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Moreton Property Developers call for overhaul of Queensland Government Bid Process



Moreton Investor Commercial property

The new Newman government is starting to make decisions and trying to get the construction sector going, but are they making it too hard?

BURSTING out of the shed with a stimulus for the fourth pillar of the economy, the new Government’s announcement of plans to redevelop the government accommodation precinct took most of us by surprise.

It wasn’t on any 100-day plan in a ministerial charter letter and at first glance, looks an awkward fit with a cost-of-living and frontline services government agenda.

Having said that, if it is to be, then the Government needs to be confident that it can conceive, scope and run a process for a project that leads to a transaction strongly resembling the one for which they invited submissions in the first place.

For the past 10 years, the property development industry has suffered at the hands of the previous government, being asked to spend millions of dollars responding to government-sponsored bids only to have the process scuttled or worse, wither slowly and expensively on the vine before dying an unrecompensed death without a decision being made.

Tenancy and privatisation offerings at Bowen Hills, Gold Coast Cruise Terminal, Coorparoo TOD, and – don’t mention the war – North Bank, have been failed government processes that have sapped the will of the private sector.

Any executive in a large property group looking to bid for transactions of this scale will report to an executive committee and board located in, most commonly, Sydney or perhaps Melbourne or overseas not Moreton or southeast Queensland.

Besides the leap of faith needed for such a remote board to approve significant expenditure on a bid in which they are one of five or six, it is critical that they can believe the competition itself will prevail through to a transaction for the lucky one.

Government will always have the lowest cost of funds and the private sector will always seek a development margin for the whole-of-life risks inherent in developing a very large single tenant building of this quality.

Respondents to a bid process asking for an offer expressed as a rent per square metre will seek a 15 to 20-year term and yes, this does start to look like a mortgage, which in the past has led the discussion back to who has the cheapest source of funds and so on.

With the William St to Brisbane River precinct, there are also many significant and long-standing departmental positions on turf and technical threshold issues that only the state can resolve through internal machinations.

It is entirely unreasonable and unrealistic to expect the private sector to resolve these in or after a bid process. They need resolution as part of the project brief.

These knowns should be acknowledged, dealt with and resolved in the structure of offers sought via the RFP (request for proposal) process or the errors of the past government may be repeated. When a formal bid process crashes, everyone loses.

The current expressions-of-interest process instigated for the William St precinct has got off to a pretty woolly start. When the process does hit the formal bid phase, we all need the RFP for William St and any associated precinct to deliver a set of well-defined technical requirements and exhibit a transaction design, land tenure, title and lease covenant that collectively describe a project that is both doable for government and bankable for the private sector.

At least then the lucky six or so shortlisted bidders risking up to $1 million each on a bid, can concentrate on providing options for a single piece and not a mixed bag of fruit.

There are many varieties of apple on the market, but at least we can clearly ask for an apple. A process that permits exotic star fruit or that southern favourite, the seedy cantaloupe, will be hard to successfully complete.

* James Basham is a director of DMA Partners

Article published on the on June 21 2012

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Commercial Property

Queensland Economic Outlook ‘Positive’: Deloitte



Queensland Economic Outlook

Construction and development appeared healthy to Deloitte’s analysts, who attributed some of Queensland’s strong economic outlook to high levels of interstate migration and international tourism, which have encouraged a growing list of tourism-related construction projects.

Queensland’s international tourist arrivals are expected to remain solid over the forecast period, averaging growth of 4.7 percent out to 2021.

There were reasonable gains in engineering activity in Queensland, and Cross River Rail was in the planning stages.

The report also put a focus on livability and housing affordability. In the midst of the continuing debate over house prices and quality of living, Deloitte reported that Queensland has less cause for concern.

Queensland’s place in the national picture of housing affordability is a comparative advantage. In the midst of a housing price boom, living in Queensland remains more affordable than in the southern states.

While Sydney and Melbourne house prices have experienced year-on year growth in the double digits, Brisbane has experienced a modest 3.5 per cent growth.”

Despite this optimism, Queensland was revealed to be mirroring the national trend, showing a slight decline in outright home ownership and owners who have a mortgage.

Rental stress was recorded to be higher than the national average, with more Queenslanders renting than owning their own home compared to the rest of the country.

“But with a modest decline in rent in the June quarter CPI figures, increasing vacancy rates, and new supply from an easing residential construction boom the conditions could result in Brisbane becoming a renter’s market,” Deloitte said.

Job growth was accelerating in Queensland and while population growth had “bottomed”, it was now back in line with the national average — although it remained below the level experienced in the state five years ago.

In less positive news, CommSec’s latest State of the States report found Queensland’s economic performance had slipped to sixth place, hampered by weak business investment and retail spending.

CommSec chief economist Craig James said that despite a recent surge in residential construction, oversupply is still a concern. Queensland would benefit from increased revenue generated by the state’s gas industry as well as spending that resulted from a rise in employment.

Queensland Treasurer Curtis Pitt defended the state’s ranking saying that the CommSec report understated the state’s performance.

“Most people’s economic indicator is whether they have a job or not and both the DAE and CommSec reports highlight our strong performance in job creation,” Pitt said.

Of Queensland’s population of 4.7 million, more than half were recorded to be living outside of the state’s capital city. Queensland’s south-east corner, including Brisbane, Gold Coast, and Sunshine Coast, saw a growth rate in population twice that of the rest of the state.

Despite Queensland’s size, urbanization has taken hold — 66 percent of the population living within 0.6 percent of Queensland’s total area.

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Commercial Property

Elanor Investors Acquire Redcliffe Shopping Centre For $55 Million



Elanor Investors Group new managed fund, the Bluewater Square Syndicate, has acquired a shopping centre in the Brisbane suburb of Redcliffe for $55.25 million with a two year rental guarantee on vacancies.

Elanor chief executive Glenn Willis said there was significant opportunity to expand the shopping centre and retail options in Redcliffe, as the property has a favourable zoning and 27 metre height limit across the majority of the 1.356 hectare site.

“Following the announcement of the establishment of the Elanor Metro and Prime Regional Hotel Fund on 21 August 2017, the establishment of Bluewater Square Syndicate takes ENN’s owned and managed portfolio of assets to approximately $990 million.

“This is expected to exceed $1 billion dollars following ENN’s co-investment in each of these new managed funds.” Willis said.

Constructed in 2008, Bluewater Square is a 10,004 square metre neighbourhood shopping centre in an increasingly densifying precinct within the Brisbane metropolitan area — 20km from the Brisbane International Airport and 30km from the Brisbane CBD.

The centre is anchored by a 3,941 square metre full-line Woolworths supermarket leased to September 2028. The centre’s sales are growing at 3 per cent per annum with a weighted average lease expiry of 6.0 years.

The Woolworths supermarket is complemented by two mini majors — Healthworks Gym and a large Terry White Chemist — and over 30 specialty retailers predominantly focussed on providing services and non-discretionary focussed food offerings. An upper level of office suites is tenanted by three law firms, a medical practice and the Redcliffe Electoral Office.

The acquisition of Bluewater Square represents a passing yield of 7.0 per cent which compares favourably to prevailing Brisbane Neighbourhood shopping centre yields.

“Bluewater Square is a modern shopping centre generating stable cash flows by providing convenient access to everyday goods and services for its local trade area,” Elanor head of office real estate Michael Baliva said.

“The Bluewater Square Syndicate provides its investors with strong income returns and significant opportunities for capital growth,” he said.

Settlement of Bluewater Square is expected to occur in October 2017.

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Commercial Property

New Industrial Land Release Hits Market



First major industrial estate in Caboolture in 10 years

In what is one of the most anticipated land releases to hit the industrial market, official marketing commenced this week on Corporate Park East, located between Brisbane and the Sunshine Coast at Caboolture.  The new 76ha integrated estate is expected to help satisfy the increasing logistics requirements of companies looking to service the northern growth corridor.

“The success of North Lakes and the residential construction activity being generated by Caloundra South and other major projects in the area has changed the perception of Caboolture among the national companies” said marketing agent Chris Massie of Ray White Commercial. “It has become clear that this will be the centre of growth in the region for the next twenty years and the bigger players are starting to position themselves accordingly”

Stage 1 is due for completion in May of next year, with tenants and owner occupiers expected to move in to the first new buildings before Christmas.  Land sizes start at 2,000m2 and can accommodate up to 20 hectare requirements.

If you would like more information emailed or to arrange a site inspection, please contact Jennifer Swaine at Ray White Commercial North Coast Central or email at


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