Industrial
As the stand out asset class over the last few years , industrial returns remain in positive territory albeit down from the highs of late 2021 . With our changing needs during the pandemic , high demand for the storage and distribution of goods saw industrial occupancy levels peak , growing income and investment demand . As such , industrial has recorded the highest ever returns , making it the most sought-after commercial property class , attracting record low yields . We saw total return levels peak at 30.9 per cent in December 2021 before reducing as interest rate movements occurred , however capital returns remain attractive averaging seven per cent in December 2022 after an impressive three year average of 13.6 per cent .
While capital returns are anticipated to decrease in response to the cost of funds , income returns will continue to be stable , capitalising on high occupancy and limited development opportunity - particularly in those states with low land availability . Overall , total returns currently sit at 12 per cent in December 2022 after averaging 18.9 per cent per annum over the past three years , still ahead of the 11 per cent annual average recorded over the last 15 years . With national average capitalisation rates showing their first period of increase in December 2022 of 17 basis points to 4.21 per cent , this continued , upward trajectory will see a rapid deterioration of capital returns in 2023 .
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