The boom of E-commerce in Australia and the property there to follow it
After the huge expansion of e-commerce in the United States, it has all for boom in Australia and according to the analyst there is going to be a rise in demand for new industrial property.
Amazon entered Australian market this year and took hold of the key property holding. The landlords then realized the importance of demand of logistics facilities and have turned their attention towards that.
According to Sass J-Baleh, who is the International Associate Director at Colliers, “Australia’s e-commerce sector is at an eight-year lag to the US”
By comparing the total sales in retail to the online retails sales J-Baleh compared the lag between the Australian and the US e-commerce sector. The last year figure was only 4.3% in Australia which was achieved in the US back in 2009.
Between the years 2002-2007 US has an average of 24% growth rate of retail in e-commerce. Australia growth rate on the other hand is supposed to increase by 29% in the next four years.
J-Baleh further stated, “Applying the same annual growth rate in the share of US online retail sales between 2009 and 2017, to Australia, results in Australia’s online share increasing to 9.9 per cent (or $37.8 billion in total online retail sales) by 2025”.
There has been a threefold increase in the demand for industrial floor space attributed to the e-commerce sector. In 2013 it was around 50,000 square meters which increased to 150,000 in 2017.
Malcom Tyson the International’s managing director for industrial in Colliers said that demand will furthermore increase in the coming years because the level of productivity within new e-commerce warehouses will increase. The landlords will be preparing themselves for this significant demand.
Mr. Tyson stated, “While e-commerce growth does not translate into a one-for-one increase in industrial space, it will certainly be a contributing factor in pushing demand in Australia and place greater emphasis on supply chain efficiency and effectiveness in the Australian market”.
The trend can be clearly observed globally.
Pertti Vanhanen, co-head of real estate of Aberdeen Standard Investment told The Australian Financial Review,
“Before e-commerce, people understood logistics as a dusty old warehouse. Now, after Amazon, it’s a very modern, high-tech sector. It is getting bigger and bigger in Europe”.
“We recently bought a new warehouse near Charles de Gaulle airport in Paris. The tenant is invested more into the systems that go into the warehouse than the cost of it. It’s basically all dark with robots – it’s easier for a computer to read bar codes in the dark.”