Victoria Property, Australia

[greengiraffe]

http://www.theage.com.au/business/proper...zsxyx.html

Melbourne apartment development hits historic high
Date
July 7, 2014

More apartments are being built in Melbourne than at any time in the city's history, which experts say is being driven largely by overseas investment.

It has also sparked fears of a glut of new apartments, causing property prices to drop once they come to be re-sold.

Almost 6000 homes have been completed or are set to be finished by the end of this year, nearly three times the annual average over the past decade, City of Melbourne development activity data shows.


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And almost 6000 more under construction in the Melbourne council area, which covers areas including the CBD, Docklands, Southbank and Carlton, are set to be finished in 2015.

More than half of the 11,546 homes set to be completed in 2014 and 2015 will be in the CBD.

In Carlton, 1361 new homes will be completed over this period, more than the number built between 2002 and 2013.

“The next couple of years are going to have the biggest annual supply of apartments that Melbourne has ever seen,” Knight Frank research director Richard Jenkins said.

He said offshore developers were driving apartment growth and that their appetite for Melbourne’s property market was set to continue, estimating they were responsible for 40 per cent of upcoming residential developments in the city.

Mr Jenkins said vacancy rates were still contained despite concerns supply could outstrip demand.

But BIS Shrapnel senior manager Angie Zigomanis said there was potential for oversupply, particularly in Docklands, Southbank and the CBD.

He said investor-grade apartment projects in these areas had limited growth prospects, and in some cases, prices could even go backwards.

“If you’ve bought something new, off the plan today, I suspect you’ll find … three years from now, it’ll be less than what you paid for it if you tried to resell it,” he said.

A further 18,737 homes from 99 developments have been approved and are set to commence construction within the next two years. Another 48 developments are still seeking planning approval, which would add another 23,241 homes. Almost half of these dwellings are destined for the CBD.

The council's data counts houses, apartments, studio apartments and student apartments.

“We don’t know how long this increase of supply will be sustained, or how many of the proposed developments will proceed,” Melbourne council deputy planning chair Stephen Mayne said. “What this research does is show us what Melbourne could look like in the next decade.”

Savills divisional research director Glenn Lampard said it was unlikely all the planned or mooted developments would go ahead.

“If the vast majority of them were built we would certainly see an oversupply, but I would imagine it would be absorbed as the population increases,” he said.

Lord Mayor Robert Doyle said Melbourne was the fastest growing city in Australia and that housing supply was keeping up with demand.

“Melbourne has become a magnet for residents and business and these latest figures are the latest chapter in our success story,” he said.

Between 2002 and 2012, the number of dwellings in the City of Melbourne almost doubled, reaching almost 60,000.

Assuming all the developments under construction are completed, there will be at least 37 "super dense" city blocks packing in between 150 and 500 homes per hectare in Melbourne by the end of 2015.

In 2012, 24 blocks were super dense and in 2002 there were just three.

[greengiraffe]

Overseas developers venture into suburbs
KYLAR LOUSSIKIAN THE AUSTRALIAN JULY 11, 2014 12:00AM

OFFSHORE developers are continuing to set the pace in Melbourne and some are now turning their attention to suburban development projects.

Malaysian developer Fajarbaru has made its first foray into the Australian market, joining players such as Singapore’s Chip Eng Seng and Ho Bee in undertaking projects in Melbourne’s eastern suburbs.

Fajarbaru has just bought three adjoining parcels of vacant land in Doncaster for $6.9 million.

The land, 2428sq m in total, was purchased from Doncaster Regency.

The site has approval for the development of an 11-storey residential building with 136 apartments.

In a company announcement, Fajarbaru said the Melbourne market was showing “signs of improvement after a generally flat 2012 to mid-2013, and following a significant decline in 2011”.

“In Australia, residential apartments still provide one of the most tax-effective investments,” the announcement read.

Overseas developers have also taken an interest in Hawthorn, where The Australian understands a Chinese developer has closed a deal on 7000sq m site on Burwood Road.

It is believed the developer purchased the site for about $30m, which was formerly owned by local businessman Ron Hall. A Melbourne-based agency and CBRE’s city sales team have been linked to the deal, but this could not be confirmed.

Chip Eng Seng picked up the former Morrison Brothers Nursery site in Williamsons Road, Doncaster, for $19.28m earlier this year and says it will launch a project this year featuring 90 townhouses and 50 apartments.

The company plans to expand its property development business in Australia and will acquire more development sites to build up its land bank, “should new attractive opportunities arise”.

Late last year, a car park behind the shopping centre at 1 Grosvenor Street sold to Ho Bee for $8.5m and that group is now planning 185 units.

A report by Knight Frank this week said Melbourne’s metropolitan apartment market had experienced a lift in median values and rents in the past 12 months, despite significant construction projects under way.

Knight Frank’s residential research associate director, Michelle Ciesielski, said that there were just over 12,600 apartments currently under construction in metropolitan Melbourne, with a number of significant projects still in the pipeline.

[greengiraffe]

Developer fears oversupply
BEN WILMOT THE AUSTRALIAN JULY 25, 2014 12:00AM

THE apartment boom appears to be rolling on across Australia with new projects launched in Sydney and Brisbane yesterday, but one of the developers involved voiced concerns about an oversupply in Melbourne’s inner-city market.

Projects were launched by Mirvac Group and David Devine’s Metro Property Development.

The listed group opened the first stage of its $1 billion project on the site of the former Harold Park Paceway in Glebe, Sydney. Mirvac is undertaking more inner Sydney projects, including Green Square, in a joint venture with Leighton Properties, and three CBD towers, as it capitalises on what Mirvac chief Susan Lloyd-Hurwitz said was the eastwards shift in Sydney’s population.

While upbeat about Mirvac’s Yarra’s Edge project in Melbourne, Ms Lloyd-Hurwitz acknowledged concerns about an oversupply of inner-city apartments directed towards investors in that market, saying “there are spots that we avoid”.

[greengiraffe]

Approval for Melbourne CBD to double
KYLAR LOUSSIKIAN THE AUSTRALIAN JULY 29, 2014 12:00AM

MELBOURNE’s CBD will more than double in size, with Victorian Planning Minister Matthew Guy approving a final master plan for the 250ha Fishermans Bend precinct.

The development will be centred on Civic Boulevard, surrounded by cafes, restaurants and shops, on what is now Plummer and Fennell streets.

The area will eventually see 40,000 new jobs and be home to 80,000 residents.

“Development of Fishermans Bend will create significant investment, jobs and commercial opportunities right on the doorstep of Melbourne’s CBD,” Mr Guy said.

“Construction alone will deliver billions of dollars in economic benefits to Victoria over the next 40 years.”

A number of analysts have already reported that Melbourne is overbuilding apartments relative to demand, and will see a slowdown next year.

But Mr Guy said Melbourne would grow quickly, and be home to 7.7 million by 2051, up from 4.3 million.

The precinct was first announced in 2011, and while the final master plan is new, some projects have been announced. Maxvic Group and former Toll Holdings’ boss Paul Little both have apartment sites, with Mr Little purchasing a property in February.

Any change in zoning would benefit the listed Goodman Group, as the company has significant holdings in the industrial area.

[greengiraffe]

Politicians are always there to convince and console

Melbourne oversupply story a tall tale, says minister Matthew Guy
• KYLAR LOUSSIKIAN
• THE AUSTRALIAN
• AUGUST 07, 2014 12:00AM
• Print
• Save for later


analYSTS warning that Melbourne’s property market is in danger of oversupply don’t know what they’re talking about, says Victorian Planning Minister Matthew Guy.
The Reserve Bank of Australia and analysts including BIS Shrapnel and Moody’s Analytics have been warning of an oversupply in the city’s apartment market for some time, in some cases forecasting sharp contractions.
A BIS Shrapnel report released late last month noted there would be “an inevitable correction following several record years of phenomenal home building in the state”.
But Mr Guy said “phenomenal construction growth” had only occurred because of a “phenomenal population increase”.
“Have (the analysts) looked at population growth data of late? We are on track for record population gains and that will mean a greater level of demand in this city.
“People aren’t going to be camping out on the streets,” Mr Guy said.
“Two decades ago, Melbourne’s population was increasing by 30,000 each year. Now we’re adding 90,000 a year, which is the population of Ben¬digo every year to Melbourne.”
“I don’t foresee some of these doomsday predictions, which have been made for the last seven years. In fact, the market is trending upwards again.”
Mr Guy has championed a raft of taller apartment buildings in Melbourne’s CBD.
In June, he approved the 319m Australia 108 tower in Southbank, alongside a 75-storey building on Elizabeth Street and a ¬54-storey tower on Queensbridge Street, also in Southbank.
Last week, the state government approved the final plan for the Fishermans Bend urban renewal area on 250ha of industrial land at Port Melbourne.
Although developments in the area awaiting approval range up to 40 storeys, there are no mandatory height limits attached to the precinct, which led some to declare Mr Guy was ceding planning control to developers.
“Docklands had a pretend ¬approach to planning, and this is just the same: a plan that acts as a smokescreen for handing over decisions about what is built to the development industry,” Michael Buxton, an urban and ¬social studies academic at RMIT, told Fairfax Media’s The Age.
Mr Guy said it was a deliberate policy “to optimise land use”.
“We need to go up, not out. There will be (buildings with) considerable height and I make no apologies for that. If we can’t get height in the city, we can’t get it anywhere.
“That’s the future for Australian cities, and particularly for Melbourne,” he added, dismissing Professor Buxton as a political opponent.

[Curiousparty]

Developers like CES would LOVE this Planning Minister....

CES' 1000 units project at Carlton is now before approval by Matthew Guy



https://urbanmelbourne.info/planning/201...ria-street
Extracted out the relevant portion below:-

" A quirk in events sees City of Melbourne currently processing another application for the site in question. Last week saw the submission of an application seeking consent of "Building and works for a display suite/sales office and proposed permit for internally illuminated signage."

It seems that while City of Melbourne have objected to the proposal, developer CEL is eager to commence marketing the tower if and (more than likely) when final approval is granted by Planning Minister Matthew Guy. "


It seems that CES is already assuming that the Planning Minister is likely to approve, despite all the resistance from the staff at City Council
(this project will bring at least $100mil SGD in net profit based on conservative assumptions)

Politicians are always there to convince and console

Melbourne oversupply story a tall tale, says minister Matthew Guy
• KYLAR LOUSSIKIAN
• THE AUSTRALIAN
• AUGUST 07, 2014 12:00AM
• Print
• Save for later


analYSTS warning that Melbourne’s property market is in danger of oversupply don’t know what they’re talking about, says Victorian Planning Minister Matthew Guy.
The Reserve Bank of Australia and analysts including BIS Shrapnel and Moody’s Analytics have been warning of an oversupply in the city’s apartment market for some time, in some cases forecasting sharp contractions.
A BIS Shrapnel report released late last month noted there would be “an inevitable correction following several record years of phenomenal home building in the state”.
But Mr Guy said “phenomenal construction growth” had only occurred because of a “phenomenal population increase”.
“Have (the analysts) looked at population growth data of late? We are on track for record population gains and that will mean a greater level of demand in this city.
“People aren’t going to be camping out on the streets,” Mr Guy said.
“Two decades ago, Melbourne’s population was increasing by 30,000 each year. Now we’re adding 90,000 a year, which is the population of Ben¬digo every year to Melbourne.”
“I don’t foresee some of these doomsday predictions, which have been made for the last seven years. In fact, the market is trending upwards again.”
Mr Guy has championed a raft of taller apartment buildings in Melbourne’s CBD.
In June, he approved the 319m Australia 108 tower in Southbank, alongside a 75-storey building on Elizabeth Street and a ¬54-storey tower on Queensbridge Street, also in Southbank.
Last week, the state government approved the final plan for the Fishermans Bend urban renewal area on 250ha of industrial land at Port Melbourne.
Although developments in the area awaiting approval range up to 40 storeys, there are no mandatory height limits attached to the precinct, which led some to declare Mr Guy was ceding planning control to developers.
“Docklands had a pretend ¬approach to planning, and this is just the same: a plan that acts as a smokescreen for handing over decisions about what is built to the development industry,” Michael Buxton, an urban and ¬social studies academic at RMIT, told Fairfax Media’s The Age.
Mr Guy said it was a deliberate policy “to optimise land use”.
“We need to go up, not out. There will be (buildings with) considerable height and I make no apologies for that. If we can’t get height in the city, we can’t get it anywhere.
“That’s the future for Australian cities, and particularly for Melbourne,” he added, dismissing Professor Buxton as a political opponent.

[Curiousparty]

It seems that the job market prospect has worsened. It would imply that the central bank would continue to maintain a loose monetary policy (i.e. keep interest rate low or even propose to cut interest rate at next central bank mtg).

The property market will be kept buoyant amidst a low interest rate environment.

**********
SYDNEY--The Australian dollar plunged to a fresh two-month low Thursday on news of a rise in unemployment to its highest level in 12 years, triggering renewed speculation that the next move in interest rates will be down.

The unemployment rate rose to a seasonally adjusted 6.4% in July from 6.0% in June, its highest level since 2002, while also beating the U.S. jobless rate for the first time since December 2006.

The Australian dollar fell around half a U.S. cent immediately after the data as traders priced in a 50% likelihood that the Reserve Bank of Australia will buck the global trend and cut interest rates in coming months.

"The more depressed the labor market is, the longer it will take the RBA to normalise monetary policy," said Forex.com analyst Chris Tedder.

"This is pushing back the market's expectations of tighter interest rates, thereby making the Australian dollar less attractive," he added.

The Reserve Bank of Australia said Tuesday it expects recent stability in interest rates to continue. It left its cash-rate target steady at 2.5%, marking 12 months of rates at extreme lows.

At 0600 GMT Thursday, the Aussie dollar was trading around US$0.9270 versus US$0.9312 late Wednesday. Prior to the employment report it was trading at US$0.9355.

A rise in job market participation as more people looked for work was the main driver of the rise in unemployment, said J.P. Morgan analyst Ben Jarman.

Still, he said the report is still consistent with evidence of slack in the economy.

"The labor market data now also looks more in line with the excess capacity that would generate current low levels of wage growth, and also with the weakening in capacity utilization," Mr. Jarman said. "We have no reason not to declare today's result a real deterioration."

The economy has been sluggish in 2014 as a high Australian dollar, falling commodity prices and the end of a decade-long mining investment boom have proved stiff headwinds. Unemployment rates has been rising steadily since early 2011.

Still, there is evidence of a pick-up in some areas of the economy like housing construction.

The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index showed Thursday a rise of 0.8 point to 52.6 in July -- its second consecutive month of expansion.


(END) Dow Jones Newswires

August 07, 2014 02:54 ET (06:54 GMT)

[specuvestor]

If the property market goes up when unemployment increases, anecdotally that is already a serious issue on both affordability and who the buyers supporting the properties are.

[BlueKelah]

Property is the only growth driver left post mining boom as result of record low interest rates. Contraction is happening every where else, especially from new tightening budget. Far from rosy going forward IMHO.

via Xperia Z1 with Android 4.4.4 running tapatalk.

[greengiraffe]

Melbourne slammed for vote on $900 apartment levy
Michael Bleby
363 words
14 Aug 2014
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
The City of Melbourne wants to levy a $900 charge on each apartment in developments approved from the start of next month, irrespective of when their applications were lodged.

The city council resolved on Tuesday to ask Planning Minister Matthew Guy to "immediately" introduce the levy so it applies to the 5260 apartments under consideration for approval. They are under a third of the 17,257 in the development pipeline in central Melbourne.

"For those applications which are currently in the pipeline – they've been lodged – if the minister were to follow this advice and the permit was issued on September 2, that would be captured and the very modest $900 developer contribution would come to the city of Melbourne," Councillor Stephen Mayne said at the meeting.

The City estimates the 25,210 people living inside the so-called Hoddle Grid of the central business district will grow by another 14,363 by 2031. To maintain the city's open space ratio, another 3972 square metres of public infrastructure is needed. The $900 levy, and a separate proposed open space contribution, would amount to $3800 on a unit worth $500,000, the council said.

The Property Council of Australia slammed the proposal, warning it would make housing more expensive for singles, families and retirees and could send investment elsewhere.

"While bricks and mortar may not move – investment does," the council's Victorian executive director Jennifer Cunich said on Wednesday. "If the ­feasibility of a development does not stack up, it simply won't happen. That means less construction jobs, less retail activity and lower overall tax revenue."

Ms Cunich also criticised the city for not consulting with it before formalising the proposal, first revealed by The Australian Financial Review in April.

In May Mr Guy introduced a ­standard infrastructure levy of $4500 per dwelling in designated growth areas, but is unlikely to oppose the move and it may not happen as quickly as the city hoped.

"He's happy to have a look at it but would like to see some consultation with the development industry and the community," a spokeswoman said.


Fairfax Media Management Pty Limited

Document AFNR000020140813ea8e0005q