Colliers International indicate that Australia’s property sector will see a return to more positive conditions in leasing markets and further confidence in the investment market in 2014.
- Colliers International Chief Executive Officer, Australia and New Zealand, John Kenny said strong investment conditions had been the defining feature of the Australian property market in 2013, with Australian property continuing to attract increasing capital from both Australian and offshore investors.
- “Our market has been considered a safe haven with low interest rates and attractive yields continuing to attract international investors and providing solid investment conditions for local investors”, said Mr Kenny.
- Colliers International found that heading into 2014 there are a number of factors which will lead to continued confidence in the investment proper markets and an improvement in demand for business premises across office, retail and industrial and will have high employment impacts.
- “This includes an ongoing improvement in global conditions, the strong recent return of confidence in the housing market and increasing business confidence on the back of improvements to consumer confidence”, said Mr Kenny.
- “As consumers begin to move away from high levels of cautiousness and move to increasing their spending, this is likely to lead to greater business activity and higher levels of business investment.”
- Nerida Conisbee, Colliers International National Director of Research, said 2014 would see a continuing shift in buyer profile within Australia’s property market.
- Ms Conisbee found that the offshore investors have been experiencing the strongest growth over the past five years and in 2012 accounted for more than half of all direct purchases by volume. In 2012 local investors re-entered the market and by November 2013 accounted for more than 70 per cent of total direct sales.
- “By the end of October, this group accounted for $4.3billion of total transactions. This is higher than what was experienced in 2007 prior to the global economic downturn, and more than double the 2012 level” said Ms Conisbee.
- Colliers International found that the improving conditions overseas have started to influence investment in Australian REITs and will directly impact property over the next 12 months.
- “Earlier this year, there was a lot of offshore capital flowing in however at present, there appears to be a shift back to other markets, particularly the US and Europe,” Ms Conisbee said.
- “Offshore buyers are, however, still active although there are a number of changes that are occurring to the types of buyers targeting Australia. The majority of offshore money has been coming from Singapore, Hong Kong, Europe and North America. Australia remains attractive and in some ways is becoming more so for a new emerging group of investors.”
- Colliers International also found that the key player of international investing was China and large capital also coming from South Korea.
- “Chinese investors have been very active in the residential space this year and this trend is now starting to spill into the commercial property market,” Ms Consibee said.
- “In 2013 the amount of Chinese direct investment in commercial property stands at $871million (to the end of November), which represents a rapid increase from 2007 when just $17million was recorded. This was boosted significantly by the sale of Centennial Plaza in Sydney in November which was one of several transactions completed that month involving a Chinese purchaser.”
- Colliers International saw significant Chinese purchases in Australia during 2013. These sales include; Centennial Plaza (260, 280 and 300 Elizabeth Street, Sydney): Sold on behalf of Investa Property Group to Invesco (on behalf of Chinese Investment Corporation), for $305 million. The largest direct property transaction in the Sydney CBD this year, which was brokered by Colliers International, and; 229-234 Franklin Street, Melbourne: Sold for $17 million to a private Chinese investor by Colliers International on behalf of Jimmy Goh.
- It was primarily privately-owned companies and private investor groups that had risen significantly, including HNA Group, Ridong Group, Dongrun Investment Group and Maville Group.
- “We can expect to hear more of these groups over the next decade as changes to regulations surrounding investment into property by Chinese investors is expected to lead to significant amounts of capital entering Australia.
- “We are also seeing waves of capital from South Korea, where the nation’s huge pension system is actively investing in property globally.
- “It is likely that pension funds will continue to increase their investment in Australian property, both local superannuation funds, and offshore groups. Malaysian investors are also expected to become more active, particularly from the huge amounts of personal wealth in that country.”
- Colliers International forecasts for leasing markets in 2014 were cautiously optimistic as the improved business confidence and better economic conditions offshore will improve the housing market and return consumer confidence and will see a recovery in rent across all sectors.
Original article published at www.theurbandeveloper.com 16/12/2013
How good an investment is south-east Queensland
Why do we believe we’ll see increasing investor interest in this market? Strong population growth, a diversified and growing economy, and substantial investment in infrastructure should combine to boost demand.
We expect that these factors will swell the number of white-collar jobs – increasing demand for office space, which in turn will push down vacancy rates and raise rental incomes. This should be good news for office property investors – especially those like Centuria Metropolitan REIT (CMA) that are already well-positioned in the market.
A significant and growing population
South East Queensland (SEQ) stretches from the Gold Coast up to the Sunshine Coast and across to Toowoomba in the west. As Australia’s third-largest population zone, the region has been growing significantly, particularly Brisbane and the Gold Coast. Interstate migration figures show a pattern of steady net migration, with Queensland the only Australian state with consistent net inflows of people from other states. In the five years prior to the 2016 Census, over 220,000 people moved to the Sunshine State – mainly to SEQ where nearly 90% of population growth occurred. This is important for property investors because of its implications for demand, but the trend is interconnected with other favourable factors.
A diversified economy poised for growth
Queensland’s economy is diversified across a range of industries including agriculture, resources, construction, tourism, manufacturing, and services. Over the past two decades, its economic growth has consistently exceeded the national average – and in our view this is likely to continue.
The resources sector is gaining momentum, and a significant pipeline of major infrastructure and development projects is helping propel economic and jobs growth, in turn increasing interstate migration and driving demand for both residential and commercial property.
Investment in infrastructure
A strong infrastructure program delivers more than business and consumer amenity – it generates jobs, drives investment, and facilitates population growth. The pipeline of infrastructure and development projects announced in the past few years is likely to have a material impact on the region – substantially improving its accessibility and amenity – most notably, Brisbane’s Queen’s Wharf precinct and the Cross River Rail.
Queen’s Wharf, touted as a “world-class entertainment precinct”, is an integrated resort development costing $3.6 billion and covering over 26 hectares with retail, dining, hotel and entertainment spaces. As Queensland’s biggest ever tourism project it will be a game-changer for Brisbane, attracting overseas as well as local visitors. Estimated to contribute $1.69 billion annually to the economy, it will employ more than 2,000 people during construction and an estimated 10,000 once operational.
The Queensland Government’s number one infrastructure project, the $5.4 billion Cross River Rail, comprises a new 10.2km rail line between Dutton Park and Bowen Hills, which includes a 5.9km tunnel under the Brisbane River and CBD. It’s the first major rail infrastructure investment in the inner city since 1986 and is set to generate urban renewal, economic development and the revitalisation of inner-city precincts.
Outlook for commercial office property investment
These factors indicate a region poised for growth – and for growing commercial property demand. CMA’s portfolio has a significant exposure to the area in general (six SEQ assets with a combined book value of over $480 million), with many of the individual assets located in those parts of Brisbane set to benefit most from these developments.
Our view is that Brisbane office markets, where five of CMA’s assets sit, are continuing to improve, with vacancies hitting a five-year low – indicating increasing tenant demand – and continued yield compression, demonstrating strong investment demand. Office sales hit the highest level in a decade during 2018 (at $2.35 billion), increasing 60% from 2017.
With the strong outlook for SEQ, we expect the region will continue to attract tenants and investors alike.
Queensland’s 100,000-property public housing shortfall revealed
Queensland has a severe shortage of social and affordable housing, an issue that is projected to get worse by 2036 according to new research.
More than 102,000 additional social houses are currently needed across the state, and 54,700 affordable houses are also needed with nearly 13 per cent of Queenslanders spending more than 30 per cent of their income on rent.
By 2036, Queensland is projected to need 254,300 more social and affordable houses – the second-highest unmet need behind NSW, the report found.
The new figures come from a UNSW City Futures Research Centre report on social housing shortfall across Australia.
Regional social housing shortfalls are higher than in Brisbane, the data shows, but Brisbane residents are slightly more likely to be spending more of their income on rent.
Housing Minister Mick de Brenni said housing affordability was a “big issue” for Queensland.
“Through the Palaszczuk government’s $1.8 billion Queensland Housing Strategy, Labor is driving key reforms and targeted investment across the housing continuum,” he said.
“The Strategy commits us to build more than 1000 affordable homes for Queenslanders, as well as a further 4522 new social homes to help ensure everyone has a safe, secure and stable place to live.”
Lead researcher Laurence Troy said 22.5 per cent of Australia’s entire housing growth must go to social housing to meet demand into the future.
“Our analysis shows that the sheer number of households in rental stress across the country means that if we’re going to meet the need, at least 12 per cent of all our housing by 2036 will need to be social and affordable housing – which is a very reasonable ambition in global terms,” Mr Troy said.
“To cover the backlog of unmet need and future need in Australia two in 10 new homes will need to be for social housing over the next 20 years, and a further one in ten for below-market affordable rental housing.”
Mr Troy said the research’s financial modelling found the “best and cheapest way” for governments to meet the need for social housing was to fund it through upfront grants and low-interest government financing.
“Delivering below market rental housing through the not-for-profit sector, as opposed to the private equity model, will save $3 billion a year by removing developer mark-ups and shareholder returns,” he said.
The financial modelling was commissioned by the NSW community housing sector.
Mr de Brenni said the state government was “listening” through its recent public consultation on rental reform and was committed to investing in affordable housing in partnership with community housing, to provide more subsidied homes for low income earners.
“We heard Queenslanders are struggling to afford rental properties in the suburbs close to where they work,” he said.
“Through our Build-to-Rent pilot project, we are seeking to work with the private sector to increase the number of long-term, affordable rental properties for low to moderate income earners, including key workers in health, early childhood and hospitality.
“Internationally, the Build-to-Rent model is delivering fantastic outcomes and facilities for tenants and we’re looking to see what the market is open to delivering here.
“The pilot, if it proceeds, will see $70 million invested towards delivery of hundreds of affordable rental properties for key workers in inner-city areas where affordability has been identified.”
Mr de Brenni said the registrations of interest for that pilot had seen strong market interest, and the department was considering the responses before calling for expressions of interest.
Moreton Bay region emerges as top performer in Brisbane market
While Brisbane has yet to see the property boom previously experienced by Sydney and Melbourne, experts said that some suburbs have been performing spectacularly. Find out how investors can capitalise on the Brisbane property market this 2019.
As the property markets of Sydney and Melbourne continue to decline, the stability in Brisbane comes as a welcome change for investors. investors start to flock into Brisbane hoping that the Queensland capital will follow in the footsteps of the two major markets.
Is it really a good time to buy properties in Brisbane right now?
According to Brisbane-based buyer’s agent Melinda Jennison, it depends largely on what the investor wants to buy.
The apartment and unit markets are generally thriving, with some softening expected through the year.
For example, in the apartment market, we are still seeing some of the oversupply being absorbed, which is good news moving forward. We do have a steady increase in population growth which is driven by both overseas migration and interstate migration, so we certainly haven’t seen the slump that was predicted.”
“However, we see some softening continuing in the unit market, perhaps for the next six to 12 months, and then we’ll see that steady out and increase into the future. Even the large research groups such as ABS have predicted slumps for 2019 but improvements in the years that follow.”
On the other hand, the house-and-land market has been fairly flat, with a few good performers across regions.
“In the single house and land market, we certainly don’t see the same. It’s been fairly flat across Brisbane if you’re looking at median values, but there’s certainly been pockets within Brisbane that are outperforming. The latest CoreLogic data in January actually showed Brisbane had four of the top 10 sub-regions.”
“These are markets with properties worth sub-$500,000, so it’s showing good promise,” Ms Jennison highlighted.
Opportunities in Moreton Bay
One of these top-performing regions in Brisbane is Moreton Bay, particularly the northern and southern sides, according to the buyer’s agent.
In fact, Moreton Bay has been deemed as one of the highest-growing shires across Australia, spurred largely by the high level of infrastructure spending across the area.
“There’s a new university being built at Petrie, for example. It’s a priority development area that’s been declared by the state government, and there’s a lot more infrastructure going in,” according to the buyer’s agent.
“A lot of the land has also recently been rezoned for higher density development. Further, there’s obviously different exit strategies that the investor can implement, particularly if they’re buying a site that has potential for future development.”
As South East Queensland benefit from the increasing level of interstate migration and population growth, Moreton Bay has secured a strong housing demand despite the increasing values of property across the region.
The new campus of the University of Sunshine Coast in Moreton is expected to improve the housing market conditions across The Mill at Moreton Bay, the new destination with the University at its core, and, ultimately, the entire Moreton Bay region.
Stage 1 of the campus, which be located adjacent to the Petrie railway station, is set to be completed in time for the first semester of 2020.
Ms Jennison said: “A lot of the area (The Mill at Moreton Bay) is actually flood-impacted land, so I guess it wasn’t ever earmarked for development, but the way they’ve developed the university around the non-flood impacted parts of the site, there’s a lot of ecological land that has been saved because it’s the squalor habitats that was associated with the sites.”
“With clever design, they’ve been able to design the University between Galangal and Petrie, and I think there’s going to be an exit from Dohles Rocks Road in Galangal—it flows through that whole area.”
At the end of the day, identifying a good investment area comes down to supply and demand, population and jobs growth as well good infrastructure, according to the buyer’s agent.
“In property investment, it comes down to supply and demand, but on top of that, it also comes down to having locations where people can secure good jobs, high-paying jobs.”
“We feel that Moreton Bay will gentrify quite quickly with young university students moving in, so we’ll see the types of accommodation gradually change over time to suit their preferences. There’s lots of opportunities within the area and the region as a whole because of this gentrification,” Ms Jennison highlighted.
Apart from noting the level of supply and demand as well as the existing and upcoming infrastructure, the buyer’s agent also encouraged investors to research any possible rezoning around the area as the zoning of land can significantly affect the investability of their properties.
In Moreton Bay, for instance, a lot of land throughout the major transport corridors have been rezoned around three years ago, meaning, the local council decided that the land be put to a different use.
“Where there existed single homes on single blocks of land, council rezoned that land for a higher and better use. It allows that land to be used for something more than just a single dwelling. It might just be a house at the moment, but in the future, it may be able to carry the capacity for 10 homes or units,” Ms Jennison explained.
Local councils often rezone land to help them plan for future growth, thus, rezoning usually happens around growth corridors or areas where the population and infrastructure spending has been rapidly increasing.
“Rezoning land allows developers to move in and build sufficient housing to accommodate the new demand that’s coming into the market.”
Whether the investor buys a property prior to rezoning to enjoy yield and some capital growth or they buy a block of land for multiple units after the rezoning for long-term growth as well as their exit strategies will be largely dependent on the investor’s personal goals, timelines and financial capabilities, according to Ms Jennison.
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