Posts: 8,305
Threads: 496
Joined: Jul 2011
Reputation:
60
- Aug 25 2015 at 1:45 PM
- Updated Aug 25 2015 at 6:21 PM
Pilbara property investors suffer as prices plunge 67pc since 2011
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/j/6/z/b/4/image.related.afrArticleLead.620x350.gj68nj.png/1440490898765.jpg[/img]This house at Edgar Street in Port Hedland is now for sale at $420,000. There are no inspections scheduled.
[Image: 1426319698156.png]
by Jonathan Barrett
It is a house that become synonymous with the mining investment downturn – 18 Edgar Street, Port Hedland, Western Australia.
The 1965 fibro and iron three bedroom home is located right near port operations at some of the busiest iron ore loading wharves in the world. It sold for $1.3 million at the height of the commodity boom in 2011, and was languishing on the market even after having its asking price heavily revised. Finally, after having its asking price dropped to $420,000, the house is "under contract".
"The market is dead, and getting worse," said John Briggs of Port Hedland Real Estate.
The massive adjustment to house prices and rentals in the mineral-rich state is occurring across the Pilbara.
[img=620x0]http://www.afr.com/content/dam/images/1/1/k/y/x/2/image.imgtype.afrArticleInline.620x0.png/1440476968491.jpg[/img]Pilbara house prices have plunged as the mining boom has ended. Erin Jonasson
Home prices in Port and South Hedland, Karratha and Newman have all plunged well below 2010 levels, according to the state government's Pilbara Development Commission, and rents are now in some case just one-quarter of 2012 levels.
And there's no guarantee they will rebound.
The formerly tremendous price rises and yields were largely caused by a shortage of housing stock in mining towns across the country that were suddenly inundated by resources project workers employed to make the most of a commodity price boom.
This included towns located near major iron ore and gas projects, such as Newman and Karratha, respectively, but also export centres like Port Hedland, and coal towns in Queensland's Galilee Basin like Moranbah and Dysart.
[img=620x0]http://www.afr.com/content/dam/images/g/j/6/p/p/8/image.imgtype.afrArticleInline.620x0.png/1440474486755.png[/img]AFR Graphic
'SHOT IN BOTH FEET'
Landlords and developers cashed in on the demand, but as rents became prohibitive, resources companies built more of their own worker camps.
This has even left towns like Newman, which has the Hancock Prospecting-led Roy Hill project under construction nearby, with an oversupply of housing.
The advertised weekly rent in Newman is now at just over $600, compared to a high of $2200 three years ago, according to the Pilbara Development Commission's June quarter housing report.
Terry Ryder, the founder of property research site Hotspotting.com.au, said landlords "shot themselves in both feet" by making it more attractive for resources companies to build their own accommodation.
"The mining companies have changed how they operate," Mr Ryder said. "There was a time when the construction of Roy Hill would have resulted in a massive boom in rents in Newman, but that hasn't happened. That's the new normal."
There are 129 houses, apartments and parcels of land on the market in Newman, according to realestate.com.au, and 164 homes for rent, in a market that suffered housing shortages just three years ago.
Most mining towns are suffering from the double blow of having companies now supply much of their own housing, and a downturn in most commodity prices triggering a pullback in project investment.
Western Australia's unemployment rate is now at 6.4 per cent, according to the Reserve Bank of Australia, the highest level in the state since 2002, and above the national jobless rate of 6.3 per cent.
Posts: 8,305
Threads: 496
Joined: Jul 2011
Reputation:
60
BHP Billiton boosts Perth footprint as office sector contracts
Greg Brown
[Image: greg_brown.png]
Property Reporter
Sydney
[b]Mining behemoth BHP Billiton is looking to sublease another 6000sq m of space in the Perth CBD as the office sector feels the pinch from the contraction of mining companies.[/b]
BHP has appointed Pepper Property to help it lease 8295sq m at Brookfield Place, an increase from about 2000sq m previously.
Canada’s Brookfield Property Partners is selling a half stake in Perth’s Brookfield Place and Melbourne’s Southern Cross Towers, through CBRE and Colliers International, with hopes of reaping about $1.3 billion. A BHP spokesman confirmed the company had increased the amount of space it was trying to sublease. He said it was not a sign that the company would cut more jobs, but a result of already flagged staff restructures.
“BHP Billiton is seeking to optimise available space within the Brookfield Place Tower following the simplification and restructure of some areas of our business, including the demerger of South32,” the spokesman said.
“BHP Billiton has appointed an agency to co-ordinate expressions of interest and, as a result, a number of floors in the building may be subleased. The design of the Brookfield Place Tower allows for a number of floors to be securely occupied without impact to BHP Billiton.”
The available sub lease space in Perth soared to 80,340sq m at the beginning of the month, representing nearly 5 per cent of the entire market, according to CBRE.
This is the highest level in two years showing Perth-based companies are continuing to contract.
CBRE agent Andrew Denny said the Perth market was close to the bottom of the market. “We don’t expect much more sub lease space to come in the future,” he said.
There were good deals for tenants, with lower rents and attractive incentives, he said. “That is why we have seen the increased transaction levels throughout 2015,” he said.
In July, Perth recorded a vacancy rate of 16.6 per cent, which saw the city over take Brisbane as the city with the most empty office space, according to the Property Council of Australia.
Posts: 8,305
Threads: 496
Joined: Jul 2011
Reputation:
60
- Sep 23 2015 at 3:22 PM
- Updated Sep 23 2015 at 9:20 PM
Sun sets on housing in the west, for now.
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/j/t/4/t/p/image.related.afrArticleLead.620x350.gjt0u3.png/1443007203150.jpg[/img]"We've got a little bit of pain to get through": ABN Group boss Dale Alcock. Darrian Traynor
[Image: 1426320577108.png]
by Michael Bleby
West Australian home builders have been among the leaders in the housing development industry but the resources-induced slump, that has pushed Perth home values down 4.9 per cent in the year to date, may change that.
"The more resources-driven states like WA and Queensland will have headwinds to deal with over the next couple of years," said ABN Group managing director Dale Alcock. "The demand will be there over the long term, but we've got a little bit of pain to get through in the interim."
Perth-based BGC Australia was the top housing developer of the year, even though its starts slipped to 4834 from 5004 a year earlier. WA peer Alcock Brown-Neaves (ABN) Group ranked second with 4608 homes - up from 4142.
The pain for WA builders is good news for home buyers, however, as prices are likely to be subdued.
[img=620x0]http://www.afr.com/content/dam/images/g/j/t/a/v/3/image.imgtype.afrArticleInline.620x0.png/1442990130158.png[/img]
"The next two years in WA there will not be an increase in lot pricing," Mr Alcock said. "Escalation has disappeared out of the market as greater competition for land sales emerges from a declining market. The same is true for housing prices on the labour side. We are now seeing available labour coming back into the market as our housing production is slow. We are also getting workers returning back to our industry from the mining and resources industry."
MARKET SHARE DROPS
The market share of WA's top 20 home builders fell over the past year. While housing starts in WA as a whole rose 9 per cent to 31,569 in the year to June, according to the Housing Industry Association – which published its numbers ahead of the official ABS figures to be revealed next month –the share of the largest builders fell to 57 per cent from 66 per cent of the total.
The patchy nature of Australia's housing market means things are not all bad for ABN Group, however, which is offsetting a weaker WA performance with strength in Victoria.
"We would have definitely seen commencements slowing in WA, but have not seen a corresponding slowdown in our other market which is Victoria," Mr Alcock said.
But in the cyclical WA economy, it was only a matter of time before the situation, which is already playing out, improved, Mr Alcock said.
"I call it [the painful period] two years for lack of anything better to really reference," he said. "What that means is we're already probably nearly on 12 months into an adjustment."
Posts: 8,305
Threads: 496
Joined: Jul 2011
Reputation:
60
Quality retail piques investor interest
Dan Wilkie
1790 words
29 Sep 2015
Business News
WABN
English
While storm clouds gather over office assets and land development comes off the boil, interest in retail property is building as investors look for somewhere secure to park their cash.
A dreary winter's day was not enough to stop investors packing a marquee in Bayswater last month, with more than 60 people turning up for the auction of a small retail property on Guildford Road.
The property sold for more than $1 million over the reserve price, with seven genuine bidders emerging from the eager crowd that had gathered for the auction undertaken by CBRE.
Anecdotes like that are becoming common in Perth property circles, with retail properties across the city increasingly generating interest from investors.
The selling agent for the Bayswater property, CBRE's Ben Younger, said there was simply not enough quality investment stock available to keep up with demand.
"There are definitely people with money and they want to put it in quality investments," Mr Younger told Business News.
"In general terms, the retail sector is very strong, while the office and development markets aren't.
"People know they can get a good return and the three key factors are location, quality of tenant and length of tenure.
"That's what the market wants and they'll push the limits to get it."
Colliers International director of retail investment services Mark Werrett agreed that there was a big pool of money in Western Australia chasing retail property.
Mr Werrett said the neighbourhood shopping centre market was particularly competitive, with every property Colliers had taken to market in the past two years generating more than 100 genuine inquiries.
"For the last four or five properties, that's resulted in 10 to 15 actual bids," Mr Werrett said.
"In my career I've never seen that sort of response.
"It just seems to me that there's a real big pool of money out there.
"With the outlook being that interest rates are going to stay down, retail is very attractive for investors."
Earlier this year, Primewest director John Bond told Business News that retail properties, particularly key neighbourhood shopping centres, were considered an extremely secure investment.
One reason for this, Mr Bond said, was that an anchor tenant such as Coles or Woolworths generally contributed more than 50 per cent of a centre's income, and those supermarkets were typically on long leases.
"You're also not exposed to discretionary spending much," Mr Bond said.
"They typically don't have clothing stores in them these days; they've become more service centres."
He said Primewest, which is the second-largest WA-headquartered shopping centre owner by total square metres owned, set up a $100 million shopping centre trust last year, a trust that was keenly sought after.
"What we like about those is we get a diversity of assets across states and a diversity of different tenants," Mr Bond said.
"It's all about mitigating risk and providing security for investors."
Another property syndicator, APiL, recently launched a trust, with a minimum investment caveat of $50,000, to acquire the Champion Drive Shopping Centre near Armadale.
APiL managing director Peter Hughes told Business News that, on the day of its launch, the trust was announced at 2:30pm and filled by the end of the day.
The centre was bought for $13.5 million and achieved an initial yield of 8 per cent.
However, Mr Hughes said the strong demand from investors keen to get a slice of syndicates was actually causing issues for APiL.
"With smaller properties, under $20 million, you're scaling back investment contributions and some people aren't even getting a look-in," he said.
"We've also got another problem; we've just sold a property in Sydney and we've got another $40 million coming back to investors.
"Primewest have sold quite a bit of their portfolio, too, so both of us are in the same boat; we've got money everywhere and nowhere to put it."
Mr Hughes said the attractiveness of retail property for both APiL and the investors in its syndicates was the reliability of the income produced.
"We're out of the Perth office market and our focus is on retail because we get substantial tenants, long leases and although the yields aren't as high as we'd like, they're certainly very competitive in the financial markets," he said.
"Shopping centres aren't going to go away. We take a view that neighbourhood centres provide convenience, and most of our centres have a major tenant and mostly food-related or services tenants.
"You can't get a haircut off the internet and you can't get fed on the internet. You can get it delivered off the internet, but the internet won't feed you."
The security of retail property has also drawn major investment from cashed-up players historically absent from the sector.
In the past 12 months, Perdaman Industries founder Vikas Rambal has made two major shopping centre purchases - the Northam Boulevard, which was bought for $14 million, and the under-construction Port Coogee Shopping Centre, which Mr Rambal is understood to have purchased from Frasers Property Group, formerly Australand, for an undisclosed sum.
Iron ore entrepreneur Tony Poli is another who has dipped his toe in retail property, with his newly established Aigle Royal Developments buying a vacant site earmarked for a neighbourhood shopping centre in Wattle Grove for $2.6 million in February.
Aigle Royal is also understood to be close to finalising a deal to buy another development site in Singleton, for around $8.2 million, where a Woolworths supermarket and associated shopping centre is expected to be built.
Another Perth-based player who beefed up his retail portfolio in the past 12 months was Armadale Central owner Gerard O'Brien.
Mr O'Brien is understood to have bought the Woolstores Shopping Centre in Fremantle in December last year for $40 million, following that up with the $13.6 million purchase of the Millstream Shopping Centre in South Perth in April.
Those purchases placed Mr O'Brien in the top five locally based shopping centre owners in the state.
Major backing
But it's not just the locals backing the prospects of retail property in Western Australia.
All of the major institutional owners, plus Perth-based Perron Group, are advancing plans for massive expansions of the city's regional shopping centres.
AMP Capital has outlined plans to spend $1.35 billion adding 47,000 and 53,000 square metres to its Garden City Booragoon and Karrinyup Shopping Centre, respectively.
Scentre Group is also planning to redevelop its Westfield Innaloo, Westfield Whitford City and Westfield Carousel shopping centres, with those expansions plans collectively worth $1.12 billion and totalling more than 136,000sqm of extra space.
Federation Centres has plans to add 20,000sqm to Mandurah Forum at a cost of $350 million, while it also expects to expand Galleria Shopping Centre in Morley, which it co-owns with Perron Group, by 20,000sqm, for a $450 million spend.
Perron Group, WA's biggest local shopping centre owner, is planning a $300 million expansion of Cockburn Gateway Shopping City; but that redevelopment hinges on a $290 million road project to alleviate traffic congestion around the already crowded centre.
As reported by Business News earlier this month, the federal government has committed to funding the Armadale Road portion of the Community Connect South project. However, the crucial link for Cockburn Gateway, a new bridge over Kwinana Freeway, has not received a commitment.
Nevertheless, Perron Group chief executive Ross Robertson said there was significant demand for more retail space in Perth.
"Defined caps on the size of centres, together with no seven-day trading, has certainly resulted in WA retail expansion lagging the nation," Mr Robertson told Business News.
"With both of these limitations removed we believe there is sufficient latent demand within the Perth retail market, however, there will be more competition in the future as centres fight for market share."
A shared aspect of all the redevelopment plans at the city's major malls are the creation of entertainment precincts, providing consumers with the option to eat, drink and play at shopping centres, rather than just shop.
Mr Robertson said that was particularly evident at Cockburn Gateway, where the centre experienced significant trade outside of normal retail hours, due to a popular strip of restaurants on the outside of the centre.
"Creating a point of difference is critical in attracting and retaining customers," he said.
"Designing shopping centres around town squares, gymnasiums, medical uses or entertainment facilities helps turn them into a destination in themselves.
"Place making has the potential to change shopping centres from being primarily commercial hubs into places where people also gather as part of their community."
The chief executive of WA's third-largest local shopping centre owner, Hawaiian's Russell Gibbs, said his company had also steered away from the traditional shopping centre format in favour of establishing them as community hubs.
He said that strategy had been in place at Hawaiian since 2010.
"With the number of redevelopments taking place across Perth there is no question the current market is competitive, which means that there has been a power shift," Mr Gibbs said.
"We are in a time that the shopper is now holding more and more power over decision making and the direction the retail world is moving in.
"That's why we operate as we do; we know that when you work with our community, with your shopper, and listen to what they are saying, that it gives us the knowledge of how to deliver success to our retailers and in turn ourselves."
Lease Equity managing director Jim Tsagalis said the other key element of the major shopping centres' expansions was a race to sign up big box international fashion retailers such as Zara, Topshop, and H&M.
Zara has already set up shop at Booragoon Garden City, while the recent opening of H&M at Lakeside Joondalup Shopping City caused much fanfare in the northern suburbs.
"With the development of these shopping centres, they will be anchored in a less traditional way for Australian shopping centres," Mr Tsagalis said.
"Historically, they were a discount department store, a supermarket, then at the regional level, a department store.
"That narrative has changed ... if one could procure three or four of the international big box fashion retailers, you could potentially get a greater per square metre turnover and therefore a greater attraction than you would from a department store.
"The interesting part of it will be, whoever gets it done first may possibly be the winner."
Business News Pty Ltd
Document WABN000020150929eb9t000b5
Posts: 8,305
Threads: 496
Joined: Jul 2011
Reputation:
60
The Pilbara evolves from mining to housing and resorts
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/k/8/5/n/o/image.related.afrArticleLead.620x350.gk802x.png/1444729356106.jpg[/img]Rio Tinto is selling 84 dwellings across five sites in Dampier and Karratha. Christian Sprogoe Photography
[Image: 1425598457909.png]
by Su-Lin Tan
Holidaymakers and home owners could be relaxing soon on the shores of the Pilbara, as Rio Tinto offers vacant housing on the Western Australian coast for sale.
The mining giant is selling 84 dwellings across five sites in Dampier and Karratha.
Marketed as the "the largest variation of dispersed housing ever offered in the city of Karratha", the sale will be managed by LJ Hooker's Vincent Siciliano and David Hipworth.
"Rio Tinto built 150-200 new dwellings and as contractors move out, these became vacant," Mr Hipworth said.
"There will be a revival in Dampier, which is still a coastal seaside town. There may still be a lot of mining infrastructure but it still has a lot of attraction, especially when the new marina comes along."
The properties being offered for sale are four blocks of apartments, with 48 two-bedroom and three-bedroom units in Dampier and a complex of 36 two-storey townhouses in Karratha.
Some of the properties were original 1960 buildings and others have been renovated.
They are separately strata-titled and could be individually refurbished for sale or lease.
"It's perfect for holiday accommodation, employee residences and backpacker lodging," Mr Hipworth said.
The surplus land on the freehold sites could also be redeveloped, Mr Siciliano said.
"Despite the resources construction program having peaked in the area, iron ore outputs in the Pilbara are at record levels, and the City of Karratha still has a permanent population estimated at 26,000 residents," he said.
The departure of mining workers because of a decline in the sector had led to property prices in Australia's regional resource hubs such as the Pilbara plunging up to 74 per cent in the past three years, CBRE said in a report.
The Karratha area recorded a 44 per cent fall in prices since 2012 and a 31 per cent fall in the past year.
"With commodity prices down 40 per cent from 2012 levels, the chances of a rapid rebound in new resource projects is low. Therefore, the residential markets in Australia's mining towns are unlikely to enter a new growth cycle over at least the medium term," CBRE's Sam Reilly said.
Mr Hipworth is confident the sites, which are open to expressions of interest until December 4, will sell.
Posts: 8,305
Threads: 496
Joined: Jul 2011
Reputation:
60
Perth agents downcast as experts warn more pain to come
NaN of
[img=620x0]http://www.afr.com/content/dam/images/1/0/c/b/d/4/image.related.afrArticleLead.620x350.gk2r4t.png/1444812183182.jpg[/img]The state of Perth's property market is probably worse than the median house price suggests, experts warn.Erin Jonasson
by Jonathan Barrett
Perth house prices are falling, rents are dropping and sales turnover decreasing, and there is little sign of an imminent turnaround, property experts have warned.
CoreLogic RP Data research shows there are almost as many properties on the market in Perth as there are in Sydney, despite the latter having more than twice the population.
"The one positive is that there is less new stock coming on to the market in Perth," CoreLogic RP Data research analyst Cameron Kusher said. "I'm surprised prices haven't actually dropped faster."
There are 19,048 properties advertised for sale in Perth, according to CoreLogic RP Data, and 20,955 in the far more populous Sydney. The median house value in Perth has dropped just over $10,000 to $529,000 in the past 12 months.
Mr Kusher said conditions were worse than the relatively modest price drop indicated, which he said could be a result of many properties simply not selling, and therefore not pushing the median price down further.
The large supply of properties, which has also pushed rents down 2.8 per cent in the past quarter, has been linked to house and apartment building projects commissioned during stronger economic times in the resources-rich state.
But as the mining investment boom ended, so did the demand for workers. Unemployment levels are increasing in Western Australia and interstate and overseas migration levels, which previously underpinned housing demand, have pulled back.
In the March quarter, 613 people (net) left Western Australia for other states, according to the Australian Bureau of Statistics.
Craig Kelson, of Kelson Real Estate in East Victoria Park, south of Perth city, said he hadn't seen as many properties on the market as now in his 20 years in real estate.
"The gap between what properties are being advertised at and what they sell at is growing," Mr Kelson said.
"Agents were still trying to be upbeat a few months ago, but now they just can't see how the market is going to turn around."
While the health of the state is linked to the resources sector, particularly iron ore, the mining and property markets do not necessarily rise and fall in tandem. Perth's property market last boomed between 2004 and 2007, soon after a period of rapid price rises in Sydney ended, whereas the iron ore spot price didn't peak until several years later in 2011.
This has led some to anticipate that investors in Sydney and Melbourne will soon move their money to markets like Perth and Brisbane. A report by forecaster BIS Shrapnel has predicted Perth prices would fall in the next two financial years, before stabilising in 2017-18, due in part to a slowdown in overseas migration there.
Posts: 8,305
Threads: 496
Joined: Jul 2011
Reputation:
60
Perth property prices plunge 6 per cent
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/k/a/a/6/y/image.related.afrArticleLead.620x350.gkpmg1.png/1445567376624.jpg[/img]Perth house prices have dropped more than 6 per cent this year. Rob Homer
[Image: 1426118807012.png]
by Julie-anne Sprague
Perth property prices have slumped more than 6 per cent this year and experts say any recovery is at least a year away.
According to the Real Estate Institute of Western Australian, house prices in Perth plunged 4.2 per cent in September, the biggest quarterly price drop since REIWA began tracking the market 21 years ago.
REIWA puts Perth's median house price at $525,000, the lowest since September 2013.
Mr Groves said one of the reasons behind the dramatic fall in the September quarter was fewer sales at higher price points.
VOLUMES LOW
Sales volumes are already low and are mainly in the lower part of the market.
"The mining types on good money who were buying higher end properties are saying they need to go work elsewhere so are either selling or leasing their properties," REIWA president Hayden Groves. "The top end has been really hit."
Statistics from CoreLogic RP Data put Perth's median house price at $500,000, or a fall of 6.5 per cent since the start of the year. REIWA data shows prices are down 5.4 per cent in the past 12 months.
Properties listed for sale have surged beyond 16,000, or 4000 more than the average.
Following the global financial crisis about 18,000 homes hit the market. However, a relatively quick recovery in commodity prices eased the pain for investors as the economy, and the housing market.
IMPACT OF IRON ORE PRICES
Most experts expect iron ore prices, the biggest contributor to Western Australia's economy, to remain flat for at least a year.
"We will see a recovery going forward because inevitably there will be trade up activity," Mr Groves said.
"Any recovery will be slow and moderate," he said. "Prices in real terms won't rise until excess supply washes through. That could take 12 to 18 months."
Property valuer Gavin Hegney said the mining downturn was only one factor behind Perth's slumping prices.
He said a bigger factor was the market was building more homes than needed.
"There are 32,000 new dwellings hitting the market, we probably need more like 15,000 to 20,000. So we have a surplus."
Mr Hegney said prices could fall another 1 to 2 per cent.
"I think we are about nine months in to an 18-month downturn," Mr Hegney said. "If you look at the numbers it's scary. But population growth is still positive. My tip is that by the next Melbourne Cup the Perth market will be in better shape. People are waiting and they're asking me when the bottom of the market is. People shouldn't be alarmed. The only mistake you can make is gearing beyond your means."
RBA DECISION 'DISAPPOINTING'
QWest Paterson chairman Warwick Hemsley said the Reserve Bank's decision to keep interest rates on hold was disappointing for the Perth housing market.
"Obviously the RBA can't make it's decision based on the condition of one state's property market, however in the last month or so Sydney, and to some extent Melbourne, have also come off the boil," Mr Hemsley said.
"The level of interest in the market from investors as well as owner-occupier buyers has declined in recent months due to tighter lending conditions and higher variable interest rates," he said.
Airey Real Estate managing director David Airey said interest rates had been low for so long that cuts had less of an impact.
"We have all got used to interest rates being low that they don't make a difference any more," Mr Airey said.
"The factor that influences people is confidence in the economy because property is such a big investment. [People] care about employment security and you want to buy the best property that your income can afford to repay."
Many existing property investors are being forced to cut rents.
There are about 8000 properties for lease in Perth. At the peak of the boom it fell to 1500. A healthy market, according to REIWA, is about 5000 homes for let.
Posts: 8,305
Threads: 496
Joined: Jul 2011
Reputation:
60
CBRE dispels myths about WA decline to Singaporeans investors
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/h/w/c/e/p/image.related.afrArticleLead.620x350.gkqavw.png/1446623011397.jpg[/img]There are good opportunities in WA, Singaporean investors have been told.
by Larry Schlesinger
Real estate group CBRE has reassured nervous Singaporean investors that West Australia's commercial and residential property market is not in freefall following the end of the resources investment boom.
CBRE managing director for WA Lloyd Jenkins told a gathering of more than 50 wealthy investors and business leaders in Singapore last week that reports of a dramatic slump in property prices was not true, while encouraging investment in sectors such as agribusiness, hotels and student accommodation.
The group included the likes of Keppel REIT and the Fragrance Group as well as current investors and those considering buying assets in the state.
"We needed to go to the market and put the story right about WA and pre-empt any stigma," Mr Jenkins said.
"There has been a lot of attention on the negative impacts the mining slowdown has had on the economy, so we want to dispel some of the myths associated with what that might mean for investors."
He joined a delegation that included Landcorp CEO Frank Marra, Clayton Utz real estate partner Simon Taskunas and WA Trade Commissioner John Catlin.
During his talk, Mr Jenkins highlighted that stories of house prices falling 50 per cent across the state were "garbage" being only confined to mining boom and bust towns such as Karratha and Port Hedland
"In the Perth metro market the falls are around 10 to 15 per cent and are very sector-specific, like on the fringes," he said.
Mr Jenkins told the gathering that during the boom period, there had been unsustainable wages growth, a shortage of suitable accommodation hindering tourism growth, extreme housing unaffordability and a high dollar – none of which were conducive to a sustainable economy.
"WA's economy is in a stabilisation phase, and coming off such a huge peak, it's inevitable there will be a drop off in activity, however, from an investment point of view – WA tells a compelling story," he said.
"We've got 2000 hotel rooms mooted over the next five years, a low Australian dollar boosting tourism and a swag of developments that will help redefine Perth into a leading business and lifestyle destination."
He said there were opportunities in the student accommodation market, which would be driven by the recent trade agreements which will allow West Australian universities to market directly in Asia.
"There is a link between international students and the apartment market. The universities are gearing up for high volume student accommodation in the thousands, replicating what has happened in Melbourne."
Posts: 8,305
Threads: 496
Joined: Jul 2011
Reputation:
60
-
Could these luxury properties be selling below replacement costs in an environment with superior quality of life?
- Nov 11 2015 at 8:00 AM
Perth mansion prices plunge12pc
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/k/v/m/x/m/image.related.afrArticleLead.620x350.gkvkgf.png/1447193085069.jpg[/img]The price of this Mosman Park mansion, which sits on 4,357sqm of land, has been cut by $2.5m to $12m.
[Image: 1426118807012.png]
by Julie-anne Sprague
House prices in Perth's wealthiest suburbs have dropped a staggering 11.5 per cent this year, nearly three times more than the drop in house prices at the bottom end of the city's property market.
Data compiled by Fairfax's Domain Group shows prestige home prices, or homes worth more than $1.2 million, fell 6.7 per cent in the September quarter, extending the decline this year to 11.5 per cent.
But homes priced below $515,000 performed far better, falling 2.3 per cent in the September quarter and are down 3.9 per cent this year.
Homes priced between $515,000 and $1.1 million slid 2.5 per cent, extending the yearly rout to 4 per cent.
[img=620x0]http://www.afr.com/content/dam/images/g/k/v/o/7/b/image.imgtype.afrArticleInline.620x0.png/1447143247423.png[/img]Prestige prices take a hit.
The figures show Perth's property downturn is being more severely felt at the top end of the market.
"If you look at it as a whole, the first home buyer market is still strong," said Domain Group senior economist Andrew Wilson.
"The building market is still strong. The market that is declining the quickest is the prestige market."
Mr Wilson said Perth's prestige home market had been flat since the global financial crisis.
[img=620x0]http://www.afr.com/content/dam/images/g/k/v/k/y/9/image.imgtype.afrArticleInline.620x0.png/1447138455668.jpg[/img]The owner of this Cottesloe mansion has been seeking $9 million for 12 months. Serena Pearce / Code Lime Photography
"These falls are not coming off a high base," he said.
One suburb suffering a particularly brutal hit is Cottesloe, the seaside suburb Andrew "Twiggy" Forrest calls home and favoured by Perth's noveau riche.
Domain Group data shows house prices in Cottesloe have plunged 9.2 per cent in the past six months, extending the yearly drop to 13.5 percent.
In fact, you would have had to buy property in Cottesloe more than five years ago to make any return. Over five years Cottesloe home prices are down 13.5 per cent.
[img=620x0]http://www.afr.com/content/dam/images/g/k/v/l/h/m/image.imgtype.afrArticleInline.620x0.png/1447139081285.jpg[/img]The asking price for the Cottesloe home of the late Alan Bond has been cut to $4.5 million.
It doesn't make for terrific selling conditions for the family of the late Alan Bond.
The failed 1980s tycoon's Cottesloe home, which is being sold by his daughter Jody Fewster, was originally marketed for $4.75 million in July. It's now on offer for $4.5 million.
Former stockbroker turned mining and energy explorer managing director Greg Bandy was trying to sell his Cottesloe mansion for $4 million, roughly what he paid for the property in 2010.
But, after sitting on the market for nearly a year, the asking price is now "mid to high $3 million".
There is little relief across the leafy western suburbs.
Prices in Dalkeith are down 10.7 per cent in the past year.
Prices in Mosman Park are down 5.4 per cent in the past six months, but off a more modest 3.9 per cent over the year.
There were too few sales to provide a genuine view on prices in Peppermint Grove. However, data from Real Estate Institute of Western Australia shows prices have dropped 19 per cent in the past year.
Asking prices for houses are being slashed.
Former Howard government minister Ian Campbell has cut the asking price for his massive Mosman Park property, which sits on a massive 4,357 square meters, from $15 million to $12.5 million.
It has been on the market since January.
Investor John Clinton has been trying to sell his mega mansion built on the former Prix A'Mour site - the sprawling mansion lived in by the late Lang Hancock and Rose Porteous was demolished in 2006 and the lots carved off and sold.
Built across two blocks, Mr Clinton is believed to have spent about $10 million building the property plus a similar amount for the land.
The property, at 149 Wellington Street, has been on the market since March.
A rare winner is Cathryn Carver, who is leaving Perth where she was ANZ's most senior banker to take up a role with NAB in Sydney.
Mrs Carver and her husband Angus paid $4.3 million for the river front mansion in 2012.
Property records show the couple's property was sold by Mack Hall agent Peter Burns for $4.55 million in September.
Claremont proved a rare bright spot with prices up 4.2 per cent over the year, and have increased 8.7 per cent in just six months.
Veteran western suburbs real estate agent Chris Shellabear said prestige house prices peaked in October 2007.
"The market has been contracting from 2008 so for about seven years, that gets forgotten," Mr Shellabear said.
"But people will believe that their property is worth was it was in 2007 and they put it to the market. What the market does is come back with an offer that some find insulting but it's generally what the market is."
Mr Shellabear said houses that required little renovation or capital expenditure were moving more quickly or rare parcels of land, such as a 1980s home he recently sold for about $6 million on Saunders Street in Mosman Park.
But Mr Shellabear said because prices had fallen further in Perth's top suburbs there were people using the opportunity to "trade up".
"A lot of buyers are coming in because they price reductions they have suffered is not nearly as much as what we [the western suburbs] have suffered," Mr Shellabear said.
"The price differential means they can pick up something in a better area. They may move from Sorrento to Cottesloe, for instance."
Mr Shellabear said there were less properties coming to market in the core areas he specialises in, suggesting the pace of price decline could slow.
Posts: 8,305
Threads: 496
Joined: Jul 2011
Reputation:
60
Lifestyle choices by design
Dan Wilkie
1020 words
9 Nov 2015
Business News
WABN
English
Facilities, amenity, location and design are becoming increasingly crucial in today's hyper-competitive apartment development market.
Apartment projects typically rely on streamlined, slick marketing techniques to attract and secure buyers; now, however, developers are turning to technology not only in their advertising, but also in their building design to establish a point of difference.
Perth's latest apartment projects are beginning to resemble high-end hotels, with shared facilities like yoga decks, luxury swimming pools, private dining rooms, high-fidelity theatre rooms and full-line gymnasiums becoming commonplace to lure buyers.
The push to create the best facilities stems from an increasing proportion of Perth apartment buyers being owner-occupiers rather than investors.
While the mix has traditionally been around 50:50, Blackburne Property Group managing director Paul Blackburne said that had tipped strongly in favour of live-in owners, with up to 70 per cent of apartments now being sold to owner-occupiers.
Mr Blackburne said most people buying an apartment were seeking an improved lifestyle.
"We're investing heavily to make our common facilities a real five-star thing," Mr Blackburne told Business News.
"What's happening now is new developers are copying what we're doing, and that's great, so we're trying to find what's next.
"What's next is design, so we're investing more in interior designers and allowing buyers to customise their apartments more."
Frasers Property Australia WA residential general manager Tony Perrin also said buyers were increasingly asking for options to customise their apartments.
Mr Perrin said buyers were willing to pay extra for specific floor coverings or customisations to cabinetry, for example, to put a personal touch on their new homes, adding another layer to a developer's job.
"It's a coordination and management issue for the developer, it will always be worn as a cost of a buyer but it adds a complexity to the contracting nature in the way that the builder and the developer work together," Mr Perrin said.
But amenity is not restricted to the facilities of a building itself, Mr Perrin said, with buyers becoming increasingly discerning regarding what surrounded an apartment development.
Finbar Group managing director Darren Pateman agreed that the most successful projects were those where residents did not have to get in their cars to do their shopping, get a coffee or grab a meal.
Targeting established communities is also a key strategy for Stirling Capital, with managing director Luke Reinecke saying adjacent amenity was the most critical factor for buyers.
"The idea of having all amenities within walking distance, such as grocers, bars, shopping and work, appeals to a range of people, from first home buyers to empty nesters," Mr Reinecke said.
For some developers, like Psaros, energy efficiency has emerged as a key consideration for buyers, who were keen to save money on electricity and water usage.
While Psaros managing director Mike Enslin said the company had focused on high-end common areas, sustainability had been an important part of its recent success, on two fronts.
"There are those who are very environmentally conscious and they feel like they are doing some good by buying into a development with some sustainability," Mr Enslin said.
"And there are those who are ambivalent about the environment, but they understand the financial benefits.
Georgiou Living is also keenly focused on green building, executive director Jon Smeulders said.
Mr Smeulders said Georgiou had collaborated with buyers to communicate what the developer could do to decrease running costs of apartments.
"You're using your heating for fewer days of the year and you're using your air-conditioner for fewer days of the year," he said.
"It's not something that's nice to have, it's part of the value proposition."
The physical marketing of apartments is also becoming all the more sophisticated, with technology playing a key role.
Some developers, like TRG Properties, have upped the ante on a traditional approach - the marketing brochure.
TRG Properties chief operating officer Tanya Trevisan said the developer aimed to have the best brochures in Perth, giving buyers a level of detail they were not able to get elsewhere.
"We spend a lot of time considering our marketing carefully; the focus is being able to demonstrate to buyers what we're going to deliver in advance," Ms Trevisan told Business News. "A huge amount of effort goes into the renders in particular, that's why we're so proud of the result and being able to be held to it.
"Also, all developers off the plan have to give specifications of what they're going to deliver, but if you actually read them, the vast majority are extremely vague, even in some very high-end apartments.
"Ours are much more specific than most developers because we want to stand by what we're saying we'll deliver."
Other developers are using a much more high-tech approach.
Psaros has utilised virtual reality headsets to give potential buyers a virtual tour of new apartments, while Blackburne showcases its apartments to buyers using interactive 85-inch touch-screens in its West Perth head office.
One of the latest innovations comes from BGC Development, which has partnered with technology company oneVR to develop an app to give potential buyers an immersive view of the developer's latest project, Sixty Flourish in Atwell.
The app not only gives the buyer a fresh insight to the development, but also allows the developer to track the success of its marketing campaigns with interested buyers.
Devwest Group director Chad Ferguson said the developer was evaluating technology to implement in its sales process, but he was wary that some approaches could be a little bit gimmicky.
"A lot of it comes down to the actual features of the project, in addition to your marketing materials," Mr Ferguson said.
"Buyers are getting a little more sophisticated, so just having flashy brochures and sales suites is not enough to convince them.
"The actual project has to have standout features, otherwise all the glossy stuff doesn't mean much."
Business News Pty Ltd
|
Homepage
PR Newswire
