Issue 50 | The Property Development Review

Welcome to Issue 46 of The Property Development Review, exclusively for agents, developers and investors.

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2 – April / May 2024

THE PROPERTY DEVELOPMENT REVIEW

April / May 2024 – 3

CONTENTS

6 THE INTERVIEW Michael Malone iiNET

16 MARKET MOVES The Latest Transaction Activity & Key Deals

28 NSW FEBRUARY’S BEST PERFORMING DEVELOPMENT SITES Top 3 perfoming listings 56 VIC FEBRUARY’S BEST PERFORMING DEVELOPMENT SITES Top 3 perfoming listings 82 QLD FEBRUARY’S BEST PERFORMING DEVELOPMENT SITES Top 3 perfoming listings 110 SA FEBRUARY’S BEST PERFORMING DEVELOPMENT SITES Top 3 perfoming listings 122 WA FEBRUARY’S BEST PERFORMING DEVELOPMENT SITES Top 3 perfoming listings

FEBRUARY’S BEST PERFORMING DEVELOPMENT SITES (NSW)

27 & 29 TRYON ROAD LINDFIELD – NSW 2070

122-124 QUEENSCLIFF ROAD QUEENSCLIFF – NSW 2096

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Development Potential Residential

MARKET MOVES

This prime raw residential development site spans 3,075 sqm*, featuring rear lane access via Tryon Lane and approximately 15 car spaces, ensuring convenience and accessibility. Zoned R4 High-Density Residential, it allows for a 1.3:1 ratio and a 17.5-meter height limit, with the potential for a significant uplift to 3:1 FSR and six (6) storeys under the NSW government’s Transport Oriented Development Program. Currently operating as an approved and renovated aged care facility with a single dwelling, it sits strategically in Lindfield Village, merely 270 meters from Lindfield Train Station. Surrounded by leading retailers, eateries, and public transport, including major developments like ‘Seldon’ by Mirvac, it offers an enticing investment prospect.

66-68 DUDLEY STREET RYDALMERE – NSW 2116

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Development Approved Residential, Boarding House

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This opportunity comprised two adjacent houses on a sizable land parcel of 1,194sqm*, strategically situated near Western Sydney University (Parramatta Campus) and major transport hubs, with a Development Approval secured for a 38-room boarding house, presenting exceptional potential. The site at 66-68 Dudley Street, Rydalmere, boasts key X-factors including DA approval for the boarding house, a land area of 1,194sqm*, an FSR of 0.6:1 and a Height Limit of 11m. Existing improvements consisting of two residential houses, convenient access to the Parramatta light rail line and Dundas Station while also having a holding income of approximately $50,000* per annum, which proved very popular with our New South Wales developer audience!

12 WEALTH REPORT Private investors the most active buyers in Australia and globally 10 THE INTERVIEW John Rothwell AO Austal 8 Hotel Transactions Hotel investors ride out economy at high end of town 14 INDUSTRIAL NEWS 2024 Commercial property frontrunner

20 UPCOMING COMMERCIAL AUCTIONS Auction Hub

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FEBRUARY’S BEST PERFORMING DEVELOPMENT SITES (VIC)

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26 HUON PARK ROAD CRANBOURNE NORTH – VIC 3977

649-651 GLEN HUNTLY ROAD CAULFIELD – VIC 3162

Auction Hub

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Auction Hub

Development Approved Child/Healthcare

This property boasts a sizable 1,922sqm* landholding with a generous 30m* frontage. With a permit approved for a cutting-edge 112-place childcare centre, it meets the burgeoning demand for childcare in the area. Positioned in General Residential Zone 1 (GRZ1), it offers lucrative leasing potential with an Agreement to Lease secured at $403,200pa net rental. Notably, the vicinity enjoys a favourable Child to Long Day Care Place ratio of 3.45 within 2km, complemented by the presence of 6 primary schools and proximity to Casey Central and HomeCo. Cranbourne Shopping Centres. With all of this in mind, it is no wonder that this site was one of our best performing for February.

Auction Hub

Upcoming

Auctions

Upcoming

Auctions

119 CHESTERVILLE ROAD CHELTENHAM – VIC 3192

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Development Approved Commercial, Industrial

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Situated at 119 Chesterville Rd, this property offers 9,226 sqm* of Industrial 1 zoned land, nestled beside parkland to its south and west. It comes with a coveted permit for a commercial/industrial development, featuring a uniquely crafted design tailored for the local community.

Social Media retargeting and lead-generation

24 MARKET INSIGHTS Real Estate Debt Emerges as Key Alternative Strategy Clare Burnett Urban Developer 26 ADVERTORIAL Tech Solutions to Increase Profitability and Productivity. Procore 27 MARKET INSIGHTS Revelop Snaps Up ‘Trophy’ Stockland Sydney Site Clare Burnett Urban Developer 84 MARKET INSIGHTS Cairns Runs Hot Marisa Wikramanayakefri Urban Developer

FEBRUARY’S BEST PERFORMING DEVELOPMENT SITES (QLD) For developers, it presented an opportunity where the groundwork and holding time had already been completed. Alternatively, it presented the opportunity to seize the chance to establish your own industrial facility in Bayside’s sought-after precinct, either as an owner- occupier or investor. Positioned amidst a dynamic locale with Morris Moor and “The Grounds” by Pellicano nearby, alongside Waves Recreation Centre, it promises a thriving environment.

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SPINNAKER SOUND MARINA , SPINNAKER DRIVE SANDSTONE POINT – QLD 4511

1-3 HOWARD STREET RUNAWAY BAY – QLD 4216

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Development Potential Residential

Spinnaker Sound Marina provides a rare chance to acquire a substantial waterfront property and established marine business near Brisbane and the Sunshine Coast. As the access point to Moreton Bay, the marina offers year-round boating in the sheltered Pumicestone Passage without sand bar crossings. With Queensland boat registrations rising steadily, demand for berths and maintenance facilities is high. New developments face significant barriers, making established marinas like Spinnaker Sound desirable. With over 250 loyal customers and high occupancy rates, the marina generates a stable annual EBITDA of approximately $1,000,000. A waitlist of 100 boats promises immediate income growth.

SPRINGFIELD CENTRAL - CITY WEST 7003 SINNATHAMBY BOULEVARD, SPRINGFIELD CENTRAL – QLD 4300

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Development Potential Mixed Use

Access to purchase-ready develop buyers for targeted leads

This strategic development site, benefiting from “Town Centre” zoning, offers a blend of permissible uses, including convenience retail, large format retail, commercial offices, entertainment, leisure, and medium-density residential options. Supported by robust population growth, retail expenditure, and pent- up demand, City West Development highlights its prime 127,250m² landholding with significant mixed-use and future development potential.

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FEBRUARY’S BEST PERFORMING DEVELOPMENT SITES (SA) Positioned approximately 25km southwest of Brisbane CBD, it lies at the heart of one of Australia’s fastest- growing regions, Greater Springfield. With flexible zoning and land use designations, it caters to evolving needs, staging its precinct development to match the burgeoning population catchment, forecasted to reach 251,428 by 2036.

With an extensive developer database coupled with predictive intelligence, we identify and target purchase-ready buyer segments that match your property, delivering quality leads for campaigns.

159 & 161 ANGLE VALE ROAD ANGLE VALE – SA 5117

100 FOLKESTONE ROAD DOVER GARDENS – SA 5048

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Development Potential Child/Healthcare, Commercial

This appealing development site spans 3,864 sqm* of land, offering diverse project possibilities (STC). The property’s current residence is leased until July 2024, providing a steady holding income of $430/week during the planning phase. Zoned as a Master Planned Township, permissible developments encompass a range of options, such as Childcare Facilities, Community Facilities, Consulting Rooms, Dwellings, Offices, Retail Shops, and Ancillary Accommodation (STC). With a landholding of 3,828 sqm* spread across 2 titles, along with the included residence generating income until January 2025, this site presents an ideal canvas for various development prospects, in line with zoning regulations and potential approvals.

200 GROTE STREET ADELAIDE – SA 5000

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Development Potential Commercial

Access to purchase-ready develope buyers for targeted leads

Presenting a 3-year leaseback, this property offers developers and occupiers a clear trajectory. It features a sizable 1,130sqm* showroom with a 184sqm* warehouse for storage, totaling 1,365sqm* of lettable space on a 1,519sqm* CBD site. Located on a bustling CBD road with Capital City zoning and a 53m height limit, it promises diverse development prospects. Key assets include the prime CBD location, functional showroom/warehouse space, 3-street frontage, proximity to F&B options and Chinatown, and a short-term income of $275,000. This property is a strategic investment opportunity with significant potential for future growth and development.

Social Media retargeting and lead-generation

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FEBRUARY’S BEST PERFORMING DEVELOPMENT SITES (WA)

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68 & 106 NETTLETON ROAD BYFORD – WA 6122

LOTS 1 & 2, 75 & 76 OCEAN DRIVE BUNBURY – WA 6230

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Development Potential Residential

This site, located in the Shire of Serpentine Jarrahdale and suburb of Byford, lies approximately 45 kilometers south of Perth CBD and 2.7 kilometers east of Byford town center. With a frontage of about 689m to Nettleton Road, it is bordered by established residential properties to the north and ongoing residential development to the southwest. Within lots 103 and 801 are Cohunu Koala Park, 3 residential dwellings, and the former Byford Animal Quarantine Station. The total site area spans 23.60 hectares, with a proposed Tourism Park title of 6.67 hectares to be retained by the existing owners, leaving a balance land area of 16.93 hectares for sale. Detailed plans and potential lot yield are available in a due diligence pack, with potential amendments subject to discussion.

to nspect, nvest, or Vst

to nspect, nvest, or Vst 163 BELGRADE ROAD WANNEROO – WA 6065

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Development Potential Industrial, Residential

Access to purchase-ready develo buyers for targeted leads

Located within the East Wanneroo District Structure Plan, endorsed by the Western Australian Planning Commission in July 2021, this property is bounded by Franklin Road to the east and Belgrade Road to the south. Zoned as ‘Suburban neighbourhood’ under the Structure Plan, it falls within Precinct 5 – Belgrade Road, aiming for 1,900 dwellings. Notably, Precinct 5 features medium-density housing, with intensified development along Belgrade Road to maximize views. The area enjoys strong connectivity to Wanneroo town center. With the northwest sub-region’s population projected to more than double by 2050, from 322,490 in 2011 to over 740,330, significant growth opportunities are anticipated. 58 VIC LISTINGS

15 OFFICE NEWS Australia’s 2024 office market presents golden opportunities

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30 NSW LISTINGS

With an extensive developer database coupled with predictive intelligence, we identify and target purchase-ready buyer segments that match your property, delivering quality leads fo campaigns.

86 QLD LISTINGS 124 WA LISTINGS 134 TAS LISTINGS 136 ACT LISTINGS 112 SA LISTINGS

4 – April / May 2024

THE PROPERTY DEVELOPMENT REVIEW

FROM THE CEO

Welcome to the 50th edition of The Property Development Review. It feels surreal to have reached this milestone – whilst this publication has evolved significantly over the course of the past eight years, the content, approach & end goal have remained consistent. I recall early iterations of the magazine focusing narrowly on one sector of the commercial property market being ‘permit- approved’ development sites for sale in Victoria. Since that time and with our creative, sales & product teams working in close collaboration, the Property Development Review is now a highly-respected, National publication with a constantly expanding readership that now includes over 50,000 developers, investors, family offices & builders throughout Australia. In line with the growth of the broader Ready Media Group business, we owe a significant part of our success to the trust & strong relationships that have been established with our valued agency partners & I’d like to take this opportunity to express my sincere thanks & gratitude for their enduring support. Inside this month’s edition, Colliers Hotels Transaction Services explores the changing and redefined hotel market, particularly in the wake of the pandemic. Knight Frank shares insights from The Wealth Report 2024, particularly around private investors have become the most active buyers, both here in Australia and globally. The Urban Developer discusses the rise of

non-bank lenders in real estate debt in the face of risk-averse traditional banks. In our exclusive The Interview series this month, Rob Langton sits down with Michael Malone, Founder of iiNet, the homegrown Australian success story he built to become the Nation’s second-largest listed ISP with over 2,000 personnel, over 1m customers & $1bn in annual revenue before its sale in 2015 in a circa $1.5bn deal. In a rare profile, he also sits down with

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

highly regarded businessman & entrepreneur, John Rothwell AO - Non-Executive Chair, Founding Director & the driving force behind Austal, the World’s largest aluminium shipbuilding company. Lastly, as always, we keep you up to date with the latest development and commercial opportunities as well as significant transactions that have occurred from around the country. Nick Headshot - TPDR Intro Page

Enjoy!

MAGAZINE DESIGN Nespecart

ON THE COVER Victor -unsplash

NICK MATERIA CEO - Ready Media Group

April / May 2024 – 5

The Interview - EXCLUSIVE

SCAN OR CLICK TO WATCH THE VIDEO INTERVIEW IN FULL 70 MINUTES

MICHAEL MALONE

With Rob Langton

IINET

Australia during which time, he simultaneously pursued his interest in becoming a teacher by completing a Post-Graduate Diploma in Education. As a student of UWA in the late 1980’s / early 1990’s, Michael’s fascination with technology and in particular, early iterations of the internet began to take shape and whilst access was available to students on campus, there were limited options available for residential use due largely to the prohibitive costs associated with the setup and establishment of fixed line services back to the US. Eager to utilise the early text-based services the internet provided (chat forums / basic e-mail), Michael calculated that the costs of a fixed-line service to his parents Padbury garage ($25k per annum + $15k setup cost) could be paid for on the condition that he was able to sign up 200 paying clients on a flat-rate of $25 per month, with the outstanding amount provided by his parents. With this innovative solution in place, Michael founded iiNet Technologies Pty Ltd n 1993, becoming the first ISP in Perth & eventually running more than 350 phone lines as well as 350 modems

Michael Malone, founder of iiNet, is a prolific Western Australian entrepreneur and company director. Under his guidance, iiNet emerged as a remarkable success story within the Australian business landscape, evolving into the nation’s second-largest publicly traded Internet service provider. With a workforce of 2,000 individuals and a customer base of 1 million, iiNet boasted an impressive annual revenue of $1 billion before its acquisition in 2015 in a deal valued at approximately $1.5 billion. Born in County Clare, Ireland in 1969, Michael’s family briefly migrated to Australia in 1974 and lived briefly in Queensland before later returning to Ireland - in 1978, the family permanently migrated back to Australia using the assisted passage scheme and settled in Perth, wherein they established a fencing business run by both parents. Michael attended Christian Brothers College in Leederville (now Aranmore Catholic College), graduating in 1986 before enrolling in a Bachelor of Science (Mathematics) at the University of Western

6 – April / May 2024

THE PROPERTY DEVELOPMENT REVIEW

that occurred in a three-year period between 2011-2014. After a months-long sabbatical, Michael made the decision to step-down as Chief Executive Officer of iiNet in 2014, selling down his holdings in the company over a number of years before and after its takeover by rival TPG in 2015. Following his success with iiNet, Michael has held a number of executive and board positions, including Co-Founder and Chairman of Diamond Cyber Security (subsequently sold to CyberCX), Chairman of SuperLoop, Director of NBNCO, Director of WiseTech Global, Director of Seven West Media & Non-Executive Director of Healthengine amongst others. He is also a prominent private investor through both his family office, Phi Capital, as well as via funds including Ten13, Ellerston and JAADE. In this rare and exclusive interview, Michael details his extraordinary personal and professional successes, the journey of iiNet, his unique philosophy and approach to business, the evolution in Western Australia’s start- up scene and what he considers his most seminal achievements.

that enabled customers to connect to the web. By 1995, iiNet had expanded into Perth’s CBD and began formally recruiting its first employees, with the company becoming synonymous for a number of internal innovations including being the first company in Australia to utilise Net Promoter Scores (NPS), insisting on staff having backgrounds or experiences in hospitality to drive strong customer service, linking staff bonuses to feedback / survey results as well as establishing call centres in predominantly English- speaking countries such as Australia, New Zealand & South Africa. As the business expanded throughout the 1990’s, its innovative culture saw it expand its offerings to include ‘triple- play’ services (broadband, telephony, video) whilst Michael borrowed heavily to fund the firm’s growth until it’s listing on the ASX in 1999. Over the course of the ensuing decade-and-a-half, iiNet grew to become Australia’s second largest internet service provider, acquiring more than fifty companies on its way to generating over $1bn in annual revenue such as New Zealand’s iHug in 2003 ($71.5m), OzEmail in 2005 ($100m) in addition to more than $225m in deals

April / May 2024 – 7

Hotel Transactions

HOTEL INVESTORS RIDE OUT ECONOMY AT HIGH END OF TOWN AS PREMIUM ASSETS REDEFINE MARKET.

Colliers Hotels Transaction Services

AUSTRALIAN HOTEL TRANSACTIONS 2020 TO 2024F Source: Colliers

Transaction volumes for Premium hotels increased by 20.9% last year, as investors bet on continued high-performance and resilient pricing, according to Colliers.

across the hotels market, ensuring investment volumes held up well last year compared to other commercial property asset classes, decreasing only 7% compared to 2022 to $2.4 billion. “While established portfolio hotel owners accounted for 87% of transactions in 2023 and acquired all ten Premium assets on the market, the hotels sector continues to attract new investors with lower cap rate expansions and more capital targeting quality opportunities across the burgeoning sector.” In a marked turnaround, domestic investors accounted for 77% of transactions last year, a level of deal flow which has not been witnessed since 2006, for this buyer segment. However, offshore investors are expected to play a more active role over 2024, expanding on the $30 billion of Premium hotels they currently own. Many opportunistic funds held onto dry powder or

Australia’s growing Premium hotels segment defies the uncertain economic climate and proves crown jewel of the market, with the transaction volume for hotels over $50 million reaching $1.53 billion or 63% of overall hotels investment last year. An increase in the Premium hotel transaction volume by 21% in 2023 ensured the average hotel sale jumped 19.1% to $41.8 million over the same period, as pricing for Premium properties in gateway cities and leisure markets remains robust, according to Colliers Head of Hotels Transaction Services Karen Wales. “Investors see the opportunity presented by improving demand levels, which supported increases in room rates across key markets of 20-50%, compared to 2019.” Ms Wales said. “Positive sentiment around recovery in travel and asset performance continue to be key investment drivers

8 – April / May 2024

THE PROPERTY DEVELOPMENT REVIEW

“The lion’s share of Premium stock is in Sydney, with an estimated value of more than $22 billion. “Notwithstanding the boom in Premium stock underpinning evolution of the sector, Australia will still be under-represented when it comes to Premium lifestyle hotels, despite more brands coming to our shores throughout 2024, expanding on the currently available 6,000 rooms or 5% of the total Premium hotel market. “Strategic investors will look past any short-term volatility for long-term returns, which lie with industry megatrends such as lifestyle, sustainability, automation and wellness. “In contrast to Premium stock, secondary or older assets are appealing to investors targeting the hotel sector for conversion to alternate uses, including Build-to-Rent, co-living or residential as State and Federal Governments tackle a lack of housing supply. “The uptick in listings seen in Q3 2023, and the fact that there are currently around $2.2 billion assets currently on the market, points to higher levels of investment activity over 2024, and we expect transaction volumes to reach $2.5 billion. “While 2024 will bring both new challenges and generational opportunities for hotel investors, pent-up demand for travel remains elevated and the sector’s market dynamics indicate progressive recovery to pre-pandemic norms. “Investing is always about looking to the future, and pre- pandemic investment theses will not necessarily prove beneficial for 2024 and beyond.”

slowed down acquisitions as external pressures built, with the belief that better buying will materialise in 2024, according to Colliers National Director of Hotels Neil Scanlan. “A superior level of due diligence and asset level performance will become more important for purchasers than in recent years when low interest rates, competitive capital flows, and cap rate compression lifted the market overall.” Mr Scanlan said. Premium hotels are anticipated to continue to outperform older competitors with luxury and upscale hotels boasting an average occupancy rate over 70% and a national average ADR of $326 over FY23, according to the Australian Accommodation Monitor. Sydney’s luxury segment recorded a stellar year, with room rates up 26 per cent compared to pre-Covid, averaging $450 in 2023. This segment also benefited from new ultra-luxury product such as Crown Resort and Capella Sydney, as well as lifestyle luxury brands W and Ace Sydney. “New stock has been predominantly located in capital cities, but the allure of luxury is now spreading to key leisure destinations, with 1,000 rooms either recently opened or planned for the Gold Coast, across brands such as Langham, Mondrian, St Regis and Ritz Carlton.” Mr Scanlan said. “Australia’s high performing Premium hotel market has swelled over the past ten years with the development of more than 36,000 new rooms.” Ms Wales added. “There are now more than 117,000 Premium hotel rooms nationally, with a combined value of almost $60 billion, providing a breadth of opportunity for sophisticated hotel investors.

Premium (+$50 million) Hotel Sales 2023

Property

City

State

Rooms

Price

Price per Room ($)

Waldorf Astoria

Sydney

NSW 220

$520 million

$2.4 million

Escarpment Portfolio *

Various

NSW 237

$200 million

Not applicable

Batman Hill on Collins

Melbourne

VIC

190

$55 million

$289K

Sheraton Grand Mirage

Gold Coast

QLD

295

$192 million

$650K

Ibis & Novotel

Melbourne

VIC

472

$170 million

$360K

Sofitel Adelaide

Adelaide

SA

251

$154 million

$613K

The Old Clare Hotel

Sydney

NSW 69

$61.8 million

$895K

Courtyard by Marriott

North Ryde

NSW 196

$55.5 million

$283K

Novotel Sydney Parramatta

Parramatta

NSW 194

$53.5 million

$276K

Oaks on William

Melbourne

VIC

220

Confidential

Confidential

TOTAL

2,344

$1.529 million

$652K

*Note: Structured deal and included more than real estate

April / May 2024 – 9

The Interview

SCAN OR CLICK TO WATCH THE VIDEO INTERVIEW IN FULL 69 MINUTES

JOHN ROTHWELL AO

With Rob Langton

AUSTAL

Joining our series for an exclusive & in-depth profile on this episode is highly regarded businessman & entrepreneur, John Rothwell AO - Non-Executive Chair, Founding Director & the driving force behind Austal, the World’s largest aluminium shipbuilding company. Having established Austal in Perth, Western Australia in 1988 with no more than five employees & $200,000 in cash, John has grown the company over the past three decades into a global maritime behemoth with over 4,300 personnel delivering over 350 world-class vessels as well as technological solutions for military, commercial and civilian applications - including for the United States Navy, United States Coast Guard, United States Marine Corps, Royal Australian Navy, Australian Customs, Government of Saudi Arabia &

Euroferrys to name a few.

With a customer base that spreads across more than one-hundred operators in fifty-nine Countries, Austal has become one of the most successful businesses in Australian corporate history, with an order book in excess of $2bn per annum, operations spread across seven shipyards in five countries and a share register that includes blue-chip institutional & private companies including BlackRock, Tattarang Ventures, UniSuper, Vanguard & Pendal. As Founding Director of Austal, John has led the business in various capacities throughout its thirty-six-year history including as Chief Executive Officer, Executive Chairman and since 2008, Non-Executive Chairman. Prior to launching Austal, John founded a small structural engineering company which later

10 – April / May 2024

THE PROPERTY DEVELOPMENT REVIEW

became a leisure craft business known as Star Boats in 1972, a company that upended traditional boat-building practices by utilising aluminium rather than fibreglass for its lightweight hulls and which he grew for over a decade before selling to Christopher Skase backed Precision Marine (now Quintex Corporation) in 1984. On a personal level, John migrated aged ten with his family from Holland in 1954 and completed three years of primary / secondary school before entering the workforce at fifteen - over the course of the following eight or so years, he held a number of roles working in steel fabrication, welding, transport & land clearing. In a highly decorated career, John been the recipient of a number of awards including Officer of the Order of Australia (AO) in 2004, Australian Entrepreneur of the Year by Ernst & Young in 2002,

Western Australia Citizen of the Year in 1999.

In this exclusive interview, John walks us through his remarkable career, the evolution of Austal over the course of more than three decades, the opportunities & challenges in running a global manufacturing business from Australia and the fundamentals required to achieve sustained success in both business and life.

April / May 2024 – 11

Wealth Report

PRIVATE INVESTORS THE MOST ACTIVE BUYERS IN AUSTRALIA AND GLOBALLY • Knight Frank’s The Wealth Report 2024 found private investors* were the mos active buyers in commercial real estate for the first time in Australia over 2023 and for the third consecutive year globally • Private capital invested A$14.8 billion in Australia’s commercial market over 2023, equating to 42.2% of total investment, more than 12% higher than the 30% in 2022, and the highest share on record • Globally, private capital invested US$338 billion in the commercial property market, equating to a 49% share of total investment, slightly up on 48% in 2022 and also the highest share on record • Globally, living sectors were the most targeted by private capital, followed by industrial and logistics, and offices • Australia came in 7th for cross border commercial real estate investment flows in 2023, with US$5.7 billion invested amongst all investors News Release

Article Source: Knight Frank February 2024

29 February 2024 Private investors the most active buyers in Australia and global • Knight Frank’s The Wealth Report 2024 found private investors* were the most buyers in commercial real estate for the first time in Australia over 2023 and for th consecutive year globally • Private capital invested A$14.8 billion in Australia’s commercial market over equating to 42.2% of total investment, more than 12% higher than the 30% in 202 the highest share on record • Globally, private capital invested US$338 billion in the commercial property m equating to a 49% share of total investment, slightly up on 48% in 2022 and al highest share on record • Globally, living sectors were the most targeted by private capital, followed by ind and logistics, and offices • Australia came in 7 th for cross border commercial real estate investment flows in with US$5.7 billion invested amongst all investors Sydney, Australia – Private investors* were most active buyers in commercial real estate for t time in Australia and for the third consecutive year globally over 2023, according to Knight Frank released flagship report The Wealth Report 2024. Private capital invested A$14.8 billion in Australia’s commercial market, equating to 42.2% investment, more than 12% higher than the 30% in 2022, and the highest share on record. The share for private investors in Australia grew significantly despite overall investment in the co commercial property market nearly halving in 2023 from the previous year, falling from $64.1 b 2022 to $35.1 billion in 2023.

Knight Frank Australia Chief Economist Ben Burston said: “In a quiet market, private investors took centre stage in 2023, taking a record share of overall transactions volumes in Australia and globally. “While major institutional and cross-border investors have taken a step back for the time being on account of high debt costs and protracted uncertainty over the outlook, private investors tend to be less reliant on debt and more opportunistic in focus, and this has enabled them to be more active. Commercial investment volumes in Australia Overall ($billion) Private ($billion) Private % 2014 $ 41.8 $ 8.2 19.7% 2015 $ 49.6 $ 8.0 16.2% 2016 $ 41.6 $ 10.7 25.8% 2017 $ 43.9 $ 10.2 23.3% 2018 $ 49.7 $ 11.3 22.8% 2019 $ 63.8 $ 12.3 19.3% 2020 $ 35.3 $ 8.3 23.5% 2021 $ 73.0 $ 20.2 27.7% 2022 $ 64.1 $ 19.2 30.0% 2023 $ 35.1 $ 14.8 42.2% Source: RCA

Sydney, Australia – Private investors* were most active buyers in commercial real estate for the first time in Australia and for the third consecutive year globally over 2023, according to Knight Frank’s justreleased flagship report The Wealth Report 2024. Private capital invested A$14.8 billion in Australia’s commercial market, equating to 42.2% of total investment, more than 12% higher than the 30% in 2022, and the highest share on record. The share for private investors in Australia grew significantly despite overall investment in the country’s commercial property market nearly halving in 2023 from the previous year, falling from $64.1 billion in 2022 to $35.1 billion in 2023. Globally, private capital remained the most active buyers for the third consecutive year in the commercial property market, investing US$338 billion. This equated to a 49% share of total investment, slightly up on 48% in 2022 and the highest share on record. Although globally private investment in 2023 also nearly halved on 2022 volumes, falling by 46% in 2023 to US$698 billion, this was a smaller contraction than institutional and public investment, both falling by 53%.

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THE PROPERTY DEVELOPMENT REVIEW

Knight Frank Australia National Head of Capital Markets Justin Bond commented: “With interest rates expected to remain elevated globally into the second half of 2024, we anticipate private capital to remain active. “Indeed, during previous times of dislocation, private capital has typically rotated back into commercial real estate. “In Australia, we also see interest from institutional capital from Singapore, Japan and some parts of Europe, with the expectation of increased transactional activity in the latter part of 2024.” Cross-border commercial real estate investment flows Australia came in 7th for cross border commercial real estate investment flows in 2023, with US$5.7 billion invested amongst all investors, behind the US (US$29.6 billion), the UK (US$20.3 billion), Canada (US$9.7 billion), Germany (US$9.6 billion), Japan (US$8.7 billion) and the Chinese Mainland (US$6 billion).

“Private investors have positioned themselves for a recovery in the commercial property market, which we believe will start to emerge in Australia later this year. “The outlook is improving, with sentiment picking up off the back of the reduction in funding costs since October, hopes for interest rate cuts later in the year and gradual erosion of bid-ask spreads. This will see the level of activity grow and the investor base normalise as the year goes on, but this process will take time and private investors will continue to take significant market share.” The most sought-after sectors in commercial real estate Globally industrial and logistics were the most invested sector in commercial real estate for the first time on record in 2022, taking a quarter of all global investment at US$174 billion, according to Knight Frank’s The Wealth Report 2024. While industrial and logistics, retail, hotel and senior housing and care all increased their share of total global investment in 2023, the office market fell from 25% in 2022 to 22% in 2023, and the living sector share contracted from 30% to 24%. All sectors recorded an annual decline in total investment in 2023, with senior housing and care (-28%) seeing the smallest decline. However, the story was slightly different for private buyers in 2023. Globally, living sectors were the most targeted by private capital, followed by industrial and logistics, and offices. Looking ahead, Knight Frank’s The Wealth Report 2024 Attitudes Survey found that 19% of respondents were looking to invest directly in commercial real estate in 2024, with investors from the Middle East (23%) and Asia (21%) likely to be the most active. However, investor preferences are shifting and for the first time in four years, a new sector has topped the investor wish list. The living sectors are the most in demand in 2024, with 14% of respondents looking to target the asset class. Interest is strongest in Europe, the Middle East, North America and Asia. News Release

News Release

Melbourne and Sydney ranked 9th and 10th respectively for total cross border investment in 2023, with US$2.2 billion and US$2.1 billion invested. Canada (US$9.7 billion), Germany (US$9.6 billion), Japan (US$8.7 billion) and the Chinese Mainland (US$6 billion). Melbourne and Sydney ranked 9 th and 10 th respectively for total cross border investment in 2023, with US$2.2 billion and US$2.1 billion invested.

Data source: Based on Knight Frank’s analysis of RCA data and Knight Frank’s Attitudes Survey

-Ends-

Data source: The above is based on Knight Frank’s analysis of RCA data and Knight Frank’s Attitudes Survey

Definitions

*Private investors: Companies whose control is in private hands and whose business is primarily geared towards operating, developing or investing in commercial real estate. Attitudes Survey: The 2024 instalment is based on responses provided during December 2023 by more than 600 private bankers, wealth advisers, intermediaries and family offices who between them manage over US$3 trillion of wealth for UHNWI clients. For further information, please contact: Vanessa De Groot – Marketing & Communications, Knight Frank Vanessa.degroot@au.knightfrank.com +61 410 460211

*Private investors : Companies whose control is in private hands and whose business is primarily geared towards operating, developing or investing in commercial real estate.

Healthcare is not far behind, attracting 13% of respondents. However, intentions do not necessarily equate to transactions, due to factors including availability of stock, market size and competition. Looking ahead, Knight Frank’s The Wealth Report 2024 Attitudes Survey found that 19% of respondents were looking to invest directly in commercial real estate in 2024, with investors from the Middle East (23%) and Asia (21%) likely to be the most active. However, investor preferences are shifting and for the first time in four years, a new sector has topped the investor wish list. The living sectors are the most in demand in 2024, with 14% of respondents looking to target the asset class. Interest is strongest in Europe, the Middle East, North America and Asia. Healthcare is not far behind, attracting 13% of respondents. However, intentions do not necessarily equate to transactions, due to factors including availability of stock, market size and competition. Knight Frank Australia National Head of Capital Markets Justin Bond commented : “ With interest rates expected to remain elevated globally into the second half of 2024, we anticipate private capital to remain active.

April / May 2024 – 13

Industrial

2024 COMMERCIAL PROPERTY FRONTRUNNER: INDUSTRIAL’S PERFORMANCE ANCHORED BY STRUCTURAL SHIFTS. Economic market conditions unable to unseat Industrial’s golden child status, with prime weighted average rents expected to increase by 8.5% nationally, over 2024, according to Colliers Industrial & Logistics Investment Review 2023.

Article Source: Colliers Industrial & Logistics Capital Markets

accounting for 39% of overall transaction volumes in 2023. “Investment in infill locations such as South Sydney, Inner West and Inner South West jumped from 49% to 64% over the last year driven by institutional investors acquiring assets of scale which has historially been tightly held, addressing consumer preferences for shorter delivery times and mitigating transport costs for the last mile, which can comprise up to half of the overall supply chain cost. “Adelaide and Perth, with prime yields averaging 6.38% and 6.50%respectively, will continue to be targeted, particularly by syndicators and mid-tier funds. In contrast, prime industrial yields now average 5.57% nationally, with Sydney averaging 5.13% and Melbourne averaging 5.38%. “Investors also continue to focus on short WALE assets to capture the uplift in rents and offset yields, ensuring the average WALE in 2023 remained low at 4.0 years.” However, long-WALE assets will become more attractive through 2024 as core capital becomes active again. “Increased weighting of capital towards the Industrial sector is ensuring its evolution, fuelling greater diversification and scale of assets.” Mr Bishop added. Colliers’ sale of the institutional A Grade two-level warehouse, at 42 Raymond Avenue in Sydney’s Matraville, for $137.2 million and a core capitalisation rate of 4.60%, is testament to the booming multi-storey industrial segment. The sale will be settled upon completion in May 2024. The data centre market has also begun to mature in Australia, with the portfolios of several domestic and offshore REIT’s now boasting this coveted asset class amid continued work from home patterns and heightened Artificial Intelligence demand. Brisbane currently possesses 22 data centres, while Sydney and Melbourne have 36 and 32, respectively. “From an investment standpoint, it is imperative to be cognisant of ESG considerations in addition to growing industrial asset segments, since non-compliance will carry potential risk for owners, including diminishing asset values or a brown discount in future.” Mr Bishop said.

Despite slight moderation over 2023, the strength of the Industrial occupier market has proven to be a robust arsenal against interest rate fluctuations, with 21.5% prime weighted net face rental growth at the end of 2023, which is around six times the 10 year annual average of 3.6%. While severe lack of supply significantly underpinned return to more sustainable growth levels, falling from 4.85 million square metres in 2022 to 3.2 million in 2023, key performance metrics such as vacancy and rents will continue to outperform historical averages at a national level, according to Colliers Head of Industrial & Logistics Capital Markets, Gavin Bishop. “With an average national vacancy rate of one percent, and 80% of last year’s record annual national supply (3.3 million sqm) already committed, the supply and demand imbalance driving Industrial income growth is a permanent structural shift for the foreseeable future.” Mr Bishop said. “Rents will continue to preserve capital values and significantly offset yields, following national weighted average prime yield softening of 70 basis points over 2023, compared to 80 basis points over 2022. “Despite a slight uptick in national average vacancy levels last year by 0.1%, prime weighted net face rents still grew over 2023 by 21.5%, and the expansionary yield cycle off the back of rising fund costs is coming to fruition with more stable economic conditions anticipated mid 2024. “Lucrative returns associated with industrial assets is attracting domestic superannuation funds, with Unisuper and Aware Super being active over 2023, and REST Super and Australian Super gearing up to deploy capital over the next 12 months. “Private investors are also sharpening their focus on the sector, accounting for 19% of overall industrial investment activity, compared to 15% in 2022.” Overall industrial transaction volumes for 2023 were aligned with the 10 year historical average, notwithstanding a fall of 25% from the year prior to $5.7 billion, according to Colliers National Director of Research, Joanne Henderson. “Following two record years of industrial investment activity, last year’s market was subdued but strong, holding the long- term transaction volume average in the face of economic fluctuations.”Ms Henderson said. “Sydney remained the most sought-after market in the country,

14 – April / May 2024

Office Market

THE PROPERTY DEVELOPMENT REVIEW

AUSTRALIA’S 2024 OFFICE MARKET PRESENTS GOLDEN OPPORTUNITIES FOR ASTUTE INVESTORS The office pricing reset and overall value decline of around 14% since the peak of 2022, will galvanise investment momentum over the second half of this year, according to Colliers.

Article Source: Colliers Office Capital Markets

resilient compared to other locations.” While most office markets experienced a drop in total investment value over 2023 comparable to that experienced during 2008, there was only around 45% difference between Sydney CBD’s deal flow of $1.716 billion last year and the previous year, according to Colliers National Director of Research Joanne Henderson. “We expect Sydney CBD’s average prime capital values to recover by around 10% from June 2024 to December 2025, supported by stabilising occupier markets and resilient rents, following average Prime net face rental growth of 3.9% over 2023.” Ms Henderson said. “Occupier demand for quality over quantity and a clear pull-to- precinct will also continue to define the Melbourne CBD market this year, after Eastern core average capital values only declined by around 9% over the 12 months prior December 2023, compared to 15% for the Docklands. “While overall transaction volumes for the Melbourne CBD office market fell from $2.9 billion in 2022 to $376 million in 2023, the entry price-point will ensure Premium grade assets aligned to occupier demand prove strong competition for the Sydney CBD this year. “Brisbane is also destined to draw investor attention in 2024, after net effective rents across all grades increased by 18.8% over 2023, some of the strongest rental growth since 2007. “Due to population growth from jobs relevant to the Olympics, and the growing supply and demand imbalance, we forecast Prime average net effective rental growth of around 8.0%% over 2024 and 9.0% over 2025 for the Brisbane CBD market.” As at January 2024, premium office space only comprised 16.8% of the Brisbane CBD market, compared to the Sydney CBD where it accounts for 27.1%, and the Melbourne CBD where it represents 22.1% of the market. “Investors are targeting Prime office assets, or those they can reposition in part because the office sector will be at the forefront of the green revolution, capturing capital value uplifts as a result of embedding ESG compliance.” Mr Woodward said. Colliers recent Global Investment Outlook Survey revealed that APAC respondents expect ESG aligned offices to command a 14% Premium, and 25% of respondents are currently implementing ESG improvement through capital program disposal and acquisition strategies.

Shrewd investors are waiting in the wings for Australia’s office values to reset, as APAC experiences a six month lag with only an average of -8% revaluation by September 2023, compared to the Americas and EMEA, which experienced revaluations of -23% and -28%, respectively. After office investment volumes declined by 76% to reach $3.6 billion in 2023, this year presents compelling counter-cyclical opportunities for foreign investors, who accounted for 44% of Australian office investment last year, according to Colliers Head of Office Capital Markets Adam Woodward. “Foreign investors recognise Australia’s market as a safe-haven and anticipated economic equilibrium will start to elevate sentiment this year.” Mr Woodward said. “Fundamental drivers of demand, such as population and employment growth, is underpinning strong leasing metrics and the long-term investment proposition of Australian office assets, which won’t witness a value drop as severe as the Americas or EMEA.” A marked increase in leasing activity occurred over 2023, with the Colliers national cumulative gross leasing volume transacted reaching around 741,000sqm, which is 42,200sqm more than in 2022 or an increase of 6.0%. Both occupier and investor preferences for quality stock will continue to elevate Premium assets above the rest of the office market, and the yield spread between Premium and A Grade assets is anticipated to expand by an additional 21 basis points from now until December this year. Similarly, the spread between Premium and B Grade office yields is likely to grow by a further 25 basis points over the same period. Secondary assets ripe for repositioning also drew investor attention, including 1 Margaret Street in Sydney, which attracted a record 65 tours during the campaign period before being sold by Colliers, on behalf of Dexus, for $293.1 million in August. The purchaser, Quintessential, has planned a $90 million multi-staged refurbishment. “Capital sources seeking stability and growth will continue to discover opportunities in accordance with nuances across Australia’s CBD office markets.” Mr Woodward said. “Sydney CBD may be the first mover when investment activity begins to ramp up around June 2024, since underlying investor sentiment currently favours Australia’s largest office market, and the value of transaction volumes over 2023 proved most

April / May 2024 – 15

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