Looking across the longer term , the office market has seen much volatility moving in response to economic shocks , impacting capital and total returns . While this may result in some short-term pain for some investors , the quality returns that this asset class has enjoyed over the longer term cannot be understated . Over the past 10 years , it has returned 10.8 per cent per annum and looking back even further , including the GFC period , annual 20 year returns have also eclipsed 10 per cent .
Industrial
The industrial asset class has been the clear winner during the COVID-19 era . There ’ s been rising needs for logistic and distribution space as well as emerging small , local businesses requiring accommodation , which has ensured vacancies remain low and rents moved upward . The construction industry has slowed over the past few years and there ’ s been a vast increase in building costs , resulting in a lack of new supply in the market , further fuelling these results . Buyers were actively looking to invest in industrial assets , from first-time buyers through to experienced groups , with many moving towards secondary assets in the quest to secure an industrial property . As a result , we saw annual total returns peak at 30.2 per cent in December 2021 - a rate well in excess of any previous highs for this market .
While the mismatch in supply and demand ensures income growth will continue for this asset class , the growing interest rates will put a cap on acceptable yields for industrial property in the short term . Industrial has proven to be an outstanding performer and has moved from what was considered as a secondary asset class to a premium one , given the changing way in which our community interacts with industrial property . Total returns over the last five years have hit 15.6 per cent per annum and 14 per cent per annum over the past 10 years , highlighting the longer-term attractiveness of this asset class . Considering the downturn during the GFC , total returns - even over a 20 year horizon - still achieved 12 per cent annually , highlighting the quality , longer-term opportunity on offer for industrial assets .
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