ADELAIDE'S PROSPECTS AMID MANUFACTURING SLUMP

ADELAIDE'S PROSPECTS AMID MANUFACTURING SLUMP

HOLDEN'S exit from Adelaide needn't spell doom and gloom for the state's economy, according to CBRE.

General Motors will close its manufacturing facility in Elizabeth and move production offshore next year, impacting about 1600 jobs in the town.

While the latest economic forecasts presented at the real estate company's annual Adelaide Market Outlook event indicate manufacturing has been declining across Australia for three decades.

CBRE Australia head of research Stephen McNabb says the demise of manufacturing in South Australia has led to increasing pessimism about economic prospects in the future.

"Over the past 15 years, the manufacturing sector has shrunk by over 18 per cent in South Australia, but the decline in car manufacturing has been in decline since about 2003 as well," McNabb says.

"The worst of the decline in car manufacturing has already hit the Australian market. The important story for South Australia is that the economy is continuing to grow.

"It is now about 40 per cent bigger than it was, which highlights it as being the key driver of the industrial market in South Australia."

About 400,000 cars were manufactured in Australia annually by 2003, however this decreased to 167,000 last year.

Manufacturing represents 8 per cent of South Australia's total economy, according to CBRE.

CBRE Asia Pacific head of research Henry Chin says Adelaide is posed to capitalise on opportunities in property, particularly strong inflows of offshore capital.

He says Australia had jumped from second to first position in Asia Pacific as the most favourable market for cross border investment in CBRE's Investor Intentions Survey.

"Traditionally, Asian investors only want to buy A-grade buildings in major gateway cities such as London, Sydney and Melbourne, but over the past 12 months, we have noticed that they are shifting their focus to non-gateway cities," Chin says.

"It's not all about China. The most active outbound Asian investor is actually Singapore and they want to continue deporting their capital into Australian markets.

"Meanwhile, Korea is the most aggressive investor, ramping up their capital in offshore markets significantly over the past year."

In 2015, outbound investment from Asian institutional investors totalled US$63 billion with the majority flowing to the US and Western Europe. The majority of US$8.1 billion injected into the Pacific was in Australia - representing 45 per cent year-on-year growth.

 

CBRE'S SECTORS TO WATCH

Health and IT

"With the new Royal Adelaide Hospital, SAHMRI and the university research buildings, Adelaide is going to have the biggest biomedical precinct in the southern hemisphere. This is going to underpin strong activity at that end of North Terrace, and moving forward, the rest of the CBD as well," says Andrew Bahr, advisory and transaction services director.

 

Food and beverage

"South Australia is increasingly positioning itself as a premium exporter in the food and beverage industry this is creating demand for space from everything such as processed food products and wine storage through to associated inputs of bottled glass, food packaging and bulk fertiliser," says David Reid, industrial and logistics senior director.

 

Offshore and domestic investment

"What we're seeing is a flow on effect from the record volumes of foreign buyers entering the Melbourne and Sydney markets, with local and domestic investors turning their attention to Adelaide as they're priced out of their own markets," says Ben Heritage, capital markets and metropolitan investment properties associate director.

 

Get our daily business news

Sign up to our free email news updates.

 
Whitefox Recruitment founder Luke Hemmings making strides as a careers leader
Partner Content
After relocating his Canberra-founded company Whitefox Recruitment to the Gold Coast la...
Whitefox Recruitment
Advertisement

Related Stories

ASIC secures its first court win for greenwashing against US giant Vanguard

ASIC secures its first court win for greenwashing against US giant Vanguard

The Australian corporate watchdog has caught out one of the world&r...

Medicinal cannabis group Althea shaves $1.5m from its cost base through staff cutbacks

Medicinal cannabis group Althea shaves $1.5m from its cost base through staff cutbacks

Australian-founded medicinal cannabis company Althea Group (ASX: AG...

Charter Hall snares 15pc stake in Hotel Property Investments for $97m from 360 Capital

Charter Hall snares 15pc stake in Hotel Property Investments for $97m from 360 Capital

Listed funds manager 360 Capital Group (ASX: TGP) has offloaded its...

Lendlease gains approval for $1.7b transformation of Queen Victoria Market precinct

Lendlease gains approval for $1.7b transformation of Queen Victoria Market precinct

Australian development giant Lendlease Group (ASX: LLC) has been gr...