The secret is out when it comes to property investment in the Hunter region, regardless of the asset class.
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It is evident that those groups that have completed projects in the region can bid with confidence, as they have not only benefited from the success of the project but also established strong working relationships with those in the property industry.
The underlying fundamentals that support investment in our commercial or industrial markets has seen the Newcastle market enter into fund managers mandates, with the demand levels being seen today not evident only 10 years ago when the market was dominated by local investors and developers.
The $52.2 million sale of 18 Honeysuckle Drive followed a comprehensive national on-market campaign that saw extraordinary enquiry from high net worth investors but more-so from listed and unlisted fund managers. The asset was purchased by IOOF Investment Management Ltd for inclusion in its Property Plus Australian direct property portfolio, with IOOF having in excess of $140 billion of funds under management and advice.
The acquisition reflected a net return of 6.20% and a capital value of $8,000/sqm, which has re-rated the local commercial market.
Investment demand exists for all assets and the feedback was often that the preference was for larger assets, with many groups indicating they would prefer to invest $100 million in Newcastle if there was the opportunity. This was the case when Industria REIT bought the Tomago Westrac facility in late 2016 for $158.6 million, showing a net return of 7.25%.
Investment Committee support to purchase assets is not restricted to the asset itself, but rather their view on the future of the market. We are seeing increased enquiry and offers to purchase property across all asset classes from a wide cross-section of the market, with national interest in the Hunter the ongoing theme. Demand has also increased for development sites, whether that be an inner-city development play or a greenfield development site capable of residential subdivision. There is no doubt that the public investment in infrastructure and the flow on effect of continued private investment has aided their positive view on our region, with our housing affordability in comparison to Sydney and employment prospects contributing to net migration patterns and population growth.
The future for the Hunter is mapped out in the Greater Newcastle Metropolitan Plan, and the benefits of this planning foresight will be seen in years to come, as has been the case with the flow on effect in the Newcastle CBD following the release of the Newcastle Urban Renewal Strategy in 2012.
There is stronger commitment than ever before for collaboration across the region to ensure its success. The Property Council is advocating for a structure that meets the needs of potential investors, a concierge service that makes it easy for them to say yes to investment opportunities across the whole of the Hunter. Colliers is pleased to work with the Council's Hunter Chapter to champion conditions that stimulate demand and attract investment in the Hunter.