Sydney Property Bubble

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Top developers plan Sydney unit bonanza
THE AUSTRALIAN AUGUST 14, 2014 12:00AM

Greg Brown

Property Reporter
Sydney
Lisa Allen

Property & Tourism Reporter
Sydney
SYDNEY’s booming apartment market has snared a couple of ­billion-dollar developers with apartment tsar Harry Triguboff planning an ambitious 900-plus unit complex in Rosebery while Toga is eyeing a Harbourfront site for a luxurious unit and serviced apartment complex.

Meriton yesterday forked out an aggressive $190 million to buy parallel sites in Rosebery from Dexus Property Group, and Mr Triguboff said it was the highest price paid for a site in the 50-year history of the private company.

The previous highest price was $145m for a land parcel in Sydney’s inner western Pagewood last year, where Meriton plans to build 2000 units. Mr Triguboff said the Rosebery project would be worth about $1 billion on completion, but he denied that the high price was a milestone for the group.

“I look upon the sales price of the whole project, so what I pay for land is only a small portion of what I get for it,” Mr Triguboff said.

“This is only one part of it and therefore it’s of low importance.”

So confident is Meriton of Sydney’s apartment market that earlier this week it tendered for a prime site from Parramatta City Council that could support about 1000 apartments, but the company missed out to a Shanghai-based buyer who offered more than $120m.

Despite a busy 18 months for Meriton, Mr Triguboff said that the group would not slow down in its hunt for sites.

“To buy land is not difficult — to build is more difficult,” Mr Triguboff said.

“The reason we are buying more land is because the sales are very buoyant, and more importantly our progress in the actual building (of apartment projects) is very good,” he said.

The 4.2 hectare Rosebery site, in Sydney’s inner southwest, will also include a childcare centre.

The deal was brokered by ­Meriton acquisitions manager Angelo Mantsis, and JLL’s ­Michael Fenton, Sam Brewer and Blair Peterken.

Meanwhile, cashed-up serviced apartment operator Toga is believed to have paid $58m for a prominent waterfront site fronting 100-102 Elliott Street, Balmain in Sydney’s inner west. Sold by the Roche Group, the trophy Sydney Harbour front site has development approval for 102 residential apartments, 19 residential serviced apartments and 1425sq m of commercial and retail area. The selling agents were Knight Frank’s Dominic Ong and Peter Krieg, who declined to comment.

Toga’s head of construction and development, Fabrizio Perilli, did not return The Australian’s calls yesterday.

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Cashing in on demand for development sites
THE AUSTRALIAN AUGUST 19, 2014 12:00AM

Lisa Allen

Property & Tourism Reporter
Sydney
SYDNEY’S booming market for apartment development sites has delivered big returns to two groups at opposite ends of the spectrum — one a band of North Shore residents and the other an English multinational.

What brings them together is selling sites to apartment-hungry developers who will pay almost any price to gain a foothold in some of Sydney’s suburbs.

Seventeen residents in two Lane Cove streets on Sydney’s Lower North Shore have banded together to sell their houses to a developer for a combined price of at least $60 million.

The house owners were offered about $4000 a square metre for their land regardless of the state of their house, one resident told The Australian yesterday. Speaking on condition of anonymity, he said he would net about $3m for the house he had occupied for decades, following at least 24 months of negotiations.

The amalgamated site has development approval for four apartment buildings of up to seven levels as well as parking.

The resident said Orca Investments had put the deal together. The amalgamated site, running the length of Birdwood Avenue and into part of Finlayson Street, has been marketed as part of the Lane Cove Village.

It was sold by CBRE agents Matthew Ramsay and Ben Wicks several weeks ago. The agents declined to comment on the buyer.

Although developer Toga was interested in the 10,400sq m site, the end buyer of 2-22 Birdwood Avenue and 11-15 Finlayson Street is an Asian-born
long-term Australian resident.

Meanwhile, listed developer Payce Consolidated has paid $95m for a 14-hectare industrial site in West Ryde. Knight Frank’s Eugene Evgenikos and Derek Erwin handled the sale of the riverside property.

The apartment developer declined to discuss its plans, but confirmed the parcel was disposed by British multinational consumer goods company Reckitt Benckiser. The site also has 72,899sq m of space across numerous buildings and Payce could undertake a residential redevelopment in coming years.

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Triguboff plans 400 Mascot flats
THE AUSTRALIAN AUGUST 26, 2014 12:00AM

Lisa Allen

Property & Tourism Reporter
Sydney
SYDNEY’S booming apartment market has attracted even more interest, with apartment tsar Harry Triguboff planning a 400-plus unit complex in Mascot after paying $75 million for a site.

Mr Triguboff’s Meriton group fended off interest from offshore buyers to acquire the 11,102sq m industrial site fronting Church and Bourke streets. The vendor was property investor Anthony Skinner and Garrick Hawkins’ Orlani Property Group.

Billed as one of the largest mixed-use residential development opportunities in Mascot, the site was sold via an expressions of interest campaign.

At least $60m was expected for the site in the heart of Mascot’s Town Centre, which was sold by CBRE’s director of residential developments, Matt Ramsay, and executive managing director Scott Gray Spencer.

Mr Ramsay said the site attracted a number of large private local and listed offshore groups. “We had more than 100 inquiries and we had 10 bids,” he said.

It is understood Crown and Toplace, which is developing the Vicinity Apartments in Canterbury, were eager bidders.

The Mascot site — which ­Orlani bought for $8.5m about a decade ago — is occupied by several industrial tenants.

Meriton has been active in Mascot. Earlier this month it paid $190m for parallel sites in Rosebery from Dexus. The 4.9ha Rosebery site fronting Rosebery and Rothschild avenues will house more than 1000 units.

Meriton also plans to build 2000 units in nearby Pagewood.

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Sydney apartment supply to peak in 2017
PUBLISHED: 25 AUG 2014 05:42:00 | UPDATED: 25 AUG 2014 14:38:24


REBECCA THISTLETON
Houses ‘overvalued’ by up to 30pc
Home buyers lobbing hefty pre-offers to beat auctions
Apartment glut puts tenants on top
Investor demand is set to deliver a spike in inner city apartment completions for Sydney, which will peak in 2017 and could tip the inner suburbs into an oversupply.

Strong investor demand, underpinned by low interest rates and capital gain expectations will continue to drive new apartment numbers, according to BIS Shrapnel’s latest research, released on Monday.

BIS Shrapnel senior manager Angie Zigomanis said inner Sydney ­apartment completions were set to peak in 2017.

BIS Shrapnel’s report, Inner Sydney Apartments 2014 to 2021, showed about 5800 apartments were under construction around inner Sydney and 11,500 apartments would be finished over the next three years.


The Australian Financial Review has reported rental yields have begin to soften in areas where dwelling values have risen and where there has been a concentration of medium and high-density development.

“Landlords of newly completed apartments will have to be more competitive to attract tenants over existing stock, while owners of older apartments may have to discount to attract tenants from neighbouring suburbs,” Mr Zigomanis said.

Declining rental yields will be ­sustainable while interest rates remain low, and the gap between rental income and mortgage repayments is relatively narrow. But weak purchaser demand and prices will emerge once interest rates lift. BIS Shrapnel expects a rate rise by the end of 2015, and further rises in 2016 and into 2017.

Short-term demand for inner Sydney apartments is expected to remain buoyant and BIS Shrapnel expects median price growth about 6 per cent per annually over 2014-15 and 2015-16.

A downturn is expected in 2016-17.

Forecasting which factored in that 6 per cent growth and potential declines and resurgence in demand pitched total price growth of about 21 per cent, or just under 3 per cent annually, through to 2021.

Mr Zigomanis said Sydney was still catching up after years of ­under-development and weak demand for new apartments, but the surge in off-the-plan apartment sales meant the market was likely to get ahead of itself again.

Mr Zigomanis said rental growth was likely to slow around inner Sydney. Combined with a rise in prices, yields will decline. But rental demand was likely to recover medium-term as overseas student numbers and inner-city employment numbers lift.

“Vacancy rates will remain relatively tight in the short term until the upturn in new construction translates to completions, while low interest rates and low or volatile returns for other investment classes are expected to continue to encourage investors into residential property,” he said.

Offshore investment into new ­apartments is expected to continue. Australia’s stable economic and ­political environment, combined with market-cooling measures in China and Singapore, will ­maintain the outflow of funds into ­Australian property.

The Australian Financial Review

BY REBECCA THISTLETON

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Apartment King: HARRY TRIGUBOFF
Why I’m buying all these sites: Harry Triguboff

PUBLISHED: 7 HOURS 44 MINUTES AGO | UPDATE: 1 HOUR 5 MINUTES AGO

Why I’m buying all these sites: Harry Triguboff
Apartment mogul Harry Triguboff says getting planning approval in NSW is too difficult compared with Victoria and Queensland. 
Comment
HARRY TRIGUBOFF
I read in the newspapers that people are surprised at the amount of land that we buy.

The reason is because it is so difficult, and so tedious, to get approvals. So I have to have a big stock of land to produce between 2000 and 3000 apartments a year.

The problem is very simple: it lies with the planning in NSW. If our planning system was as good as it is in Victoria and Queensland, NSW would definitely be producing twice as many new homes as in Victoria.

Everyone wants Sydney – that is why our prices are so high. The NSW Department of Planning had big plans to redo the whole system under former premier Barry O’Farrell, but that didn’t work because the Labor Party would not support the changes in the upper house.

The tragedy was that for three years the people in the Department of Planning were all the time involved in changing the system.

Nobody needs to change the whole system; all we have to do is make adjustments and make them constantly. In a business we always adjust to meet the market and the planning of the state is no different. They must be prepared to change all the time.

Our weakness in NSW is that the state has decided people want only houses, not apartments.

That is complete nonsense. We sell more apartments than houses; people pay more for apartments than for houses and apartments are rising in price more than houses are.

The idea that people don’t like apartments needs to be knocked out of politicians’ brains once and for all.

Then the politicians will be happy to support development, and so will the aldermen in councils, and so will the council planners. If all of them were in favour of development, which is what the community and the NSW economy needs, then Sydney would regain its rightful place.

Why do they build as many apartments in Melbourne as they do in ­Sydney? Nobody would ever claim that Sydney is not a more attractive or desirable place.

STATE CAUSING COSTLY DELAYS
The answer is simple: we just can’t get approvals here in NSW. That is why I have this stock of land. All the time I have to argue with the authorities to get projects through.

Every time I make a minor change I am delayed by a month or two. And nobody is responsible for the number of delays that cause high prices.

The present government is not interested in detail and we still have to hear how the department wants to manage the planning.

I have been waiting for a long time. I have been waiting for the minister, the director-general and the premier and I haven’t been getting very far.

I feel certain they didn’t just pick on me, because everybody else has the same experience.

It is very hard to understand how, with our interest rates so low, and with foreigners so keen on buying our product. that our production has not gone up. It’s still the same.

We’re delighted when NSW construction is up by 10 per cent, but it should be up by 50 per cent if we look at what is needed.

When we talk about houses being dear and our children not being able to buy, the answer is very simple.

The parents are very happy that the prices are dear because they have all made money.

And the children? Where were they when the prices were depressed? I didn’t see any children wanting to buy anything at all.

Now that the prices have gone up they want to buy. I am very happy that they want to buy. I want them to buy.

And I agree it’s difficult. So parents have to help.

I am glad to say that they are helping, but they have to help more.

That is how the Chinese do it; all the family chips in. My Chinese buyers are 20 to 25-year-olds without much money, who are helped by the family. We should do the same.

The Australian Financial Review

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Mirvac posts plans for hot apartment market

BEN WILMOT AND KYLAR LOUISSIKIAN THE AUSTRALIAN SEPTEMBER 04, 2014 12:00AM

MIRVAC Group is capitalising on the surging Sydney apartment market by striking a development deal in Chatswood and looking to convert a Lane Cove commercial site into units.

The developer has been restocking its residential pipeline in Sydney and is well-positioned due to the strong residential cycle and its exposure to NSW, which has experienced the country’s biggest price growth.

Mirvac, which last month struck a deal to take full control of the $1.1 billion Green Square development in inner Sydney by acquiring the half-share owned by Leighton Properties, is also stepping up its exposure to Sydney’s north shore. It is also working with Australia Post on plans for a tower on the Chatswood post office site.

A proposed 19-storey tower was withdrawn by Australia Post last year, but it is understood a new 200-240 unit proposal is in the works.

In North Ryde, it is looking to convert a $31m site with approval for commercial development into a mixed-use project that could have up to 500 units.

Mirvac is preparing to launch a number of projects, including Morton in Sydney’s Bondi and Wharf’s Entrance in Victoria. It has teamed up with Coombes Property Group to propose a $500m tower on the George St cinema site in Sydney’s CBD.

It has also purchased sites in Waterloo and Catherine Fields, and is working on the City Tattersalls Club redevelopment and the luxury 71 Macquarie Street project with AMP Capital.

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Asian buyers in $1bn Sydney office tower raid
THE AUSTRALIAN SEPTEMBER 04, 2014 12:00AM

Greg Brown

Property Reporter
Sydney
ASIAN apartment developers are chasing more than $1 billion of ­office towers at the southern end of the Sydney central business district, with buildings owned by AMP Capital Wholesale Office Fund (AWOF) and Singaporean GIC Real Estate in due diligence.

On the biggest offering, one of Asia’s wealthiest individuals is in due diligence to buy 175 Liverpool Street from GIC for close to $400 million, property executives said.

The north-facing 28-level tower is one of the city’s best re­development opportunities and offers Hyde Park views, on which the Singapore-based buyer is ­expected to capitalise.

It could be transformed into an apartment and hotel development worth more than $600m, and sources said Mirvac had only just been edged out of the race.

GIC put the site up for sale in response to strong off-market ­offers from Chinese developers that began last year. GIC and the agents marketing the building, JLL and CBRE, declined to comment, but architects Crone Partners developed a hotel and apartment scheme for the site ­earlier in the year.

Nearby, an Asian developer is thought to be in due diligence on AWOF’s 338 Pitt Street, just days after a deal with a Chinese group failed to go ahead. The tower, which is likely to be sold for about $100m, is being marketed by ­Savills and CBRE.

AWOF fund manager Nick McGrath told The Australian in June that the strong demand for apartment development opportunities led the group to offer the tower as a development play.

Built in 1997, the office building is up to 50 per cent ­vacant. AMP bought the building in 2005, when it was 94 per cent leased.

On the same block, GDI Property Group’s building at 233 Castle­reagh Street has caught the eye of an Asian developer, the group rumoured to be pursuing a structured deal that could value the tower at about $180m. The 24-level building, valued at $129m, has been earmarked to sell by the landlord for more than a year. It includes 21,000sq m of floor space.

GDI, a value-add player, bought the site from Leighton Properties for $120m in 2006 and values in the area have surged.

GDI has said it is investigating the feasibility of redevelopment options, including residential conversion, but refused to comment on any talks.

Dexus Property Group and Perron Group’s jointly owned 201 Elizabeth Street is expected to be converted into an apartment project by a Chinese developer, if a $400m sale goes ahead.

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4000 new apartments on the way this spring

Words by SUE WILLIAMS
1653 words
30 Aug 2014
The Sydney Morning Herald
SMHH
English
© 2014 Copyright John Fairfax Holdings Limited. Factiva.Gateway.Messages.Archive.V1_0.ELink
COVER STORY

That may sound a lot, but gents say there's still plenty of demand.

Spring fever is about to hit Sydney's new apartment market, with buyers spoilt for choice from a swag of developments about to come into bloom.

Most onlookers are now predicting a solid to strong market throughout the season, and that kind of thriving demand and the promise of rising prices have encouraged developers to launch a whole raft of new projects over the next season - almost 4000 of them across Sydney alone.

"Sydney still has a long-term shortage of property," says David Milton, managing director of agents CBRE residential, which is marketing at least 11 new apartment buildings over the next few months.

"But there are some really nice developments coming to market that will give buyers a lot of choice. They have a lot of confidence because of interest rates and the way the NSW economy is moving up a few gears."

At agents Colliers, general manager of residential David Chittenden is also optimistic. "We are very positive about the spring market," he says. "The winter market was unprecedented with [auction] clearance rates constantly around 80 per cent, which contradicts history. But with winter performing so strongly, we expect spring to be even stronger."

Developers are urgently trying to get stock into the market to take advantage of such demand, believes Noel Lucas-Martinez, director of NSW project marketing at Knight Frank. "Market conditions are very buoyant moving into spring with low interest rates, an under-supply of property and areas of high demand."

Domain Group senior economist Dr Andrew Wilson also thinks spring will deliver prices growth, just not at the blistering pace of the past year.

"The spring season is now really gearing up, but prices won't experience the same boomtime as they did last year," says.

"We simply don't have the income levels to keep supporting that kind of price growth, with affordability the issue. Last year, house prices rose 17 per cent and units 13 per cent but I think this spring we'll see about half that for houses, and eight to 10 per cent for units."

Buyers are being encouraged by new releases in locations they favour, according to Lloyds Property director Haig Conolly. "Developers are now putting in a lot of work to deliver projects to take advantage of this spring buying season," he says. "And for buyers, there's the continuation of external factors such as continued low interest rates and government incentives, particularly those for new apartments."

Wilson says affordability issues are driving many buyers to the north, north-west and south-west, and Richardson & Wrench director and chief auctioneer Peter Baldwin agrees that many are now looking outside their first choice suburbs.

"Strathfield buyers are now looking to neighbouring suburbs such as Belfield, Greenacre and Punchbowl," Baldwin says. "Epping buyers to Ryde and North Ryde, and Parramatta buyers to Oatlands. Bexley and Bexley North are in big demand and will continue in the popularity stakes."

The spring jump may well begin a little later this year on the back of low supply. "But when it happens, it'll come fast and furious," he says. "We'll see some good quality properties coming on to the market because there is a sense that the prices are there to support an upgrade or down-size."

NEW DEVELOPMENTS THIS SPRING

There are almost 4000 new apartments scheduled for release this spring. Here's a sample:

Waverley Four new three and four-bed terraces, 304 Bronte Road. Developed by Fiducia Property Group, to be launched in November by agents CBRE.

Surry Hills 22 apartments, 533 Elizabeth Street as Botanik. Developed by Samadi Group, to be launched in October by agents Colliers.

Neutral Bay 24 apartments, 128 Military Road as Bay Central. Developed by Platino, to be launched in September by Knight Frank.

Crows Nest 50 apartments and two townhouses, 139 West Street as Aster Towers Developed by D&A Property Group, to be launched in September by agents CPM Realty.

Turramurra 104 apartments, 1448 Pacific Highway as Crestview Gardens. Developed by MV Developments, to be launched in October by Lloyds Property.

Leichhardt 288 apartments on 22 George Street as Leichhardt Green. Developed by Greenland Australia, to be launched in October by CBRE.

Summer Hill 127 apartments, Smith and Edward Streets, as Flour Mill. Developed by EG Funds, to be launched in October/November by Colliers.

Meadowbank 61 apartments, 146 Bowden Street as Water's Edge. Developed by Navarra, to be launched in September by Knight Frank.

Parramatta 361 apartments, 1A Morton Street as Morton Street. Developed by JQZ, to be launched in October by CBRE.

Campsie 87 apartments, 502 Canterbury Road as Shine Apartments. Developed by Australia Jia Shun Development, to be launched in September by agents Colliers.

Woolooware 50 apartments and six penthouses, 471 Captain Cook Drive, next stage Woolooware Bay. Developed by Bluestone, to be launched in October/December by agents Colliers.

CASE STUDY

'I THINK THE MARKET IS LOOKING PRETTY GOOD'

This spring should be a busy one for business, intelligence consultant Shane Lee believes.

He's just decided this is the perfect time of year to put two of his properties on the market, and is now looking for another to buy. "Springtime is a good time for buying and selling property," he says.

"I think the market is looking pretty good for now. As long as interest rates remain at the same level, I'm very optimistic."

Lee, 39, is now selling a one-bedroom-plus-study apartment in the Jasper building of the St Margaret's complex in Surry Hills, with great city views, through agent Michael Murray of Murray Property Agents, and is planning to sell a two-bed terrace in Bondi Junction.

Instead, he's looking to buy in the Castle Hill or Baulkham Hills area as he believes the north west of the city is one of its greatest growth areas, particularly with the arrival of the rail line. "The north west has a lot of growth to go, and I'm keen to get in early," Lee says.

With better public transport, the leafiness of the area, as well as its good schools, relaxed suburban feel, and good shopping nearby, it is likely to come even more into favour.

"I think spring is a good time to make these big decisions. The economy is going well, the Reserve Bank looks unlikely to change the interest rate, and everything feels much more positive," Lee says.

COVER PROPERTY

GLEBE, MEZZO Sydney, Bay Street and Wentworth StreetPRICE GUIDE: $585,000-$2.5 million+

Spring has sprung early for the latest new apartment project to be unveiled in Glebe. Close to the city but on the edge of leafy Wentworth Park, the 213-apartment MEZZO Sydney, over four 10-level towers sitting on a central podium, has already been the subject of about 1300 registrations of interest - despite only limited advertising in advance of its September release.

"All the indications are that the spring market will be very strong," says David Cullen, managing director at developer Oakstand Property Group, which is working with the Denwol Group. "There really hasn't been much stock coming on in Glebe, except for Harold Park, and this is really city fringe.

"Even though it's high density, it has a great green buffer in the park and the podium is landscaped, adjoining 32 acres [12 hectares] of parkland, so it really is the best of both worlds."

The north-facing MEZZO Sydney, just a five-minute walk from Broadway's shopping and the universities of the area, was designed by architects Chrofi and Kannfinch, after a City of Sydney design excellence competition.

There will be full-height glazing, tiled floors and stone benchtops inside the apartments, and downstairs it will have 4400 square metres of commercial and retail space.

"We had a full city block which is very rare," says Cullen. "But it allowed us to create a podium up to level 3 and with such a wide frontage we've designed the apartments to a very high level."

MEZZO Sydney will have studios (41-43sqm) from $585,000; one-beds (43-63sqm) from $650,000; two-beds (64-96sqm) from $885,000; and three-beds (103-142sqm) from $1.7 million. mezzosydney.com.au. Phone Savills, 1800 788 837.

OR TRY THESE ...

WATERLOO

5 SAM SING STREET

$650,000+

With overhanging gardens both internal and outside, green lobbies on every level and a large communal roof terrace, The Tower Residences will be perfect for the warmer months. Surrounded by parkland, there are one, two and three-bedroom apartments available off the plan. The units, within walking distance of Green Square train station, local buses and the town centre, are being developed by JQZ, all with aircon and gas heating. towerresidences.com.au. Phone Sunnyland Properties Group, 9570 7688.

SYDNEY

1502/61 MACQUARIE STREET

$4.5 million+

What a view of spring arriving at the harbour! A three-bedroom, three-bathroom penthouse in The Pullman Quay Grand, close to the Opera House and Royal Botanic Gardens, is coming up for auction on September 22. The apartment has 226 sqm of space and a 24-hour concierge, room service, pool and gym. Phone Morton & Morton agent Ettienne West, 0410 593 749.

CHATSWOOD

1/15 KOORINGA ROAD

$850,000+

A two-bed, two-bath garden apartment with an outdoor entertaining deck to enjoy spring is a short walk from the centre of Chatwood. In a six-year-old boutique building, it's close to public transport and has airconditioning, a timber floor and large garage and storage area. For auction September 13. Phone Ray White Willoughby agent, Andy Yeung, 0414 588 382.


Fairfax Media Management Pty Limited

Document SMHH000020140829ea8u0005b

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Room to move

Rebecca Thistleton
1202 words
4 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Property Some pundits say the boom in house prices has a long way to go but could quickly change if interest rates rise. For now, rates are on hold and first-home buyers and upgraders are being locked out of the market, writes Rebecca Thistleton.

Sydney's thriving house prices have more room to grow – another 5 per cent between now and the end of the year, says one of the industry's leading commentators.

Macquarie Capital's Rod Cornish suggests the 10 per cent house price rise his group tipped for 2014 is half-way there and will prove him right come year's end.

Property industry pundits agree their housing sentiment will remain strong – so long as interest rates stay low, which remains questionable. The Reserve Bank of Australia wants to avoid steering the housing market into a bubble, but has been put off increasing rates when the housing market remains flat in some cities and broader economic indicators are not being stimulated by successive cuts.

While rising prices may put off some home upgraders and lock out first-time buyers, those low rates continue to encourage investors – who drove the housing market resurgence and continue competing for properties.

"Rates now look like being low for longer than we originally thought which may impact on prices," Cornish says.

Without a rate rise, Sydney would reach the tipping point – where the market would change – after another 15 per cent price rise. He concedes it would take time to get to that point.

"This degree of price rise would take the median house price to a high level and you could imagine if this was widespread across Australia, there could be an interest rate reaction to slow the housing market prior to that point," he says.

If rates were to rise 1 per cent, perhaps in 2015, Cornish says that market change point would be hit after a 7 per cent price rise. If rates were to rise 0.5 per cent, the tipping point would be reached after a 10 per cent house price rise. "In 2004, for example, housing affordability in Sydney went beyond the tipping point level with overseas interest, confidence etc – what followed was a long-winded downturn," Cornish says.

For now, the consensus seems to be that a rate rise is unlikely before the end of the year. The latest value index from RP Data CoreLogic showed the strongest increase recorded across the winter months since before the global financial crisis.

Laing and Simmons general manager Leanne Pilkington says low interest rates are underpinning positive market sentiment. "As a result we are seeing values rise as buyers feel confident and in some cases are willing to pay a premium," Pilkington says.

"However, the dramatic shortage of stock is just as influential in contributing to this price growth. While agents have enjoyed a strong winter period, it will be interesting to see if the onset of spring will result in a wave of properties coming to market as it has in the past," she says.

Agents, buyers' advocates and analysts have all commented on the lack of stock on the market heading into September, and both competition and price growth remain strong, so the peak spring selling season may be setting up to be an absolute thriller.

SQM Research director Louis Christopher pours water on that suggestion, warning punters not to get carried away.

"It is clear for all to see that the market remains strong on the east coast of Australia, however, the mining-exposed cities are, by and large, having a downturn that will likely persist for some time yet," he says.

The latest figures from SQM Research showed stock on market levels at the end of August were just over 2 per cent lower than the same time last year.

The group's asking prices index showed Melbourne was the only capital to record monthly increases in sentiment for both houses and units. For now, weekend auctions are drawing multiple bidders, pushing sales prices together

Cooley auctions put a Homebush property under the hammer at the end of August, listed with LJ Hooker. There were 21 bidders who, after 41 raises of hands, took the sales price $290,000 above the reserve. Similar results have been reported across Sydney and Melbourne, where there is still plenty of fizz in the market.

At the same time, the RBA is unlikely to shift interest rates, which would affect the country, off the back of over-performing markets in the two biggest cities.

Cooley auction house put 377 properties to the market in August, up from 339 in the same month last year. The clearance rate was 80 per cent, and 71 per cent sold above the reserve. The average number of bidders was six, and bidder depth is what drives up sale prices.

Sales activity has one property adviser warning buyers to avoid the Sydney market in spring. Gavin McPherson, chief executive Oasis Property, says simply: "Don't do it".

"If I couldn't convince you to not buy at all in Sydney, I'd at least stress the point that you'd be wiser to wait three or four years and, here's a tip, pick up the same or similar house in three or four years for less (in my opinion 10 to 15 per cent less) than go to auction."

McPherson predicts drops of up to 15 per cent in Melbourne as soon as interest rates rise.

"Of course, this could take some time. In the meantime, I expect affordability to keep us at these highs as the dumb and very late money chases the unrealistic profits of a sponge that has already been wrung."

In the construction market, Housing Industry Association chief economist Harley Dale says interest rates are likely to remain on hold, which will support more residential construction activity throughout 2014-15.

The Reserve Bank is still planning "a period of stability in interest rates", according to the bank's statement made on Tuesday when rates were kept on hold.

All of the 31 analysts Bloomberg surveyed ahead of that meeting agreed there would be no change.

HSBC chief economist Paul Bloxham said in a note to clients that he expects the RBA's next move to be a rise, but not the second quarter of next year – although that does depend on the national economic outlook.

"We maintain our long held view that the RBA's easing phase is done," he said.

For now, the property industry remains certain the market is buoyant, but not heading towards a bubble.

In the construction and housing markets, industry players want rates to remain on hold to keep air in the tyres throughout spring.

"The stable interest rate environment is a critical platform for steady market performance for the remainder of the year," Laing and Simmons' Pilkington says.

But for every positive there's a negative. She says first homebuyers are increasingly forced out of the market, beaten by offers from investors, encouraged by those record-low interest rates.

10 per cent the rise Macquarie Capital's Rod Cornish is predicting for Sydney house growth in 2014


Fairfax Media Management Pty Limited

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Shimao eyes $1bn windfall in CBD tower

THE AUSTRALIAN SEPTEMBER 10, 2014 12:00AM

Greg Brown

Property Reporter
Sydney
Supplied Editorial xu
Shimao’s Hui Wing Mau is 6th on the BRW Rich List. Picture: Bloomberg Source: Supplied
A COMPANY controlled by Australia’s richest Chinese-born citizen, billionaire Hui Wing Mau, is in due diligence to buy a Sydney office building that has potential for an apartment and hotel development worth up to $1 billion.

The move comes as the apartment boom drives up the prices of office towers in Sydney, Melbourne and Brisbane that have the potential to be converted for residential use in the booming inner-city unit market.

The building being targeted, at 175 Liverpool Street in the CBD, is one of Sydney’s most sought after development sites and comes as more Asian-backed groups look to secure buildings.

It is thought that Mr Hui, who was this year ranked 6th on the BRW Rich List, ahead of Harry Triguboff and Andrew Forrest, is aiming to develop the tower through his Hong Kong-listed property development company Shimao Property Holdings.

The building’s owner, Singaporean investment giant GIC Real Estate, is expected to reap up to $400 million if the deal goes ahead. The parties and JLL and CBRE, the agents on the deal, declined to comment last night.

The 28-level tower has Hyde Park views and a net lettable area of about 46,320sq m.

GIC picked up the Liverpool Street office block for $125m in 1996 and has since built a multi-billion-dollar portfolio of office towers, shopping centres, hotels across Australia.

Mr Hui, 64, known formally as Xu Rongmao, is worth about $6.35bn and has held an Australian passport since 2004. It is believed he has dual Australian-Hong Kong nationality.

He was reportedly the oldest of eight children and grew up poor in the Fujian Province, on mainland China’s southeast coast. He emigrated to Hong Kong in the 1970s where he began work in a textile factory. During the 80s he accumulated a portfolio of factories and was China’s first owner of a three-star hotel after the government liberalised investment laws, according to BRW.

He founded Shimao Property in 2001, which listed on the Hong Kong Stock Exchange in 2006.

Mr Hui reportedly undertook several property ventures in Australia during the 90s and later completed an MBA at the University of South Australia.

Mr Hui is rumoured to have made a $100,000 donation to the NSW branch of the Australian Labor Party a decade ago.

Mr Hui will join a host of Chinese-born billionaires investing in Australian real estate development. China’s richest man Wang Jianlin has led the property arm of Dalian Wanda Group into the Gold Coast, with a half stake in the $1bn Jewell apartment and hotel complex. Country Garden, controlled by China’s richest woman, Yang Huiyan, is building an apartment complex in Sydney’s northern suburbs.

The largest player, state-owned Chinese developer Greenland Holding Group, has invested $1.4bn in Australian development projects in the past 18 months.