Connect with us

Finance

German giant Union Investment to double Asia-Pacific plays

An artist’s impression of Brisbane’s South Point development that Union bought last year. Source: Supplied

An artist’s impression of Brisbane’s South Point development that Union bought last year. Source: Supplied

Germany’s biggest open-ended fund manager, Union Investment, aims to fairly quickly double its €1 billion ($1.4bn) of property investments in the Asia-Pacific after making its first foray into Australia last year, according to Eric Cheah, the group’s regional head of real estate.

“We are very focused on Australia — it’s one of our target markets, and one of our priority markets as well,” said Mr Cheah, who comes to Australia every few weeks from his Singapore base.

Union, which has €240bn ­invested globally with just over $26bn of real estate assets under management, struck a $200 million deal to buy the Southpoint office tower in Brisbane from ­Anthony John Group a year ago.

The construction of the 23,500 sq m development at South Bank, which will house Flight Centre’s 2000 Brisbane staff, is being funded by Union.

Australia had always been on the group’s radar, Mr Cheah said. “It was quite a proud moment for the group and we would love to do more,” he said of the Southpoint acquisition. “We would like to double our €1bn investment (in the region) in the short- to medium-term, three to five years.”

Mr Cheah who worked for Hudson Conway on the building of Melbourne’s Crown Casino before moving to Singapore in 2000, said Southpoint’s 10-year weighted average lease expiry would allow the investment to ride out the additional supply coming into the Brisbane market, which is ­already facing high vacancies.

Mr Cheah declined to comment on potential investments, although market sources said the funds giant had been an underbidder on Leighton Properties’ North Sydney office tower, which was sold in 2013 for $413m and has run the ruler over Brisbane’s Waterfront Place, which is under due diligence to Dexus at more than $630m.

Globally, the fund manager invests across commercial property sectors and also owns 47 hotels and residential property. Outside Europe, Union is more focused on CBD locations and would initially look at office investments in ­Australia, Mr Cheah said. In the Asia-Pacific, Japan is its other ­investment focus.

“But over time, as we have a greater allocation to Australia, we would hope to broaden that universe,” he said, noting that hotels and CBD retail here would also make sense.

Mr Cheah said Union’s challenge was to deploy its capital in the increasingly competitive ­global markets.

“We have roughly more than €10m a day that comes through the door,” he said.

While Australia had gained ­attention as an investment destination, quantitative easing had seen the global investment playing field awash with capital, Mr Cheah said.

“We have a 50-year history of being a prudent investor that we want to preserve.”

While on the surface it ­appeared an asset bubble could be forming, Mr Cheah questioned whether the money would “peel away and be less relentless”

“If you stopped QE today, that doesn’t stop the volume of money already printed, so the pressure remains.”

By Turi Condon

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Finance

Investors Lead Home Loan Rush

Home Loan

Property investor lending in January has risen by 10.5 per cent, lifting the overall value of home loans to $28.7 billion in the month—an increase of 43 per cent on 2020.

The surge in the latest Australian Bureau of Statistics figures occurred across all states and territories, with the exception of the Northern Territory, to be 44.3 per cent higher year on year, the largest annual growth on record since 2003.

Owner-occupier lending for homes rose 10.9 per cent in January, 52.3 per cent higher than in January 2020, with first home buyers increasing by 9.6 per cent to be at the highest level since May 2009, mirroring the similar uptake following the global financial crisis and the introduction of the first home-owner grant.

Investor lending for housing lifted by 9.4 per cent, capping a 22.7 per cent rise across the last twelve months and revealing a renewed appetite in new loan applications.

The lift marks the the largest rise in new loan commitments for investor housing since September 2016.

The number of first home buyer loan commitments for investment purposes accounted for 4.4 per cent of all first home buyer commitments.

The HomeBuilder program, which offers grants of $25,000 to help construct or renovate a property, is also contributing to an increasingly febrile market.

 Home Loan

▲ The value of loans for alterations and additions in the three month to January 2021 is 40.8 per cent higher than the same time the previous year.

“Since the HomeBuilder grant was introduced in June 2020, there have been record rises in the value of construction loan commitments,” ABS head of finance Katherine Keenan said.

“Loan applications made late in 2020—prior to the reduction of the HomeBuilder grant on 1 January 2021—contributed to the strong rise in January’s construction loan commitments of 15.7 per cent.”

The value of new loan commitments to owner occupiers rose 10.9 per cent, the largest monthly increase since August 2020.

Owner-occupier first home buyer loan commitments accounted for 36.5 per cent of all owner occupier commitments.

Despite 6.5 million Victorians being put through two lockdowns in the lead up to January, the value of new loan commitments to investors also rose 12.9 per cent in the state across the month.

ANZ economist Adelaide Timbrell said Victoria has continued to play catch-up after its lockdown, with its total new lending moving from 15.2 per cent year on year in December to 29.7 per cent year on year in January.

“Government support is adding to the momentum of housing lending, with stamp duty concessions in Victoria, the first home owner deposit scheme and other first home owner concessions all reducing the initial cost of home purchases.

“Low rates—including an outlook of continued low borrowing costs—are fuelling the housing market more than other parts of the economy,” Timbrell said.

Loans to owner-occupiers for the construction of a new dwelling in the three months to January 2021 compared to the same time last year has tripled in Western Australia, up 221.7 per cent and more than doubled in Queensland to 164.9 per cent.

The Northern Territory recorded a 160.3 per cent boost while Tasmania and Victoria also recorded spikes of around 100 per cent.

HIA economist Angela Lillicrap said investors were now returning but remained more active in the market for established dwellings.

“The value of lending to investors increased by 17.6 per cent in the three months to January 2021 from the previous quarter.

“Low interest rates, rising house prices, higher savings and a demographic shift in demand towards detached housing and regional areas should ensure ongoing demand,” Lillicrap said.

National house prices grew slightly by 0.9 per cent in January to surpassed pre-Covid levels by 1 per cent, and be 0.7 per cent higher than the previous September 2017 peak.

 

Article Source: theurbandeveloper.com

Continue Reading

Finance

2020 saw 6,777 interest rate cuts across Australia’s home loan institutions

From 1 January to 31 December there were 6,777 cuts to home loans, with an average cut of -0.30%, according to Canstar’s database.

It recorded:

  • 880 cuts to variable rates for owner occupiers, with an average cut of -0.21%
  • 2,455 cuts to fixed rates for owner occupiers, with an average cut of -0.33%
  • 764 cuts to variable rates for investors, with an average cut of -0.21%
  • 2,678 cuts to fixed rates for investors, with an average cut of -0.32%

Over the same period there were 535 home loan rate increases, with an average increase of 0.20%.

On 1st January 2020 the average variable rate for owner occupiers paying principal and interest was 3.73% (80% LVR). Today that rate is 3.32% The lowest variable rate was 2.69% and it is now 1.99% (80% LVR) or 1.77% (60% LVR).

On the 1st January 2020 the average 3-year fixed rate for owner occupiers paying principal and interest was 3.15%. Today the average 3-year fixed rate is 2.30%. The lowest 3-year fixed rate was 2.69% and it is now 1.89%.

Australia's home loan institutions

Savings interest rates

From 1 January to 31 December Canstar recorded:

  • 529 cuts to savings, with an average cut of -0.18%
  • 262 cuts to regular savings accounts, with an average cut of -0.19%
  • 267 cuts to bonus savings accounts, with an average cut of -0.17%

On 1st January 2020 the average regular savings account rate was 1.12%. Today that rate is 0.43%. The maximum rate was 2.65% and it is now 1.75% (available for 4-months).

On 1st January 2020 the average bonus savings account rate was 1.47%, now just 0.75%. The maximum rate was 2.25% and it is now 1.35%.

 

Article Source: www.urban.com.au

Continue Reading

Finance

Home-buyer confidence at an all-time high

Home-buyers

More than two-thirds of respondents in a recent survey believe that the conditions are right to purchase a home – a level of confidence not seen since the onset of the pandemic.

Finder’s latest consumer sentiment survey, which involved a nationally representative sample of more than 20,300 respondents, found that 67% of Australians feel that now is a suitable time get on the property ladder, up from 42% last April.

This marked the first time that home-buying optimism has reached this level since the financial comparison site started tracking the metric in May 2019.

Confidence was highest in Adelaide, where 77% of those polled thought now is the right time to buy a home. This was followed by Melbourne’s 70%, Brisbane’s 69%, Perth’s 67%, and Sydney’s 59%. Numbers were not available for Canberra, Darwin, and Hobart.

Those expecting house prices in their areas to “significantly increase” also hit an all-time high of 19%, climbing from just 5% in September last year.

Meanwhile, respondents who anticipate property values to “somewhat increase” rose to 44% from a low of 18% back in April.

Graham Cooke, insights manager at Finder, said that the recent spike home-buyer optimism was a good indication of economic recovery.

“This rebound in buyer confidence is indicative of increased economic activity over the past few months, along with an optimistic outlook for 2021,” he said. “Not only did the Australian government do a better job than most at restricting the spread of COVID-19, but federal and state economic support measures helped prop up the property market.”

Cooke said that property prices in every capital city, expect for Melbourne, have reached a higher level compared to the same time last year, adding that he expected “this trajectory to continue,” especially with 86% of economists in a separate Finders survey predicting a full recovery of national house values this year.

However, Cooke advised prospective buyers to carefully consider the pros and cons “before taking the plunge in the current market.”

“Low interest rates and government assistance packages like the First Home Loan Deposit Scheme put buyers in a strong position. The potential removal of stamp duty in NSW will be another boon for buyers and may spread to other states,” he said. “If you’re thinking about dipping your toe in the market this year, make sure you have a strong credit history, and shop around before signing up for a home loan.”

 

Article Source: www.brokernews.com.au

Continue Reading

Positive Cashflow Property

duplex designs, dual occupancy homes

Property Investment Advice

gold coast property management

Trending