Victoria Property, Australia

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New planning minister has big shoes to fill

Property observed Rebecca Thistleton
712 words
4 Dec 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

A flippant comment rang true at a ­Melbourne property function on Tuesday: developers who courted Victoria's opposition planning spokesman ahead of Saturday's election wasted their time.

Labor won the state election after four years in opposition, planning spokesman Brian Tee lost his upper house seat, and the chance to take on a portfolio likened to a poisoned chalice.

A planning minister's decisions are scrutinised, criticised and verbally beaten in the media. The role lacks the seniority and clout afforded to the ­treasurer or attorney-general, and there is ­little chance to wave cash or pork barrel to win friends.

What a planning minister approves, rejects and legislates reshapes cities well beyond a political term. On ­Thursday, Victoria will have a new planning minister. Next year, NSW and Queensland also go to the polls.

Premier-elect Daniel Andrews will hand-pick his ministry from a 22-strong cabinet. There are 13 women on board, up-and-comer Jane Garret or former planning parliamentary secretary Jenny Mikakos may be considered.

Whoever Andrews appoints will have to dance around former planning minister Matthew Guy's deep footprints. Guy was lambasted for locking up the inner suburbs, favouring ­development over streetscapes and approving projects which would shadow landmarks.

He signed off on more than 15 CBD skyscrapers a year, some to be the among the tallest in the Southern ­Hemisphere and later drew kudos for releasing the departmental reports behind those decisions.

Guy made changes which the public would not recognise, but have improved long-term planning in Melbourne through red tape reduction and boosting housing stock to support a surging population. Guy's Plan Melbourne paper drew criticism but was a solid, long-term planning framework. He offered developers the opportunities and certainty NSW has lacked for more than a decade and until recently, Melbourne was well ahead in dwelling approval numbers.

There will be a swathe of ­Liberal-voting developers lining up to shake the new planning minister's hand. Many will meet the new Labor planning ­minister with a little less of the warmth and enthusiasm they reserved for Guy and would do themselves a favour to look beyond their political leanings.

Two threats to good planning are the public's fear of change and party politics. A new minister needs to keep both threats in mind, then move on.

Planning presents problems but the opportunities to stimulate a state's economy and business confidence, while improving livability and housing affordability, should invigorating a new minister.Those challenges and opportunities face all major cities, not just Melbourne.

As livability and housing affordability worsens across our cities, public interest in planning rises. Capitalising on the public's desire to steer decision-making means future planning ministers can lead. Bringing a supportive electorate with them could be their greatest challenge.

While their legacies are debatable, the bold statements of leaders past are today's realities: Paul Keating's Barangaroo push, Bob Carr's claim Sydney was full . . . Jeff Kennett.

Among the greatest imprints left by a state leader was from 1970s Victorian premier Dick Hamer. Successive leaders from both sides of politics have agreed he was ahead of his time.

Appointed local government minister in 1964, he was effectively Victoria's first planning minister. As Tim Colebatch noted in his recent biography of Hamer: "... one can only regret that he did not arrive in the job some years sooner".

From then until the early 80s as ­Victorian premier, Hamer notched up an enviable achievement list, while ­battling similar controversies to his contemporaries.

This was a bloke who told a building conference of the need to plan Melbourne for 5 million people, more than 40 years before successive governments wrote the policies to catch up.

Leaders on both sides of politics have lauded Hamer's forward-thinking. He proved planning does not have to be a partisan topic of debate.

The planning portfolio can offer the greatest chance of long-term change, a point the property industry and the public want future planning ministers to recognise. Don't see the planning ministry as an albatross lacking sexy funding announcements. Start ­thinking about the legacy.

rebecca.thistleton@fairfaxmedia.com.au


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http://www.afr.com/news/policy/budget/vi...505-ggtqp8

Victoria budget 2015: Property industry prepares for showdown


Victoria has introduced a 3 per cent stamp duty surcharge of foreign buyers of residential real estate.
by Nick Lenaghan

Victoria will hit foreigners with a 3 per cent tax on purchases of residential real estate, a tax that will have to be paid by large Australian property developers than are majority foreign owned, such as Mirvac and Australand.

The state may also face the end of its property boom. The state treasury has reduced its growth forecasts for property taxes in coming years.

As well as the new stamp duty surcharge, the government has introduced a new slug on absentee foreign landlords. Combined, the two new taxes will raise a combined $333 million over the next four years.

While it was initially thought the stamp duty surcharge was aimed at foreign buyers, in Singapore or Hong Kong for example, state Treasurer Tim Pallas revealed major local developers could be slugged as well.

Heavyweight developers such as Mirvac, AVJennings and the recently privatised Australand, could all be taxed on their residential land acquisitions.

"We're still looking at the issue, but my anticipation would be that this will apply to those companies that have majority foreign ownership," Mr Pallas said during Tuesday's budget lock-up.

TICKET CLIPPED TWICE

As well, it appears treasury will collect twice in situations where a developer pays the duty on its acquisition of residential land. Subsequent foreign buyers of the completed project – apartments or houses – will also then be slugged on their purchases.

In all, property taxes deliver almost $8 billion in 2015-16, the biggest tax contributor to the budget.

The growth in those taxes is slowing. Stamp duty is forecast to grow 2.9 per cent to about $5 billion in the coming year, including the new foreigner surcharge.

Two years ago that growth was close to 28 per cent. In the forward years, treasury forecasts stamp duty growth to be "below-trend", that is below the 5 per cent to 6 per cent range.

"The longer the current upswing in the property market lasts, the greater is the likelihood a slowdown will emerge," the budget papers said.

"House prices have already risen considerably at a time when income growth has been slowing, pushing up household leverage."

Land tax – imposed on landlords and investors – is already falling, by 1.4 per cent to $1.8 billion in 2015-16. Its growth is expected to be more modest in the forward years in line with a more subdued market.

And, buried in the budget papers is the promise of a sweeping government review into housing affordability, looking into the impact of taxation, regulation and grants. It is due to be complete by the end of 2015.

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Labor backs down on property tax
Bianca Hall
366 words
16 May 2015
The Age
AGEE
English
© 2015 Copyright John Fairfax Holdings Limited. Factiva.Gateway.Messages.Archive.V1_0.ELink
The plan to tax foreign owners investing in Victorian properties, which could increase the cost of housing for Victorian first home buyers, was drafted without consulting the Planning Minister.

Labor is now in frantic talks with developers to neutralise the issue, after Planning Minister Richard Wynne admitted on Friday the plan could increase the cost of new properties.

There were "potentially unintentional consequences" to the policy, Mr Wynne acknowledged during an often fiery public accounts and estimates committee. "I'm aware of this, and I know the Treasurer is," he said.

Mr Wynne said a 3 per cent tax on foreign purchases would bolster the government's coffers and mean foreign investors paid their fair share for investment in infrastructure and services.

But under questioning by Liberal MP David Morris, Mr Wynne said the initiative was drafted in Treasurer Tim Pallas' office, and agreed that no advice had been sought from his office about the plan.

In its budget, released two weeks ago, the government announced that foreign nationals, many from China, will pay a new tax equivalent to 3 per cent of the purchase price of houses. It said this would raise $279 million over four years. Foreign housing investors would also pay an extra 0.5 per cent in land tax from 2016 on new and existing properties, raising $53.5 million over four years.

But it soon emerged that large developers that have significant foreign ownership, including Mirvac and Australand, would be classified as foreign investors, and would be caught in the tax hike.

"We're still looking at the issue, but my anticipation would be that this will apply to those companies that have majority foreign ownership," Mr Pallas said during the budget lock-up.

Since the budget, however, the government has been forced to back down on the issue under intense lobbying from the property sector.

It is now moving to exempt majority-foreign owned companies that operate within Australia, concerned that, as it stands, the policy could negatively impact on housing supply levels. It is expected the government will announce next week how this will be applied.


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Adviser closes door on 'risky' apartments

Larry Schlesinger
545 words
30 May 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.

The tightening of investment lending standards will make it harder for some investors to acquire apartments in Melbourne's oversupplied inner-city markets, with fears prices could collapse if there is an easing in demand or off-the-plan buyers can't find the cash for a bigger deposit at settlement.

Property investment adviser Neil Smoli says he hasn't steered a client into a Melbourne apartment in 18 months.

Mr Smoli, who runs property investment firm Aviate, believes Melbourne's inner-city market is a no-go zone for investors because of an oversupply of apartments.

Tighter investment lending criteria adopted by the banks this month raises the risk factor even further, Mr Smoli said, by making it harder for off-the-plan buyers to settle their contracts. Under the new bank policies, lucrative discounts on investment loans have been removed, with loan-to-value ratios cut back, meaning buyers must fund bigger deposits.

While developers can seek damages if they are forced to resell an apartment at settlement, a flood of apartments onto the market could compromise the purchase price and have a bearing on valuations, Mr Smoli warned.

"We've seen this occur before in about 2001 and 2002 when there was heightened supply in Docklands, which had a massive impact on the rental market, with landlords offering rent-free periods and even paying for removalists," he said. "We don't want our clients ending up in negative equity territory or without a tenant."

BIS Shrapnel senior manager of residential property, Angie Zigomanis, said lenders already had restrictions in place in markets like Docklands and Southbank, but agreed that further tightening could cause problems for off-the-plan buyers come settlement time. "Some buyers may find they have to borrow using the equity in their own homes to cover the lower LVR - something they probably don't want to do," he said.

But Docklands real estate agent Keith Bayliss said he did not expect any major impact from the lending changes.

"We have a lot of owner-occupier buyers and we're not dealing with many first-home buyers, who are the ones at the margin of affordability," said Mr Bayliss, managing director of MICM Property.

"There's no issue with supply, either. We're very happy with the vacancy rate, which is about 2 per cent across the portfolio we manage."

Market analyst Louis Christopher of SQM Research said markets like Docklands and Southbank are historically very volatile and timing was key for investors. "It's not a market for the novice investor," Mr Christopher said.

Mr Christopher said current changes to investment lending policies would affect appetite, but not in a big way. "I expect APRA over time to up the ante, which will result in heavier changes.

"These changes will knock out the weaker, highly geared speculator investors, who were already a line-ball call to get loans. It's quite a healthy thing, actually," he said.

The latest SQM Research data paints a relatively strong picture of markets like the CBD, Docklands and Southbank. Vacancies in April ranged from 2.9 per cent to 4.3 per cent - well down from peaks of 12 per cent a year ago.


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Melbourne land sales record healthy growth

Larry Schlesinger
417 words
20 May 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.

Sales of residential lots in Melbourne's greenfield growth corridors reached their highest level in more than five years in the March quarter as developers released hundreds of new lots on to the market to meet the rising housing demand.

Lot sales averaged about 1300 per month - almost 4000 for the quarter - a rise of 14 per cent on the December quarter and 41 per cent higher than the same time last year, said the Urban Development Institute of Australia's National Land Supply Program, compiled with property research firms Charter Keck Cramer and Research4.

There were 160 projects active across the outer suburbs over the quarter, almost double the number recorded at the end of 2010, the program found.

Eleven new projects were launched over the quarter, including the 711-hectare Woodlea Estate near Caroline Springs. Developers Mirvac and Victoria Investments & Properties took the unusual step of using a lucky draw ballot to sell the first stage of 70 lots because of the higher number of registrations.

However, Melbourne lot prices remained flat over the quarter at a median lot price of $210,000 as developers flooded the market with new lot releases, which increased by 36 per cent on a year ago.

Melbourne remained the most affordable residential land market by some distance. On average a Melbourne lot was $185,000 cheaper than a block in metro Sydney ($395,000) and well under the median of land in Perth ($260,000) and South East Queensland ($250,000).

UDIA Victoria CEO Danni Addison said: "Melbourne has regained its title as the highest volume greenfield market in Australia with 31 per cent of national sales".

Ms Addison said higher demand was a factor of an increase of the number of trading estates, competitive prices, a robust established housing market and historically low interest rates.

"Coupled with this demand, healthy competition between developers is ensuring that Melbourne is producing the highest volumes of affordable land supply in the nation," she said.

There were 12 estates which achieved more than 20 lot sales per month over the quarter with Wyndham in south west, incorporating the booming new housing suburbs of Point Cook, Werribee and Williams Landing, recording the most sales. Developers active in Wyndham included Stockland, Cedar Woods and Lend Lease.

Casey, in the south east, which included the suburbs of Cranbourne and Clyde, was the second most active growth corridor over the quarter, according to the NLSP figures.


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Developers avoid new Victorian tax

Nick Lenaghan
393 words
26 May 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.

Large developers that are big Australian players but foreign-controlled, such as Mirvac, AVJennings and Australand, have been spared a new stamp duty surcharge, after Victorian Treasurer Tim Pallas cut a compromise with the property industry on Tuesday.

Offshore players such as Chinese state-owned giant Greenland could also win exemptions under the deal hammered out with industry lobby groups, the Property Council of Australia and the Urban Development Institute of Australia.

New guidelines will establish generous carve-out clauses for developers that increase the supply of housing stock and invest in development projects.

The guidelines are designed to ensure a level playing field for all developers after the introduction of the new tax.

The guidelines give the Treasurer discretion to exempt foreign-controlled developers from a 3 per cent stamp duty surcharge introduced with the state budget for foreign buyers of residential real estate. While the new impost is aimed primarily at offshore buyers of houses and apartments, it soon became apparent it could apply to residential land purchases by Australian developers whose ownership is mostly in foreign hands.

It was likely the tax would be passed on to all buyers - Australian and foreign - of the final housing product.

Home buyers in the growth areas of Melbourne faced the prospect of an indirect tax bill of between $2000 and $6000.

A sticking point in negotiations over the carve-out clauses was the legal weight they would carry. The guidelines will not be included in the legislation, but they will be tabled in Parliament and published by the state revenue office.

"Our preference would have been to have the guidelines referenced in the bill. However, we are pleased to have secured many other important changes, which will avoid a number of unintended consequences," the PCA's Victorian executive director Jennifer Cunich said.

Danni Addison, the UDIA's state leader, said the guidelines were common sense. "The proper use of discretionary powers established today will ensure that companies which positively contribute towards the affordability of Victorian housing will be able to continue to confidently invest in this state," she said.

A government spokesman said Treasury would not need to revise forecast revenue - of $333 million over four years - from the stamp duty surcharge and a new absentee landlord tax, in the wake of the new guidelines.


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Labor backs down on property tax
Bianca Hall
366 words
16 May 2015
The Age
AGEE
English
© 2015 Copyright John Fairfax Holdings Limited. Factiva.Gateway.Messages.Archive.V1_0.ELink
The plan to tax foreign owners investing in Victorian properties, which could increase the cost of housing for Victorian first home buyers, was drafted without consulting the Planning Minister.

Labor is now in frantic talks with developers to neutralise the issue, after Planning Minister Richard Wynne admitted on Friday the plan could increase the cost of new properties.

There were "potentially unintentional consequences" to the policy, Mr Wynne acknowledged during an often fiery public accounts and estimates committee. "I'm aware of this, and I know the Treasurer is," he said.

Mr Wynne said a 3 per cent tax on foreign purchases would bolster the government's coffers and mean foreign investors paid their fair share for investment in infrastructure and services.

But under questioning by Liberal MP David Morris, Mr Wynne said the initiative was drafted in Treasurer Tim Pallas' office, and agreed that no advice had been sought from his office about the plan.

In its budget, released two weeks ago, the government announced that foreign nationals, many from China, will pay a new tax equivalent to 3 per cent of the purchase price of houses. It said this would raise $279 million over four years. Foreign housing investors would also pay an extra 0.5 per cent in land tax from 2016 on new and existing properties, raising $53.5 million over four years.

But it soon emerged that large developers that have significant foreign ownership, including Mirvac and Australand, would be classified as foreign investors, and would be caught in the tax hike.

"We're still looking at the issue, but my anticipation would be that this will apply to those companies that have majority foreign ownership," Mr Pallas said during the budget lock-up.

Since the budget, however, the government has been forced to back down on the issue under intense lobbying from the property sector.

It is now moving to exempt majority-foreign owned companies that operate within Australia, concerned that, as it stands, the policy could negatively impact on housing supply levels. It is expected the government will announce next week how this will be applied.


Fairfax Media Management Pty Limited

Document AGEE000020150515eb5g0003w

[soros]

What is an absentee landlord tax ? Not living in the property ?

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Jun 12 2015 at 5:38 PM Updated Jun 12 2015 at 5:38 PM

Lend Lease apartments sold in a flash

An artist's rendering of the new Lease Lease apartment project at 889 Collins Street in Docklands.
by Nick Lenaghan

Lend Lease had already sold down the vast majority of its next $750 million thrust of residential development in Melbourne's Docklands by the time Victoria's Planning Minister Richard Wynne gave his approval for the towers on Friday.

The two projects at 883 and 889 Collins Street will overlook the Yarra River, at the point where the extensions of Collins and Bourke Streets – which run parallel through the old city grid – curve into Docklands and finally intersect.

In all, four towers will rise from the two neighbouring projects, comprising 1064 apartments.

Even before Mr Wynne gave his assent to the projects, Lend Lease had provisionally sold 70 per cent of the units, which range in price from $395,000 to $1.8 million.

With the cool river breeze at his back, Mr Wynne gave testament to the strength of Melbourne's hot apartment market.

"I can't think of a better place to live than down in the Docklands, said Mr Wynne, whose electoral seat is across town in inner city Richmond.

"Families want to live in this precinct. That's why the spread of apartments – across one, two and three [bedrooms] and some with studies as well – is a fantastic initiative."

There was a political point to be made as well by a minister who has roused grumbles from the property industry over an initially slow pace of project approvals.

The construction value of projects approved in the last six months has risen to $2.8 billion, putting the Labor government on track to beat the record $4 billion in approvals set in 2014 by the previous Coalition regime.

With so many sales already in hand, Lend Lease will soon begin construction. Around 30 per cent of the transactions are accounted for by offshore buyers.

Jonathan Emery, Lend Lease's managing director for urban regeneration, said the developer was already planning to launch new residential projects in the Victoria Harbour section of Docklands, with no apparent end in sight to the soaring buyer demand.

"Every time we come to market and think about things, we look at where we are and where the market is. We take it step by step. At the moment we have no intention of taking our foot off the accelerator. The customers seem to really enjoy this location and the product."

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un 16 2015 at 6:13 PM Updated Jun 16 2015 at 8:03 PM
Malaysian developer plans massive 6-tower Southbank project

Melbourne's Southbank precinct beside the Yarra River


by Nick Lenaghan
Kuala Lumpur-listed developer PJ Development has lodged one of the largest single development proposals ever put to the state's planning authorities, with a $1.5 billion plan for a 6-tower project in Melbourne's Southbank.

Last June the Malaysian developer paid a record $145 million to acquire a two-hectare city fringe car-park site at 93-119 Kavanagh Street site from interests associated with the Mario Lo Giudice's Banco Group.

The proposal for the site is just as staggering, with six towers clustered around a large open realm, on the south bank of the Yarra River, opposite the CBD.

The plan includes four residential towers comprising 2610 apartments. There is a 621-rooom hotel planned, along with a 52,000 square metre strata office tower.

The towers range in height from 30 levels to 65 levels, with the tallest being 226 metres.

Designed by Cox Architecture, the project includes 3525sq m of open space, along with rooftop gardens and a swimming pool atop one tower.

Controlled by one of Malaysia's richest men, Ong Leong Huat, Pj Development joins a growing list of Malaysian developers getting active in the Melbourne market.

They include UEM Sunrise, controlled by a Malaysian sovereign fund, and Mammoth. Developers from Singapore, Hong Kong and the China mainland are also significant players here

The company did not provide comment on the proposal when contacted on Tuesday, nor could property lawyer Eu Ming Lim of Thomson Geer, who acted for it in the purchase last year.

"Southbank is one of the primary business centres in Melbourne, housing many offices of major corporations, high rise developments and landmark buildings such as Crown Casino, Southbank Promenade, Southgate Restaurant and Shopping Precinct, Melbourne Convention and Exhibition Centre as well as the Eureka Tower, the tallest building in the city of Melbourne," the company said in June last year.

"The management of PJD deems the property to be an ideal site for long-term development with strong growth potential, given that it is one of the last pieces of sizeable prime land available for development in the Melbourne CBD.

"In addition, the acquisition is also in line with the board's strategy to enhance its profile and diversify its earnings outside Malaysia."

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Victorian market surges on all fronts
Nick Lenaghan
463 words
2 Jul 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.

Victoria's surging property market has left its strongest imprint in the commercial and industrial sector, with the growth in the value of deals done in metropolitan Melbourne up by more than 26 per cent in 2014.

The 2014 report by the state's Valuer-General drills down into the changes in values and sales volumes across the state, in all sectors of the real estate market.

It shows the value of commercial and industrial sales in metro Melbourne increased to $10.9 billion in 2014. The average sale price was up 23.5 per cent to almost $2.3 million.

As always, residential sales across the state account for the lion's share in the value and number of all property deals in Victoria. In 2014, metro residential sales totalled $63.8 billion, compared with $60.2 billion in the previous year.

Transactions in country dwellings rose to $12.2 billion, compared to $11.9 billion in the previous year.

"The property market in Victoria showed significant increases overall throughout 2014," said Victoria's Valuer-General Robert Marsh in his market overview. "The residential, commercial and industrial markets experienced an increase in the total number of sales and the total value of sales."

The total value of sales of all property in Victoria increased by 11.9 per cent from $84.1 billion in 2013 to an estimated $94.2 billion in 2014.

The total number of sales increased by 3.1 per cent from 155,981 to an estimated 160,783, reflecting an increase of 3.1 per cent in residential sales.

The median house price across the state increased 5.7 per cent to $460,000 in 2014. The previous year it rose 4.8 per cent to $435,000, and in 2012 it slipped by 1.2 per cent to $415,000.

In the past decade the state's median house price has risen 70 per cent, from $270,000 to $460,000.

The fastest-rising suburb, on the Valuer-General's figures, was St Kilda West, neighbouring the prized Middle Park and Albert Park bayside pockets. The median house price there rose 58 per cent to $1.8 million in 2014.

Tree-changers pushed up prices on Mt Dandenong as well, where the median house price gained 40 per cent to $630,000.

Overall, commercial and industrial property sales across the state increased 22.8 per cent in their total value, up from $9.85 billion in 2013 to an estimated $12.09 billion in 2014.

In primary production, the value of sales in country Victoria rose 17.4 per cent to $1.8 billion in 2014. The number of deals increased as well, by 5.1 per cent.


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