The former premier industrial suburb of Dandenong is back in vogue with industrial land prices having doubled in the past three years driven by owner-occupiers, private investors, and growth in service industries, according to Colliers International research.
Prices have risen 29% in the last year alone, and the trend looks likely to continue with the most recent sale of a 1,500sqm Greens Rd site at what is believed to be a record for the area at $210sqm.
Once arguably Melbourne’s premier industrial location, home to the likes of the 61ha GMH manufacturing facility which included 170,000sqm of buildings on the busy Princes Highway, Dandenong’s popularity declined for a number of reasons. not the least the growth in the west spurred by the Western Ring Road.
The 42 Greens Road property, located almost opposite the Centrepoint Industrial Estate in Williams Road, and in a bulky goods use precinct, sold to an owner-occupier for $315,000.
Selling agent, Colliers International’s Kosta Filinis, says the scarcity of land in surrounding areas had recently turned the spotlight back on Dandenong, putting upward pressure on prices.
He said the vastly improved access to and from Dandenong, flowing from the opening of CityLink, and the Greens Road location, which had attracted the likes of Harvey Norman, had also been important factors.
Other recent sales in Dandenong include:
- A 10,880 sqm metre lot at Southlink Business Park Dandenong, which sold for $107sqm to a private investor land banking for owner occupation;
- A 2,250sqm lot at 3 Marni Street Dandenong (in an established industrial area) sold for $115sqm; and,
- A 1,987sqm block at lot 20 Licola Crescent, Dandenong, in the Villante Estate, sold for $125psm.
According to latest research from Colliers International, service industry growth, and owner-occupier and small investor acquisitions would continue to put upward pressure on prices.
Head of research Matt Whitby says growth in smaller, owner-occupied, service industries have already absorbed available land at estates such as Southpark, Estate One, and Centrepoint in Dandenong.
“The low interest rate environment continues to entice owner-occupiers into the sales market opting to buy industrial property rather than lease in many instances.
”While a rise in interest rates should stimulate the tenancy market, owner-occupiers should continue to dominate this segment of the market over the next year,’’ Whitby says.
He says the trend to private investors seeking higher yielding investments than were currently on offer from the share market and other property sectors also looked likely to continue in the medium term.
While there have been significant moves on industrial yields in the last month with a Coles Myer property at Laverton selling on a record 6.87%, industrial property yields generally range between 8 and 11%, with offices returning around 7-9%; retail consistently below 5%, and residential 4% and below.
