The industrial property sector is poised to reap benefits from any growthin the economy, following last year's strong growth in returns, industrymembers say.

Speaking at the second annual Investment Property Databank (IPD) SAValuation Conference in Sandton on Wednesday, property economist FrancoisViruly said that the industrial property sector was poised to benefit themost from growth in the economy .

He said that the latest figures released by the IPD and the South AfricanProperty Index showed directly owned industrial properties recorded a turnaroundin total return of 17,5% after a number of years of sluggish growth.

This level of growth outperformed retail properties, which recordedat total return of 17,4%.

"Last year the industrial sector saw positive growth in property valueswith capital growth rising by 3,4%," he said.

This also compared well against the office property sector, which contracted2,41%, he said.

Viruly said that the total returns of the direct industrial propertysector would "outpace" the office sector and outperform the rest of themarket.

JSE Securities Exchange SAlisted Pangbourne, Metboard and Martprop allhave large exposures to industrial properties, or are entirely industrial.

Most listed property funds have some exposure to industrial properties.

Viruly warned, however, that many customers wanted modern, cleaner,facilities rather than traditional industrial properties.

"My proviso is that users of space are increasingly looking for modernindustrial sites, which also have certain risks for traditional smoke-stackfactories or distribution centres that are in less attractive areas," hesaid.

Pangbourne CEO Athol Campbell disagreed with Viruly on traditional factories.His company had redeveloped an old property in Isando, near the JohannesburgInternational Airport, increasing returns, he said. Redevelopments couldalso boost yardage and access, he said.

Campbell said industrial property had been performing well for a while.Strong retail sales translated into strong manufacturing, and this ledto demand for industrial space, he said.

Business Day