Watch: JLL NZ’s webinar series episode 3 – Industrial property perspectives
On Wednesday 6 May we held the third episode of our exclusive webinar series to answer your questions and provide some clarity in these uncertain times. The first episode providing a general overview of the overall New Zealand commercial property market and the second episode providing critical updates to New Zealand’s capital markets are both available on-demand.
This episode focused in on our current environment and the implications for the industrial property market in New Zealand. Moderated by JLL New Zealand Head of Industrial, Jolyon Thomson, the panel featured a host of distinguished experts from across the region:
- Jamie Guerra, JLL Australia Head of Industrial
- Sass Baleh, JLL Australia Head of Industrial Research
- Stuart Ross, JLL Southeast Asia Head of Industrial
- Wouter Robberts, JLL New Zealand Valuations Head of Industrial
There were a series of questions from our guests throughout the webinar – more than our panellists had time to answer –so JLL Southeast Asia Head of Industrial, Stuart Ross and JLL New Zealand Valuations Head of Industrial, Wouter Robberts have taken the time to answer them below.
Can you talk about the rise of the Chinese companies like Ailibaba. Will they move aggressively into Australasian markets?
Stuart Ross: Chinese companies have certainly been on a path of global expansion in recent years after realising their competitiveness in the mainland can provide opportunities offshore.
This may be slowed by COVID-19, however we expect it to continue once international travel resumes. Our experience with Chinese companies expanding overseas has mainly been with the larger e-commerce platforms like Alibaba and their logistics company Cainiao, as well as JD.com.
The main focus of their expansion has been into countries producing products in high demand from their Chinese customers, so North America and Europe, but with Australia and New Zealand’s food and pharmacy/health products highly sought after, we expect they’ll grow their presence here also.
LOGOS are a new player in NZ. Could you talk about their platform in Asia Pacific?
Stuart Ross: LOGOS are now well and truly vested in New Zealand as I know JLL NZ’s very own Wouter Robberts assisted them with their first acquisition in Wiri in 2018, and more recently this year an additional industrial estate in Otahuhu. LOGOS were founded in Sydney, Australia just after the Global Financial Crisis and quickly expanded operations into Singapore and China and more recently into India, South East Asia, and Korea. They have strong capital partners and with the recent tie up with ARA in Singapore, they now have the full capability to manage core and development opportunities. They will no doubt continue to expand in Australia and New Zealand as they look to increase assets under management.
What are you seeing in terms of prime industrial warehousing - are you seeing values falling post-COVID or do you expect them to remain flat?
Wouter Robberts: I expect them to stay flat, although there will likely be greater scrutiny from investors on tenant covenant, bank guarantees, guarantors et cetera, which over the past couple of years has potentially become less scrutinised with the industrial market and general property market performing very strongly. There are still a lot of investors and others out there with cash who are chasing yield given all-time low interest rates and a volatile equities market. We see risk to increase and therefore cap rates to soften slightly over secondary quality assets occupied by non-essential businesses, however prime assets with good tenant covenants in good locations we do not expect to see a material change. I think across the board there will be a flight to quality.
Will New Zealand’s recovery from the COVID-19 pandemic result in increased or decreased medium-term demand for the industrial unit premises required by small businesses in manufacturing, transport, and logistics?
Wouter Robberts: I would consider it to increase. We think there may be some short term implications around supply chain movements et cetera for some occupiers, however the detriment for some occupiers presents opportunities for others, particularly in the logistics space.
We are holding our next webinar on Wednesday 20 May with a focus on providing clarity for corporate occupiers within New Zealand.
Register now to save your spot.