure on the Australian dollar since February this year, which has prompted renewed demand for Australian raw materials.”
2. Online retailers and consumer spending
Further to the upside of industrial property is that along with a mining-led recovery, the evolution of online retailers has spurred demand for warehousing and distribution hubs, cold storage facilities and data centres.
Consumer spending in Australia hit an all-time high in the first quarter of 2018 and a number of global retail giants – including online behemoth Amazon – have recently launched operations to capitalise. With a catalogue of over 500 million products to sell, it’s clear Amazon, and other like-minded companies pushing into the Australian market, will have huge, ongoing warehousing requirements.
3. Demand is increasing
Demand for commercial and industrial property is on the march. Leading property information group CoreLogic recently reported that in the year to June, nearly 40 per cent of commercial real estate transactions were industrial, with locations on the outer fringe of Australia’s major metropolitan centres proving most popular.
Trilogy’s initial forays into Central Queensland showed property investors believe in the regional resurgence, with the $12 million Trilogy Industrial Property Trust, featuring two properties in the Mackay suburb of Paget, filling subscriptions quickly.
The attraction to industrial assets, according to Philip, is that they provide higher rental yields and offer opportunities to value-add through expansion or renovation.
Make an informed decision
If you are considering investing in industrial property, Philip recommends completing a thorough due diligence before making a financial commitment.
“It’s important to do your research,”
“Engage local agents, get information from those ‘on the ground’ and discover how businesses in the area are faring.
“This will help you establish how strong the demand for industrial space is in the area, so you can be confident that your investment dollars are well-placed in a location primed for growth.”
Trilogy is actively exploring and identifying industrial markets in both regional and metropolitan Australia in efforts to acquire another high performing asset for our investors. If you’re considering investing in an industrial asset but without the necessary capital to go it alone, check out the Trilogy Industrial Property Trust.
This article has been prepared by Trilogy Funds Management Limited (Trilogy) ABN 59 080 383 679 AFSL 261425 as responsible entity for the managed investment schemes mentioned in this article. Trilogy has issued a Product Disclosure Statement (PDS) for each of the managed investment schemes mentioned within this article. The PDSs are available at www.trilogyfunds.com.au or by contacting us. You should obtain a copy of the relevant PDS, understand the risks, and seek personal advice from a licensed Financial Adviser before investing. Investment in the Trust is subject to terms and conditions, and risks which are disclosed in the PDS. These risks include the risk of losing income or principal invested. Applications will only be accepted on the current application form that accompanies the PDS. These managed investment schemes are not a bank deposits and Trilogy does not guarantee their performance. Trilogy provides only general financial product advice on its own products and does not consider your objectives, financial situation, or needs in providing such advice. This advice is general advice only and does not consider your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances and we recommend that you seek personal financial product advice on your objectives, financial situation or needs and obtain and read the relevant product disclosure statement before making any investment decision.
