Industrial property in the Australian market delivered returns of 12.1 per cent over the year ended June 30 2014. This exceeds the returns from retail and office property, which generated returns of 9.8 and 9.0 per cent, respectively.
The strong showing is the result of demand for distribution and warehousing generated by increases in retail spending in the country’s economy.
Income return for industrial property over the long term has also outperformed retail and office property.
Returns were 9.0 per cent per annum over 20 years to June 30, 2014. Retail and office property returns were 7.4 per cent per annum and 7.3 per cent per annum.
Rental yields on industrial property are also higher reflecting the tendency for single tenants in assets.
Over the medium term, demand for warehousing and distribution assets is expected to rise due to economic growth and the rise in online retail sales.
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