As market instability continues, KordaMentha Real Estate looks to the intrinsic value in industrial properties.
Real Estate specialist, Tom Korda, recently spoke with the Australian Property Institute's (API) Benn Dorrington. Featured in the API's Australia & New Zealand Property Journal, Tom shared his insights into the firm's industrial investment strategy and how it pivots to find value-add opportunities in an unstable market.
With industrial property investments made across Melbourne and the Gold Coast recently, Tom said, “We are looking for value in real estate, particularly at the moment when you can't rely on interest rates and you can't rely on the financial markets to help you out, so you're really looking at the intrinsic value of the property.”
While questions remain about rental growth and space requirements coming out of the COVID-19 pandemic, Tom noted there are opportunities with investing in currently under-rented properties and capturing healthy yields once rents revert. He also noted the significant institutional capital targeting industrial property and how this is set to affect values, “... that's going to put a floor on where values go. There's going to be some buffer compared [to] some of the riskier asset classes or some of the asset classes that were more affected by COVID.”
Tom stated that he remained cautiously optimistic, “I'm still bullish on industrial, but I think the biggest issue right now is finding value in certain assets… you've got to adjust your pricing expectations accordingly to make sure that you are complying with the requirements that the banks set, given the leverage you generally require on value-add to core-plus investments.”
You can read the full article, as published in the Australia & New Zealand Property Journal, here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.