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Queensland Government’s Focus on Building in the State

This is an opinion piece by Peter Hyland, Urbis Regional director.

Brisbane investor peter-hyland

THE State Government is focused and very serious about scrutinising its needs as both a property owner and tenant.

Tuesday’s unveiling of Premier Campbell Newman’s vision for the revitalisation of the George and William streets government office precinct clearly signals to the broader industry it’s serious about setting an agenda of cultural change in Queensland starting directly with its own centres of control and influence.

The announcement, coupled with last week’s scrapping of the Bowen Hills office precinct project where Queensland Health was previously committed as a tenant, decisively heralds Premier Newman’s needs and expectations of the Government property portfolio.

The new precinct is a shot in the arm for Brisbane’s CBD, with the potential to transform a key city tract, and it should be welcomed as both visionary and confidence-building.

The transition of the Urban Land Development Authority’s power back to local authorities is another example of the State Government moving quickly to walk its talk. The Premier has taken a sensible and measured approach to make good on his election promise.

The ULDA, created to cut through red tape and speed up the approval process to bring affordable product to market, taught important lessons that fast and effective outcomes were possible. However, just as it was appropriate to create the ULDA, with a job well done it’s now also appropriate to transition some of its powers back to local authorities.

While Queensland waits for the outcome of the audit of government finances to discover the state’s true capacity, the property industry eagerly awaits guidance on four key areas of consideration for the Government’s policy makers. These decisions will shape and impact every aspect of the industry for the next decade.

Firstly transport infrastructure, particularly around rail capacity, remains a pressing issue while understanding the new Government’s property requirements as an owner and tenant will influence projects in Brisbane and our major regional centres.

We also urgently need to come to grips with the associated planning issues around the resource boom to ensure the best outcomes for our state’s regions and towns. Finally housing affordability, and its associated ripple effect, will be central to creating the momentum and confidence needed to revitalise Queensland’s property market.

To date the moves have been big and bold but the State Government is not acting impetuously, it is simply seeking to make immediate change.

The property industry expected hard decisions, which would inevitably impact some businesses, but were prepared to accept those with the pay-off of good economic growth and development a key fundamental that underpins a healthy Queensland property sector.

With a string of strong and confident decisions the Queensland Government’s ship has set its course and it would appear there is indeed a captain at the helm.

Originally published on couriermail.com.au on June 1, 2012.

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Brisbane

HomeCo bucks trend of negative property valuations

HomeCo bucks trend of negative property valuations

Freshly listed landlord HomeCo is bucking the real estate sector’s trend of downward property revaluations, boosting the value of its large-format malls by 5.2 per cent.

While many of its listed real estate trust peers with a retail focus have seen sharp falls in the value across their portfolios from the COVID-19 crisis, HomeCo, run by executive chairman David Di Pilla, said preliminary and unaudited valuations had its portfolio rise 5.2 per cent, giving its malls a combined value above $1 billion.

“Our portfolio has been carefully constructed and our assets have thrived and done well through the last few months,” Mr Di Pilla said.

Despite the uncertainty of the pandemic lockdown, foot traffic in HomeCo’s centre rose 9 and 17 per cent in May and June.

“We didn’t have the dip that the traditional malls had in foot traffic. Retailers have remained open and as a result we’ve been trading well,” he said.

HomeCo listed on the Australian exchange in October last year and controls a string of convenience-focused malls developed from former Masters stores.

About half of the group’s portfolio was assessed by external valuers with the rest being scrutinised in-house.

Mr Di Pilla attributed the positive result to rents being set at the bottom of the rental curve at the firm’s initial public offering, which gave the business good growth in assets over time.

Diversified developer Stockland on Monday reported a valuation decline of 6 per cent across its portfolio. Earlier this month GPT reported an 8.8 per cent decline and mall landlord Vicinity Centres said it expects a hit to values of between 11 and 13 per cent.

HomeCo’s development pipeline also contributed to stronger capitalisation rates for its properties.

But while the pandemic didn’t tarnish values, it has affected income − with the landlord saying in May its final 2020 distribution will be half of its pre-coronavirus forecast, at a minimum of 0.05¢ per security.

The fund manager is also in expansion mode. It has purchased the Parafield Retail Complex in Adelaide for $25 million from one of its foundational investors to add to its portfolio.

The mall is 35 per cent leased to Wesfarmers-related retailers and counts Super Retail Group among other tenants.

The deal will generate an ungeared cash yield of 7.5 per cent in the first year, Mr Di Pilla said. That follows the purchase of another mall in regional Ballarat in Victoria earlier this year.

Meanwhile, neighbourhood-focused landlord SCA Property Group has reported a cash rent shortfall of $22 million between March and June 19, 2020 across its centres.

A portion of the shortfall was from government-mandated waivers or deferrals to tenants as a result of the pandemic, SCA said.

This, combined with a capital raising of $279 million undertaken in April, will drive down its full-year distribution to 12.5¢ per security from its previous guidance of 15.1¢.

 

 

 

This article is republished from www.brisbanetimes.com.au under a Creative Commons license. Read the original article.

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Brisbane

Brisbane real estate a mix of growth, consistent, plateauing and declining suburbs: Hotspotting’s Terry Ryder

Brisbane real estate a mix of growth, consistent, plateauing and declining suburbs Hotspotting’s Terry Ryder

Brisbane shows how complex markets can be and illustrates the folly of generalisation.

My winter survey of sales activity and prices reveals that the number of rising markets across the Brisbane metro area is matched by the number of declining/danger areas – and in between are the majority of suburbs which are consistency or plateau markets.

Brisbane’s data shows the impact of the Covid-19 shutdown while also displaying a good level of resilience. The number of suburbs with rising sales activity (28) is lower than the Autumn 2020 survey (37), but better than at the same time last year (24).

There continues to be a high level of consistency markets (50 suburbs, down slightly from 56 in the previous survey). The existence of 28 growth suburbs and 50 consistency suburbs shows a solid degree of resistance to the virus crisis period. But also significant is the 113 plateau markets (suburbs where sales activity has dropped below the previous levels), the highest in three years.

Brisbane also has 21 suburbs ranked as declining markets, slightly fewer than in the previous quarterly survey (23) and substantially lower than six months ago (32). There are also seven danger markets, ones where sales activity and prices are down and vacancies are uncomfortably high.

The Brisbane market was poised for a long overdue boom before Covid-19 struck. As we wrote in the previous edition: “Every statistic that matters depicts uplift in the Brisbane market and prices are expected to rise in 2020. Many commentators have forecast a Brisbane boom in recent years, though many were simply assuming that the Queensland capital would follow the lead of Melbourne and Sydney. Brisbane, however, has lacked the core growth drivers that boosted markets in the two biggest cities.

“But, increasingly, growth parameters are lining up for Brisbane. Population data is favourable, the affordability comparison is helpful, surveyed investors say they are targeting Brisbane – and the major piece of the puzzle previously missing, infrastructure spending, is starting to happen.”

Because of those factors, we believe Brisbane will return to strength quickly in the recovery-from-corona phase.

As we often find with these surveys, there is particular strength in the northern suburbs of Brisbane – the Brisbane North precinct and the Moreton Bay LGA jointly account for half of the 28 suburbs ranked as rising markets. The southside has many of the struggling markets and Brisbane’s inner-city provides all of the danger markets.

In our analysis we divide the sprawling Brisbane City LGA into five precincts (inner, north, south, east and west) while the more distant parts of the metro area are covered by the LGAs of Ipswich, Logan, Redland and Moreton Bay – a total of nine precincts. 

The Brisbane North precinct and its neighbour Moreton Bay Region are the standouts, as they have been in our surveys in the past.

The Moreton Bay Region LGA has regularly been the best-performing Brisbane market, boosted by affordability, good infrastructure and proximity to employment nodes (including a new university campus). And its status has been enhanced in this survey, with the number of rising suburbs increasing from eight to nine. This LGA also has 10 suburbs ranked as consistency markets, which overall creates a strong result for this precinct in a virus-impacted market.

Leading suburbs include Petrie (quarterly sales of 43-47-53-69-66), Strathpine (65-79-81-83) and Banksia Beach (46-54-67-68-70).

Brisbane North has 5 suburbs classified as rising markets, 9 ranked as consistency markets and none ranked as declining or danger markets. There are two particular clusters with strongly-performing suburbs: the inner north (which includes suburbs like Newmarket, Windsor, Stafford and Kedron), and the north-east precinct (which includes Nudgee, Nundah, Northgate and Wavell Heights). 

Ashgrove, with quarterly sales of 54-57-60-71-74, is typical of the suburbs with rising trajectories. Zillmere (42-47-49-56-62-64) is another of the growth markets.

The other standout market to emerge in this survey is the Brisbane-east precinct, which has five growth suburbs, seven consistency markets and no locations ranked as declining or danger markets. Leading locations include Wynnum West (54-67-74-80) and Murarrie (22-28-29-35-47-51).

The Brisbane-inner precinct is a confusion of suburbs with contrasting rankings: the 22 ranked suburbs include 2 rising, 17 plateau, 1 consistency, 2 declining and 7 danger. The danger markets (Albion, Bowen Hills, Fortitude Valley, Kelvin Grove, South Brisbane, West End and Woolloongabba) are those where sales activity has dropped markedly, prices are down and vacancy rates are high – particularly with a recent virus-related surge in empty apartments in the inner-city areas.

Logan City in the far south of the Brisbane metro area continues to struggle. It has 12 suburbs with declining sales activity. But there are also signs of life, with two rising suburbs and five consistency suburbs.

Brisbane is split almost 50-50 between markets where prices are up in annual terms and those where prices have fallen in the past 12 months: 52% of apartment markets have recorded annual growth and 44% of house markets have risen, providing an overall result of 46% growth markets and 54% with falling prices.

In most cases, whether rising or falling, the change has been minor (less than 5% in the past year).

Leading suburbs for growth in their median house prices include Coorparoo (16%), Morningside (13%), St Lucia (15%) and Windsor (22%), but the market leader is Fig Tree Pocket, where the median price has increased 32% to $1.18 million. 

Among the unit markets, the best for annual growth in median prices have been Bulimba (23%, Mango Hill (13%), Alderley (12% and Annerley (11%).

 

 

 

 

This article is republished from www.propertyobserver.com.au under a Creative Commons license. Read the original article.

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Brisbane

Chinese interest in Australian property shrinks as diplomatic rift grows

Chinese interest in Australian property shrinks as diplomatic rift grows

Chinese buyer enquiries for Australian homes fell to their lowest in almost three years in May, according to independent data, suggesting multibillion-dollar housing demand could be another casualty of a diplomatic spat between the two countries.

Data published by international property portal Juwai IQI shows enquiries slumped by more than 65 per cent in May compared with April, when enquiries surged as Australia emerged from the throes of the COVID-19 pandemic ahead of most rival markets.

May’s slide coincided with a move by Canberra to push for an investigation into the origins of the novel coronavirus, first detected in China late last year, drawing a sharp rebuke from Beijing and threats of economic reprisals.

A prolonged slump in interest from China’s real estate buyers could spell trouble for a sector that has been a pillar of Australia’s economy in recent years. Mainland China has been a major source of foreign real estate investment, with investors pouring $6.1 billion into residential and commercial construction and home auctions in the last financial year alone.

“If the situation doesn’t escalate further things will stabilise,” Juwai IQI Executive Chairman Georg Chmiel said in a phone interview. “So long as it isn’t prolonged, as long as it isn’t systemic.”

May’s drop means mainland China now ranks below the United States and Canada as the largest source countries for investment in property in Australia, the Juwai IQI data shows.

Mainland China now ranks below the United States and Canada as the largest source countries for investment in property in Australia.

Chinese investment typically flows into new apartments, fuelling construction activity and employment.

But a slowdown in Chinese demand will be a fresh blow to the already slowing housing market, though official figures still show dwelling approvals up 5.7 per cent from a year ago.

Economists generally expect the diplomatic tensions to be resolved without too much of a hit to Australia’s economy, though the spat is an added risk to an already uncertain outlook.

“In the current environment the rise in tensions potentially will have a negative impact so it is somewhat concerning,” said Sarah Hunter, chief economist at BIS Oxford.

The Reserve Bank expressed concern at its June 2 policy meeting about the outlook for dwelling investment, with the construction pipeline drying up, auction activity slowing and rents creeping lower.

A pullback could further frustrate Canberra’s attempts to reignite the economy, made more difficult by China’s decision in May to start suspending beef imports from Australia’s major meat processors, and impose hefty tariffs on barley.

 

 

 

 

This article is republished from www.brisbanetimes.com.au under a Creative Commons license. Read the original article.

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