Property demand expected to peak in 2008

The soaring demand for industrial property space will peak in Sydney and Brisbane next year, then start to tumble in 2009, analysts say.

In a report, UBS property analysts attributed strong industrial tenant demand to Australia's economic growth, low unemployment and upbeat business sentiment.

"In 2008, Sydney and Brisbane are expected to peak, and then in 2009 begin a downswing," UBS said.

UBS said industrial markets in Sydney, Melbourne and Brisbane were currently at the top of the property cycle, with demand coming from some of the largest occupiers of industrial property space, such as supermarkets and transport companies.

The predictions on the downturn come amid an increase in the amount of industrial property up for sale, with rents rocketing 25.6 per cent in Perth in the year to March 2007, and 16.1 per cent in Brisbane.

Overall, in the year to March 2007, Australian prime industrial rents grew by 13.1 per cent to reach an average of $98 per square metre.

"Retail sales and consumer confidence data have returned to the levels last seen in 2003 amid the housing property boom.

"Further, jobs growth is healthy, while the unemployment rate is at a record low."

Investors were moving aggressively to establish a foothold around Sydney's M7, the TradeCoast in Brisbane and the Eastlink and Craigieburn Freeway in Melbourne.