Retail property flight drives healthcare interest - Queensland Property Investor
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Retail property flight drives healthcare interest

Retail property flight drives healthcare interest

Heated interest in healthcare real estate is being driven not only by the sector’s recession-proof reputation, but an exit from retail property at a time of skinny returns and shaky consumer confidence.

According to property watchers the yield compression evident with retail property assets such as shopping centres has seen investors questioning the returns from this asset class and seeking safer alternatives.

At the same time, the healthcare sector has also caught the eye of local and offshore institutional investors attracted to Australia’s ageing demographic trends and the long-term and stable nature of the tenancies.

“We have seen some quite firmly priced transactions in healthcare,” said Australian Unity executive general manager (property) Mark Pratt.

“There’s certainly a lot more institutional interest in healthcare and given more capital has been brought to bear that has impacted asset valuations.”

CBRE director of healthcare and social infrastructure Sandro Peluso said healthcare sector yields were just starting to compress, which meant buyers were willing to pay higher prices for lower returns.

He said recent transactions for assets such as private hospitals and medical centres were stuck on yields of 5-6 per cent, compared with about 8 per cent five years ago.

In contrast yields on retail assets such as shopping centres have fallen from 5-6 per cent to 3-4 per cent – a return on investment that many buyers were baulking at.

“That’s what’s going to happen with healthcare,” Mr Peluso said. “So there’s a case for getting in before it’s too late and it doesn’t make any investment sense.”

Specialist healthcare investor Barwon Investment Partners concurs that “weakness in the retail sector will see an increase in alternative property sectors such as healthcare.”

Despite the danger of overpaying, deep-pocketed investors have been vying for deals in what remains a highly fragmented sector.

The listed property trust Centuria recently finalised a 63 per cent interest in Heathley Ltd’s property funds management business, to form the Centuria Heathley joint venture managing $600 million of assets.

“Healthcare is a strongly performing, rapidly expanding property sector and a natural fit for Centuria,” Centuria joint-CEO John McBain said.

Centuria Heathley has secured a separate venture with AXA Investment Managers’ ‘real’ assets division and Grosvenor Group, with a targeted $500 million portfolio.

The French-based AXA is not the only offshore giant attracted to Australian healthcare.

 

Healthcare is a strongly performing, rapidly expanding property sector.

John McBain

In August last year Canada’s NorthWest Healthcare entered the local market with a joint venture to build a $2 billion fund, seeded with $412 million of assets from the former Generation Healthcare REIT.Meanwhile Barwon’s $500 million institutional fund last month inked a $20 million to develop an adolescent mental health facility in Canberra, along with operator Healthe Care.

Australian Unity operates a 20-year-old healthcare property trust that has $1.7 billion of diverse health care assets, including a component of Brisbane’s Herston Quarter medical precinct (Australian Unity is master-developer of the $1.1 billion project).

Mr Pratt said the fund currently had a preference for brownfield developments with existing patient demand.

“An existing lease generally can give a cap rate that is higher than that of a new buy,” he said.

Mr Pratt said a potential headwind for the sector was the ongoing pricing pressure from government and private health insurers to manage costs and pricing.

CBRE last month transacted the $8.6 million sale of a day hospital in the western Melbourne suburb of Sunshine on a yield of 6 per cent.

Earlier, the firm handled the $5.52 million sale of a Cheltenham day facility (in the city’s south east) on a yield of 5.5 per cent.

 

 

Source: www.brisbanetimes.com.au

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Brisbane

Brisbane rents: Landlords in ‘rosier position’ as unit oversupply eases

Brisbane rents Landlords in ‘rosier position’ as unit oversupply eases

Brisbane rents are creeping up and the proportion of vacant homes is inching down, as the city’s rental market recovers from years of oversupply, experts say.

Asking rents for units rose 1.3 per cent to a median $380 a week over the past year, the latest figures from the Domain Rental Report for the September quarter show.

House rents also edged up 1.3 per cent to a median $405 over the same time period, according to the report released on Thursday.

The combined vacancy rate fell 0.1 percentage points to 2.2 per cent during the September quarter.

It comes after a wave of new apartments were built in Brisbane’s inner city in recent years, with the extra supply keeping a lid on rents.

Domain research analyst Eliza Owen said the market was now in good health, despite appearing to be near-stagnant.

Median weekly asking rents for units
REGIONSEP-19JUN-19SEP-18QOQ % ∆YOY % ∆
Brisbane – City wide$380$380$3750.0%1.3%
Brisbane – East$405$405$4000.0%1.3%
Brisbane – North$370$365$3631.4%2.1%
Brisbane – South$385$380$3751.3%2.7%
Brisbane – West$400$415$390-3.6%2.6%
Brisbane Inner City$420$425$410-1.2%2.4%
Ipswich$295$295$2960.0%-0.3%
Logan$300$300$3000.0%0.0%
Moreton Bay – North$315$315$3100.0%1.6%
Moreton Bay – South$340$335$3351.5%1.5%

For units, the stability was a positive story compared to oversupply-induced market weakness a few years back, Ms Owen said.

“There’s been a lot of fear about over-development but in the building space there’s been tightening of dwelling completions,” she said. “They’ve come down sharply and are returning to long-run average levels.”

Rents were now trending up and vacancy rates down, she said.

“The picture for south-east Queensland in terms of rental returns is pretty good, it’s also one of the most affordable rental markets for houses.”

Ms Owen said interstate migration, mostly from Sydney, was a major factor in keeping the rental market balanced.

“The tightening of the rental market is off the back of strong population growth and a very affordable lifestyle, and this is reflected in the rental vacancy rate which is down to 2.2 per cent from 2.6 in the previous year,” she said.

Median weekly asking rents for houses
REGIONSEP-19JUN-19SEP-18QOQ % ∆YOY % ∆
Brisbane – City wide$405$400$4001.3%1.3%
Brisbane – East$450$450$4500.0%0.0%
Brisbane – North$435$435$4300.0%1.2%
Brisbane – South$435$435$4400.0%-1.1%
Brisbane – West$490$485$4801.0%2.1%
Brisbane Inner City$550$530$5203.8%5.8%
Ipswich$350$350$3500.0%0.0%
Logan$365$360$3651.4%0.0%
Moreton Bay – North$375$370$3651.4%2.7%
Moreton Bay – South$410$413$410-0.6%0.0%

Space Property projects director Adam Gray said the unit market was threatening to tip into under-supply for sales, which could have a flow-on effect to the rental market.

“There’s a few reasons, one of the main reasons we’re not putting as much supply in,” he said. “There’s certainly a lot less cranes, and apartments being built than there once was.

“A lot of that was happening in the inner city and now rents are rising and rental vacancy rates are dropping.”

Ray White Brisbane CBD principal Dean Yesberg did not think a looming under-supply was something to worry about yet.

“No, definitely not,” he said. “We’ve got enough supply coming through to cater.”

The bulk of rentals were being filled because of new employment opportunities in the Queensland capital, said Mr Yesberg.

“The mining industry are getting into a better situation and that’s seen an increase in families coming to Brisbane, well qualified people coming up here for jobs,” he said.

“The coal mining people are getting into full swing, then there’s a lot of infrastructure going into Brisbane right now – the Cross River Rail and Queens Wharf casino, [for example].”

Median weekly rents – houses

CAPITAL CITYMEDIAN WEEKLY RENTQOQYOY
Sydney$525-0.9%-4.5%
Melbourne$4300.0%0.0%
Brisbane$4051.3%1.3%
Adelaide$3850.0%2.7%
Perth$3701.4%5.7%
Canberra$5500.0%0.0%
Darwin$4901.0%-2.0%
Hobart$4500.0%9.8%

Urbis director of property economics and research Paul Riga said young people were continuing to drive the rental market, particularly for units in the inner city.

“There’s a bit of a mix, when we look at the building manager feedback, the Gen Y demographic is driving that market,” he said.

“They’re here for employment and maybe from Sydney so their first port of call won’t be to buy, it will be to rent.

“It’s not a majority but it’s just grown in proportion. Some of our building managers are suggesting up to 20 per cent of their rental inquiry is coming from interstate.

“It’s a rosier position if you’re a landlord, definitely.”

Median weekly rents – units

CAPITAL CITYMEDIAN WEEKLY RENTQOQYOY
Sydney$520-1.0%-4.6%
Melbourne$4200.0%2.4%
Brisbane$3800.0%1.3%
Adelaide$3101.6%3.3%
Perth$3100.0%3.3%
Canberra$4700.0%4.4%
Darwin$380-1.3%-5.0%
Hobart$3953.9%12.9%

 

 

Source: www.domain.com.au

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Brisbane

Investec Lists Fortitude Valley Office Tower

Investec Lists Fortitude Valley Office Tower

The newly-listed Investec Australia Property Fund will divest its 11-storey Fortitude Valley office building with an expected price north of $90 million as it moves to recycle capital.

Fresh off the heels of its fully underwritten institutional placement and purchase of three industrial properties in the Northern Territory, Western Australia and South Australia for $84 million last month, Investec has motioned to sell its Brisbane, 757 Ann Street, tower.

Investec purchasted the Nettleton Tribe-designed tower for 68.5 million after it was completed in 2014.

Comprising 9,422sq m of office space with a weighted average lease expiry of approximately five years, the A-grade building, anchored by technology company Asea Brown Boveri, is 100 per cent leased.

Investec Lists Fortitude Valley Office Tower 1

Cushman & Wakefield’s Mike Walsh and Peter Court are managing the international expression of interest campaign, to kick off mid-October, with expectations it will generate strong interest from domestic and off-shore institutions, funds and syndication groups.

“The entire commercial component of the asset is structured on a net lease basis, providing smooth, predictable cash flow for investors,” Court said.

Sales over the first half of the year surpassed the total volume of sales over 2018—reaching $1.2 billion, according to Colliers research, with Australian institutional investors dominating the lion share of transactions.

Commercial assets currently on the market include Perth-based investor RG Property’s 410 Queen Street in Brisbane’s ‘golden triangle’.

Recent Brisbane assets changing hands include the sale of the Jubilee Place Office development at nearby 470 St Pauls Terrace to a real estate fund managed by Credit Suisse, Malaysian-backed HCK’s 116 Adelaide street for $30 million, and QIC’s Q&A Centre at 141 Queen Street and 140 Elizabeth Street which sold to Taiwanese developer Shayher Group.

As for development plans in the Fortitude Valley precinct, Sydney fund manager Millinium Capital in August announced plans for a new university campus and 30-storey tower that would comprise student accomodation, co-living and co-working space at 240 Brunswick Street and 11 Overells Lane.

 

 

 

Source: theurbandeveloper.com

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Brisbane

Australian property management startup raises $3.5 million, expands to Brisbane

Australian property management startup raises $3.5 million, expands to Brisbane

Australian proptech startup :Different has announced it raised $3.5 million in its latest funding round to continue its national expansion.

The fund raising coincides with the company’s launch into Brisbane today.

:Different is a full-service property management startup where property owners pay a fixed fee of $100 per month instead of a percentage based on the rental price of the property.

The appeal of :Different is their tech base which automates the everyday tasks of a property manager.

:Different’s owner app provides 24/7 access to documents like lease agreements, statements, and maintenance requests, while the tenant app helps streamline requests and fast track communications.

Over the last 12 months, :Different’s customer base has grown five folds with more than $700 million worth of properties now under management across New South Wales and Victoria, while its team has quadrupled to 32.

The latest funding round supports :Different’s ambitions to expand into new markets, further enhance its tech platform and continue to build its team of expert property managers, said Mina Radhakrishnan, Co-Founder at :Different.   

“We’ve already had huge success since launching in Sydney and Melbourne, and we’re thrilled to offer the same great offering to Queenslanders,” Radhakrishnan said.

“We have big growth ambitions for :Different. This latest funding round will help us continue to rebuild property management in Australia and beyond.”

Source: www.propertyobserver.com.au

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