Dredge a property win

by Maireid Sullivan | February 22, 2008 at 01:47 am

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This article will help those who are trying to understand how land value works. It reveals why the dredging of Port Phillip Bay (in Melbourne, Australia) will go ahead, –why the protectors will lose, and why the Victorian (state) government must make the decision that it does.

Note the sentence; "there is an important correlation between container volumes and industrial estate"

What the protesters do is pointless, until they come to understand how land value works...which is all about the government granted license that is land value.

Article by Phillip Hoskins, 8 February, 2008, The AGE.com.au

THE channel deepening project, by expanding the Port of Melbourne's trade capacity, will generate growth in Melbourne's commercial property market, according to leading agent CB Richard Ellis.
CBRE's director of research for the Pacific region, Kevin Stanley, said with dredging under way, the logistics sector — "Melbourne's 21st Century industrial driver" — would be guaranteed well into the next decade.

The dredging project will deepen Melbourne's shipping channels to ensure the port can handle the bigger container ships that are expected to dominate future trade.

Mr Stanley, outlining CBRE's property outlook for Melbourne this year, said there was an important correlation between container volumes coming into a port and demand for industrial estate.

In the US, for example, the number of containers arriving at West Coast ports — the entrance point for most imports from China — had fallen since 2002, and even gone backwards, as consumers in a slowing economy stopped buying so many imports.

"The rate of growth in industrial stock, or net absorption, in these markets is now also falling dramatically," he said. "It's close to negative territory for the first time since the 2001 recession."

Mr Stanley said there was a lesson here for Melbourne. "The point for Melbourne is, if the rate of growth in containers were to fall, not because of a drop in consumer demand, but because of a capacity restraint in the shipping channel, then we would also expect to see a corresponding fall in demand for warehousing and distribution centres.

"It appears this may have been averted just in time, and demand for industrial property is forecast to remain high on the back of ongoing growth in containers coming into the Port of Melbourne," he said.

In general, Mr Stanley said Melbourne's industrial sector was booming, with construction at an all-time high due to the strong local economy, high population growth and rising import volumes.

Last year, a record 1.6 million square metres of new industrial stock was built in Melbourne, with 1.4 million sq m forecast this year. "By the end of this year, Melbourne's total industry market will measure 37 million square metres, almost 40% of Australia's industrial market," he said.

http://www.cbre.com.au