Welcome to Issue 46 of The Property Development Review, exclusively for agents, developers and investors.
SEPTEMBER / OCTOBER 2023 - ISSUE NUMBER 46
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.
Property information in one location
Create a free user account for access to: • Site Information • Site Data • Map Features
Be a property winner with our powerful mapping and reporting tool, serving all the information you need to buy, sell, develop or invest in property.
• Development Pipeline • Suburb Demographics • Planning & Due Diligence Reports
Visit DistrictData.com.au to get started today.
High resolution imagery, unlimited due diligence reports and advanced map features available from just $50 per month. Visit DistrictData.com.au
2 –September / October 2023
THE PROPERTY DEVELOPMENT REVIEW
FROM THE CEO
Greetings, and welcome to our current September/October edition of The Property Development Review. I’d like to start with this month’s exciting news: Ready Media Group has acquired 100% ownership of DistrictData. This exclusive due diligence property data program is accessible with every DevelopmentReady and CommercialReady online listing. It provides detailed property information for individuals engaged in buying, selling, investing, or developing real estate across the country. Moving forward our focus is to further escalate DistrictData’s integration across all our platforms in addition to boosting performance features. No other commercial property portal provides users with this level of information. In this issue, our very own Rob Langton continues The Interview series with Rod Jones, one of Perth’s leading business figures for more than three decades. As Co-Founder of global education provider Navitas and Chairman of Hoperidge Capital, Rod’s remarkable journey saw him navigating multiple economic and political cycles. In this interview, he shares with us key career insights and business philosophies. Benni Aroni , property authority from Pitcher Partners returns, offering key insights into the Build-to-Rent (BTR) market segment in Australia; what’s driving its current growth, how BTR developers can maximise returns and some of the key opportunities currently presented within the sector.
Knight Frank established a dedicated Healthcare and Life Sciences division last year in response to the sector’s rapid growth. According to the division’s, National Head, Sam Biggins, investor demand for healthcare assets will continue to surpass the available opportunities in the foreseeable future. Thirteen Commercial’s Founder and Managing Director, Anthony Lenzi , joins us for a podcast. With over eighteen years of experience
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
developing small and large-scale properties across Adelaide, Anthony, discusses how the market has evolved and some of the key business lessons he learned along the way. Additionally, this issue includes the latest national development and investment opportunities on offer, significant transactions, noteworthy property news plus more. Enjoy the read! Nick Headshot - TPDR Intro Page
NICK MATERIA CEO - Ready Media Group
MAGAZINE DESIGN Nespecart
ON THE COVER Dmitry Osipenko Crown Sydney -unsplash
September / October 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
NSW Ted Lloyd State Manger 0408 276 103
VIC Scott Bremner Chief Customer Officer 0487 600 077
QLD Sally Miller Major Accounts 0459 398 151
VIC Michael Bevilacqua Head of Majors & Key Accounts 0437 426 043
QLD Jake Ragkousis National Sales Director 0447 460 230
SA | WA | TAS Michael Arcobelli
State Manager 0488 882 726
4 –September / October 2023
THE PROPERTY DEVELOPMENT REVIEW
CONTENTS
7 THE INTERVIEW ROD JONES
22 MARKET MOVES The latest transaction activity and key deals 24 UPCOMING COMMERCIAL AUCTIONS 1,500 Homes 18 EDITORIAL VANESSA RADER International students adding to housing supply issues 17 MARKET NEWS Land Audit Helps Northshore Site to Create up to 16 FEATURED NEWS DAN WHITE What will spring bring?
29 NSW MARKET OVERVIEW Craig Pontey McGrath 46 VIC MARKET OVERVIEW John Bongiorno Marshall White
Co-Founder - Navitas Executive Chairman - Hoperidge Capital 8 PODCAST ANTHONY LENZI Founder and Managing Director - Thirteen Commercial
9 PODCAST SAM BIGGINS
114 WA MARKET OVERVIEW Anthony Van Der Wielen Empire Property 84 QLD MARKET OVERVIEW Simon & Courtney Caulfield Place
10 EDITORIAL Investment demand for healthcare assets strong in the current market Partner, National Head of Healthcare & Life Sciences Knight Frank
MARKET MOVES
14 FEATURED NEWS BENNI ARONI
30 NSW LISTINGS
48 VIC LISTINGS
Auction Hub
Auction Hub
86 QLD LISTINGS 116 WA LISTINGS 121 TAS LISTINGS 111 SA LISTINGS
Auction Hub
Auction Hub
Upcoming
Auctions
Build to Rent Developments A solution to supply & cost challenges
Upcoming
Auctions
September / October 2023 – 5
What leading residential agents are saying:
Simon and I definitely get more quality leads from Development Ready than any other online portals for our development sales. This not only saves us valuable time but also ensures that the leads we received were not just quantity, but truly quality prospects. The platform’s ability to deliver high- quality leads, tailored to our industry and target audience is an invaluable asset for any listing with development potential. Highly recommend I just wanted to mention Marshall White found the quality and volume of enquiry coming from Development Ready to be phenomenal for several residential development sites that we ran recently. My team was fielding enquiry from developers and builders that we were not previously seeing and we will continue using Development Ready for any properties with development potential. The highly targeted nature of the eDM’s and social media is a fantastic approach in reaching the right buyers and developers. Matthew Pillios Director, Marshall White
As an experienced Real Estate Agent, I have found that Development Ready is the go-to marketing solution for residential development sites, offering a distinctive approach to attract qualified leads by targeting developers across the nation. Their unparalleled platform delivers exceptional results, outperforming other portals in the industry when it comes to marketing land development sites.
Chris Cotton Sales Consultant, Harcourts Wine Coast (RESI)
Having used the Development Ready portal since its inception, the website has been a great source of enquiry on any development campaigns I have put online with them. I find the weekly EDM’s a great way to keep on top of any upcoming sites for sale within my market. The approach taken by the team at Development Ready is unlike other platforms by actively targeting relevant buyers, means as an agent I receive good, qualified enquiry. My team and I include their packages in all of our Development Site listings as they are the market leaders in that space.
Development Ready! Simon and Courtney Caulfield Partner & Lead Agent Place Kangaroo Point
Craig Pontey Principal, McGrath Double Bay
For any residential listing with development potential, we find the quality of leads coming from Development Ready to be very qualified and by having builders and developers enquiring throughout a campaign increases competition so we will continue using this platform moving forward. Well done to the team on such a targeted, progressive approach. Linton Allen
I recently used Development Ready for the sale of a development site in Brighton. The value to our client was exceptional, delivering by far the most enquiry for the project and ultimately led us to the eventual buyer. I will be recommending Development Ready to all clients wanting to gain more access to the developer network. Thank you.
Andre O’Brien Director, Hodges
Sales Manager, Empire Property
Visit DevelopmentReady.com.au
6 –September / October 2023
The Interview
THE PROPERTY DEVELOPMENT REVIEW
SCAN OR CLICK TO WATCH THE VIDEO INTERVIEW IN FULL 64 MINUTES
ROD JONES
With Rob Langton
CO-FOUNDER - NAVITAS EXECUTIVE CHAIRMAN - HOPERIDGE CAPITAL
Our special guest on this episode is Rod Jones - Co-Founder of global education provider Navitas & Executive Chairman of Hoperidge Capital. Unquestionably one of Perth’s leading business figures for more than three decades, Rod’s remarkable career has scaled the heights of the education industry, initially through the launch of IBT Education and the Perth Institute of Business Technology. In the 1990’s, the business was renamed Navitas and launched globally into the UK, Europe, Canada and the US, before listing on the ASX for $1 per share in 2004 and with a market capitalisation of $350m. By day’s end, the share price had more than doubled to $2.40, valuing the business in excess of $800m. Fast forward over the next decade and Rod led the business as Chief Executive Officer for some twenty-four years until 2018, navigating multiple economic and political cycles including constant changes in policy & direction both domestically and internationally. In 2019, BGH Capital engineered one of the largest ever buyouts by an Australian private equity firm, acquiring Navitas and taking the company private in a $2.3bn enterprise deal, with shares ultimately valued at $5.825. Utilising his expertise and financial resources, Rod now overseas his family office, Hoperidge Capital, a private investment vehicle with diversified holdings across the property, education, technology, medical innovation and energy sectors.
September / October 2023 – 7
Podcast
SCAN OR CLICK TO LISTEN TO THE INTERVIEW IN FULL 28 MINUTES
With Rob Langton ANTHONY LENZI
FOUNDER AND MANAGING DIRECTOR - THIRTEEN COMMERCIAL
Our guest on this episode is Anthony Lenzi, Managing Director of Thirteen Commercial. Thirteen Commercial is a dynamic construction and development company, founded by Adelaide entrepreneur Anthony Lenzi, who has more than eighteen year’s experience developing small and large scale properties across Adelaide. Headquartered in Flinders Park, Thirteen Commercial is spearheading several high profile industrial and commercial developments, throughout the Adelaide CBD and inner west.
ADVERTISE IN TPDR
Reach a wide audience pool by advertising in The Property Development Review. Call 03 9631 5476 or Email jamie@readymedia.com.au
Click for More Info
8 – September / October 2023
Podcast
THE PROPERTY DEVELOPMENT REVIEW
SCAN OR CLICK TO LISTEN TO THE INTERVIEW IN FULL 65 MINUTES
SAM BIGGINS
With Rob Langton
PARTNER, NATIONAL HEAD OF HEALTHCARE & LIFE SCIENCES – KNIGHT FRANK
In this interview with Rob Langton, Sam Biggins, discusses Knight Frank’s new Australian, Healthcare & Life Sciences division which focuses on healthcare real estate investments. The division seeks to leverage the robust demand for healthcare real estate, fuelled by factors like elevated investments in the sector, a surge in capital influx, and heightened interest in properties such as clinical medical facilities, seniors’ living spaces, and other healthcare- oriented assets. Sam highlights the significant opportunity in private hospitals, with only about 25% of their asset value securitised, creating potential for institutional and private investors to enter this asset class. Regarding market sentiment, Sam notes that despite challenges like rising debt costs, there is continued demand from established healthcare investors and growing interest from those diversifying their portfolios. Healthcare real estate exhibits lower volatility compared to traditional asset classes like office, retail, and industrial properties. The stability of tenant businesses and the strong demand for healthcare facilities contribute to the sector’s attractiveness. The scope of healthcare and life sciences real estate includes retirement living, aged care, medical centres, hospitals, specialist facilities, and life sciences.
The life sciences sector in Australia has gained momentum in recent years, with increasing interest in investment. Sam discusses a recent transaction involving Regis, where Hesperia acquired a property with plans for a mixed-use medical redevelopment, highlighting the trend of co-locating healthcare facilities with established healthcare precincts. Sam emphasises the importance of population growth, location, and competition in healthcare and aged care investments. He addresses the changing landscape of aged care regulations, the impact of COVID-19, and the evolving preferences for premium seniors’ living. He touches on the funding environment, sale and leaseback arrangements, and the integration of operational and property ownership roles. In the context of the life sciences sector, Sam talks about the demand for co-location with hospitals and academia, creating ecosystems that foster innovation. He notes the need for life sciences facilities to be in proximity to other occupiers to thrive. Sam anticipates growth for Knight Frank’s Healthcare & Life Sciences division, recruiting candidates across the Eastern Seaboard to better serve key markets. He also expects continued asset recycling in aged care, divestment of non-core assets by institutional investors, and opportunities for smaller investors to enter the sector.
September / October 2023 – 9
Editorial
INVESTMENT DEMAND FOR HEALTHCARE ASSETS STRONG IN THE CURRENT MARKET
Life Sciences and Innovation
“Drivers for investment in healthcare real estate are very strong, with demand coming from both established healthcare investors as well as new players,” he said. “We’re also experiencing strong enquiry from investors who have been long exposed to the traditional asset classes and are now looking to diversity their asset allocation. “Certainly the amount of capital that’s flowing into the sector continues to be quite high and there are significant opportunities for institutional and private investors to move into this asset class. Sam recently spoke to Development Ready about the healthcare and life sciences sector, with Knight Frank establishing a dedicated division in this sector last year in response to growth in the market. Investor demand for healthcare assets will outweigh available opportunities for the foreseeable future, according to Knight Frank Partner and National Head of Healthcare and Life Sciences Sam Biggins.
10 – September / October 2023
THE PROPERTY DEVELOPMENT REVIEW
“It’s a demand curve that we’re never going to get in front of.” Healthcare covers a broad range of assets, including retirement living, aged care, primary medical centres, day, acute and tertiary hospitals, and specialist facilities. Life Sciences includes large format pathology and research laboratories, pharmaceutical manufacturing facilities, biomedical research and even emerging sectors like medical marijuana farms and processing facilities. Life Sciences is a nascent investment class in Australia, despite being very well established in key global markets such as the United States, United Kingdom, parts of Europe and parts of Asia. “Investment here in Australia has really only begun to gather momentum in the last five years,” said Mr Biggins. “Prior to that, most of life sciences real estate was held either by government, or academia or a combination of the two.” One of the attractions for investors of Healthcare and Life Sciences real estate is that the tenants are very sticky, according to Mr Biggins. “The fitout can sometimes be a multiple of the base build construction costs,” he said. “So typically, once they’re there, it’s very rare that tenants relocate. “Medical real estate typically has much lower volatility and higher occupancy compared to the mainstream asset classes.” Mr Biggins said many investors and developers in this space were looking at buying larger medical and life sciences facilities, in established healthcare precincts. Knight Frank’s recently released Life Sciences and Innovation report, based on a survey of life sciences occupiers in Queensland, found the overwhelming feedback was the desire for co-location with other facilities in established healthcare precincts, particularly either hospitals or academia, or ideally both to create an ecosystem. “There’s no shortage of capital looking to build life sciences products here in Australia, but the key is having access to the tenants and trying to be in a location where you are either co-located or have close enough proximity to other life sciences ecosystem occupiers to establish a critical mass of tenants in an incubator-style environment who feed off each other” said Mr Biggins. “Being dislocated out as an island independently isn’t going to work.” Knight Frank is currently looking to grow its Healthcare and Life Sciences business to better service clients in key markets in this growing sector moving forward. Mr Biggins predicted that over the remainder of this year there would be opportunities created for smaller investors or high-net- worth family offices to gain exposure to the healthcare and life sciences sector. “I expect we’ll continue to see non-core assets divested by institutional investors, with their focus more so on larger, perhaps single-occupier institutional-grade real estate,” he said. “In terms of transaction opportunities, I believe we’ll also continue to see more asset recycling in the aged care space as a number of the operators rationalise their portfolios.” Mr Biggins said the aged care sector was experiencing change, as legislation around federal bed licences ceases to apply from next year, with approval going back to local councils or planning authorities. Aged care was also particularly challenged by COVID, which had an impact on the occupancy of facilities and the availability of labour. Construction costs are also having an impact on the asset class. “What we’re seeing from a transactional perspective is a number of our aged care sector clients are looking at their asset management strategies, including how many sites they ay have within a certain geography, the occupancy of those facilities, and also the availability of staffing for those facilities,” Mr Biggins said. “In some cases, they’re choosing to streamline their portfolios and divest some assets to release equity to reinvest into the facilities they will retain.” When buying healthcare and life sciences assets, investors need to look at the location of the asset, any competing facilities nearby, and in particular conduct deep research into the population growth in the area and the demographics, because that correlates back to the services that may be in demand in the area in the future, according to Mr Biggins.
September / October 2023 – 11
Share and track property documents.
InstaDocs data room streamlines the due diligence process by providing secure and easy access to documentation for buyers and tracking capabilities for agents.
Visit instadocs.com.au
Here’s what leading agents are saying
“I am thrilled with how InstaDocs has transformed our workflow and has now become an integral part of the smooth delivery of our services.” “From the moment we started using InstaDocs, we immediately noticed a significant boost in efficiency. The platform’s intuitive interface and powerful features have revolutionized the way we handle our documentation delivery. No longer do we wrestle with cumbersome manual paperwork or confusing file management systems. InstaDocs has simplified everything. It is now a standard inclusion in all our appointments. InstaDocs has not only positively impacted our workflow but has also elevated the overall productivity and added a layer of capturing contact details & client engagement with the disclosure documents. If you’re searching for a way to simplify your documentation processes and track engagement then, InstaDocs is the answer you’ve been looking for.”
“I’ve been using InstaDocs for my campaigns for a few months now and I’ve been really impressed with it.” “The platform is super easy to use and performs seamlessly. The user engagement tracking has made it much easier for us to identify the buyers who are genuinely interested in the asset - This enables me to know who to qualify during a campaign. Since InstaDocs comes with the DevelopmentReady package, it adds a lot of value to the listing package, and I’ll certainly continue using these datarooms in the future.”
Nick Estephen Director, Joint Head of Sydney South West Colliers
Robert Dunne Director, Commercial Sales, Brisbane Savills
“To say that I am a fan of this dataroom is an understatement. It has made my life as a commercial real estate agent so much easier. ” “Past practice of selling sizable or complicated real estate has relied on multiple due diligence files being set up or the use of dropbox or commercial datarooms run by others. All these practices had their drawbacks and difficulties. The ability to control our own dataroom and monitor the usage has improved efficiency, client reporting and most importantly response times with buyers. The team behind InstaDocs are quick to respond to any queries we may have and are certainly receptive to new ideas. I look forward to working with InstaDocs for a long time.”
“InstaDocs provides ease, qualification, and control. The platform provides a fast and user-friendly ability to store and communicate large amount of documents.” “We are able to completely control who has access to the information and verify applicants prior to permitting access to the data room. I would recommend this platform as it is widely accepted within our industry which makes it easy for everyone to use. Improved functions such as drag and drop have had a major impact on reducing the time uploading information and together with 1-click functions and individual downloadable ability provides further control over the information.”
Brett Wilkins Director of Capital Markets, WA RWC
Richard McCouaig Associate Director Sales & Leasing Commercial, Gold Coast Cushman & Wakefield
Featured News
BUILD TO RENT DEVELOPMENTS A SOLUTION TO SUPPLY & COST CHALLENGES
Build to Rent (BTR) is an established sector in the USA (estimated at 12% of residential housing) and has over the last decade blossomed in the UK (currently estimated at 5% of residential housing) - It has evolved in Australia over the past five years due to numerous factors, which I will elaborate on, but no one at this early stage is prepared to predict its potential size.
Benni Aroni Client Director - Property Pitcher Partners.
shortage, strong rental growth, and the inability of developers to achieve sufficient returns with their traditional BTS offerings. Those returns have been cruelled by sale price (revenue) limitations, especially in Victoria, construction supply and cost challenges leading to solvency issues, and interest/finance cost escalations. I anticipate each of those factors will improve over the next 12-24 months. My view (but certainly not a universal view) is that the conventional belief among residential developers (not specialist BTR developers) would be that if they had a site that could work for BTR or BTS, they would do a BTS development every time. My rationale for this is that for most sites BTS has higher returns, more advanced planning laws, a much shorter exit timeframe, feasibility models which developers and financiers understand and adopt, and no requirement for operational expertise. When BTR was first mooted in Australia, many saw it as an affordable housing model. In fact, the vast bulk of BTR developments are seeking at least a 20% premium over conventional rentals. The additional amenities and services provided by BTR developers to date, combined with the factors outlined above, have created momentum and initial success. As more product is added and renters struggle with cost-of-living
BTR is expected to be an important and relevant sector especially for large scale developers with expertise and access to requisite capital sources. The question of whether traditional Build to Sell (BTS) developers now engaging in BTR developments will revert to BTS when IRR returns are again 15% plus is a polarising one. When I put this question to Richard Temlett, National Executive Director of Charter Keck Cramer, his response was, “The BTR market will continue to emerge and evolve across Australian cities over the next market cycle up to 2030. Much like occurred with student accommodation, it will take one or more market cycles for BTR to be fully understood by financiers and investors, and also to be fully embraced by the renter population. Once it has reached a critical mass and has market acceptance it will play an important role in housing Australians – much like the role BTR is already playing in more mature housing markets overseas.” What is driving growth of BTR offerings in Australia? BTR offerings in Australia are already helping both developers and renters address current challenges in the housing market and the broader economy. BTR has had a very positive initial growth spurt due to our housing
14 –September / October 2023
THE PROPERTY DEVELOPMENT REVIEW
in the revenue model of the BTR developer. If those skills are not within the developer’s business, partnerships must be formed, and revenue sharing models will need to be incorporated into feasibilities. These combined with project and development management fees should generate a double-digit internal rate of return (IRR). Operational revenue may add to revenues over time, but these are marginal without significant scale. When appropriate, an exit profit will hopefully increase the overall IRR to the mid-teens or above which is required to justify the effort and risk involved. BTR is an opportunity for yield, but the policy environment must be accommodated too. If we accept rentals will accommodate over 30% of our population, having custom-built quality rentals is an ambition we should embrace. The threat of rental controls is the antithesis of encouraging investment in this sector. Reforms that will assist include: Planning: Jamie Govenlock , Director at Urbis, was kind enough to provide the following quote exclusively for this article: “BTR is a relatively new phenomenon for the Victorian planning system. There are many differences between the traditional BTS product as compared to the BTS approach. The Victorian planning system in sense has been caught a little off guard with the surge in BTR applications. As BTR is more heavily focused on creating an active community life in the buildings, planning controls should respond with more flexibility to the internal design of BTR buildings. The current control framework was really geared toward BTS and not BTR. A change that could be made to the current planning framework for BTR would be for greater flexibility around the provision of private and communal open space areas. In BTR projects, given the approach to create communities in buildings, there could be a scenario where private open space is significantly reduced in order to provide high quality communal area to foster interaction and community in buildings for residents” Tax reform: I am indebted to Craig Whatman and Adrian Clerici , Partners at Pitcher Partners for their input and far superior knowledge in this area: Having noted the importance of capital, and the overwhelming sourcing being offshore, it becomes imperative that our managed investment trust (MIT) and thin capitalisation taxation rules do not discourage overseas investors. BTS developers can claim GST credits on construction costs, BTR developers generally cannot unless their product can meet the requirements to be classified as commercial residential premises. GST reform should also be considered. The land tax holding cost ends at the point of sale to BTS apartment purchasers, but BTR developers retain the asset and need to incorporate land tax within their annual holding and operational budgets. Reforms on MIT rules, depreciation and land tax concessions have been reviewed and to an extent implemented, but they could go further. Developers should capitalise on population growth and the BTR opportunity now. Macroplan’s Brian Haratsis has recently been quoted as saying Melbourne could be the first location in Australia with a competitive BTR market. Our skyline supports his view. His data states that of the 4,443 operating BTR units in Australia, 2,245 are in Melbourne. The announced pipeline in July of 19,853 has no less than 13,081 in Melbourne. The reason is simply that our land prices and availability allow feasibilities to achieve the yields developers and investors require. Brian does record that these numbers are minor, noting he estimates Australia will develop over one million residential developments between now and 2030, lifting total housing stock to over 12 million. Over that period, Brian estimates population growth of 2.35 million people, 500,000 of them in Melbourne. To date there are a handful of operating assets in Australia, but those have demonstrated the local ability to create and manage assets as well as those in other more established markets such as the UK have a competitive advantage. For BTS developers looking to address funding risk while generating yield from their projects, a transition to BTR is challenging but what an opportunity.
challenges, BTR developers are already aggressively looking for development cost savings and a mid-market offering. BTR does allow diversity of offerings and developers such as Assemble are targeting workers in key industries with innovative rent to buy models. It’s important to note that BTR in Australia in the private sector has no ambitions to resolve homelessness, social disability accommodation, or refugee housing issues. That said, leading groups have demonstrated an ability to deliver and manage affordable housing elements, diversifying the BTR offerings available. The world is shifting towards renting assets rather than owning them and the BTR pivot is a manifestation of this trend. Brand and amenity will be material in this sector especially with millennials who will prioritise lifestyle choices over owning a home. Revenue generation arising from transition to BTR sector. The BTR developer operator can make its return from: • sourcing and managing the capital required for the project • project and development managing fees in the delivery stages • operational management on completion • selling the end development at the appropriate time (we are now seeing BTS developers offering turn-key projects to BTR operators). Where any of these tasks are outsourced, revenue sharing models are negotiated. Although developers are now exploring smaller models, initial BTR developments in Australia have been undertaken by global players or larger local developers. They have generally looked at models above 200 apartments to enable sufficient scale and intend to brand multiple sites. Finding a dearth of BTR management expertise, local operating groups have created internal management arms. These internal teams are doing what they can, however operational requirements for a BTR development need to be broader in scope to be efficient and profitable. Therefore, a trend towards engaging external management operations is emerging. Management companies with a background in community living operations, such as student accommodation, have expertise and are providing third-party services to developers, so each party can focus on what they do best. Sourcing and managing capital are keys to unlocking BTR in Australia. Speaking to BTR developers was a seriously educational exercise for myself. Sourcing and managing capital are the lifeblood of most successful and scalable business models, but its importance in the BTR sector was not apparent even to me until I took a deep dive for this article. Given BTR developments are large, require more than $100m in debt and equity funding, and the substantive BTR developers intend to create numerous projects with aggregate valuations in the billions, the role of capital becomes pivotal to their business models. In the short period that BTR has evolved in Australia, Christian Grahame , the Head of HOME, estimates that over $20b of capital investment in the sector has already been utilised. He notes 80% of that capital has been sourced from overseas funds and only 20% locally. Asia, the UK, Canada and the Netherlands feature prominently. The majority of sourcing is from sovereign and institutional funds all over the globe. This suggests to me that our own superannuation funds will be major players soon. The one note of caution is that, while these capital partners are patient, and factor ESG and social impact into their investments, they require commercial returns. If BTR cannot provide acceptable returns, for various reasons including government regulation, these capital sources will pivot and materially impact the sectors growth, if not survival. The revelation for me is that sourcing and managing capital is a vital element
September / October 2023 – 15
Featured News
WHAT WILL SPRING BRING?
Dan White Managing Director, Ray White Group - Fourth Generation White Family
Our August 2023 sales results officially certified the renewed and broad-based resurgence in the residential market that we have been seeing since late May 2023.
There were many extraordinary results from our residential offices during August, the most remarkable being a record month from Ray White Lower North Shore Group, writing $216 million in sales, and from Josh Tesolin and his team at Ray White Quakers Hill selling 135 properties.This revitalised market rewards those businesses who fought hardest during more subdued times. Our Chief Economist, Nerida Conisbee, has written about some of the reasons as to why we are seeing the market behave in the way that it is. The Australian commercial market tells a less exciting story. There remains a more significant disconnect between where buyer’s see value and the urgency of vendor’s to genuinely test the market to see where value sits. Transaction numbers reflect this divide. Aside from these figures and our awards nights that were held for our Victorian, New Zealand, South Australian and Commercial networks, the highlight of the month was the extraordinary response from our New Zealand members to the release of NurtureCloud. We are now live across our international network with NurtureCloud, enabling our business leaders to provide their teams with a unique and AI powered platform to communicate with customers. We are now well into an extensive trial of the next few modules of NurtureCloud that we hope will enable us to provide both buyers and vendors with a significantly improved experience. A huge thank you to all our members in this trial, especially Vince Carnevale and his team at Ray White Pascoe Vale. What will spring bring? There will be enough stock to record some big results, maybe not at 2021 levels but not too far off. So much depends of course on the broader economic sentiment and how that influences buyer behaviour. One senses it would not be prudent, nor worth tempting fate, to revise our budgets just yet!
We wrote $6.9 billion in sales in August across Australia and New Zealand. This was 14 per cent higher than the same month in 2022. Remarkably, it was only four per cent down on 2021 - a year that broke all the sales records and has been disclaimed by many as a ‘statistical outlier’! In May, we reported a small, but identifiable, increase in new listings coming to market especially on Australia’s east coast. This was very unusual - new listings normally drop in the winter months. Interest rates were still rising, and given that the expectation was for an increasingly depressed market, was this a blip? But the trend became firmer in June, and stronger again in July. Were more listings coming a result of the impending ‘mortgage cliff’ that so many forecasters were predicting? Hard to say: vendors that are coming to market as a result of financial stress will usually keep that fact to themselves. We listed 10,500 properties during August - 12 per cent up on last year and more than 20 per cent higher than two years ago. Buyers, including potential sellers that intend to repurchase, now have a lot more property to choose from. Given that our listing authority numbers (i.e. properties that will formally come to market in the next few weeks) are growing strongly, the market is very well-stocked for Spring. While there is emerging confidence in New Zealand, the national election set for mid-October is just one reason why it is lagging Australia in terms of new listing activity. Some have predicted that this increase in listings would result in a ‘buyer’s market’. This hasn’t happened, at least it hasn’t happened yet, and it may not happen! The median number of days it took us to sell the properties we sold in May was 37, and in August it was 31. Auction clearance rates in Australia have risen from 60 per cent a year ago to just over 70 per cent today (though are still about 10 per cent below their peak in October 2021). Neoval’s August price indices for August showed renewed price growth in our major markets.
16 –September / October 2023
Market News
THE PROPERTY DEVELOPMENT REVIEW
LAND AUDIT HELPS NORTHSHORE SITE TO CREATE UP TO 1,500 HOMES
Up to 1,500 new homes will be developed following the release of two significant development opportunities at Northshore.
been delivered, and this land will continue to create more housing. The Government is also supporting infrastructure in the precinct with a $180 million investment for the design and construction of a major roads project at Northshore. Queensland Premier, Annastacia Palaszuczuk, commented on the Queensland Government’s response to housing shortages, “Queensland and the whole nation are experiencing housing pressures. That’s why we held the Housing Summit and a key outcome has been the land audit.” “My Government is committed to unlocking more land to
A site identified through the Queensland Government Land Audit will deliver Social and Affordable housing. The dedicated Social and Affordable Housing on an 8,000 sqm site is expected to provide approximately 150 to 200 homes and will be supported by a Community Housing Provider. The second opportunity is for a residential development, that includes a requirement for 5% affordable housing, on approximately 4.1ha of land, across three super lot development sites, which is expected to provide approximately 1,300 dwellings over the next decade. Both developments will facilitate over $500 million of private sector investment and create around 1,450 construction jobs. The development scheme offered can allow up to 143,886 sqm* of Gross Floor Area & up to 30 storeys. The landmark site sits adjacent to the Olympic & Paralympic Games Athletes Village precinct, and it is the last development opportunity being offered by the Queensland Government in Northshore prior to the Brisbane Olympic & Paralympic Games hosted in 2032. The housing is expected to consist mainly of apartments, with the final makeup to be determined through the development approval. To date, around 3,000 dwellings at Northshore have
increase housing supply,” added Palaszuczuk. The land audit was a key commitment from the
Queensland Government’s Housing Summit. Work is continuing with councils as well as community and faith- based organisations to identify underutilised land that could potentially be used for housing. “The land audit is a great example of finding creative solutions to housing challenges,” commented Queensland Deputy Premier, Steven Miles. Miles added, “Up to 1,500 homes will equal a 50 per cent increase in homes in Northshore.” Currently, 17 sites are being invested for suitable delivery of housing.
September / October 2023 – 17
Editorial
INTERNATIONAL STUDENTS ADDING TO HOUSING SUPPLY ISSUES
As international student enrolments rise, more student housing in need to accommodate this growing population.
cent). Despite this large jump in student numbers, activity continues to still be behind 2019 results, however, there has been a movement towards NSW over Victoria with recovery occurring quicker in the more northern state. NSW is now home to the bulk of the student population, while markets such as Queensland, WA and SA have also increased their representation. While student numbers were higher prior to COVID-19, so too was our development of purpose built student housing. The rise of offshore investors into this space saw a strong uptick in development both on-campus and private facilities. Many groups came to Australia to capitalise on this need, however, have been quiet over the last few years. Construction starts were at their highest in 2019 where 8,000 units commenced across 22 projects, the bulk located in Sydney, Melbourne, Brisbane and Adelaide, with some of the first purpose built facilities in Perth also coming online. With the tap turning back on
Vanessa Rader Head of Commercial Research Ray White Commercial
There have been 648,700 international student enrolments across Australia this year, a 27 pr cent increase on the same time last year. After China banned foreign university online courses earlier this year, we saw a remarkable increase in the number of international visas and subsequent enrolments in Australian courses. The Chinese foreign student population is the largest in the country, representing 22 per cent of all international students, followed by India (16 per cent) and Nepal (9 per
18 – September / October 2023
THE PROPERTY DEVELOPMENT REVIEW
for international students, and the shortage of housing across the country, the need to continue to develop student accommodation options has now expanded. With most capital cities recording residential vacancy rates in the sub 1.5 per cent range, and rentals increasing as much as 30 per cent per annum in some markets, the mismatch in demand and supply across the broader residential market has been added to by this rapid influx of students. Encouragingly, over the last 12 months we have seen more than 3,500 purpose built student accommodation units completed (dominated by Sydney and Melbourne), many of which were fully subscribed to prior to completion, further emphasising the underlying demand. While 2023 has seen limited new starts, there are close to 2,500 units currently under construction likely to be added to supply over the next 18 months. While we have seen some improvement in development activity, the limited movement in this space during the pandemic has seen the need for some “catch up”, not dissimilar to the broader residential market grappling with population increases fuelled by immigration. However, a combination of labour shortages and high material costs continues to strain the building industry, coupled with lengthy planning delays all adding to the untimeliness of supply projects. Across the investment front, student accommodation and its relationship with residential demand and strong increases in income has not gone unnoticed. An asset class long favoured by offshore buyers, these groups have historically purchased larger portfolios across the country. However, limited assets to market have seen no major transactions occur more recently. The growth of assets such as boarding houses as an investment option have increased in popularity in line with significant rises in residential rents and the demand for smaller and more affordable housing options from a range of tenants.
September / October 2023 – 19
Purpose built for selling income producing commercial property TENANTED INVESTMENT
Here’s the difference
In 2023 are you still trying to reach commercial property investors by advertising your listing at the suburb level on a main stream property portal? Unlike residential buyers focused on certain suburbs, commercial investors search for properties far and wide. See how you can utilise our multi-channel approach, targeting a 20k+ verified commercial buyer database on a state and national level.
National lead-gen EDM program Reach the inbox of over 20k investor subscribers Best in class social media lead-gen Leverage our national first-party investor data InstaDocs Virtual data-rooms for deal tracking
Our investor audience includes
I nvestment fund managers Private investors Childcare owners/buyers REIT’s Diversified property fund managers Unlisted property funds Occupiers e.g. (Data Centres, Call Centres, Medical, IT, Trade Sales, Logistics companies, Retail/Convenience groups) HNW medical professionals Development groups
Request a Media Kit for more information
or scan QR code CLICK HERE
20 – September / October 2023
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
September / October 2023 – 21
MARKET MOVES
VIC
VENDOR/ PURCHASER
DESCRIPTION
AGENCY
SALE $
High-end residential developer Roulston with the Buxton Group has secured the last significant development site comprising two adjoining lots in the highly converted Malvern East, directly opposite Central Park.
385-387 Wattletree Road, Malvern East
Colliers' Ted Dwyer and Ben Baines
$14.5 million
P: Roulston & Buxton Group
Fitzroys’ Brent Glassford and Marco Sandrin
A local operator has pounced at the opportunity to buy their own premises after a highly-functional logistics facility on the same well-located street was put on the market.
$5.95 million
47 Burns Road , Altona
P: Local Operator
A prime strata-titled investment occupied by national restaurant chain La Porchetta and positioned opposite Woolworths in a booming Melbourne growth corridor sold for $3.3 million.
Shops 5-8, Hazel Glen Drive, Doreen
V: Local Investor P: Local Investor
Fitzroys’ Ervin Niyaz and Chris Kombi
$3.3 million
Circa $8 million
5-7 Clarendon Street, Avondale Heights
A 1,414 sqm childcare centre with a annual rental income of $428,400 and a new 20-year lease sold to Melbourne-based investment fund.
CBRE's Sandro Peluso, Marcello Caspani-Muto and Jimmy Tat
P: Hume Partners
101 Clarke Street, South Melbourne
Clarke House - a multi-storey 1,025 square metre commercial building, owned by former Piping Hot managing director, sold 24 hours before its scheduled auction on Friday.
V: Mark Johannsen P: Local Owner-Occupier
Jones Real Estate's Paul Jones and Luke Peric
$6.56 million
A corner hospitality freehold, tenanted by Figlia Pizzeria & Grana Deli, by hostpiality operators Luke Skidmore, Andreas Papadakis and Alberto Fava (Tipo 00) sold on a 4% yield and a land rate of $9,722 per sqm.
331-335 Lygon Street, Brunswick East
V: Private Investor P: Private Investor
Fitzroys’ Chris Kombi and Ervin Niyaz
$3 million
A local investor has purchased a 1,128 sqm office warehouse building, reflecting a building rate of $3,590 per sqm.
Colliers' Mitch Purcell and Corey Vraca
$4.05 million
193 O'Herns Road, Epping
P: Local Investor
Vicinity Centres has sold the Broadmeadows Homemaker Centre for $20 million on the heels of its recent $134.5 million sale of a 50% stake in the neighbouring Broadmeadows Central regional shopping centre.
V: Vicinity Centres P: Private Investor
1185-1197 Pascoe Vale Road, Broadmeadows
$20 million
CBRE’s James Douglas
NSW
VENDOR/ PURCHASER
DESCRIPTION
AGENCY
SALE $
A Sydney-based investor group purchased a 5,259 sqm fully occupied asset in Wollongong that holds a rental income of $1.412 million in an off-market deal.
Burgess Rawson's Geoff Sinclair and Yosh Mendis
67-71 King Street, Warrawong
P: Sydney-based Investor
$21 million
After a successful capital raising campaign that saw $700 million raised, Centennial and Brookfield Real Estate's Enhanced Value Partnership has secured two industrial and logistics assets spanning 42,000 sqm.
V: Centuria Capital P: Centennial & Brookfield Real Estate
114 and 120 Old Pittwater Road, Brookvale
Colliers' Gavin Bishop in conjunction with CBRE's Chris O'Brien
$84 million
Centennial continued its purchase streak this month, with the acquisition of another 5.3Ha logistics facility.
V: Charter Hall P: Centennial
115-121 Jedda Road, Prestons
Cushman & Wakefield
$79 million
The iconic Republic Hotel, in the centre of the Sydney CBD, was sold by a Singaporean Investment Trust, which acquired the asset in 2017.
V: Singaporean Investment Trust P: Virtual
Circa $40 million
JLL's Ben McDonald, in conjunction with Savills' Nick Lower
69-73 Pitt Street, Sydney
A two-storey freehold with 180 sqm of net lettable area on a 140 sqm site was sold by a local owner-occupier.
V: The Choy Family P: Offshore Investor
Knight Frank's James Masselos and Anthony Pirrottina
133 Belmore Road, Randwick
$2.35 million
V: Redcape Hotel Group (MA Financial) P: Local Operator
HTL Property's Sam Handy and Andrew Jolliffe
Undisclosed
3 Memorial Drive, Shellharbour
Redcape continued its selling streak with the sale of the Central Hotel.
22 –September / October 2023
Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108 Page 109 Page 110 Page 111 Page 112 Page 113 Page 114 Page 115 Page 116 Page 117 Page 118 Page 119 Page 120 Page 121 Page 122Powered by FlippingBook