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South East Queensland Market 2016-17: This Is Your Life

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With the year almost at an end, it’s that time when we all stop to reflect on what has passed, before we move on into the future. This most certainly applies to the development and property industry, where we take the time to reflect on the market and where it may be heading in 2017.

Experts from Colliers International in Brisbane and the Gold Coast have take the time to provide commentary on the South East Queensland capital market and metro markets to review the year-that-was and to provide a forecast for the coming new year.

Capital Markets

By Tom Barr, National Director of Capital Markets

2016 Overview

In 2016 we have seen an increasing buy-side capital demand, particularly from offshore capital, fuelled largely by the substantial yield arbitrage available between Brisbane, Sydney and Melbourne. Domestic asset managers have been increasingly active in the market representing offshore capital mandates, as the listed A-REIT’s have found it difficult to compete due to their required hurdle rates of return.

In 2016, our team has received over 85 per cent of bids from offshore parties for the sale campaigns of 41 George Street and Green Square, with the origin of offshore capital on these campaigns emanating from Singapore, USA, Korea and Germany.

Only three major office investments have traded thus far in the core CBD in 2016. The lack of on market core CBD office opportunities has seen investors turn their attention to quality large scale assets outside the traditional CBD grid.

We have seen that with the sales of 100 Skyring Terrace Newstead (50% interest), ATO Upper Mount Gravatt, and the pending sale of Green Square Fortitude Valley.

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Record high vacancy rates in Brisbane have resulted in a two-tiered leasing and capital market, as tenants and buyers continue to be focused on the prime-grade end of the market. However with forecasts showing an improving leasing market over the next couple of years, we anticipate an increasing number of buyers willing to go up the risk curve and make counter cyclical plays in the secondary-grade CBD market.  We have seen this beginning to emerge, with the transactions of 333 Adelaide Street and 444 Queen Street (66% interest) in 2016.

2017 Forecast

Given the backdrop of limited supply and unprecedented buy-side capital demand, in 2017 we anticipate market yields will continue to tighten and are expected to breach 5.5 per cent in the core CBD market. Buy-side capital demand will continue to be dominated by offshore groups

We anticipate an increase in the number of owners wanting to capitalise on the unprecedented strength of buy-side capital demand from offshore, and divest out of their investments. The demand from offshore groups will strengthen further in 2017.

Given the heightened geo-political and macro-economic situation globally, and a surprising outcome in the US presidential election, we foresee an increasing number of transactions will be driven by a motivation to repatriate offshore capital back to select origins.

We have already seen this begin to emerge with a number of transactions being driven by repatriation of Malaysian capital.

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Metro Markets

By Hunter Higgins, Director of Investment Services

2016 Overview

In the Brisbane metro market there has been a noticeable change in the demand shift from residential development sites to quality investment stock. With this change in direction, we have also experienced a significant lift in student accommodation and aged care facility developments.

Developers are focusing on investment grade stock with value add potential, and investors are very active in the market due to low interest rates and volatile stock market.

Distinct lack of quality stock has created competitive tension between prospective purchasers, which has ultimately reflected in sharper yields and increased end sale prices. We have also had a significant increase in auction success with 87.5% of properties transacted via auction.

2017 Forecast

In 2017 we are likely to see a noticeable change in site values due to supply, and the yields for quality stock will continue to remain robust. We are already experiencing significant inbound capital from offshore, investors are now starting to focus on Queensland, due to excessive yields in Sydney and Melbourne.

Demand will remain strong for the CBD and immediate fringe quality blue chip and premium assets such as fast food, service stations, neighbourhood retail and shopping centres. Any value add opportunities with quality national and multinational tenants are favoured.

In Brisbane we are also seeing Asian buyers channeling capital into quality assets. According to CityScope, 43 out of the 137 strata-titled ground floor retail units in the Brisbane City are under Asian ownership.

Originally Published: https://www.theurbandeveloper.com/

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Opinion

These are the top 3 spots to bag a bargain in Brisbane: Ryder

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These are the top 3 spots to bag a bargain in Brisbane: Ryder

Property analyst Terry Ryder has picked three spots to invest in Brisbane. Picture: Richard Walker.Source:News Corp Australia

WANT to know where to invest in Brisbane that’s both affordable and offers the prospect of price growth? Look no further…

THERE are only three areas in Greater Brisbane that offer affordable real estate with growth potential, according to property analyst Terry Ryder.

The founder of Hotspotting.com.au has identified three precincts where there are plenty of houses well below the median Brisbane house price of around $530,000, close to transport links, shopping and jobs nodes, and with median rental yields in the 5 to 5.5 per cent range.

Here they are:

These are the top 3 spots to bag a bargain in Brisbane: Ryder

Hotspoting.com.au director Terry Ryder at his home in Queensland.Source:News Limited

1. Goodna-Redbank Plains, Ipswich

These suburbs are at the eastern fringe of the Ipswich local government area — the part closest to Brisbane, the motorway and the train line.

They are also close to the Springfield masterplanned community, which has an array of modern facilities, including university campus, hospital and commercial-retail precincts.

“There are numerous big shopping centres and major employment nodes nearby, with the recently announced $5 billion Defence vehicle contract focused on this precinct as a major new jobs creator,” Mr Ryder said.

These are the top 3 spots to bag a bargain in Brisbane: Ryder

Terry Ryder thinks parts of Ipswich would make a good property investment. Picture: Chris McCormack.Source:News Corp Australia

 These are the top 3 spots to bag a bargain in Brisbane: Ryder

Terry Ryder thinks Redbank Plains is a good place to invest in property.Source:News Limited

2. Eagleby-Beenleigh-Woodridge, Logan

Mr Ryder said these older suburbs in Logan had median house prices in the $300,000s and were clustered around the train line and the Pacific Motorway, both of which link central Brisbane to the Gold Coast.

“This is also where there is an impressive shopping offering, including major bulky goods retail, and well-established infrastructure like schools and medical facilities (as well as a surprising number of golf courses).

3. Moreton Bay

The suburbs of Beachmere, Burpengary and Upper Caboolture have experienced double-digit growth in their median house prices in the past year, according to Mr Ryder.

They are all close to major road and rail links, but aren’t as expensive as North Lakes has become.

Even in the Redcliffe Peninsula, where most of the water-focused suburbs are, the median house price is only in the $400,000s.

And the Peninsula now has rail links to central Brisbane, making it an even more appealing prospect.

These are the top 3 spots to bag a bargain in Brisbane: Ryder

The Moreton Bay Rail link has made the area more appealing to property investors, according to Terry Ryder. Picture: Tara Croser.Source:News Corp Australia

Source: moretoninvestor.com.au

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Opinion

Property tax hikes will hit economy hard

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Property tax hikes will hit economy hard

The state government’s planned property tax increases risk wiping the state off the global investment map, warns Chris Mountford,
executive director of Property Council Queensland.Kevin Farmer

THE state government’s planned property tax increases, due to come into effect on July 1, risk wiping the state off the global investment map.
As the government begins work on the State Budget, the Property Council is ramping up efforts to highlight the hidden effects of the tax hikes.

These tax hikes will increase the cost of doing business, damage Queensland’s economic competitiveness and impact on every Queenslander.

With Queensland preparing to leverage the Commonwealth Games to attract new investment opportunities, these tax increases couldn’t come at a worse time.

Election campaign costings, released in the days prior to the November 2017 state election, revealed the government’s intention to introduce new land tax thresholds for aggregated land holdings with an unimproved value above $10 million.

Individuals, companies and trusts who are within this new threshold will be subjected to a 25% increase in the rate of land tax from July 1.

The government has also committed to increasing the stamp duty surcharge on foreign buyers of residential property from 3% to 7%.

The end result of this decision will be higher business rents, higher costs for new homes and damage to Queensland’s reputation as an investment destination.

Businesses who lease premises from larger landlords can expect additional rental and occupancy costs.

New homebuyers can expect an additional $800-$1000 added to the cost of purchasing a new home.

We once were able to lure investment from interstate and overseas with attractive tax rates, but we now find ourselves uncompetitive with our southern neighbours.

The Property Council is calling for the government to abandon the tax increases and commit to review and modernise Queensland’s property tax framework.

Our current land tax thresholds haven’t been changed in a decade, leading to significant bracket creep as property values have increased dramatically.

We need a simpler, fairer and more attractive property tax system to unlock investment and create jobs.

An all-encompassing review of Queensland’s outdated thresholds and property tax rates needs to be undertaken to put Queensland back on the investment map.

Chris Mountford is executive director of Property Council Queensland.

Source: brisbaneinvestor.com.au

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Opinion

Ipswich house prices on the rise

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Ipswich house prices on the rise

This is according to the latest analysis by RiskWise Property Research which found despite below-average property price growth over the past three months, Ipswich is an attractive destination to home buyers and investors who seek affordable housing. Over the medium to long-term the region is projected to deliver solid returns.

The research house CEO, Doron Peleg, said this would be driven by very affordable dwelling options and ongoing population growth, in particular, by high levels of interstate migration from Sydney and Melbourne.

The $5 billion contract for 211 high-tech armoured vehicles will result in a new multimillion-dollar Centre of Excellence at Redbank and defence jobs for 40 years.

Ipswich Mayor Andrew Antoniolli said the contract would create more than 330 permanent jobs from the outset, build significant opportunities for local businesses and provide associated work with ongoing delivery and maintenance of the vehicles.

“Defence directly contributed to more than 7000 jobs and almost $800 million to the Ipswich economy in 2016-17. But this contract will mean jobs for the next 30 to 40 years, for the life of the contract,” Cr Antoniolli said.

Mr Peleg said with the Queensland Government also allocating $868 million towards infrastructure and road projects in July last year, it was likely to trigger a construction boom which would grow local employment and hence demand for housing.

He said the Ipswich area, which was just 40km west of the Brisbane metropolitan area, enjoyed a stable property market offering both affordability, with a median house price of $371,000, and excellent access to the growing local business areas.

“The Ipswich area did deliver a slightly below average price growth relative to the Greater Brisbane and Australian benchmarks over the past five years,” Mr Peleg said.

“This is likely a result of its geographic distance from central Brisbane and the coastline, where most of the housing demand is centred.

“But that bodes well for those looking for affordability and the area has a house price-to-income ratio of 5.2 which is well below that of Brisbane and the rest of Australia.

“Also, lending restrictions and the potential recommendations of the Banking Royal Commission that are likely to result in lower borrowing capacity, are likely to increase the demand for Ipswich property.”

Mr Peleg said the region had a high median rental return of 5.2 per cent for houses and 5.8 for units which surpassed both the Greater Brisbane and Australian medians and could be attributed to the “very low” median property price combined with the ongoing demand for rental properties across Ipswich.

He expected them to remain at a consistent level over the short to medium-term.

“However, it is worth noting that units, with an extremely affordable median price of $280,000, do carry a higher level of risk, particularly in the short-term due to high additional supply levels,” he said.

“The Ipswich area delivered lower capital growth for units than for houses over the past five years. We believe given the high supply levels expected over the next 24 months, it is likely the area will continue its poor price growth trajectory.”

Another 2,683 new units will be added to the local property market over the next 24 months which is an increase of 39.1 per cent to the existing supply and sits well above the number for Greater Brisbane.

Mr Peleg said this level of supply should be treated with “high caution” and was likely to slow the market for units over the short to medium term.

Visit www.riskwiseproperty.com.au

RiskWise Property Research was formed in 2016 with the goal of providing property risk advise and research services to help its clients make informed purchasing decisions.

Its goal is to provide private investors, home buyers, property professionals and institutional clients with detailed risk information to support smarter decision making. Its vision is to be a global leader in property risk rating and research helping its clients to achieve deeper risk insights so they can make smarter property investment decisions.

Source: www.miragenews.com

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