THE PROPERTY DEVELOPMENT REVIEW
receive strong off market offers, imagine what they would get achieve in a wider market. We’ve got a really good example of this. Yesterday we settled a large East Brisbane asset that’s anchored by a medical tenant. It was a campaign that we took to market in 2021 and didn’t reach the desired pricing because of multiple other assets on offer at the time. It’s a $12 million plus medical asset right in the middle of the Olympic precinct. This sale happened because there’s no other stock for this pent up demand. I wanted to ask you and you touched on it, there is the Olympic affected pricing, but more broadly across Brisbane and geographically speaking, where’s the most in-demand areas? Are there any key themes that you’re seeing? NW: Both Hamilton and Port Side are major precincts which have traditionally been residential and will now see a commercial influx - we’ve already seen the jump with proprieties within these immediate proximities. A number of groups are essentially land banking, some paying crazy prices by just saying, that’s fine, in ten years time I’ll have a solution for it. On the yield front, there’s some consistency around the 4% to 5% range, obviously, depending on the asset type and location. Nick, there’s obviously a lot of private groups in Brisbane, are you seeing new entrants from Victoria, New South Wales or from Western Australia. NW: Yes - there’s some serious coming from interstate that have made a lot of money, who know commercial property has always been a natural hedge against inflation. These groups are out there in droves buying Queensland assets particularly in Brisbane. So, you know, they land banking, you know, they’re chasing yield, some are owner occupiers reinvesting money by buying their own facility. HH: With sites, what we’re seeing is that there’s very strong competition for sites with full river city views or within Olympic precincts. NW: Secondary locations that don’t have city views not within the big precincts, struggle a little bit and are probably being a bit more impacted pricewise. What impact is the Olympics on the market in terms of sentiment and confidence? And what impact do you think it will continue to happen in the future. HH: Our status has evolved from a provincial town to a global event host. This transformation has firmly established us (Brisbane) as more than a rural town and solidified our position as the third-largest capital city in Australia. NW: We are rapidly closing the gap with our counterparts to the south. This global recognition of our presence is further enhanced by ongoing
infrastructure initiatives, such as the Queen’s Wharf Casino and the development of six-star hotels. As a result, we are positioning ourselves as the nearest major capital city to Asia, reinforcing our prominence on the international stage. How are you finding interest in Brisbane from some of those big international players or even smaller international players out of Asia? NW: There’s a noticeable shift in perception, indicating a growing awareness. We’re witnessing tangible progress in terms of offshore deals making their way back into Australia, particularly Brisbane. What are some of the key questions that individuals ask? I think the biggest one now revolves around the impact of interest rates. Additionally, the challenges faced by developers and builders? NW: It’s important to recognise that active trading is ongoing. Pricing dynamics, yields, and rate per square meters are indicating favourable results. In fact, our results are surpassing those from the pre-COVID period in 2019. As look ahead to the second half of this year and the forthcoming months, what do you see will change? NW: I think tackling interest rates - there should be some light at the end of the tunnel by the back end, hopefully it will stabilise, subject to inflation. The construction and development sector is facing a lot of headwinds. Factors such as labour shortages pose a significant challenge moving forward. We’re going through a housing crisis and shortage, - how developers manage these pressing concerns is a big focus point. HH: Just to add to Nick’s interest rate comment, one thing we noticed this year, the one time we had a pause on interest rates, there was a huge return to the market. The phone started ringing - we had a really good run. Then when interest rates went up again, we noticed a slide back down. How are (investors) finding the funding environment at the moment? NW: The most important thing in this market cycle is having the backing of banks who can actually push deals through. But yes, I think it’s difficult for everyone. The debt side is slow and what we’re hearing there’s capital out there - just extremely risk adverse allowing for a lot of contingencies. So give us an indication, if you could, as to what you’ve got coming to market in terms of assets? HH: We’ve got a lot of good owner occupier opportunities and some confidential development sites that are coming through in those core Brisbane precincts we talked about earlier. Gentlemen, always a pleasure to catch up with you both. Thanks for your time and we look forward to continuing to watch your growth.
August / September 2023 – 73
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