Western Australia Property

[greengiraffe]

Tradies scarce in Perth building surge

Jonathan Barrett
454 words
17 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

Tradespeople are in hot demand in Perth and bricklayers and other skilled labourers are struggling to keep up with residential construction demand.

The busy period of house and apartment constructions is underpinned by high vacant land sales in Western Australia in 2012-13 at just over 20,000.

That represented the fifth biggest annual turnover in the past two decades, according to data compiled by property analysis website REIWA.com.

The busy period of vacant land ­purchases has since subsided, with just under 17,000 recorded in the last financial year. However, industry experts believe demand for tradespeople will remain strong as the formerly vacant land sites are now being developed en masse.

One of the country's biggest residential builders, Perth-based Dale Alcock, managing director of ABN Group, said there were some delays in Perth in getting bricklayers on to sites, which put other trades back. "We are already at capacity," Mr Alcock said. "Those land sales have to wash through. We will be very busy on site for the next 12 to 18 months before it returns to more normal levels."

ABN Group is a major trainer of apprentices. Almost one-third of its 300 current apprentices are bricklayers.Mining construction down

The increased demand for trades in the residential market coincides with a downturn in demand for construction workers on resource projects in Western Australia's mineral-rich Pilbara.

That decrease was the result of a ­sustained decline in the iron ore price, which meant the rate of construction of new resources projects diminished considerably.

"There are people who are coming back who were jaded with fly in, fly out," Mr Alcock said. "We are seeing a natural swing-back."

There is a threat that residential ­construction work could dry up once the current busy period subsides. Turnover in the broader market, including land sales and house and apartment sales, dropped in 2013-14 and agents are reporting subdued interest in the first few months of 2014-15.

BankWest chief economist Alan Langford said the state economy would hit a "soft spot" within two years if there were no new major resources projects and the housing market cooled.

Craig Kelson, of Kelson Real Estate in Carlisle, south of Perth, said the period where it was cheaper to buy vacant land and build than buy an established home had ended as land prices and labour costs increased.

"A couple of blocks I have now are ­sitting there and not getting much interest," Mr Kelson said.

There had been subdued appetite even for established homes this financial year. "It's a bit slow out there on all fronts, to be honest," he said.


Fairfax Media Management Pty Limited

Document AFNR000020141016eaah00037

[greengiraffe]

Brookfield to push Rio towards Bishops See North tower
THE AUSTRALIAN NOVEMBER 06, 2014 12:00AM

Greg Brown

Property Reporter
Sydney

ONE of Perth’s largest resources tenants, Rio Tinto, is shifting away from moving its iron ore headquarters to the $2.6 billion Elizabeth Quay precinct, with the group favoured to anchor a long- planned second office tower at Bishops See.

Brookfield Office Properties is lobbying to sign Rio Tinto at the proposed Bishops See North office tower at 235 St Georges Terrace in Perth’s central business district, according to market ­sources.

Brookfield and West Australian group Hawaiian Property have been eyeing the construction of the more than 40,000sq m tower since at least 2008. The partners finished the development of the smaller Bishops See South office tower in 2009, which houses KPMG and Macquarie Group.

According to reports in 2008, the West Australian government was expected to anchor the Bishops See North building, but the deal did not proceed.

Brookfield and Hawaiian declined to comment. A spokesman for Rio said a decision on the companies’ Perth headquarters had not been made. Rio is one of Perth’s largest office users and occupies 40,000sq m of space in one of the city’s premium towers, Central Park at 152-158 St Georges Terrace, which is jointly owned by Perron Group and Singaporean-listed Frasers Commercial Trust.

The Australian reported in September that Brookfield was appointed preferred party to develop the next stage of the Elizabeth Quay precinct, outbidding second-placed Mirvac Group. The group held talks with Rio to potentially anchor an office tower in Elizabeth Quay but sources said that the Bishops See move was more likely. It will throw open Brookfield’s plans for the Elizabeth Quay precinct.

While Brookfield would have the right to develop about $1bn of prime office space, it is thought that it would be more likely to undertake a mixed-use project with a $500 million or $600m office component. Sources said that Brookfield may look to downsize the office component further.

While there is no certainty Rio will move offices, it could be part of a trend of resource companies leaving large spaces in premium Perth CBD towers.

The Australian revealed in July that Woodside Petroleum had signed a memorandum of understanding to anchor an office tower in a development on the old Emu Brewery site. The group is leaving about 40,000sq m at the $500m Woodside Plaza office building.

Chevron owns a development site in Elizabeth Quay. It’s lease at the QV1 Building expires in 2023.

In the six months to July, Perth CBD office vacancy rose to nearly 12 per cent, while the market had the weakest tenant demand in Australia, according to the Property Council of Australia. Dexus Property Group chief executive Darren Steinberg said in July that the Perth vacancy rate could peak at 16 per cent.

[greengiraffe]

Perth vacancies soar as population growth wanes
PUBLISHED: 05 NOV 2014 00:08:00 | UPDATED: 05 NOV 2014 05:44:36

Perth vacancies soar as population growth wanes
There are 11,935 properties on the market across Perth, says data. Photo: Erin Jonasson
JONATHAN BARRETT

Hundreds of vacant apartments are languishing on the market in Perth’s city precinct, as owners struggle to find buyers and tenants in the over-supplied market.

Property searches show there are more than 230 apartments and units for sale in Perth’s city area, and 250 for rent.

SQM Research calculates the overall home vacancy rate in the Perth city postcode of 6000 at 5.9 per cent, which is almost double the rate of the comparable data for some east coast state capitals, such as Sydney.

The Perth inner-city vacancy rate is expected to increase as the completion of a record number of developments – commissioned during stronger economic times – are completed next year, at the same time as population growth slows in Western Australia.

Gavin Hegney, of Perth-based valuers Hegney Property Group, said the trend could become a problem for developers if prices drop enough to prompt investors to walk away from their deposits they paid for off-the-plan apartments.

“That might be a problem when it comes to buyers settling on new apartments in six to 18 months,” Mr Hegney said.

There are 11,935 properties on the market across Perth, according to REIWA.com.au, which is 2604 more than this time last year.

Jonathan Barrett

The Australian Financial Review

BY JONATHAN BARRETT
Jonathan Barrett
Jonathan is our Perth bureau chief, covering all state issues.

[greengiraffe]

First-home buyers change habits

Jonathan Barrett
327 words
5 Nov 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

First-home buyers are purchasing fewer established homes and building more of their own, in a change in buying habits that is increasing supply in Perth and suppressing house prices.

The change in behaviour has been linked to the state government's adjustment of first-home owner grants last year, offering $10,000 to those purchasing or building a new home, in contrast to $3000 for those buying an established one.

The policy of turbo-charging the ­residential construction sector by increasing grants for new homes has been adopted in every state and territory in recent years, with enticements of up to $30,000 on offer to build a new home in Tasmania.

Gavin Hegney, of Perth-based valuers Hegney Property Group, said the grants had significantly changed buying behaviour a year after the policy was introduced in Western Australia.

"It used to be that first-home buyers were purchasing one new property for every four established. They have shifted for the money. Now around 40 per cent are buying new," he said.

The new grant arrangements in WA – which came into effect on September 25, 2013 and replaced a flat $7000 grant to all first-time buyers – coincided with an economic downturn in the former boom state.As population growth slowed, so did demand for housing.

Rents eased and residential vacancy rates surpassed 4 per cent – one of the highest in the country – which has led to stagnating house prices.

AMP Capital chief economist Shane Oliver said the stronger markets of Sydney and Melbourne hadn't experienced the price stagnation of Perth because demand was still outstripping supply.

"[Sydney] spent a decade lagging the national [price growth] average. It's now out in front for the first time in 10 years," he said.

Sydney properties are the fastest selling in the country, with an average time on market of 27 days for houses and 26 days for units.


Fairfax Media Management Pty Limited

Document AFNR000020141104eab500030

[greengiraffe]

GDI sees bright future for Perth offices

Larry Schlesinger
461 words
20 Nov 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

The $500 million GDI Property Group has shrugged off concerns about the weakening Perth office market after a Credit Suisse report said the central business district vacancy rate would peak at 18 per cent next year with net effective rents falling 5.4 per cent.

The report – Perth AREITS – highlighted that GDI had the highest exposure of all listed property trusts to the Perth office market, with a 40 per cent weighting, ahead of DEXUS Property Group, Investa Office Fund and Mirvac.

GDI owns the Mill Green office complex on St Georges Terrace and Mill Street with more than 40,000 square metres of office space across three buildings, and a book value of $332 million.

Of these three buildings, one is fully occupied, another has a 10 per cent vacancy rate and the third is unoccupied and earmarked for possible residential conversion.

GDI managing director and chief executive Steven Gillard told The Australian Financial Review he expected the oil and gas sector to pick up and drive demand for office space in Perth.

"Oil and gas will be the ­saviour of Australia. It's where our wealth is generated. It's all cyclical. Over the long term we are positive about Perth," he said.

He agreed vacancy rates looked a "bit dicey" but said GDI did not share as pessimistic an outlook as the Credit Suisse report.

"Our rents are a bit below the ­market rate so we are not too ­worried. It's all about a flight to ­quality building. We've done a number of deals this year," he said.

Credit Suisse analysts John ­Richmond, Stephen Rich and Mikhail Mohl called Perth the "least preferred [office] market ". They said weakening demand and a 10.3 per cent increase in supply in the next three to four years would drive up the vacancy rate to 18 per cent.

"Net absorption fell by a further 14,000 square metres in the September quarter, marking the ninth consecutive reduction in tenant space requirements for the Perth CBD. Vacancy rate surging

"Over this time, Perth's vacancy rate has surged from 2.9 per cent to 14.7 per cent. Resource-related ­contractions continue to weigh on demand with BHP Billiton ­contracting by a further 84,000 sq m in the quarter," the analysts said.

Major office projects include Leighton's King Square development, which is 50 per cent owned by DEXUS. Just over half of the 53,000 sq m of office and retail space is pre-committed, with Shell taking 19,300 sq m for its head office.

The Credit Suisse report noted modest improvement in non-mining related expansionary activity from sectors such as education and non-mining construction.


Fairfax Media Management Pty Limited

Document AFNR000020141119eabk00025

[BlueKelah]

With deteriorating mining investment perth will be in rough times. Maybe they can get the Chinese to come in and buy up all the empty vacant stuff, now that they have a shiny new FTA.

via tapatalk

[specuvestor]

^^^ Actually Chinese govt directed investment would be very keen to buy resources rather than properties.

[greengiraffe]

Jun 28 2015 at 1:52 PM Updated Jun 28 2015 at 7:26 PM

Perth property market 'feels just like a recession'

The high vacancy rate in Perth has been attributed to large reductions in office requirements by the under-pressure mining sector and affiliated businesses.

Agents are offering large incentives to fill office vacancies in Perth. Philip Gostelow
by Jonathan Barrett

Perth is awash with vacant offices, while its stagnant housing market "feels just like a recession", property experts have warned.

Property Council of Australia executive director Joe Lenzo said the inner-city office vacancy rate was now about 16 per cent and would be about 20 per cent by year's end.

"Right now it's a tenant's market, no question about it," Mr Lenzo said.

"It's not going to get any better any time soon."

The high vacancy rate has been attributed to large reductions in office requirements by the under-pressure mining sector and affiliated businesses such as engineering and human resources companies.

EXCEPTIONAL INCENTIVES

Agents are offering exceptional incentives to get tenants into vacant city offices.

Private education company Navitas recently moved its main offices from Mount Pleasant, south of the city, onto the main financial strip on St Georges Terrace.

Navitas chief executive Rod Jones said the rent was comparable to what the company was paying at the much older offices.

"Everything you see around you was done for free – a $5 million fit-out," Mr Jones said.

Residential rents are also falling. Perth residential vacancy rates have risen to 4.9 per cent, according to the Real Estate Institute of Western Australia (REIWA), just three years after an emerging rental crisis occurred in Perth where vacancy rates dipped below 0.7 per cent.

BUYER'S MARKET

The number of houses, units and blocks of land for sale in metropolitan Perth has now surpassed 14,000.

Most property experts believe equilibrium is achieved in Perth's residential market when there are about 12,000 properties on the market, which means it has swiftly transitioned from a seller's market to a buyer's market in less than a year.

Craig Kelson, of Kelson Real Estate in Carlisle, south of Perth, said many sellers were pricing their $500,000 to $600,000 homes about 5 per cent too high.

"You have to price a home spot on or people won't even turn up to the home open," Mr Kelson said.

"It feels just like a recession."

MOST PAIN

Given there has been a spate of building activity that has only recently subsided, some of the most pain is being felt among those who subdivided properties and are trying to now offload several identical homes into a subdued market.

Western Australia is about to enter its third consecutive year of shrinking state final demand, which measures consumption and investment but not exports. The resource-rich state's strong level of exports means it is not in recession, even if parts of the market have recession characteristics.

Bankwest chief economist Alan Langford said the loss of high-paid jobs in the state was affecting spending.

"We have been hit by the loss of the high-wage jobs that go with the construction phase of mining projects," Mr Langford said.

"You are seeing that in reduced household consumption."

Perth's median house price is about $550,000, according to REIWA, which is the same price it has hovered at for about the past 18 months. This compares with the rapid price increases being experienced in Sydney and Melbourne.

[greengiraffe]

Jun 30 2015 at 10:03 AM Updated Jun 30 2015 at 11:52 AM

Distressed sales in Port Hedland drive house prices down

Older-style Port Hedland properties are under the most price pressure. Erin Jonasson/ AFR
by Jonathan Barrett
There is only one type of house sale in the iron ore export hub of Port Hedland – a distressed one.

"In a word the market is 'dead'," John Briggs, of Port Hedland Real Estate, said.

"The last one out of Port Hedland please turn the lights out."

Property searches show there are 382 properties for sale in Port and South Hedland, a market that suffered severe housing shortages just a few years ago. The conditions are linked to the pullback in big resources-related construction projects that formerly filled the towns' private housing, delivering landlords double-digit yields.

The resources sector has since moved from the construction phase to the far less labour-intensive production phase.

Median home prices in Port Hedland are down 12.5 per cent from already depleted prices 12 months ago, the Real Estate Institute of Western Australia (REIWA) says.

Mortgagee repossessions were abundant now, Mr Briggs said.

"There's going to be a lot more tears in Port Hedland," he said.

MORTGAGE REPOSSESSION

One Port Hedland house on a 928-square-metre block in Trembath Street – a mortgage repossession – has been put on the market for $330,000. It last sold for $605,000 in 2008 and one agent believes it was worth as much as $1 million in 2010-11.

Agents and home owners in the region are hoping that construction activity linked to the development of Roy Hill's iron ore and export operations will result in housing demand beyond what the company, Hancock Prospecting, has provided for in its accommodation camps.

Gavin Hegney, from Hegney Property Group, said it should come as no surprise to see house prices lose 50 per cent of their value in resources hubs once demand for workers tapers off.

"The time to own property is going into the construction phase. You just don't want to be left holding on to it into the production phase," Mr Hegney said.

Prices for older houses and apartments are under the most pressure, while there is evidence buyers will still open their wallets for the right property.

Listed property company Cedar Woods Properties found buying appetite for its South Hedland development, Elements. In Port Hedland, property group Finbar is planning to build a residential and short-stay complex on the former hospital site bought from the state-owned LandCorp, but the developer has negotiated a clause that allows it to call off the project if enough pre-sales are not recorded.

Mr Hegney said home prices in the broader market, including metropolitan Perth, were stagnant or falling as a result of the increased supply of housing that was commissioned during stronger economic times in Western Australia.

GOING TO BE IN STRIFE

"Some of those investors who bought off the plan are going to be in strife when it comes to settlement or they simply might not want to settle. That creates a whole new set of issues."

Perth's median house price is about $550,000, REIWA says, which is almost unchanged from prices recorded 18 months ago.

The resources-rich state is not in recession because of its strong exports, but it is forecast to enter its third consecutive fiscal year of shrinking state final demand, which measures consumption and investment but excludes trade.

During the iron ore price boom the state was experiencing rapid population increases, which was driving rental and buying demand. Net overseas migration has dropped from a high of 56,291 in 2012 to 18,901 in 2014, the Australian Bureau of Statistics says. Net interstate migration is negative now.

[greengiraffe]

This is a mining town in South Australia but the story is the same...

The most dangerous job in Roxby Downs is not down a mine
Date
August 10, 2015 - 8:02PM

Simon Evans

One Roxby Downs real estate agent has 240 rental properties on her books and 60 of them are now vacant. Photo: David Mariuz

Kayla Schwartz has one of the most dangerous jobs in Roxby Downs, the town where BHP Billiton has just slashed a further 380 jobs from its workforce at the giant Olympic Dam copper and uranium mine in northern South Australia.

She's not deep underground in the mine, but instead fields a torrent of angry calls from property investors demanding to know why their investment property in the town 560 kilometres north of Adelaide is still vacant, and why the asking rent has just dropped $100 a week for a three-bedroom house.

Ms Schwartz, a property manager with Andrews Property, calmly tells them she has 240 rental properties on her books and 60 of them are now vacant.

She also lets them know that her husband has just been made redundant in a rapid downward spiral in the mining sector, and it's likely they will be heading elsewhere after arriving in the town a little more than three years ago, when optimism was still high about a $30 billion expansion of Olympic Dam.

The expansion had been a decade in the planning by BHP, regulators and government, but was shelved in August 2012, in a devastating blow for the town, which was specially built from 1988 onwards for workers at Olympic Dam.

"It's very difficult trying to explain things to our landlords," Ms Schwartz says.

Her own experience is a symbol of how Roxby Downs, with a population of 4500, has joined towns like Port Hedland in north-west Western Australia and Gladstone and Mackay in Queensland in the hard lessons of property investment as commodity prices crash.

She has just moved out of a three-bedroom house with one bathroom and a big yard that her family had been renting for $350 a week. It's now back on the market with an asking price of $250 to $270 a week.

This is in stark contrast to when she arrived and there was a choice of just two rental properties in the entire town across four real estate agencies, and they were priced at $900 a week and $550 a week.

Her colleague on the sales side, Donna Daniel, a real estate agent with Andrew Property, says "run-of-the-mill" properties have had their value drop 40-50 per cent in the past three years, and the downward slide is escalating. "It's a very investor-driven market," Ms Daniel says. She says there is basically no demand from buyers for properties that go on the market, despite a three-bedroom house now fetching $270,000 to $320,000.

BHP Billiton's axing of 380 jobs from Olympic Dam came on top of 140 white-collar positions being culled from its Adelaide corporate office in June and 220 among workers and contractors in January at the mine.

Roxby Downs administrator Bill Boehm, the equivalent of the local mayor under the town's unusual legislation when it was first set up, has been in his role for 16 years and says morale has taken a beating since the 2012 expansion was dumped.

"It's been a bit harder than the normal boom and busts," Mr Boehm says.

He says there is high turnover of people any way, with about 20 per cent of people leaving on average each year even in good times, but long-term residents are stoic. He points to the 2200 people attending the annual Roxby Downs racing day on August 1 on the sand track in the town to watch the horses go round in a six-event card.

Dr Andrew Wilson, senior economist for the Domain Group, owned by Fairfax Media, says the buying up of investment properties in mining areas like Gladstone and Mackay had been "casino investment" not based on fundamentals, which can reverse suddenly when commodity prices tumble.

"Certainly we've seen price bubbles in some of these mining towns. It is buyer beware," he says.

Data on average house prices in Roxby Downs shows they were sitting at $455,834 in June, 2012, and by June 2015, this had fallen to $351,667.

Mr Boehm says shop and office vacancies have also been on the rise. This will be worsened in early October, when Beyond Bank shuts its Roxby Downs branch.

Jun 30 2015 at 10:03 AM Updated Jun 30 2015 at 11:52 AM

Distressed sales in Port Hedland drive house prices down

Older-style Port Hedland properties are under the most price pressure. Erin Jonasson/ AFR
by Jonathan Barrett
There is only one type of house sale in the iron ore export hub of Port Hedland – a distressed one.

"In a word the market is 'dead'," John Briggs, of Port Hedland Real Estate, said.

"The last one out of Port Hedland please turn the lights out."

Property searches show there are 382 properties for sale in Port and South Hedland, a market that suffered severe housing shortages just a few years ago. The conditions are linked to the pullback in big resources-related construction projects that formerly filled the towns' private housing, delivering landlords double-digit yields.

The resources sector has since moved from the construction phase to the far less labour-intensive production phase.

Median home prices in Port Hedland are down 12.5 per cent from already depleted prices 12 months ago, the Real Estate Institute of Western Australia (REIWA) says.

Mortgagee repossessions were abundant now, Mr Briggs said.

"There's going to be a lot more tears in Port Hedland," he said.

MORTGAGE REPOSSESSION

One Port Hedland house on a 928-square-metre block in Trembath Street – a mortgage repossession – has been put on the market for $330,000. It last sold for $605,000 in 2008 and one agent believes it was worth as much as $1 million in 2010-11.

Agents and home owners in the region are hoping that construction activity linked to the development of Roy Hill's iron ore and export operations will result in housing demand beyond what the company, Hancock Prospecting, has provided for in its accommodation camps.

Gavin Hegney, from Hegney Property Group, said it should come as no surprise to see house prices lose 50 per cent of their value in resources hubs once demand for workers tapers off.

"The time to own property is going into the construction phase. You just don't want to be left holding on to it into the production phase," Mr Hegney said.

Prices for older houses and apartments are under the most pressure, while there is evidence buyers will still open their wallets for the right property.

Listed property company Cedar Woods Properties found buying appetite for its South Hedland development, Elements. In Port Hedland, property group Finbar is planning to build a residential and short-stay complex on the former hospital site bought from the state-owned LandCorp, but the developer has negotiated a clause that allows it to call off the project if enough pre-sales are not recorded.

Mr Hegney said home prices in the broader market, including metropolitan Perth, were stagnant or falling as a result of the increased supply of housing that was commissioned during stronger economic times in Western Australia.

GOING TO BE IN STRIFE

"Some of those investors who bought off the plan are going to be in strife when it comes to settlement or they simply might not want to settle. That creates a whole new set of issues."

Perth's median house price is about $550,000, REIWA says, which is almost unchanged from prices recorded 18 months ago.

The resources-rich state is not in recession because of its strong exports, but it is forecast to enter its third consecutive fiscal year of shrinking state final demand, which measures consumption and investment but excludes trade.

During the iron ore price boom the state was experiencing rapid population increases, which was driving rental and buying demand. Net overseas migration has dropped from a high of 56,291 in 2012 to 18,901 in 2014, the Australian Bureau of Statistics says. Net interstate migration is negative now.