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Published 31 January 2013 12:25, Updated 01 February 2013 13:10
Bob Ell and wife Bridget at a house auction in Sydney’s Neutral Bay Photo: Lisa Wiltse
BRW Rich Lister Bob Ell is set to buy a prime industrial property in Sydney’s south-west as the market for A-grade industrial assets heats up.
The 34-hectare site on the corner of Milperra Road and Henry Lawson Drive is near Bankstown airport and two kilometres from the M5 Motorway.
Ell’s company Leda Holdings now has a pipeline of industrial developments and investments of about $650 million. A Leda spokesman says demand is steady for prime industrial property along the M5 and M7 Motorways.
“Land in Sydney’s south-west and off that M5 corridor is not plentiful, there’s not a lot of land out there,” the spokesman says. “Even in the Eastern Creek precinct the land is drying up. There’s not a shortage by a long shot but there’s certainly not going to be an oversupply in the future.”
The purchase, for an estimated $25 million, hinges on a lengthy development approval process with the federal government, owing to the site’s proximity to Bankstown airport. Ell hopes to build an industrial park that will house a mix of large industrial users, retail showrooms and bulky goods centres.
The land was formerly held by a development company owned by Mirvac, Leighton Holdings and West Australian superannuation fund Westscheme. Receivers KordaMentha were appointed to the venture in 2010.
The deal follows Ell’s purchase last month of 11.5 hectares of industrial land at Caringbah in Sydney’s south for $34 million.
The market for quality industrial properties has strengthened in the past year, with rising interest from local real estate investment trusts such as Dexus, Goodman Group and Charter Hall, along with offshore buyers like the Singaporean sovereign wealth fund GIC, British financial group Aviva and South Korean pension fund NPS.
Gavin Bishop, national director of industrial for Colliers International, is involved with the Bankstown deal. He believes the market for prime industrial property will improve this year.
“I think you’re going to see more [activity], and what you’re also giong to find is because of the lack of prime grade investment products on the market, the secondary industrial assets are going to attract more interest.
“Land values have come down to a level where you are seeing developers and owner occupiers re-entering the market.”
But funding restraints are still preventing smaller players from buying, he says.