Australia Property

[Boon]

Chinese real estate investors looking beyond Sydney and Melbourne

27 MAY 2015

Sam Butler

Property investors and developers from China are targeting cities and regions in Australia beyond the ‘gateway’ cities of Sydney and Melbourne.
That's according to a recent update to the Demystifying Chinese Investment in Australia report prepared by KPMG and the University of Sydney Business School and China Studies Centre, featuring analysis from Knight Frank.

The report identifies Brisbane, the Gold Coast and Adelaide, along with regional Victorian and NSW suburbs, as "new destinations offering discounts on prime property … [that] Chinese high net worth investors and developers are looking to".

"[Chinese investors] are … targeting a more diversified group of real estate assets, from hotels and leisure to industrial to student accommodation," the report says.

"There has been increasing activity in non-core areas of Brisbane, such as Newstead and Fortitude Valley, and this is expected to broaden to more metropolitan sites and to the Gold Coast.

"Adelaide and more satellite or regional suburbs of NSW and Victoria will start to gain traction/interest from Chinese [sic] and we should see some stronger price growth occur also."

The Illawarra and Newcastle/Lake Macquarie regions in NSW have seen "solid" increases in home and unit values over the past year, according to CoreLogic RP Data, while Geelong and Latrobe-Gippsland in Victoria also showed steady growth in the same period.

The report identifies that in 2014, almost half of all Chinese outbound direct investment (ODI) was concentrated in commercial real estate transactions, up from 14% in 2013, to $4.37bn in total. It says the China-Australia Free Trade Agreement, for which both countries signed a Declaration of Intent in November 2014, "is expected to accelerate the flow of Chinese investment funds into the Australian property market".

Of the Australian states, NSW still has overwhelmingly the largest share of Chinese real estate investment.

https://www.mywealth.commbank.com.au/pro...ws20150527

[greengiraffe]

Home ‘feeding frenzy leaves out average earners: John Fraser
THE AUSTRALIAN JUNE 02, 2015 12:00AM

David Uren

Economics Editor
Canberra

Bursting the property bubble hysteria
Bursting the property bubble hysteria
Rock-bottom interest rates are driving a housing bubble in Sydney that is putting living in the city beyond the reach of ordinary wage-earners such as teachers, repeating the social dysfunction of London, according to Treasury secretary John Fraser.

Mr Fraser told a Senate hearing yesterday it was “un­equivocally the casethat there were housing bubbles in Sydney and in up-market sectors of ­Melbourne, saying the eagerness of buyers resembled a “feeding frenzy”.

“I had a taxi driver in Sydney tell me how he’d turned over his property in the western suburbs and asked whether he should buy three or four apartments,” he said.

Mr Fraser, who was formerly global director of asset management for the giant investment bank UBS, said this reminded him of the sharemarket dictum that when the “bellhop” is buying it is time to get out.

Tony Abbott sought to distance the government from Mr Fraser’s frank comments, telling parliament that he did not think prices were too high and claiming credit for the low interest rates that Mr Fraser blamed for the housing boom.

“As someone who, along with the bank, owns a house in Sydney, I do hope our housing prices are increasing. I want housing to be affordable, but nevertheless, I also want house prices to be modestly increasing,” the Prime Minister said. “This government is trying to make housing more available. We are trying to make housing more affordable and the best way to make housing more affordable is to keep interest rates low and stable, and that is exactly what is happening.”

Mr Fraser said he was more concerned about the social than the economic consequences of the inflated housing markets in the two cities, saying he was confident both the banking regulator, the Australian Prudential Regulation Authority, and the banks themselves were aware of the risks and able to manage them.

“House prices are high and certainly in Sydney it is having a palpable impact on young people trying to get into the housing market, and I think that’s highly unfortunate,’’ he said. “I’m more worried about the social impacts, particularly in Sydney, about ­people on lower incomes getting access to housing. I’ve seen what happened in London.”

Mr Fraser said when he had lived there, he was on the board of a school that found it extremely difficult to hire good teachers because it was too expensive for them to live in the city.

He said the boom was a direct result of the fall in interest rates rather than the ability of investors to claim negative-gearing deductions. “It is a function of monetary policy settings because if finance is cheap, housing is seen to be a good investment,’’ he said. “The first thing mum and dad said when you started working was buy a house and the first thing the rugby league clubs told players when they made any money was to buy a second house.

“The perception is this will be a never-ending increase in housing prices, and we know that this will not be the case. It worries me that these historically low levels of interest rates are encouraging people to perhaps over-invest in housing. You’ve only got to see the plethora of house renovations to realise something is amiss.”

Councils approved the largest number of new detached houses in five years in April, according to the Australian ­Bureau of Statistics, although the number of plans presented for apartment blocks dipped in the month.

The total number of residential approvals was 16.3 per cent higher than a year ago.

[greengiraffe]

THE AUSTRALIAN JUNE 01, 2015 3:29PM
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Jared Owens

Reporter
Canberra

Bursting the property bubble hysteria
A house in Sydney’s Surry Hills sells at auction.A house in Sydney’s Surry Hills sells at auction. Source: News Corp Australia < PrevNext >
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Tony Abbott hopes housing prices in Sydney will continue to increase, despite his Treasury secretary warning there were “unequivocally” property bubbles in the nation’s two largest cities.

Appearing before a Senate hearing today, Treasury boss John Fraser said he was concerned about the amount of money being poured into the housing market with interest rates so low.

Mr Fraser said that while there was little sign of a housing bubble outside Sydney and the higher-priced end of the Melbourne market, he was concerned about the size of investment in property buying as well as restoration projects.

“It does worry me that the historically low level of interest rates are encouraging people to perhaps over invest in housing,” Mr Fraser said.

The Prime Minister, asked in question time whether he agreed with Mr Fraser about the housing bubble in Sydney and parts of Melbourne, told parliament: “As someone who along with a bank owns a house in Sydney I do hope that our housing prices are increasing.

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MOREBuilding approvals fall in April
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“I do want housing to be affordable, but nevertheless I also want house prices to be modestly increasing.

“Madam Speaker, the important thing is to ensure that our economy is as strong as possible so that people have as much resources at their disposal as possible, have jobs, so that they can go out there and buy the things they need including the housing that they need.

“This government is trying to make housing more available, we’ve tried to make housing more affordable, and the best way to make housing more affordable is to keep interest rates low and stable and that’s exactly what’s happening and trying to make sure the economy is strong.”

Labor MP Andrew Giles criticised Mr Abbott’s comments as “extraordinary”.

“Prime Minister demonstrating his complete lack of interest in housing affordability, save for his own house price,” Mr Giles tweeted from the chamber.


Wayne Swan, a former treasurer, tweeted: “Abbott completely clueless on the economy, embarrassing.”


Mr Abbott, who earns $507,000 a year as Prime Minister, co-owns a family home at Forestville, in his northern beaches electorate of Warringah.

There is an NAB mortgage over that property, according to Mr Abbott’s pecuniary interests statement.

The Senate hearing was told the gap between the Reserve Bank’s record low cash rate of two per cent and interest rates on credit cards was widening.

Mr Fraser said a “deep” investigation into credit card interest rates could be worthwhile.

He said the people who pay these credit card interest rates tend to be those who don’t fully pay off the amount and are perhaps less capable of servicing that debt “and that worries me”.

Additional reporting: AAP, Business Spectator

[Boon]

Australia 2015: Boom and gloom

TERRY MCCRANN HERALD SUN JUNE 02, 2015
THE relatively new and very different Treasury secretary John Fraser says there is a “bubble” in the Sydney property market and at the high end of the Melbourne market.

Whether or not he’s right, the really interesting and far more important issue is the meaning and significance of the stark contrast between what’s happening in the property market in those two cities and the increasingly gloomy outlook for the actual economy.

The Budget forecasts for the economy over the next year or so are already looking too optimistic and out of date.

The always dubious assumption the economy will whirr back all but automatically to strong growth after that — necessary to “chart” a fantasy fiscal path back to surplus, sometime in our lifetimes — is now looking straight out laughable.

The — downwardly — revised Reserve Bank forecasts in May that post validated that month’s interest rate cut are likely to be revised downward again at the next quarterly monetary policy statement in August.


This contrast of simultaneous boom and gloom defies both history and plain common sense.

When an economy is at best sluggish and potentially worse, you do not normally see the sort of frenzy we are seeing in the Sydney and Melbourne — and no, John, it’s not just at the high end — property markets.

The reason is obvious. When people are losing their jobs, or facing zero or near-zero pay increases if they are lucky enough to keep them, they do not generally go out on a Saturday to bid, and for some of them to pay, crazily higher prices for property.

In past periods, property booms have coincided or followed economic booms; and they’ve tended to be brought to a crashing halt by the same thing that was either simultaneously or had earlier slowed the economic boom — rising interest rates.

Yet right now interest rates are falling; certainly, through May, and the way things are looking, most likely again this year.

That’s to say, far from the RBA thinking of raising rates to spike the property market to fight the “boom” in today’s Australia, it’s almost certainly going to cut again into the “gloom” reality of the broader, real economy.

There is a very simple, but critically important reason for the disconnect. The “gloom” reflects the way the real economy is hostage to a slowing China.

This is captured most visibly and viscerally in Andrew “Twiggy” Forrest’s cries of pain over the iron ore price. More broadly, the prices for our commodity exports are now back to the level they plunged to at the peak (or trough?) of the GFC in 2009.

The “boom”, in contrast, is because Melbourne and Sydney property prices have disconnected from the reality of the broader economy and are now part of a global reassessment — upward — in asset prices and in particular prices for premium, and critically, “available” developed world property.

This is a consequence of two things. The globally ubiquitous first factor is the very low interest rates — zero in most of the world — getting closer to that here. Broadly this has sparked a chase for investment yield or value and the ready availability of cheap money to do the chasing.

The second, which has been focused on Australia and because of our relatively small size dramatically amplified, is Chinese money — accumulated from the past decade of that country’s extraordinary and sustained economic growth and wealth generation — pouring out and then into both established and new property here. Think about the irony in the contrast.

Just as the slowing China boom builds a sluggish if not actually bleak future for the Australian economy, the money made over there and in other parts of Asia from that boom is now fuelling our property market boom.

Further, there’s no obvious policy shift which could bring them back into some form of unity.

Even lower rates would provide more fuel for the property market but do little dramatic for the economy, further widening the contrast.

The capex figures last week showed the desired and fundamentally necessary shift from falling investment in the resources sectors to rising investment in non-resources — manufacturing, retail, services, construction — is not happening.

Worse, investment in non resources is actually falling and hitting all-time post-war lows! And resources investment is about to go over a cliff. It’s only being held up by major projects being finished.
When they are, that’s it: there won’t be another big greenfields mine or oil-and-gas project built in Australia in the next decade.

A big part of the problem is the Aussie dollar. When commodity prices were last this low, in 2009, the Aussie was just coming back from hitting lows around US64c. Now it’s staying stubbornly above US76c.

Further, that’s up against a strong US dollar. It’s up 40 per cent against the euro compared to 2009 and a thumping 63 per cent against the yen.

It’s even 7 per cent higher against the Chinese renminbi compared with 2009.

The attractiveness of Australian property — and our “high” interest rates — is keeping the Aussie high, while that strong Aussie is helping strangle the non-resources side of the economy, just as the resources side is hitting the wall.

With one exception: New residential construction — where Melbourne is even outdoing Sydney; and again, thanks to a flood of Chinese investment.

http://www.heraldsun.com.au/business/ter...7378700707

[specuvestor]

Interest rate cuts are holding up both the chinese and Aussie property markets.

I don't agree that "there’s no obvious policy shift which could bring them back into some form of unity"... some form of hot money taxation and limitation on leverage/ loan in AUD would do the trick, as history has thought us.

[greengiraffe]

International criminals ‘using Australian real estate to launder money’
THE AUSTRALIAN JUNE 03, 2015 12:00AM

Kylar Loussikian

Journalist
Sydney

Millions of dollars of Australian real estate could be being used by criminals to launder money, ­according to the federal financial intelligence agency, with relatively uncomplicated methods ­requiring little planning or expertise used to conceal illicit funds.

The report, produced by the Australian Transaction Reports and Analysis Centre, comes as the Australian Taxation Office revealed it was investigating 195 cases where foreigners may have illegally purchased property.

The tax office is already investigating one luxury property, thought to be worth more than $40 million, which was purchased by a company with a “straw” director related to the foreign owner.

Yesterday’s ATRAC report listed common methods for money-laundering through real estate, including the use of complicit third parties with no criminal records or the use of third party bank ­accounts to purchase the property.

A spokeswoman for the agency said the exact figure of money laundered through Australian real estate was unclear, but she pointed to a single investigation last year finding evidence of money-laundering across property valued at $5m, and more than $80m recovered in the prior two years.

Other methods include the manip­ulation of property prices and creating a fictitious rental agreement where criminals provide a tenant with illicit funds to cover rent payments to give an ­appearance of a legitimate income.

Earlier this year, the Paris-based Financial Action Task Force reported that Australian real ­estate was a favoured destination for proceeds from corruption, particularly from China.

“Large amounts are suspected to be laundered out of China into the Australian real estate market,” the report notes.

“China and other countries within the Asia-Pacific region were also seen as likely sources of corruption proceeds that are laundered in Australia.

Chinese investors are expected to pour about $60 billion into Australian housing over the next six years, more than double the $28bn spent in the previous six, according to researchers at Credit Suisse.

[greengiraffe]

Sydney housing bubble not all toil and trouble
THE AUSTRALIAN JUNE 04, 2015 12:00AM

Turi Condon

Property Editor
Sydney

When the tea room chat turns from “where should I buy” to “I’ve sold my investment property”, you know the end of the boom is near.

That, of course, is in Sydney, where prices surged 15 per cent in the past year.

This is the heart of the reignited housing bubble debate that this week saw Treasury secretary John Fraser and chair of the recent Financial System inquiry, David Murray, raise their concerns over just how hot the Sydney market has become.

Yesterday Australian Securities & Investments Commission chairman Greg Medcraft warned buyers and investors to be careful and factor in mortgage rates of 7 per cent, not 4 per cent.

“History tells us people don’t know they were in a bubble until after it was over,” he said.

So the question is will the bubble burst, and by how much?

At the extreme end of the spectrum was US economic forecaster and bear Harry Dent, who last year tipped a savage 50 per cent Australia-wide crash. But Australia’s housing and mortgage markets are very different from the US, where a borrower can “hand back the keys”.

Tim Lawless, researcher Core­Logic RP Data’s head of research, yesterday said capital gains across Sydney would drift lower, with price growth closer to the 10 per cent mark by this time next year.

There will be some pockets of pain, with parts of inner Sydney and Melbourne seeing over­development, but these have been well flagged.

Elsewhere, price growth will slow, but is unlikely to crash.

Interest rates are expected to stay low for some time and, while there is concern over job security, a major spike in unemployment is not expected.

Lawless says tighter lending conditions for investors, affordability barriers, as well as low rental yields — just 3.4 per cent for Sydney houses — will slow the market.

In other parts of the country the housing market is only just up off the mat. Perth’s housing prices are in reverse and showed only 0.7 per cent growth in the year to May. Prices in Brisbane and Adelaide were up by just over 3 per cent, while Melbourne was a solid 9 per cent.

This is a relatively contained, but very high-profile bubble.

[greengiraffe]

'Bubble' call may trigger clampdown
Jacob Greber Economics correspondent
883 words
2 Jun 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.
Treasury head points to property 'feeding frenzy' Abbott welcomes rising house prices

Treasury secretary John Fraser has declared Sydney and parts of Melbourne's property markets as being unequivocally in a property bubble that resembles a "feeding frenzy", a startling declaration from one of the nation's most senior economic managers that could lead to tougher regulatory intervention.

The blunt analysis by Mr Fraser, who is a member of the Reserve Bank of Australia board, puts additional pressure on the central bank and Australian Prudential Regulatory Authority to ensure there isn't a property crash.

Mr Fraser said limits on lending announced in December, known as macroprudential tools, were a good step but there is a "a perception that this will be a never-ending increase in housing prices and we know that will not be the case".

He said his main concern about house prices was the social impact, after living in London where he spent five years on the board of a girl's school, which struggled to hire teachers because they couldn't afford the rent.

Prime Minister Tony Abbott said that as a home owner in Sydney he welcomed rising property prices. "I do hope our housing prices are increasing," he told Parliament.

Mr Abbott said he welcomed Mr Fraser's remarks on housing, which he wants to be "affordable but nevertheless, I also want house prices to be modestly increasing".

The remarks by Mr Abbott and Mr Fraser underscore that while low rates may make existing home owners feel wealthier thanks to price gains, they also price poor and younger workers out of many markets in major cities.

"I wonder what a young family in Sydney or Melbourne looking to buy their first home thinks of the Prime Minister saying he wants house prices to go even higher," Opposition Leader Bill Shorten said. "He just doesn't get it."

With the Reserve Bank expected at Tuesday's board meeting to reiterate its official bias for further official interest rate cuts, additional upward pressure on house prices is likely in coming months.

Sydney household prices have surged 39.3 per cent since bottoming out in May 2012, followed by Melbourne's 22.4 per cent gain, according to Corelogic RP Data figures released on Monday. Nationally, prices are up 3.8 per cent over the first four months of the year and 9 per cent over the past 12 months.

Stockland chief executive Mark Steinert denied there was a bubble but conceded that some parts of Sydney were "getting a little ahead of themselves".

Mr Steinert, who manages the nation's largest developer, said he expects Sydney's price growth will moderate to a more sustainable 5 to 6 per cent over the next 12 months, helped by more homes for sale.

"Continued growth in residential real estate is underpinned by strong population growth and recent years of undersupply," he said.

Reserve Bank assistant governor Malcolm Edey, who has responsibility for financial system stability, told a Senate committee it may be "another three months or so" before it was clear whether APRA's macroprudential crackdown is slowing lending to investors.

"We had been saying the second half of the year … [but] realistically it will be a few more months … we want to get a good sense of how credit growth is performing," he said.

"A lot of people do think it's a bubble - serious people think that - and we agree that this is a situation where the market is strong, it's overheated, it's a risky situation."

NAB tightened a stress test on its borrowers to see if they could afford to repay loans on all their properties if mortgage rates hit 7 per cent.

As of June 13, the new the test will be automatically applied to existing mortgage repayments, according to a bank statement released on Monday.

Mr Fraser, speaking to the same committee under questioning by Greens Senator Peter Whish-Wilson, pointed to the proliferation of home renovation shows as a sign that "something is amiss" in the property market.

"When you look at the housing price bubble evidence, it's unequivocally the case in Sydney," Mr Fraser said.

It was also "certainly the case in higher-priced areas in Melbourne," whereas elsewhere in Australia, "the evidence is less compelling".

"I base that on my observations as well as the data," Mr Fraser said.

He said he was confident that APRA had the housing price bubble well in hand, while banks had taking internal measures that showed they were aware of the risks.

He described meeting a taxi driver in Sydney on Sunday who had just turned over his property in the city's western suburbs and asked the Treasury secretary whether he should buy three or four investment properties with the proceeds.

Mr Fraser said he did not provide the driver any advice, but noted to the committee the old adage that "when bellboys are buying equities, it's time to get out".

He said the price gains appeared confined to certain areas.

"It does seem a little bit like a feeding frenzy but when you get out of those suburbs into the outer suburbs it's less the case."

WITH ROBERT HARLEY


Fairfax Media Management Pty Limited

Document AFNR000020150601eb620000a

[Boon]

APRA says everything is fine in housing market, but look at credit cards

June 4, 2015 - 7:16AM

Gareth Hutchens

Australia's financial regulator says it is not too worried about Sydney and Melbourne's property markets, despite serious concerns from Treasury and the Reserve Bank about a housing bubble.

But it agrees there ought to be closer scrutiny of the interest rates banks are charging on their credit cards, saying it cannot see why credit card margins are so high.

Australian Prudential and Regulation Authority chairman Wayne Byres told senators in Canberra on Wednesday he had the power to use policies that target specific housing markets in Australia – such as Sydney and Melbourne – to prevent bank lending practices from becoming too loose.

But he did not think he needed to use them, he said, because his warning to banks last year that he was watching their lending behaviour seemed to be having an effect.

He said the annual growth rate in housing credit growth – a key driver of property price rises – was heading towards 15 per cent last year so he warned banks APRA would be using a benchmark of 10 per cent as an "important risk indicator".

"They've been co-operative in terms of changing practices," he said.

"At the time we sent our letter, the growth in investor lending was about 10 per cent but it was accelerating, it was heading towards 11, 12, 15 per cent."

"It's still hovering around 10 per cent [but] we're arguing around the decimal point here, 10.3 per cent, 10.4 per cent, so I think we've had some moderating impact and I suspect we'll have some more moderating impact over the coming months."

He said APRA was prepared to do more to cool investor activity but it didn't seem necessary at this stage.

The comments follow warnings by Treasury Secretary John Fraser, who on Monday said Sydney's housing market was showing "unequivocal" signs of a housing bubble, as were upmarket areas of Melbourne.

"It does worry me that the historically low level of interest rates are encouraging people to perhaps over-invest in housing," Mr Fraser told senators.

Reserve Bank assistant governor Dr Malcolm Edey also told senators he was concerned about Sydney's housing market.

"We agree that this is a situation where the market is strong, it's overheated, it's a risky situation," Dr Edey said.

But Treasurer Joe Hockey said on Wednesday that record low interest rates were encouraging new investment in housing supply across Australia, and this was to be welcomed.

"If there is a concern about elevated house prices, Sydney or parts of Melbourne, then the best way to respond is with increased supply," Mr Hockey said.

"What you're seeing in the National Accounts is clear evidence that there is a significant increase in the supply of housing, and that's to be welcomed."

My Byres also agreed with Treasury, the RBA, and the Australian Securities and Investments Commission officials that there ought to be closer scrutiny of the interest rates banks are charging on their credit cards, because the current "spread" between the official cash rate and rates charged on credit cards was at record levels.

"I understand the point fully that the margins on credit card business look very high, certainly to any other form of credit, and certainly I can't sit here today with an explanation of why that is," Mr Byres said.

"Informing us all about that is probably a useful piece of work."

http://www.smh.com.au/business/banking-a...hfw5v.html

[Boon]

One developer is selling sites, not apartments into the Sydney boom

Jun 3 2015

by Robert Harley

While Sydney taxi drivers are buying real estate, some of the professionals are selling up.

Legacy Property, a Sydney apartment and housing developer headed by Matthew Hyder, is selling four of its sites to Chinese developers.

"The uplift premium on the sales is close to, if not more than, the profit we expected on the entire project," he said.

Mr Hyder comes from a Texas family steeped in real estate. He studied at Princeton and was drawn to Australia by Macquarie Group when its real estate ambitions were at their height. In 2012-14 he bought 10 sites for his new company and several of the projects, like Montrose in North Sydney and Bondi Junction, were sell out successes.

He is not calling the top of the market. He is not even using the word bubble.

In fact for most of us, who just own our homes or investment properties, Sydney housing clearly has further to run.

Before this is over, Sydney-siders will hear a lot more calls, like that of Treasury secretary, John Fraser, who declared this week that Sydney housing is "unequivocally" in a bubble.

Sydney is an under supplied market, fuelled by rising Asian interest, investor demand and a major step down in mortgage rates.

The Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report for March, released on Wednesday, noted the big jump in NSW house prices over the year and the fact that the average NSW mortgage had risen 8 per cent tipping over the $400,000 mark.

But with the rise in income, and the fall in interest rates, affordability has hardly weakened at all. Sure, NSW buyers are paying a whopping 35 per cent of average household for their mortgages but on the evidence of the past, that is not breaking point.

DEVELOPMENT IS A DIFFERENT GAME

Development is a different game. Developers have to juggle not only rising apartment prices but rising land prices and rising construction prices. Mr Hyder said both are on the rise.

"Since mid-2012, development site prices have have doubled," he said. "Three years ago you could buy in North Sydney at a site price equivalent to $148,000 a unit. Now its not less than $300,000."

"The big issue now is construction costs. That is a major factor starting to rear its head.

"You used to be able to build, six stories or under for $250,000 a unit. Now it is $300,000. And high rise has gone from $325,000 a unit to $400,000. And there is difficulty in engaging a builder, even at an elevated price, because they have so much work on."

"The revenue has come up to support the increase in the land price. But what people are not factoring into account is the significant increase in construction costs. The feasibility will require a lot more equity."

Those dynamics are playing out in Sydney and Melbourne and now in Brisbane, with at this stage no sign of weakening in site prices.

This cycle is different. There are many more apartments under development and many being built by offshore parties whose motivations and financial strength are not well understood.

Mr Hyder is selling. "It's in response to the significant appetite from the Chinese development community coming to Sydney and looking for well located sites, with a certainty of approval that than that required by a local developer," he said

"They need to be pretty certain of the outcome. And the certainty is expressed in the price.".

http://www.afr.com/real-estate/one-devel...603-ghfgw2