Welcome to Issue 44 of The Property Development Review, exclusively for agents, developers and investors.
AUGUST / SEPTEMBER 2023 - ISSUE NUMBER 45
EXCLUSIVELY FOR PROPERTY DEVELOPERS, INVESTORS & AGENTS ACROSS ASIA-PACIFIC
LISTINGS The latest commercial assets and development site opportunities across Australia.
INTERVIEWS We speak exclusively to Australia’s best business and property leaders.
ANALYSIS Unique perspectives from the deal-makers on the ground.
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2 –August / September 2023
THE PROPERTY DEVELOPMENT REVIEW
FROM THE CEO
Welcome to the August/September edition of The Property Development Review. In this issue, our team presents a selection of topical market news and updates. Included are, KordaMentha’s, Faddy Fan’s, article on “Insights and upcoming challenges faced by foreign residential property owners” who will be impacted by changing tax regulations in addition to the impact of the current severe rental crisis, currently with a minuscule vacancy rate of just 0.9%. Benni Aroni, a prominent figure at accountancy firm Pitcher Partners, offers a thought-provoking article on the unparalleled challenges that developers are facing in the current environment. This narrative of the Rouse Hill property market highlights its resilience, particularly among affluent buyers, as exemplified by Castle Group’s impressive $150 million Rouse Hill development project. Our Interview series with Rob Langton features an exclusive conversation with esteemed Australian business leader, Nicholas Moore AO. With a remarkable corporate journey spanning over three decades, Nicholas has cultivated a legendary track record of success, driven by his innate ability to foresee opportunities in investment markets well in advance. During his tenure as the former CEO of Macquarie’s
Investment Banking Group, the division experienced a remarkable income growth of 67 percent, managing a portfolio of assets exceeding $550 billion culminating in a remarkable 300 percent increase in shareholder returns As always, we have kept you up to date with the newest development sites for sale,
EDITOR IN CHIEF Frank Materia frank@ readymedia.com.au
IN-HOUSE WRITER Oliver Gregurek
ADVERTISING OPPORTUNITIES frank@ readymedia.com.au PROPERTY LISTING ENQUIRIES info@ readymedia.com.au EDITORIAL ENQUIRIES editor@ readymedia.com.au CONTACT Ready Media Group Head Office Level 3 161 Buckhurst St South Melbourne VIC 3205 03 9631 5476 info@ readymedia.com.au
plus a summary of recently transacted commercial properties Australia-wide. Enjoy the read and importantly keep well. Best Regards Nick Headshot - TPDR Intro Page
NICK MATERIA CEO - Ready Media Group
MAGAZINE DESIGN Nespecart
ON THE COVER Sam Wemut -unsplash
August / September 2023 – 3
List with Australia’s leading platforms, DevelopmentReady & CommercialReady today! Speak with our expert team for more information.
VIC Frank Materia Residential State Manager 0400 649 959
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State Manager 0488 882 726
4 –August / September 2023
THE PROPERTY DEVELOPMENT REVIEW
CONTENTS
6 THE INTERVIEW NICHOLAS MOORE AO Moore Family Office 8 FEATURED NEWS
18 MARKET MOVES The latest transaction activity and key deals 20 UPCOMING COMMERCIAL AUCTIONS 15 MARKET NEWS Last Remaining Rozelle Gateway Site Comes To Market
72 PODCAST HUNTER HIGGIN & NICK WEDGE Colliers Brisbane
74 MARKET NEWS Wealth shift set to drive unprecedented demand in new projects 75 QLD LISTINGS
MARKET MOVES
FADDY FAN Taxing times
ahead for foreign residential owners 10 FEATURED NEWS BENNI ARONI ‘Unprecedented’ developer challenges in 2023
96 SA MARKET OVERVIEW Max Frohlich Knight Frank
Auction Hub
Auction Hub
Auction Hub
Auction Hub
Upcoming
Auctions
100 WA MARKET OVERVIEW Luka Marinovich The Agency 98 SA LISTINGS 102 WA LISTINGS
Upcoming
Auctions
12 FEATURED NEWS Castle Group’s $150m Rouse Hill development strikes a chord with affluent buyers 14 FEATURED NEWS TROY LINNANE South East Queensland residential market showing strength despite headwinds
22 NSW MARKET OVERVIEW Simon Kersten Colliers NSW 42 VIC MARKET OVERVIEW Andrew Egan & Callum Williamson B&S Land 24 NSW LISTINGS 44 VIC LISTINGS
to nspect, nvest, or Vst
to nspect, nvest, or Vst
August / September 2023 – 5
The Interview
SCAN OR CLICK TO WATCH THE VIDEO INTERVIEW IN FULL 64 MINUTES
NICHOLAS MOORE AO
With Rob Langton
MOORE FAMILY OFFICE
In a remarkable corporate career that extends across more than three decades, Nicholas Moore AO, has established a formidable track record of success, predicated on an innate ability to recognise opportunity across investment markets well ahead of the curve. As his interest in the function of business grew during the latter part of his teenage years, Nicholas enrolled in a Bachelor of Laws / Bachelor of Commerce degree at the University of New South Wales, spending some five and half years at UNSW, including six months at the College of Law to become a qualified solicitor. Following graduation in 1982, Nicholas was drawn to the field of accountancy and joined Cherry & Partners Chartered Accountants (later to become Peat Marwick / KPMG), specialising in taxation services for a period of four years - during this time, Nicholas also completed the Chartered Accountancy program. By 1986 and owing in large part to the encouragement of a seminal influence and mentor
in his early career, John Caldon, then Deputy Managing Director and Head of Investment Banking, Nicholas joined Macquarie Group in the firm’s financial packaging division. The fortuitous timing of his move to Macquarie coincided during a period of significant deregulation in Australia’s financial markets throughout the 1980’s which unleashed a climate of innovation, coupled with a growing assertiveness and dominance across the firm’s domestic operations. Over the course of the next decade, Nicholas became an instrumental figure within Macquarie’s corporate services division, with a broad remit across a range of transactions including Sydney’s Hills Motorway, a deal that gave rise to the establishment of the firm’s infrastructure business. Upon its formation in 2001, Nicholas was appointed Head of Macquarie’s Investment Banking Group (now known as Macquarie Capital), overseeing remarkable progress over the course of the next seven years including ten-fold growth in net income as well as global expansion for the group’s operations across advisory, funds
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THE PROPERTY DEVELOPMENT REVIEW
management and financing - this included some 3,600 team members working in more than fifty offices and twenty countries throughout the World. In February 2008, Macquarie announced to the market that Nicholas Moore would be appointed the firm’s next Chief Executive Officer and Managing Director, becoming only the fifth person in the organisations near forty-year history. Having been appointed in the depths of the Global Financial Crisis, Nicholas transformed the business over the course of the ensuing decade (2008 - 2018) - de-risking the business model through strategic acquisition, global expansion into funds management & infrastructure investment, and an emphasis on annuity- style income. In unquestionably one of the firm’s most defining decades across it’s storied fifty-year history, Nicholas ushered in a new era for Macquarie Group - building upon the firm’s unique risk management framework and celebrated bottom-up approach to the identification of opportunity and employee empowerment, he steered the organisation’s presence on a global stage, perhaps most distinctly illustrated via the lifting of the firm’s international income by 67 percent, a portfolio of
assets under management that exceeded $550bn, a revenue base through which 70% of income was derived offshore and a 300 percent increase in shareholder returns - an extraordinary legacy of success. Following a thirty-three-year career at Macquarie Group, including close to eleven years as CEO, Nicholas stepped down in 2018 and began focusing on a number of projects and ventures that presented him with new opportunity to contribute his considerable skillset & expertise across both public and professional life. Nicholas currently holds several significant chairmanships and directorships, including Chairman of Willow Technology Corporation, Screen Australia, The Centre for Independent Studies, The Smith Family, and the National Catholic Education Commission. In a rare and exclusive profile, Nicholas discusses his incredible journey, from re-shaping a global financial powerhouse with over 15,000 employees across the World, to leading some of Australia’s most important philanthropic organisations - sharing the key lessons for success, and life, along the way.
August / September 2023 – 7
Featured News
TAXING TIMES AHEAD FOR FOREIGN RESIDENTIAL OWNERS
Melbourne, like most Australian cities, is in the midst of a severe rental crisis with the vacancy rate now 0.9%, half of that of a year ago. Demand, driven by a dispersion of share houses during the pandemic and now a population boom, combined with the much-discussed supply constraints and interest rate rises, ultimately resulting in unsustainable rental growth.
Faddy Fan Associate Director KordaMentha
The pressing issue is exacerbated by a significant scarcity of rental apartments to meet this escalating demand. Currently, ownership of rental apartments in Melbourne is predominantly composed of individual investors, both from domestic and foreign origins. The desire to acquire and retain a rental apartment is heavily influenced by its financial outcomes, which is being tested to the absolute limit.
article is that foreign owners cannot buy established dwellings, only new dwellings. Case study one – the escalating acquisition costs from 2014 to 2023 for off-the-plan apartments in Melbourne. 2014 2015 2019 2023 Contract price $550,000 $550,000 $550,000 $550,000 Stamp Duty* (Investor) $1,600 $1,600 $28,070 $28,070 Foreign N/A 3% 7% 8%
Over the past decade, Melbourne experienced a notable wave of foreign investors seeking to acquire apartments as investment assets, driven by the allure of stable income and potentially the ability to occupy in the future. This surge in demand was encouraged by Government policy and led to an increase in the supply of rental apartments, as developers exhibited a willingness to develop large scale apartment projects based on robust market confidence in successful apartment sales. Foreign Investment Review Board (FIRB) data shows that the approvals for residential purchases increased rapidly between 2010 to 2016 and peaked in 2015-16 (with total value of $72.4 billion). Challenges to holding the investment property As the property market boom attracted more foreign investors, they’ve become an easy tax target. In response to concerns about housing affordability and the impact of foreign investment on the local market, state and federal government introduced several policies aimed at “cooling down” house prices, even though foreigners couldn’t compete for the established dwellings that saw the bulk of price escalation. These policies directly affected the acquisition and holding costs for foreign investors, putting a handbrake on the large-scale “investment grade”, highly lettable apartment supply. Case study one shows the changes in total acquisition costs for a foreign investor buying an off-the-plan apartment in Melbourne between 2014 and 2023. For the same contract value, the total acquisition costs have increased from $1,600 to $86,170. Critical to note in this
Purchaser Additional Duty FIRB Application Fee Total Acquisition Costs
($16,500) ($38,500)* ($44,000)
N/A
$5,000
$5,500
$14,100
$1,600 (0.3%)
$23,100 $72,07
$86,1700 (15.6%)
(4.2%)
(13.1%)
*Victoria government removed stamp duty concessions for off-the-plan sales to investor in July 2017. With each increase in duties and fees we saw significant reductions in FIRB approvals, with a notable decline from 2016-2017 and 2019 to 2020. FIRB approvals for residential purchasers are now almost one tenth of the levels seen in 2015-2016. Whilst geopolitical tensions, cost and planning issues have also been significant, tax deterrents have no doubt been a factor in halting the supply of lettable high-rise apartments.
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to the investment, resulting in a loss of -$7,420 per annum. Case study two – Foreign investor return forecast on Melbourne investment apartment A foreign investor has purchased an off-the-plan, one bedroom apartment for $550,000, with a taxable land value of $77,000. The intention is to lease the apartment for an extended period, aiming to generate rental income as a return on the investment. The forecast income is shown below:
Predicted sell-off of investment properties The recent changes in land tax duty in several jurisdictions, particularly Victoria, combined with the interest rate crunch have combined to make it almost impossible for foreign owners to hold an investment property over the long term. Despite increasing rents, property income is heading towards losses for foreign owners as additional duties and interest costs are outstripping rent. The proposed Victorian State Budget (2023-24) comes with even greater taxes which may be the catalyst for foreign owners to exit the market entirely. • From 1 January 2024, the rate of the Absentee Owner Surcharge will increase from two per cent to four per cent of the unimproved value of the land. Absentee Owner Surcharge is a ‘second’ land tax on top of the existing land tax payable for all types of property investors. The minimum threshold will also reduce from $300,000 to $50,000 for Land Tax and Absentee Owner Surcharge, meaning almost all properties will now be subject to the duties.I • A ‘COVID-19 debt temporary surcharge’ will also apply in addition to land lax: − a $500 flat fee will apply for taxable landholdings between $50,000 and $100,000. − a fixed fee of $975 will apply to taxable landholdings between $100,000 and $300,000. − for taxable landholdings above $300,000, a $975 fixed surcharge will apply and an increased rate of land tax by 0.10% of the value of the landholdings.
2020
2023
Stamp Duty
$72,070
$86,170
Rent
~$400-$450
~$550-$600
per week
per week
Annual rent
$23,400
$31,200
(upper range) Expenses Management fee Council rates Body corporate Income before interest, tax and duties Less interest payments (Assume 60% Loan-to-Value) fees Water rates
6%
6%
approx. $1,200 p.a. approx. $2,500 p.a.
approx. $1,200 p.a. approx. $2,500 p.a.
$500
$500
$17,796 p.a.
$22,560 p.a.
$16,500 p.a.
$26,400 p.a.
(5%* interest rate)
(8%* interest rate)
Less Land tax
Nil
$500 p.a.
Less Absentee owner surcharge Total annual income or loss
Nil
$3,080 p.a.
Source: SRO website, https://www.sro.vic.gov.au/state-budget-2023-24-announcement
$1,296 -$7,420 p.a. * A foreign purchaser without Australian income has limited finance options and higher interest rate, normally 2-3% higher than the local home loan rate. Source: SRO website, https://www.sro.vic.gov.au/state-budget-2023-24-announcement
The change in policy means some foreign investors will start to receive a land tax bill for the first time, as the reduction in minimum threshold to $50,000 will trigger land tax on almost all property holdings. Case study two shows the financial return for a foreign investor with an apartment in Melbourne. The combination of increasing interest costs and land tax proves to be detrimental
According to recent reports from CoreLogic, the proportion of investor-owned sale listings has surged to its highest point in 12 months, with Australian mum-and-dad investors divesting their investment properties due to interest rate increases and possible rent caps being proposed by the Victorian State Government. Foreign investors are likely to jump ship soon too, especially when 2024 surcharge duties hit their account. KordaMentha Real Estate is anticipating a wave of foreign investors exiting the Melbourne apartment market in the next 18 months, likely at a discount to the original purchase price. Some may argue this is a good thing for housing affordability for local owner occupiers, however, it creates a dilemma for new supply as developer’s feasibilities will come under significant pressure. What we know is that the sellers will likely lose, but we don’t know who the buyers will be. Will it be first home buyers looking to replace their rental or a local investor looking for a cheap deal? Either way, this is not going to provide the traditional developer any confidence to bring new apartment products to the high density, affordable and lettable apartment market. Perhaps institutional “Build-to Rent” will be the antidote, but this may require more aggressive tax incentives given the low returns derived from residential property.
August / September 2023 – 9
Featured News
‘UNPRECEDENTED’ DEVELOPER CHALLENGES IN 2023
During Covid the most overused word was “unprecedented”, and I took a visceral dislike to seeing it appear in every commentary piece. I cringe at the title I have given this article but how else do I describe a set of challenges that I have not seen coalesce in my 68 years on the planet and certainly in my decades in the property/construction/finance sectors. I will let you the reader determine whether the term is valid.
Benni Aroni Client Director - Property Pitcher Partners.
I doubt there is a fundable “residential” feasibility in 2023. In this article my focus will be Victorian residential. In future articles I will address the commercial sectors including BTR, hospitality, offices, mixed use, retail, and alternates such as lifestyle communities, childcare, aged and health offerings. My definition of a fundable feasibility was historically one that shows an IRR of 20% plus. In fairness a 15% plus IRR is not bad and many developers are proposing projects on that projection. The 2023 challenge is that investors can get a double-digit return lending funds on first mortgage through numerous respected non-bank lenders with
relatively less risk. Do a few more percentage points warrant the risk and stress of “development”? Examining the elements of a feasibility is the best way I know to illustrate the challenges of development in 2023.
Let’s start at the top – Revenue.
It is now accepted that to address the items I will classify as development expenses, revenues on residential developments in Victoria need to and are increasing by a minimum of 25%. There will be variations between product but an apartment block in the CBD/Southbank area that in 2020 stacked up at an average of $10,000 a square
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blended finance costs of anywhere between 9% - 15%. International funders have arrived, but they too demand commercial returns. The alternate funders are rejecting many applications as they too assume a conservative risk profile and can now pick and choose which developers and projects they are comfortable to support. The proliferation of internal funding models developers are creating highlights the challenge of third party funding. Similarly funding partnerships between finance providers and select developers are a consistent 2023 conversation. • Other Professional Fees, marketing costs and commissions, have increased largely because they are calculated as percentages of construction costs or sale prices. Insurances have skyrocketed for multiple reasons and holding costs and statutory and Council fees have soared because the property industry is the main source of severely challenged Government and Council funding. I am indebted to Andrew Clugston, a partner at Pitcher Partners, for highlighting a quiet trend that is emerging. Developers such as Beulah, UEM Sunrise and OSK are pushing forward with their residential (mixed use) projects. Clearly these groups have access to funding sources and held sites for several years. UEM Sunrise pivoted its site from Build to Sell to Build to Rent and contracted a fund through with Greystar. How developers pivot to achieve feasibility is worthy of an article by itself. Asian developers may accept lower IRRs, but rest assured Australian developers such as Gurner and Mirvac are monitoring and will launch projects strategically. They are innovative and have unique capacities. They will find ways to progress their projects when they deem the timing to be right. We have a massive under supply of residential stock and voracious demand illustrated by rentals which have increased 15%- 20% in 2023. The evolution of the BTR sector, which warrants a separate article, further substantiates demand. Interesting to note that despite this demand and rental hike investors are trying to divest their holdings due to Land Tax, energy, insurances, and interest cost increases. Those investors that were hedging are now spooked by threats such as capped rentals (likely) and removal of negative gearing (less likely). Owner occupiers that can afford to pay the new revenue paradigm will be supplied as lots of developers are targeting them, but “affordable” housing will only happen with planning reform and government funding. The positive I can guarantee is that population growth both organic and via migration, added to the inherent attractions of Australia and Victoria assures demand for residential product indefinitely. The supply equation requires planning reform which is coming, and building and financing options which are currently opaque. There is no more creative community than the residential property eco-system so I remain optimistic. ESG, technology such as Ai and density will all be part of the solution – the journey will be challenging and for the capitalised and creative, no doubt rewarding.
metre, in 2023 needs to average $13,000 a square metre, many would say $15,000 a square metre. So, a two-bedroom 80 square metre apartment that was priced at $800,000 will be $1,040,000 - $1,200,000. Stamp duty and GST will of course be on the higher amount – so much for affordable housing. The same revenue jump is required in suburban and greenfield developments. A further challenge is that Planning often requires active frontages, leading to out of place convenience stores or commercial outlets, and parking ratios that require basement construction. Very rarely do these spaces generate positive revenue. Development costs. • Land The collapse of land prices has been predicted every couple of years for as long as I can remember. It just does not happen. In any event in Victoria the land component of your feasibility will only be 15% - 25% (around 30% in NSW) of the development cost. This has not varied in 2023, but holding costs have, especially if you are unfortunate enough to be a foreign investor. Land Taxes, duties, levies and planning imposts in 2023 are hefty. Valuers who value on past comparables, not future development offerings, and funders who work on acquisition price as opposed to the uplifted value created by development skills exacerbate the 2023 challenges. I am bemused by the current confusion as to how best to exploit a site. Historically location and demand determined usage but today since very little is certain and offices are on the nose the debate between, build to sell, build to rent, create a hospitality offering, find an alternate usage like a medical centre quite often leads to paralysis. • Construction About 1600 financial collapses in this sector is a 2023 challenge by anyone’s reckoning. Supply restraints and cost escalations while stabilising is not over. Union influence is just beginning to flare, with Labour Governments beholden to Unions omnipresent. It is a given construction costs have gone up around 30% in the last 24 months, but the bigger issue is that a broken model is not being addressed. Fixed price contracts, novation, design and construct contracts are all flawed models which require reform, but there is no will so there is no way. 2023 has seen more early works collaboration between developers and builders, a small green shoot. Builders need more realistic margins which they can best achieve by becoming developers and rejecting third party work. This option is only available for builders with strong balance sheets and appropriate cash flow management processes. So, developers choose their builder with trepidation and funders insist on conditions and contingencies which truly challenge feasibilities. • Finance Finance costs have doubled or tripled in 2023. Even the best of developers are finding it harder to get acceptable bank finance and equity investment has never been more difficult to attract. Mezzanine or stretch preferred debt has blossomed leading to
August / September 2023 – 11
Featured News
CASTLE GROUP’S $150M ROUSE HILL DEVELOPMENT STRIKES A CHORD WITH AFFLUENT BUYERS
Castle Group’s Park Avenue Estate located 800m from Tallawong Metro
On the ground, Castle Group, a prominent Hills developer and Rouse Hill’s largest private landowner and developer, saw something different—and the evidence is far from anecdotal. According to data from Pricefinder, the median price in Rouse Hill in June 2023 ($1,500,000) is higher than it was in July 2022 ($1,475,000). The National Australia Bank now forecasts Sydney house prices will increase 6.9% in 2023 with a further 4.9% increase forecast in 2024. Price growth will be supported by low levels of property supply and the more than 700,000 migrants expected by the end of 2024. Castle Group’s confidence and market knowledge saw the acquisition in 2022 of a 2.02ha site at 74 Tallawong Road, Rouse Hill, located 800m from Tallawong Station and about 45km northwest of the Sydney CBD. The Group now brings to market its Park Avenue development at 74 and 95 Tallawong Road, Rouse Hill, with 112 homes and an end value of $150 million. The development comprises free-standing double-storey three, four and five-bedroom homes 800m from Tallawong Metro, and opposite a planned park. “We planned this development meticulously and conducted research on what buyers in Rouse Hill were seeking. We found that there was an undersupplied segment of housing priced between $1.1 and $1.4 million that would attract strong demand. We’ve designed Park Avenue to fill that demand,” Castle Group director Ritchie Perera said. Castle Group specialises in low-to-medium-density property development and has an intimate knowledge of the north-west property market. Since 2006, Castle Group has developed or value-added and sold projects with an end value exceeding $1 billion. “We bought our first site in Rouse Hill in 2014, before the opening of the Sydney Metro,” Perera said. “I was drawn to the suburb given its infrastructure, open space, education options and famous Town Centre.” “We take pride in identifying growth opportunities. Rouse Hill is no exception, with the suburb rapidly gentrifying since our first acquisition,” Perera said. Rouse Hill’s lifestyle appeal has drawn a demographic of young professionals and affluent families. The story of the Rouse Hill property market is one of resilience. With the cash rate beginning its climb in June 2022, talk was rife of double-digit declines in house prices through to the end of 2023.
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Future Tallawong retail precinct adjacent to Tallawong Metro Station
Of note, 22.1 per cent of its residents earn more than $2000 a week—30 per cent higher than the Greater Sydney average and consistent with other affluent suburbs such as Chatswood at 21.3 per cent. It’s that demographic for which Castle Group has designed its Park Avenue development—a strategy that has seen strong buyer demand. “Homes at Park Avenue feature open living areas, modern facades and are appointed with finishes you’d find in a luxury home,” said Perera. Since launching in Q1 2023, Castle Group has sold 40 per cent of its 112 homes. “Our sales success is a result of our meticulous planning,” Perera said.
The new Rouse Hill Hospital, now under construction
“We have an intimate knowledge of the markets in which we operate and always start with the consumer in mind.” “Until recently, most of our buyers were locals from Kellyville, Parramatta, and Castle Hill. We’re now seeing buyers from Chatswood, Sydney City, and the eastern suburbs with couples aged in the early to mid-30s wanting more space than a two-bedroom apartment. We’ve also been mindful of the shift in how our buyers live. Catering to multi- generational living, more than half the homes in Park Avenue feature a downstairs bedroom and full bathroom” “Our knowledge of the market and buyer demographic has allowed us to bring to market what is the most in-demand product in Rouse Hill,” said Perera of Park Avenue.
August / September 2023 – 13
Featured News
SOUTH EAST QUEENSLAND RESIDENTIAL MARKET SHOWING STRENGTH DESPITE HEADWINDS With interest rate rises of 4 per cent since
May 2022, with the cash rate now 4.1 per cent, and significant increases in construction costs, the South East Queensland (SEQ) residential market has shown resilience despite these challenges. This resilience stems from continued underlying demand from local and interstate purchasers and a limited supply of existing and new housing stock for the growing population.
Troy Linnane Director Residential
Development Sites Colliers Queensland
Due to these factors, build-to-rent (BTR) is gaining significant traction; up to 4,000 BTR units are in application or approved phases, 1,800 are under construction, and up to 2,000 are completed across SEQ. Institutional capital, both domestic and off-shore, is looking to invest in this emerging asset class. While not the solution to the current housing crisis, it will assist, and it is expected this sector will continue to grow in Australia due to continued population growth, housing affordability constraints and lifestyle preferences. This BTR demand is propelled further by the increasing under 35’s population who prefer to rent. The Colliers Queensland Development Site team have collectively transacted up to $750 million in development site sales in the last 12 months and has multiple active campaigns in South East Qld, including Ripley Town Centre. SEQ will further benefit from the continued momentum and build-up towards the Brisbane 2032 Olympic and Paralympic Games, with Federal and State Government investment in new infrastructure such as stadiums and public transport. There is still plenty of capital looking at development opportunities, and discerning purchasers are now looking beyond the current fundamentals and planning to leverage from the likely capital growth achieved when interest rates and construction costs stabilise, and consumer confidence improves.
Housing stock continues to sell at a faster pace in 2023 compared to previous years, with Brisbane dwelling prices increasing by 3 per cent in the last quarter due to this demand. An example of this is the number of apartment sales for ‘Monarch’, at Toowong, launched in March, which is now two-thirds sold, with 140 apartments sold mostly to local owner-occupiers. The housing crisis in SEQ is significant, with a current vacancy rate of 0.9 per cent, and it’s worth noting that 3 per cent is market equilibrium. Accordingly, rental growth has grown considerably, with an increase of 17 per cent in the 12 months to June 2023. Population growth in Queensland is outperforming other states, with an increase of about 110,000 new residents over the 12 months to September 2022, with most of this growth stemming from interstate migration from New South Wales and Victoria. South East Queensland is forecast to grow by 2.2 million people and be home to circa 6 million by 2046, requiring around 900,000 new dwellings. Additionally, the Federal Government recently announced an increase in international migration into Australia over the next two years of up to 700,000 people, of which at least 100,000 new residents are expected for Queensland. While this initiative is to help alleviate skilled labour shortages across the industry, including the construction sector, this will, in turn, add further pressure to an already undersupplied housing market.
14 – August / September 2023
Market News
THE PROPERTY DEVELOPMENT REVIEW
LAST REMAINING ROZELLE GATEWAY SITE COMES TO MARKET
75 Victoria Road, Rozelle
A one-of-a-kind industrial/commercial development site along the high-profile Victoria Road has hit the market, as developer demand in the land-restricted Inner West flourishes.
driveway access points along Victoria Road. Purchasers are encouraged to explore the many permissible uses for the site, as opportunities of this scale rarely come to market. “Developments of this nature should be highly profitable and enjoy the future growth prospects with over 70,000 cars passing daily and the increased exposure to arise from surrounding upgrades,” says Mr Kotzias. The corridor has been somewhat of an eyesore for many years, however, with Stage 1 visions of the Future Bays West unveiled by the NSW Department of Planning, the once-inaccessible White Bay Power Station and surrounds, are earmarked to transform into a waterfront concourse. This ambitious urban renewal project, along with the forthcoming Metro Station, Rozelle Parklands, and the near-completed Rozelle interchange, will enhance the area’s appeal. Noted as one of Sydney’s most significant urban regeneration projects. Mr Kotzias stated, “This is the sole remaining vacant parcel of land in this precinct, that offers an opportunity for the next owners to po sition their business in a rapidly gentrifying precinct on the doorstep of the CBD”.
75 Victoria Road, Rozelle, tightly held for over 20 years by Stasia Pty Ltd will be marketed by Adam Charles, via an expressions of interest campaign with a 6.5-million- dollar price guide. Leading the campaign, associate Director, Peter Kotzias, is confident this prized Inner West landmark on over 1020 sqm will attract strong interest and invites discerning buyers seeking an exciting new business venture. The confidence in the sale has arisen from Mr Kotzia’s recent, July transaction of 53-55 Victoria Road, Rozelle. The 653 sqm property sold off market, last month for $5.1 million to a local investor. The property at 75 Victoria Road, Rozelle, offers an elevated land holding of 1,024 sqm and is the last undeveloped site along the Victoria Road corridor- known as the gateway to the CBD. Featuring 3 street frontages, a substantial 49*m frontage to Victoria Road and CBD skyline views. Once a service station - now fully remediated and ready for a new life, the E4, General industrial site benefits from DA/CDC approval for a modern two-storey car wash/ car service development with two approved
Interested parties can contact the team at Adam Charles - expressions of interest will close on the 7th of September 2023.
August / September 2023 – 15
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THE PROPERTY DEVELOPMENT REVIEW
The results
“Burgess Rawson has been incredibly impressed with both the quality and volume of enquiry generated from CommercialReady for our investment portfolio listings. We are seeing new enquiry and high-intent investors coming off your platforms and the ability to target investors at both a state and national level is delivering us really high-value leads.” Shaun Venables, Partner “We have used the CommercialReady platform on almost every i nvestment campaign we launched in the last 2 years. It has exposed our listings to a national audience of buyers we have not previously dealt with and many campaigns have resulted in our team securing buyers and registered bidders.” Jared Johnson and Lachlan Marshall, Directors “We pay close attention and track closely the platforms we use during a marketing campaign and CommercialReady continues to deliver high-quality and unique enquires, that reiterates to us and to our clients that we are getting ‘bang for our buck’.” Lachlan O’Keeffe, Director - Retail Investment Sales “CommercialReady forms a vital part of our marketing of any investment opportunity. Given our clients are so time poor, being able to align with CommercialReady allows us to directly reach buyers via their targeted portal on multiple occasions throughout a campaign. This is critical for us in listing presentations, to be able to articulate to our vendors that gaining cut-through with potential buyers and being in front of them on multiple occasion is critical to a successful outcome.” James Thorpe, Director - Investment Sales
DM program 0k investor subscribers
media lead-gen -party investor data
al tracking
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agers
Call Centres, Medical, IT, Trade etail/Convenience groups)
August / September 2023 – 17
MARKET MOVES
VIC Various, Victoria & New South Wales
VENDOR/ PURCHASER
DESCRIPTION
AGENCY
SALE $
As the logistics sector of commercial real estate continues to be one of the best- performing classes, UniSuper has expanded its investment in the sector, acquiring a half stake in an industrial property portfolio for $560 million.
V: National Pension Service of Korea P: UniSuper
Cushman & Wakefield's Tony Iuliano and Adrian Rowse
$560 million
Two off-the-plans strata office suites within Orchard Piper's highly anticipated Toorak Village development sold, setting a new city fringe and suburban record with the latest sales reflecting a building rate of $17,021 per sqm.
Circa $10 million
V: Orchard Piper P: Local Owner Occupiers
424 Toorak Road, Toorak
Colliers' Ben Baines and Matt Knox
Church Street has reaffirmed its blue-chip status, with the auction of a NAB on a shopping strip reflecting a 3,5% yield and a land rate of $24,826 per sqm.
Fitzroys’ Mark Talbot and Tom Fisher
$7.15 million
35 Church Street, Brighton
V: Local Investor
A sought-after retail investment located on a prime Thornbury corner, currently tenanted by Tradelink, sold under the hammer reflecting a yield of 4.35%.
Colliers’ Andrew Ryan, Corey Vraca and Mitch Purcell
$3.355 million
316 St Georges Road, Thornbury
P: Local Investor
Boutique property developer, Piccolo, purchased a development site situated in one of Melbourne's most sought-after residential precincts.
Colliers' Hamish Burgess, Ian Sanders and Justin Hazell
$35 million
18 Barry Street, Kew
P: Piccolo
Stonebridge Property Group's Julian White, Dylan Kilner, and Chao Zhang, in conjunction with Colliers' Alex Browne and Ben Baines
A private investor has secured a vacant 2,739 sqm office building, which was formerly the headquarters of Bunnings Warehouse
V: Local Family P: Private Investor
$17 million
465 Auburn Road, Hawthorn
428/452 Wyndham Street, Shepparton
A Dan Murphy’s anchored retail investment in the heart of Shepparton sold in an off- market transaction, reflecting a 5.76% yield.
$13 million
V: Private Investors
Colliers’ Tim McIntosh
107 Metrolink Circuit, Campbellfield
An industrial 1 zoned freehold asset in one of Melbourne's most sought-after industrial precincts sold at auction, achieving a land rate of $2,881/sqm.
Savills' Anthony Cannizzaro and Arthur Vainbrant
$5.175 million
Direct
Colliers' Ben Young and Chris Nanni
$2.65 million
180-182 Ryrie Street, Geelong
A 800 sqm, two-storey prime asset in the heart of Geelong CBD changed hands.
P: Owner Occupier
WA
VENDOR/ PURCHASER
DESCRIPTION
AGENCY
SALE $
Resource transportation firm, Skippers Transport, purchased a 1.82-hectare underdeveloped industrial site, marking the first time the property had changed hands in 25 years.
JLL's Chris Monterosso and Luke Schreier
91-103 Kurnell Road, Welshpool
$10.3 million
P: Skippers Transport
153-169 Mandurah Terrace, Mandurah
The only remaining holiday park in the heart of the West Australian coastal city of Mandurah, a tourist destination around an hour south of Perth, has sold.
V: Private Family P: Equinox Group
Knight Frank's Tony Delich and Cory Dell’Olio
$13 million
TAS
VENDOR/ PURCHASER
DESCRIPTION
AGENCY
SALE $
The 1048-hectare property known as "Reedy" was purchased by the Crouch family, who already have a substantial presence in King Island, as well as Waverley Station in Scone. After this purchase, the Crouch family owns around 30,000 Angus cattle across King Island, Scone and Gunnedah.
V: PGA Group P: The Crouch Family
King Island
(Speculated) LAWD's Danny Thomas $22.66 million
ACT
VENDOR/ PURCHASER
DESCRIPTION
AGENCY
SALE $
V: Shakespeare Property Group P Serene Capital
Serene Capital, a funds management firm that focuses on core property classes, purchased Canberra's Abode Hotel and Apartments taking their assets under management to $750 million.
CBRE’s Michael Simpson, Vasso Zographou and Tristan Cotchett
10 Bowes Street, Phillip
$41.5 million
18 –August / September 2023
THE PROPERTY DEVELOPMENT REVIEW
Brought to you by
QLD
VENDOR/ PURCHASER
DESCRIPTION
AGENCY
SALE $
A 63,109 sqm industrial asset leased to TSS Freight and Bidfoods, with a separate standalone facility on the land parcel leased to Pacific Optics sold reflecting a yield of 5.17%.
$55.625 million
18 Nyhold Drive & 1 Bluestone Place, Yatala
V: Sydney-Based Fund P: Private Investor"
CG Property Group's Michael Callow and Mark Gilbride
CBRE’s Mark Witheriff, Jack Morrison and Peter Chapple in conjunction with McVay Real Estate's Dan McVay and Brock McDermott
The City of Gold Coast has expanded its investment portfolio with the $46.25 million purchase of the Wyndham Corporate Centre in Bundall, which holds a 93% occupancy rate, and fully leased net income of $3,537,960.
V: RF CorVal P: The City of Gold Coast
Undisclosed
Level 7/1 Corporate Ct, Bundall
V: Ray White Capital and State Development Corporation Pty Ltd P: Brisbane Investment Firm"
A large development site known as Aviary Toowong in inner Brisbane sold, with the purchaser intending to undertake a joint venture with the owner of the adjoining site at 80-88 Jephson Street to integrate the properties into a $1 billion retail, office and residential development over the total 1.3Ha of land. One of the largest industrial land sales in Brisbane’s western corridor this year has just transacted, with a property sold in the Citiswich Business Park in a deal negotiated by Knight Frank.
Corner of Sherwood Road and High Street, Toowong
Knight Frank's Christian Sandstrom
$53 million
Speculated $70+ million
V: Walker Corporation P: Aliro Group
88 Hume Drive, Bundamba
Knight Frank’s Mark Clifford
NSW
VENDOR/ PURCHASER
DESCRIPTION
AGENCY
SALE $
Located right across the road from Bondi Beach and one of only four hotels in Bondi, Topikos, sold to fifth-generation hotelier Edward Ryan.
HTL Property's Andrew Jolliffe, Dan Dragicevich and Xavier Plunkett
180 Campbell Parade, Bondi Beach
P: Edward Ryan
Undisclosed
The Royal Hotel Taree was sold to a group of local investors who add the venue to an existing portfolio of hospitality assets and plan to provide a premium hospitality offering in Taree.
JLL's Edward Browne and Greg Jeloudev
202 Victoria Street, Taree
P: Local Investor Syndicate
Undisclosed
As the logistics sector of commercial real estate continues to be one of the best-performing classes, UniSuper has expanded its investment in the sector, acquiring a half stake in an industrial property portfolio for $560 million.
V: National Pension Service of Korea P: UniSuper
Cushman & Wakefield's Tony Iuliano and Adrian Rowse
Various, Victoria & New South Wales
$560 million
Property developer and funds manager, Charter Hall, offloaded a university building leased by the University of New South Wales as it looks to repay investors seeking to withdraw funds.
Cushman & Wakefield's Peter Court and Mike Walsh
221-227 Anzac Parade, Kensington
V: Charter Hall
$80 million
V: Landcom on behlaf of Sydney Metro P: Mulpha
A major commercial development site situated immediately adjacent to the Norwest Station was sold by Landcom on behalf of Sydney Metro, following an Invitation to Tender campaign.
Knight Frank's Mark Litwin, Wally Scales and Grant Bulpett
25-31 Brookhollow Avenue, Norwest
Undisclosed
A Western Sydney tarp repairer business, Nans Tarps, has reaped from the sale of its Lidcombe site after 42 years of ownership. husband-and-wife team behind Nans Tarps purchased the commercial landholding in 1981 for $41,000. Three adjoining industrial assets with a total land area of 10,474 sqm, sold in one line via private treaty, with the new owner planning to redevelop the site into a custom-built facility.
$2.9 millin
25 Vaughan Street, Lidcombe
V: Nans Tarps
CBRE’s Robert Dowdy
179-181 & 185 Parramatta Road and 29-31 Park Road, Homebush West
Knight Frank's Angus Klem and Wally Scales
$24.5 million
P: Private Owner-Occupier
SA
VENDOR/ PURCHASER
DESCRIPTION
AGENCY
SALE $
Savills' Nick Lower and Rob Williamson in conjunction with CBRE's Michael Simpson and Tom Gibson
Alternative investment firm with a hospitality focus, Salter Brothers, purchased the Sofitel Adelaide, taking their hotel portfolio to $3 billion.
V: Palumbo Family P: Salter Brothers
108 Currie St, Adelaide
$154 million
Property fund manager FRP Capital purchased the Brickworks Marketplace shopping centre in Adelaide for $85 million, representing a 5.43% yield.
V: Charter Hall P: Telstra Super
$85 million
38 South Rd, Torrensville
JLL's Nick Willis and Sam Hatcher
a quality office building with significant value add upside in a prime Adelaide CBD location sold on a passing yield of 6.43%. The 3,432 sqm three-storey office building with 56 basement car parks generated strong interest from a local and national perspective.
Colliers' Alistair Mackie, Rhys Newman and Paul van Reesema
$13 million
99 Frome Street, Adelaide
Direct
August / September 2023 – 19
Auction Hub
Our top picks of the latest commercial auctions from around the country
130 Northcliffe Drive, Warrawong, NSW
736-740 Glenferrie Road, Hawthorn, VIC
2 Deauville Drive, Southport, QLD
461 Beaudesert Nerang Road, Nerang, QLD
Lot 27, Level 8, 64 Castlereagh Street, Sydney, NSW
20 – August / September 2023
Upcoming Commercial Auctions
Address
Property Type
Auction Time
Auction Location
Agency
Est Income.
2 Deauville Drive, Southport, QLD, 4215
Kollosche Commercial
Other, Retail, Mixed Use
$160,680 p/a 25 Aug 2023 12:00PM On-site
1014 High Street, Armadale, VIC, 3143
Fitzroys
Retail, Strip Retail, Mixed Use
$128,684 p/a 25 Aug 2023 01:00PM On-site
736-740 Glenferrie Road, Hawthorn, VIC, 3122
$536,578 p/a 31 Aug 2023 12:00PM On-site
Gorman Allard Shelton
Retail, Child/ Healthcare, Strip Retail
461 Beaudesert Nerang Road, Nerang, QLD, 4211
CLARK Commercial
Industrial, Land Contact Agent 31 Aug 2023 01:00PM On-site
3/205 Leitchs Road, Brendale, QLD, 4500
Contact Agent 31 Aug 2023 04:00PM In-room
Retail, Offices, Office Suites, Mixed Use
RWC Queensland, RWC Northern Corridor Group
(Contact Agent)
114-122 Union Road, Surrey Hills, VIC, 3127
GormanKelly
Retail, Land, Offices
$174,000 p/a 1 Sep 2023 12:00PM On-site
421 King Street, Newtown, NSW, 2042
XCommercial
Retail
$73,000 p/a 5 Sep 2023 10:30AM Contact Agent
Lot 27, Level 8, 64 Castlereagh Street, Sydney, NSW, 2000
JLL, Cabmon Property
Offices, Full Floor Office
Vacant
7 Sep 2023 10:30AM In-room (Cooley Auction Centre Sydney, Level 5, 1 Margaret Street, Sydney)
174-176 Bay Street, Brighton, VIC, 3186
Fitzroys
Retail, Strip Retail, Mixed Use
$82,379 p/a 7 Sep 2023 01:00PM On-site
130 Northcliffe Drive, Warrawong, NSW, 2502
Burgess Rawson Retail, Other,
$563,132 p/a 12 Sep 2023 10:30AM In-room (Yallamundi
Cafe/Restaurant
Rooms, Sydney Opera House)
5-7 Craigieburn Road, Craigieburn, VIC, 3064
Burgess Rawson Child/Healthcare $322,184 p/a 13 Sep 2023 10:30AM In-room (Crown Casino, Melbourne)
239-243 Henley Beach Road, Torrensville, SA, 5031
$238,075 p/a 14 Sep 2023 11:00AM On-site
Burgess Rawsin, Knight Frank
Retail, Service Station, Mixed Use
Ready to inspect, invest, or just take a look around? Visit commercialready.com.au
August / September 2023 – 21
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