Queensland, Australia Property

Newman government pledges to sell off land holdings for development
ROSANNE BARRETT THE AUSTRALIAN JANUARY 22, 2015 12:00AM

Newman pledges to sell land holdings
Queensland Premier Campbell Newman. Source: News Corp Australia
IF re-elected the Newman government intends to run the ruler over government land holdings and sell off sites to boost dev­elopment and construction.

Departments will have to justify their land holdings, reversing the current situation where surplus plots were offered up for sale.

Deputy Premier Jeff Seeney saidthe government was “determined to find a more efficient way of managing state government land and assets”.

He said the centralised Government Land Assets Management group — established during the term — had been “hugely successful in identifying land that could be put to better use”.

“A re-elected LNP government will continue the GLAM process and work with community and not-for-profit groups to unlock land for community benefit, but also to boost private development of key sites,” he said.

Currently on the block is the redevelopment of the old hospital sites in inner-city Brisbane at Herston, the Fortitude Valley state school, the 9000sq m dental school in the central business district, the 3.4 hectare former Southport Hospital site on the Gold Coast and a new riverside parcel of land at Brisbane’s Hamilton North Shore.

Those sales alone are expected to bring in hundreds of millions of dollars.

It is also managing a competitive tender process to facilitate the development of a multi-billion dollar casino resort along Brisbane’s central business district ­riverfront at Queen’s Wharf.

“Labor left sites like the Queens Wharf precinct in Brisbane to languish for decades, but we’ve moved quickly to offer that land for development with spin-offs for the entire community,” Mr Seeney said.

That choice is down to two: James Packer’s Crown and Chinese state-owned Greenland versus Echo Entertainment and Hong Kong’s Chow Tai Fook and the Far East Consortium.

The government has also released development land in Brisbane’s Yeerongpilly, Redlands, Boggo Road and the Village for the Gold Coast’s 2018 Commonwealth Games.

The Australian has also obtained tender documents from the Department of Justice and Attorney-General seeking valuations for its land and justice-related buildings.

It owns and maintains court heritage and non-heritage assets, juvenile justice buildings, corrective services establishments and land. But a spokesman said the revaluations were routine.

Land supply has emerged as an election issue.

Yesterday the state’s Property Council called for an overhaul of regional planning to increase land supply available for development, echoing a call last week from the Urban Development Institute of Australia.

“An undersupply of land has significantly driven up the cost of new housing in Queensland,” executive director Chris Mountford said.

Raptis back for Gold Coast 'super-cycle'
Robert Harley
373 words
11 Apr 2015
The Australian Financial Review
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The coming real estate boom on the Gold Coast will see some properties triple in value, according to independent finance and broking advisory house Fat Prophets.

Chief executive Angus Geddes said the next Gold Coast cycle would supersede the previous boom.

"The next cycle could prove to be a super-cycle driven by Chinese investment and rapidly growing tourism numbers," he wrote.

Nothing symbolises the coming boom more than the return of legendary Gold Coast developer Jim Raptis, who - after a financial collapse in the early 1990s and again after the financial crisis - announced his third comeback this week. "I think his third comeback will prove just as significant in terms of timing once again," Mr Geddes said.

Andrew Wilson, an economist at Fairfax Media's Domain, is also upbeat about the Gold Coast. Over the next year, he predicts prices will rise over 5 per cent and as much as 10 per cent as the market recovers and the robust local economy - the strongest in south-east Queensland - drives further gains.

Mr Geddes is a believer in playing the property cycles. He is sitting out the latest boom in Melbourne, Sydney, London and Auckland. "I would not be touching them at current elevated levels with a barge pole," he said.

But he buys in the wake of a bust. "The bigger the bust, the bigger the opportunities," he said. "I was very active on the Gold Coast a few years ago and built up a residential portfolio of well-located, quality apartments at a fraction of the underlying replacement cost. If one can buy at a steep discount to replacement cost, then over time value must return at some point for well-located real estate."

Today, the gross running yield on the portfolio is "well north of 10 per cent". But Mr Geddes is not selling yet. Capital value prices are yet to move significantly, but quality stock at the right place is now very hard to find. "I have found that tightening supply is a typical precursor to a significant upward move in prices or a full-blown property boom. We saw this Sydney and Melbourne 18 months ago," he said.


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Brisbane is a seller's dream

Matthew Cranston
424 words
28 May 2015
The Australian Financial Review
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Brisbane-based property company Tessa Group has taken full advantage of the city's booming apartment market and low interest rates, selling $100 million of apartments, townhouses and house and land packages in the last two months for multiple developers.

Tessa, which is just asset backwards, was started 12 months ago by Brendan Tutt, a former lieutenant of Brisbane property godfathers David Devine and Ken Woodley.

Since its inception the company has sold more than $250 million in apartments, secured management rights to residential property assets valued at $240 million, collecting $12 million in rent per annum, started building and mortgage financing arms and began its own property development business.

"Since starting we have not stopped," Mr Tutt said.

"We have the strongest market conditions in the last 20 years and we think there are another two to three years of these conditions," he said.

Tessa is forecasting to sell more than 1000 apartments this year for developers, which have so far included respected names such as Jon Haseler, Reg Rowe, Kim Pradella, Mark Stockwell and John Livingstone. Part of those 1000 apartment sales will also be for Tessa's own residential development arm, which controls five inner city sites with a final development value of $100 million.

Tessa appointed Hutchinson Builders to deliver its first development G35 at Windsor in Brisbane's inner north with Bankwest funding the debt for the project.

Part of his strategy is to diversify revenue streams and insulate from shocks to the market.

"We have built several strong partnerships, which we have used to expand rapidly but also to provide diversity," he said. "We are protecting ourselves by not being too one-dimensional."

Mr Tutt has teamed up with numerous partners to create five divisions, including Tessa property advisory and project marketing with Andrew Coulter, and Tessa Build with PointCorp directors Chris Vitale and Paul Gedoun. Developing a good culture within all the divisions has been key.

"To make a good property business you need to understand the history of the market but you also need to have a good culture.

"Strong markets aren't always around and you have to be prepared for anything."

Mr Tutt owes a large part of his successful skill set to Metro Property Development's Ken Woodley.

"Ken has been the greatest influence on my career. He is by far the best project marketer in Australia and the skill set I have learnt from him I use on a day-to-day basis."


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Apartment sales still strong in Qld capital

Matthew Cranston
370 words
28 May 2015
The Australian Financial Review
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The number of apartments being purchased in Brisbane's booming market has dipped in the first quarter of this year but the dollar value of sales is still 200 per cent above the 10-year average for the city.

Place Advisory reports that $742.9 million worth of apartments were purchased in Brisbane during the March quarter across a total of 1225 unconditional sales. That figure is down from the record 1621 sales worth $894 million recorded in the December quarter.

Place Advisory director Lachlan Walker said the back-to-back results reflected "sustained confidence" in Brisbane's apartment market where interstate buyers have been attracted to the comparatively better value.

"These results were built on the strength of the previous record-breaking December quarter and show the Brisbane market continues to capitalise on affordability and high yields. This, coupled with the historically low interest-rate environment, means confidence and sales have remained exceptional," Mr Walker said.

He said sales across inner Brisbane remain supply-driven and were marked by one and two bedroom apartment transactions representing 94 per cent of all sales. He said they were mainly driven by investor buyers.

Despite major banks having ramped up the cost of loans and tightened serviceability models in response to growing regulatory heat and surging prices, Brisbane has benefited from increased price growth.

Place Advisory reports that the weighted average sale price has jumped more than 10 per cent in three months. The weighted average sale price has reached $606,469, up from $551,558 in the December quarter.

The best performing projects in Brisbane during the quarter were AMP and Billbergia's Skytower with 170 transactions, Anthony John Group's Southpoint Stage C project with 130 transactions, Mirvac's Unison development with 124 transactions and Citimark's Hercules with 112 transactions.

"With many projects preparing for launches within the next six months, it's reasonable to say the supply will remain strong and our outlook is that unconditional sales in Brisbane will remain solid for some time," Mr Walker said.

According to Place Advisory, there were 2455 apartments for sale across inner Brisbane at the end of the March quarter.


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Inner Brisbane apartments 10 per cent unoccupied

Matthew Cranston
309 words
21 May 2015
The Australian Financial Review
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Apartments in Brisbane will remain cheap because of record supply and some rising vacancy despite formidable demand from investors according to analysts.

BIS Shrapnel's latest apartment report authored by Angie Zigomanis claims that 11 per cent of inner Brisbane apartments are unoccupied (above Sydney's 7 per cent) and that the market may experience rising vacancy which will limit rental growth and soften price expectations.

"Rising vacancy rates will limit rental growth in [fiscal 2015] to an estimated 1.7 per cent," Mr Zigomanis said, "Moreover, momentum in unit prices is expected to come to a halt, as the record level of apartment completions in [fiscal 2015] creates increased competition from new apartments and has a negative impact on prices."

The BIS Shrapnel report notes that unoccupied dwellings - those held as second homes or kept empty as a speculative investment - comprise 11 per cent of total apartment stock in the inner Brisbane. "Demand for inner city apartments from investors currently shows little signs of abating despite the potential impact on rents and prices of further sizeable new additions to the rental stock across Inner Brisbane," Mr Zigomanis said.

However BIS is bullish on the increased level of overseas investment.

"This should also see overseas investors increasingly favour the Inner Brisbane apartment market over Sydney and Melbourne, with demand from these investors being underpinned by low borrowing costs ... a preference to invest in a more transparent and stable political environment, and recent falls in the Australian dollar."

Melbourne-based developer Tim Gurner, who has just sold $340 million worth of Brisbane apartments, notes that about 12 per cent of his stock has been sold to offshore buyers. "While there is constant talk of oversupply, I do not believe all the approved projects slated for development will actually be built."


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Jun 24 2015 at 4:55 PM Updated Jun 24 2015 at 7:47 PM

Asian buyers fuel Gold Coast property surge

by Matthew Cranston
One summers day in 2014, China's richest man Wang Jianlin visited Gold Coast Mayor Tom Tate at his council office to talk about investment.

"He came into my office and complimented the city," Mr Tate said, "He said he was interested in investing here and so I told him about a saying we have here; 'Before you dive into the swimming pool you need to dip your toe in the water'."

Just over six months later Wang Jianlin, through his company Wanda, committed to investing $900 million in a beachfront resort development called the Jewel.

"His translater rang me to tell me that Mr Wang had dipped his toe in the water and I said he has dipped his big toe in."


Gold Coast Mayor Tom Tate poses for a portrait on June 24, 2015 in Brisbane, Australia. Chris Hyde

Wang Jianlin's commitment was not the first but since his decision there has been run on Gold Coast development sites with more than $600 million sold to Asian-backed buyers, giving clear indications that the glitter strip's property market is recovering in leaps and bounds from its horror financial crisis slump.

About four years ago beachfront land couldn't get a bid above $5000 per square metre. The latest beachfront deal to Hong Kong based Forise shows about $20,000 per square metre.

All these deals are also yet to be reported by the Foreign Investment Review Board which recorded a record $18 billion of Chinese, Singapore and Hong Kong investment in Australian real estate in fiscal 2014. The flood of Asian based capital into the city is a sure sign that a property development boom is now underway and that prices are firmly on an upward trend.

McVay Real Estate's father and son team Dan McVay and Sam McVay have transacted half a billion dollars in deals in the last 6 months alone on the Gold Coast including this month's $70 million-plus sale of the Crowne Plaza to a multi-family office out of Singapore. They have been meeting with Asian based investors in cities such as Hong Kong and Singapore every second month for the last three years. Their frequent flier points are in the millions.

"I can tell you I have never seen so much interest and I did my first deal on the Gold Coast in 1986," Dan McVay says.

"This has to be the start of another development phase on the Gold Coast because there is so much capital coming."

He says the Gold Coast and Australia should not fear the capital inflow.

"Paul Keating introduced FIRB because of the massive Japanese investment in the 1980s. But we cannot be panicking about where the money is coming from. We are staring at a surge in the market place."

Record numbers of Chinese visitors are flooding into the city. Chinese visitor numbers rose 18 per cent to 784,000 over the year ended December according to Tourism Research Australia's International Visitor Survey. Spending by Chinese visitors has also risen 19 per cent to $5.7 billion accounting for 18 per cent of all international visitor spending.

Busloads of Chinese tourists, frequenting the famous Focus Chinese restaurant on The Esplanade, are driven passed properties recently purchased by groups such as Hong Kong-based Forise Holdings, developer Ho Bee, Hong Kong billionaire Tony Fung and one one of Asia's largest resort operators Banyan Tree.

In a sign of how the holiday playground has recovered since the removal of the bikies, Mayor Tate, who is of Thai heritage, has now visited China almost ten times on self funded trips designed to establish relationships and promote the Gold Coast.

"I tell them I am part Asian and that that means I sort of understand what they are thinking - I get a lot of laughter at that," he says. But the laughter has been followed up with serious investment.

While Australia's largest private developer Harry Triguboff called the bottom of the Gold Coast market early and has started building a 40 storey tower, Australia's big four banks are still wary about lending for major apartment developments on Gold Coast. They burnt their hands there in 2007 with major exposures in the high rise apartment towers.

Ironically, one of the largest banks to have lent for Gold Coast real estate has been the Bank of China. It stumped up the debt for the purchase of the Chevron Renaissaince shopping centre in May.

One of the latest real estate deals to have attracted attention on the Gold Coast was the sale of a run down old building a block back from the beachfront. It sold to the Chinese-backed Ridong for $21 million through Colliers International's Darrell Irwin who says the one noticable feature about this real estate cycle is the lack of big domestic developers.

"There is an absence of the traditional listed apartment developers such as Mirvac, Stockland and Lend Lease who have previously been down here," Mr Irwin says.

"They are now focussed on the capital city markets which have been good to them and would prefer lower risk land subdivision and townhouse developments in the corridor between Brisbane and the Gold Coast."

Listed group Sunland, a stalwart of the Gold Coast, has been one of the few buying in. It snapped a major development site at Broadbeach for more than $60 million.

The reticence to lend by the big Australian banks and the caution from domestic developers is another reason why the big Asian money such as Wang Jianlin is so important.

Canford Property Group's Roland Evans helped secure the Wanda injection of capital for the Jewel project and also helped amalgamate the massive beachfront landholding that Banyan Tree are using for their development.

"We probably have another four to five of those amalgamations that will sell over the next year," Mr Evans says, "And they will change the face of the Gold Coast forever."

Mr Evans has made 17 trips to China in the last year which he says is crucial for maintaining the relationship with Chinese investors.

He warns that Australians need to be ready for the money that will flow in. He recounts a story of one of his top Chinese clients who wanted to buy a Rolls Royce after buying a property.

"I took him to the dealer and we were all in the car checking everything. It was a done deal, but he turned on the SAT Nav and when he looked for the Mandarin language it didn't have it. He walked straight out."

[Paul Keating introduced FIRB because of the massive Japanese investment in the 1980s]

replace Japanese with Chinese, sounds like a repeat of history no? And we all know how that ended...

The world is different. People buy with cash or little leverage. They don't need 90% unlike the locals. But gold coast? No no. I agree we know how it ended for sentosa florida for places relying on transient holiday makers

Actually this is a misconception... buying with cash does not mean you are not debt funded unless you know the structure behind. Sometimes people only look at onshore debt but forget capital is international. And capital is not always equity.

Just as SGX will see you buy stocks with cash but only yourself and maybe the broker will know how you fund it.

(25-06-2015, 12:13 AM)newbie11 Wrote: The world is different. People buy with cash or little leverage. They don't need 90% unlike the locals.

(25-06-2015, 10:52 AM)specuvestor Wrote: Actually this is a misconception... buying with cash does not mean you are not debt funded unless you know the structure behind. Sometimes people only look at onshore debt but forget capital is international. And capital is not always equity.

Just as SGX will see you buy stocks with cash but only yourself and maybe the broker will know how you fund it.

(25-06-2015, 12:13 AM)newbie11 Wrote: The world is different. People buy with cash or little leverage. They don't need 90% unlike the locals.

That's true, many china man funded by corrupt monies as can be seen by some recent cases which I reckon are just the tip of the iceberg. The recent report of the money laundering by malaysian side may not point to China but is still a good case in point.

For bigger buyers like the developers, sometimes we can trace their funding to bond issues on HK or USA markets, usually issued at very attractive rates. Any deflation of property bubbles caused by them worldwide will likely see them defaulting. The Kaisa default in the USA markets is a recent example.