04-12-2014, 12:41 AM
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05-12-2014, 11:30 PM
Growth fails to impress as year draws to a close
THE AUSTRALIAN DECEMBER 06, 2014 12:00AM
Lisa Allen
Property & Tourism Reporter
Sydney
Chairman of Ray White
Brian White says most people selling property are also buying. Source: News Corp Australia
THE bluster about rising capital growth in the nation’s housing markets seems overblown given this year’s growth rate was nearly 3 per cent lower than last year, according to research house RP Data.
“With just one month left in 2014 it is looking as if this year will see a lower level of capital growth than last year,” RP Data research analyst Cameron Kusher says. “This year home values have risen by 7 per cent compared to growth of 9.8 per cent in 2013.”
The housing marked peaked back in April and in the three months to November values rose by just 0.8 per cent across the combined capitals. Melbourne’s performance in November was bleak with house and apartment values falling back 2.6 per cent.
Some vendors have clearly missed the housing boat. Should they wait for the next peak before attempting to sell for a healthy price? What if they need to offload their property within the next few months?
The decision can depend on location.
If it’s in a powerhouse city such as Sydney (where values jumped 13.2 per cent in the past year), selling (and getting a healthy price) next year could still be fine.
But what about Canberra, which produced capital growth of just 1.7 per cent in the year to November 30, or Perth, where values rose a tiny 1.4 per cent? Darwin also came off substantially, producing value growth of just 1.4 per cent to a median dwelling value of $540,000.
Ray White chairman Brian White says no one can tell what will happen next year but in most cases people selling property are also buying. “Only 35 to 40 per cent of people who sell property are selling primarily because of perceived capital growth — they are selling because they want a change in the property asset they are going to be living in.”
Veteran Melbourne agent Gerald Delany, chairman of Kay & Burton, says making the decision to sell can come down to motivation. “My advice to people who are selling real estate is not to necessarily to judge the market on its performance,’’ Delany says.
“If you are buying and selling at the same time you will achieve your ultimate aim and therefore a person should not try to speculate and read the market.”
Ever the real estate agent, Delany says the drop in Melbourne’s dwellings in November was not a “dramatic fall in the market but more a calming of the market as we have had a lot of real estate transacted over the past three to four months. There is only a certain absorption that can be endured by the market and it is a supply and demand commodity.”
In the past few weeks auction clearance rates fell noticeably across the largest markets, Sydney and Melbourne. Clearance rates were in the low 70 per cent bracket in Sydney and mid-60 per cent in Melbourne.
Australian Bureau of Statistics data shows the number of apartment approvals in Sydney dropped markedly in one year. “Apartment approvals in NSW in October 2014 were 2008 compared to a high point of 2464 a year ago in October 2013,” says Chris Johnson, chief executive of the Urban Taskforce.
“This represents a drop of 23 per cent in one year. The smaller state of Victoria has apartment approvals growing with 2258 approvals in October.”
THE AUSTRALIAN DECEMBER 06, 2014 12:00AM
Lisa Allen
Property & Tourism Reporter
Sydney
Chairman of Ray White
Brian White says most people selling property are also buying. Source: News Corp Australia
THE bluster about rising capital growth in the nation’s housing markets seems overblown given this year’s growth rate was nearly 3 per cent lower than last year, according to research house RP Data.
“With just one month left in 2014 it is looking as if this year will see a lower level of capital growth than last year,” RP Data research analyst Cameron Kusher says. “This year home values have risen by 7 per cent compared to growth of 9.8 per cent in 2013.”
The housing marked peaked back in April and in the three months to November values rose by just 0.8 per cent across the combined capitals. Melbourne’s performance in November was bleak with house and apartment values falling back 2.6 per cent.
Some vendors have clearly missed the housing boat. Should they wait for the next peak before attempting to sell for a healthy price? What if they need to offload their property within the next few months?
The decision can depend on location.
If it’s in a powerhouse city such as Sydney (where values jumped 13.2 per cent in the past year), selling (and getting a healthy price) next year could still be fine.
But what about Canberra, which produced capital growth of just 1.7 per cent in the year to November 30, or Perth, where values rose a tiny 1.4 per cent? Darwin also came off substantially, producing value growth of just 1.4 per cent to a median dwelling value of $540,000.
Ray White chairman Brian White says no one can tell what will happen next year but in most cases people selling property are also buying. “Only 35 to 40 per cent of people who sell property are selling primarily because of perceived capital growth — they are selling because they want a change in the property asset they are going to be living in.”
Veteran Melbourne agent Gerald Delany, chairman of Kay & Burton, says making the decision to sell can come down to motivation. “My advice to people who are selling real estate is not to necessarily to judge the market on its performance,’’ Delany says.
“If you are buying and selling at the same time you will achieve your ultimate aim and therefore a person should not try to speculate and read the market.”
Ever the real estate agent, Delany says the drop in Melbourne’s dwellings in November was not a “dramatic fall in the market but more a calming of the market as we have had a lot of real estate transacted over the past three to four months. There is only a certain absorption that can be endured by the market and it is a supply and demand commodity.”
In the past few weeks auction clearance rates fell noticeably across the largest markets, Sydney and Melbourne. Clearance rates were in the low 70 per cent bracket in Sydney and mid-60 per cent in Melbourne.
Australian Bureau of Statistics data shows the number of apartment approvals in Sydney dropped markedly in one year. “Apartment approvals in NSW in October 2014 were 2008 compared to a high point of 2464 a year ago in October 2013,” says Chris Johnson, chief executive of the Urban Taskforce.
“This represents a drop of 23 per cent in one year. The smaller state of Victoria has apartment approvals growing with 2258 approvals in October.”
05-12-2014, 11:33 PM
Booming property market to finish year on a high
THE AUSTRALIAN DECEMBER 06, 2014 12:00AM
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Save for later
Kylar Loussikian
Journalist
Sydney
WITH the summer holiday season fast approaching, this weekend looms as the year’s final hurrah for a booming property sector.
Last week 3908 auctions were held in the capital cities, a record that is 10 per cent higher than the previous high of 3548, in December last year.
And volumes will remain high this weekend, according to CoreLogic RP Data’s auction expert Robert Larocca, who says 3226 capital city auctions are expected, compared with 3213 for the same period last year.
In Perth’s beachside Cottesloe, David and Adeline Rogers hope their auction this weekend will draw in the crowds. Bidding on their modern three-bedroom, two-bathroom house in Pearce Street is to begin in the vicinity of $2.5 million and the couple hope their home will stand out amid Perth’s slower auction market.
Start of sidebar. Skip to end of sidebar.
MOREExhalation, not an implosion
End of sidebar. Return to start of sidebar.
“We love the house and we love the suburb, but we have chosen to move now to provide for our future family needs, and to select a suburb and a school before our son starts preschool next year,” Mr Rogers said.
“Cottesloe is a fabulous area, we’re metres from the best beach in Australia, in my opinion, and there’s all the cafes and amenities that comes with that. And the best sunset in the world.”
Perth’s clearance rates have been volatile in the past month, recording clearances as low as 22 per cent last weekend.
But in Australia’s two powerhouse markets, Sydney and Melbourne, high numbers of properties continue to come on to the market, and there are high clearance rates.
More than three-quarters of properties listed for auction in Sydney last weekend sold, according to CoreLogic.
But the trend is slowing. Earlier this year, Sydney recorded a string of weeks of auction clearances above 80 per cent.
And economists have warned the price boom has also begun to moderate: home price growth peaked in April, when year-on-year growth hit 11.5 per cent.
The latest CoreLogic figures show a first fall in prices since May, down 0.3 per cent for November.
However, year-on-year growth across capital cities remained strong at 8.5 per cent.
Vivian Yap of Acton Dalkeith Realty, who is selling the Rogers house, said it had been a good year for the Perth market.
The volatility of Perth’s auction clearance rate could be because Western Australia traditionally prefers private treaty sales.
“If you look at the number of auctions being conducted this year compared to last year in Perth, it’s increased dramatically,” Ms Yap said.
THE AUSTRALIAN DECEMBER 06, 2014 12:00AM
Save for later
Kylar Loussikian
Journalist
Sydney
WITH the summer holiday season fast approaching, this weekend looms as the year’s final hurrah for a booming property sector.
Last week 3908 auctions were held in the capital cities, a record that is 10 per cent higher than the previous high of 3548, in December last year.
And volumes will remain high this weekend, according to CoreLogic RP Data’s auction expert Robert Larocca, who says 3226 capital city auctions are expected, compared with 3213 for the same period last year.
In Perth’s beachside Cottesloe, David and Adeline Rogers hope their auction this weekend will draw in the crowds. Bidding on their modern three-bedroom, two-bathroom house in Pearce Street is to begin in the vicinity of $2.5 million and the couple hope their home will stand out amid Perth’s slower auction market.
Start of sidebar. Skip to end of sidebar.
MOREExhalation, not an implosion
End of sidebar. Return to start of sidebar.
“We love the house and we love the suburb, but we have chosen to move now to provide for our future family needs, and to select a suburb and a school before our son starts preschool next year,” Mr Rogers said.
“Cottesloe is a fabulous area, we’re metres from the best beach in Australia, in my opinion, and there’s all the cafes and amenities that comes with that. And the best sunset in the world.”
Perth’s clearance rates have been volatile in the past month, recording clearances as low as 22 per cent last weekend.
But in Australia’s two powerhouse markets, Sydney and Melbourne, high numbers of properties continue to come on to the market, and there are high clearance rates.
More than three-quarters of properties listed for auction in Sydney last weekend sold, according to CoreLogic.
But the trend is slowing. Earlier this year, Sydney recorded a string of weeks of auction clearances above 80 per cent.
And economists have warned the price boom has also begun to moderate: home price growth peaked in April, when year-on-year growth hit 11.5 per cent.
The latest CoreLogic figures show a first fall in prices since May, down 0.3 per cent for November.
However, year-on-year growth across capital cities remained strong at 8.5 per cent.
Vivian Yap of Acton Dalkeith Realty, who is selling the Rogers house, said it had been a good year for the Perth market.
The volatility of Perth’s auction clearance rate could be because Western Australia traditionally prefers private treaty sales.
“If you look at the number of auctions being conducted this year compared to last year in Perth, it’s increased dramatically,” Ms Yap said.
06-12-2014, 05:10 PM
Visas stem flow of Chinese visitors Chinese tourists each spend more than $7300, making them the biggest spenders of any tourist group.
Jamie Freed
414 words
5 Dec 2014
BRW
BRW
English
Copyright 2014. Fairfax Media Management Pty Limited.
Australia is falling behind in the battle to win Chinese tourists because it makes it too hard for them to get visas, says Austrade, Tourism Australia and NSW Trade & Investment.
The number of Chinese tourists rose 10 per cent to 736,000 in the 12 months ending on September 30, about half the 21.8 per cent rise to the United States from a much higher starting point.
The US last month signed a deal allowing 10-year, multi-entry visas for Chinese travellers.
"Reducing the length and complexity of the visitor visa application would reduce the burden of applying for a visa and close the gap on some of our competitors," Austrade said in submission to a Productivity Commission research project on Australia's international tourism industry.
An international visitor survey from Tourism Research Australia on Wednesday found that Chinese visitors on average spent $7362 compared with an average of $4899 overall, making the Chinese the highest spenders.
Unlike tourists from other markets, such as Malaysia, Chinese visitors cannot fill out an electronic visa application and they are required to present detailed information in English such as a letter from an employer and bank account details.
NSW Trade & Investment said the complexity of manual processes to apply for a tourist visa to Australia were considered a "disincentive" to visit, particularly for independent travellers visiting family and friends.
"Improvements by the Commonwealth to electronic visa processing for Chinese visitors would make it easier for this highly valuable visitor market to travel to Australia, further supporting the National Tourism 2020 target," the state body said.
Tourism Australia said the country needed to keep improving and streamlining visa issuing processes to remain competitive.
"At times, Australia has led other countries (such as the Electronic Travel Authority in 1996), however there are examples where other countries have overtaken Australia to streamline visa processes," the marketing group said.
The office of Immigration Minister Scott Morrison did not respond to questions on whether changes to the visa process were being considered.
Industry sources suggested the government has been slow-moving on the China visa issue in part because the processing fee would drop from $130 to $20 if the country was accepted into the electronic scheme, resulting in the loss of tens of millions of dollars in annual revenue.
Fairfax Media Management Pty Limited
Document BRW0000020141205eac500002
Jamie Freed
414 words
5 Dec 2014
BRW
BRW
English
Copyright 2014. Fairfax Media Management Pty Limited.
Australia is falling behind in the battle to win Chinese tourists because it makes it too hard for them to get visas, says Austrade, Tourism Australia and NSW Trade & Investment.
The number of Chinese tourists rose 10 per cent to 736,000 in the 12 months ending on September 30, about half the 21.8 per cent rise to the United States from a much higher starting point.
The US last month signed a deal allowing 10-year, multi-entry visas for Chinese travellers.
"Reducing the length and complexity of the visitor visa application would reduce the burden of applying for a visa and close the gap on some of our competitors," Austrade said in submission to a Productivity Commission research project on Australia's international tourism industry.
An international visitor survey from Tourism Research Australia on Wednesday found that Chinese visitors on average spent $7362 compared with an average of $4899 overall, making the Chinese the highest spenders.
Unlike tourists from other markets, such as Malaysia, Chinese visitors cannot fill out an electronic visa application and they are required to present detailed information in English such as a letter from an employer and bank account details.
NSW Trade & Investment said the complexity of manual processes to apply for a tourist visa to Australia were considered a "disincentive" to visit, particularly for independent travellers visiting family and friends.
"Improvements by the Commonwealth to electronic visa processing for Chinese visitors would make it easier for this highly valuable visitor market to travel to Australia, further supporting the National Tourism 2020 target," the state body said.
Tourism Australia said the country needed to keep improving and streamlining visa issuing processes to remain competitive.
"At times, Australia has led other countries (such as the Electronic Travel Authority in 1996), however there are examples where other countries have overtaken Australia to streamline visa processes," the marketing group said.
The office of Immigration Minister Scott Morrison did not respond to questions on whether changes to the visa process were being considered.
Industry sources suggested the government has been slow-moving on the China visa issue in part because the processing fee would drop from $130 to $20 if the country was accepted into the electronic scheme, resulting in the loss of tens of millions of dollars in annual revenue.
Fairfax Media Management Pty Limited
Document BRW0000020141205eac500002
07-12-2014, 11:08 PM
Auction clearances point to cooling housing market
THE AUSTRALIAN DECEMBER 08, 2014 12:00AM
Gina Rushton
Journalist
Sydney
MELBOURNE’S housing market outperformed other capital cities over the weekend when more than 1400 properties went under the hammer, while competition continued to cool between bidders in Sydney where clearance rates remained underwhelming.
Sydney recorded its lowest clearance rate in 18 months on Saturday as 1028 properties were put to auction, said Australian Property Monitors senior economist Andrew Wilson.
“We had a very skinny clearance rate of 70.5 per cent in Sydney; the first time we’ve had four weekends in a row below 75 per cent since the end of 2012,” Dr Wilson said.
After two weeks with clearance rates in the mid-60s, Melbourne recorded a rate of 70.1 per cent as buyers turned out to the 1456 auctions held across the city.
While the property market tends to slow down before the summer months when the industry takes a vacation, the figures pointed towards a “weakening in the market”, Dr Wilson said.
“Sydney has run out of steam and is now matching the auction energy in Melbourne,” he said.
Brisbane recorded a clearance rate of 35.2 per cent, Adelaide 68 per cent, Perth 38 per cent and Canberra 62.1 per cent, according to RP Data.
Next weekend is the final “super Saturday” of auctions and is expected to break records for listing numbers, while the weekend after is likely to see just 500 or so auctions across both Sydney and Melbourne.
THE AUSTRALIAN DECEMBER 08, 2014 12:00AM
Gina Rushton
Journalist
Sydney
MELBOURNE’S housing market outperformed other capital cities over the weekend when more than 1400 properties went under the hammer, while competition continued to cool between bidders in Sydney where clearance rates remained underwhelming.
Sydney recorded its lowest clearance rate in 18 months on Saturday as 1028 properties were put to auction, said Australian Property Monitors senior economist Andrew Wilson.
“We had a very skinny clearance rate of 70.5 per cent in Sydney; the first time we’ve had four weekends in a row below 75 per cent since the end of 2012,” Dr Wilson said.
After two weeks with clearance rates in the mid-60s, Melbourne recorded a rate of 70.1 per cent as buyers turned out to the 1456 auctions held across the city.
While the property market tends to slow down before the summer months when the industry takes a vacation, the figures pointed towards a “weakening in the market”, Dr Wilson said.
“Sydney has run out of steam and is now matching the auction energy in Melbourne,” he said.
Brisbane recorded a clearance rate of 35.2 per cent, Adelaide 68 per cent, Perth 38 per cent and Canberra 62.1 per cent, according to RP Data.
Next weekend is the final “super Saturday” of auctions and is expected to break records for listing numbers, while the weekend after is likely to see just 500 or so auctions across both Sydney and Melbourne.
08-12-2014, 08:07 AM
Hot property: Chinese investment activity strengthens in the Sydney market
December 5, 2014
Sam Brewer
The residential development market in Sydney has been extremely active during 2014. JLL has transacted over $1.35 billion of residential development sites across metropolitan Sydney this year to date. The most significant contributors to this have been Chinese and Hong Kong-based investors, in addition to ongoing local interest from groups including Meriton and Cbus Property.
There has been a slight slowing in the end rate of new apartment prices in comparison with the more rapid growth in prices that we saw earlier in the year – however residential sales and established residential price growth are both still increasing.
Australia is now in the top three destinations of choice for Chinese property buyers, along with the United States and Britain. Sydney is usually first choice, however, demand has been such that it is becoming difficult to acquire sites, so interest has also been moving to Melbourne and Brisbane.
In the current market we are seeing an enormous emergence of major Chinese investment groups including Golden Horse and Poly Real Estate, who continue to have a significant appetite for residential development land in the Sydney market. We don't anticipate that this will stop in the near future. In fact, the amount of capital that's coming in is increasing. The total value of Foreign Investment Review Board (FIRB) approvals in FY 2013 relating to property investment by Chinese investors was $5.9 billion, up from $4.2 billion in FY 2012.
Larger Chinese investment groups tend to seek residential development projects on a scale of 500 apartments or more, and some are establishing teams and offices to roll out multiple development projects into 2015.
There are many factors driving continued Chinese investment in the Sydney and Australian market, including our Significant Investor Visa (SIV) for people who can invest $5 million or more in property, introduced in 2013; favourable foreign investment legislation; lifestyle and weather; education resources; the need for investment diversification; historically low interest rates if borrowing from local Australian banks; the advantage of a more convenient time difference between Australia and Asia than the US and Britain; and the fact that many Chinese investors already have business and family connections in Australia.
In addition to these points, China's decision to cut interest rates in November 2014 adds to the likelihood of Chinese investors remaining active, including in the Sydney market.
Finally, I believe the Australian property market has underestimated the positive impact the recent China-Australia Free Trade Agreement (ChAFTA) will have. Based on all of these factors, it is anticipated that Sydney's residential development market activity has a long way to run.
http://www.smh.com.au/business/property/...1z4b6.html
December 5, 2014
Sam Brewer
The residential development market in Sydney has been extremely active during 2014. JLL has transacted over $1.35 billion of residential development sites across metropolitan Sydney this year to date. The most significant contributors to this have been Chinese and Hong Kong-based investors, in addition to ongoing local interest from groups including Meriton and Cbus Property.
There has been a slight slowing in the end rate of new apartment prices in comparison with the more rapid growth in prices that we saw earlier in the year – however residential sales and established residential price growth are both still increasing.
Australia is now in the top three destinations of choice for Chinese property buyers, along with the United States and Britain. Sydney is usually first choice, however, demand has been such that it is becoming difficult to acquire sites, so interest has also been moving to Melbourne and Brisbane.
In the current market we are seeing an enormous emergence of major Chinese investment groups including Golden Horse and Poly Real Estate, who continue to have a significant appetite for residential development land in the Sydney market. We don't anticipate that this will stop in the near future. In fact, the amount of capital that's coming in is increasing. The total value of Foreign Investment Review Board (FIRB) approvals in FY 2013 relating to property investment by Chinese investors was $5.9 billion, up from $4.2 billion in FY 2012.
Larger Chinese investment groups tend to seek residential development projects on a scale of 500 apartments or more, and some are establishing teams and offices to roll out multiple development projects into 2015.
There are many factors driving continued Chinese investment in the Sydney and Australian market, including our Significant Investor Visa (SIV) for people who can invest $5 million or more in property, introduced in 2013; favourable foreign investment legislation; lifestyle and weather; education resources; the need for investment diversification; historically low interest rates if borrowing from local Australian banks; the advantage of a more convenient time difference between Australia and Asia than the US and Britain; and the fact that many Chinese investors already have business and family connections in Australia.
In addition to these points, China's decision to cut interest rates in November 2014 adds to the likelihood of Chinese investors remaining active, including in the Sydney market.
Finally, I believe the Australian property market has underestimated the positive impact the recent China-Australia Free Trade Agreement (ChAFTA) will have. Based on all of these factors, it is anticipated that Sydney's residential development market activity has a long way to run.
http://www.smh.com.au/business/property/...1z4b6.html
08-12-2014, 09:58 PM
Singapore investors’ $58bn spree focuses on Australian real estate
FLORENCE CHONG THE AUSTRALIAN DECEMBER 09, 2014 12:00AM
Australia in Singapore’s $58bn spree
CDL Hotels International chief executive Kwek Leng Beng. Source: News Corp Australia
SINGAPOREAN investors spent $US47 billion ($58bn) on overseas property in the last two years — a large chunk of which was on Australian real estate — making it the biggest international property buyer from the Asia Pacific.
More capital flowed out of Singapore to global real estate than from China or Japan, the world’s second and third largest economies respectively.
About $US6.7bn was spent in Australia by buyers from Singapore, compared with $US2.7bn by China groups and a negligible amount (about $US175m) from Japan, says JLL’s head of research, Asia Pacific capital markets Megan Walters.
Many global private equity groups and fund managers have offices in Singapore, which could account for the city-state’s dominance, Dr Walters noted.
At least 12 Singapore-listed companies are looking for Australian property investments but are yet to buy, including the likes of the Tong Eng Brothers, Koh Brothers Group, Cambridge Industrial Trust, Hong Fok Corp and Bonvest Holdings, according to analysts in Singapore.
Singapore’s property market has weakened, pushing many developers offshore. Virtually all the listed property companies in Singapore have reported lower profits and shrinking margins, due to high land costs, rising labour costs, falling demand and increasing inventories.
At the end of June, official figures showed that nearly a third of completed units, largely in the luxury segment, remained unsold.
“You can’t run fast like in the past. In the past perhaps you can sell 100 units within one or two months. Now, to sell 100 units, you take nine months,” Koh Wee Meng, CEO of Fragrance Group, told Forbes magazine recently.
Mr Koh, who has splashed $156m on sites in Melbourne, believes conditions “will continue to be tough”.
Meanwhile, the falling Australian dollar is making investing here more attractive.
In August, Frasers Centrepoint paid $2.6bn to take over Australand, while City Development (CDL), Singapore’s second largest developer, looked at Leighton Properties, now reported to be in due diligence with Stockland.
CDL’s executive chairman Kwek Leng Beng has told the market CDL was seeking property platforms in Japan and Australia.
CDL, which already has acquired hotels in Perth and Brisbane for $175m, is believed to be looking for sites in Australia.
Land prices in sought after areas in Singapore have been rising at three times the pace of apartment costs, with plot values rising by an average 30 per cent a year since early 2011, according to agents in Singapore.
During a briefing last year Mr Kwek said buying land at the prevailing high prices would be “suicidal”.
Alistair Meadows, JLL’s international group head in Asia, said offshore investors generally started with direct investments, and it was a natural progression to look at potential corporate targets.
“It is inevitable that if they are committed to the long term (in Australia), they will look at establishing a platform or a joint venture which will give them operational capability around development,” said Mr Meadows.
He points to the tie-up between Far East Organisation, controlled by brothers Robert and Philip Ng, and Toga Group, as an example.
Singapore’s luxury apartment developer Hiap Hoe, which has spent more than $300m on acquisitions in Melbourne, formed a joint venture with Australian developer Probuild last year.
Many others are going it alone, and Australian site prices are increasing rapidly, making it more difficult for groups without local knowledge.
“It is hard to replicate the same returns when buying land at today’s prices,” said Marc Giuffrida, executive director, CBRE’s global markets group. “If they are unable to build up a land bank, they are not able to expand.”
The latest crop of Singapore buyers includes small to mid-sized companies — several venturing offshore for the first time. Unlike big players, like CDL, which have gone further afield (mostly to Britain), smaller companies are deterred by the distance and high cost of entry to western markets.
In the past, smaller Singaporean companies would have invested in Malaysia, Hong Kong or even China.
But Mr Giuffrida says: “They are faced with the same issues in all those markets. It is a magnification of the same problems in Singapore. These countries will not provide the diversification that they seek.”
Ironically, they are bidding up prices in Australia — just as Chinese developers are bidding up land prices in Singapore, he said.
The Singapore listed Figtree Holdings, an industrial property developer, set a record price for a site without development approval in Melbourne.
Even at that price, Patrick Callaghan, director DTZ Melbourne, told The Australian: “The big thing to the purchaser is that the cost of acquisition (in Australia) is the same as that of the construction cost (in Singapore).”
FLORENCE CHONG THE AUSTRALIAN DECEMBER 09, 2014 12:00AM
Australia in Singapore’s $58bn spree
CDL Hotels International chief executive Kwek Leng Beng. Source: News Corp Australia
SINGAPOREAN investors spent $US47 billion ($58bn) on overseas property in the last two years — a large chunk of which was on Australian real estate — making it the biggest international property buyer from the Asia Pacific.
More capital flowed out of Singapore to global real estate than from China or Japan, the world’s second and third largest economies respectively.
About $US6.7bn was spent in Australia by buyers from Singapore, compared with $US2.7bn by China groups and a negligible amount (about $US175m) from Japan, says JLL’s head of research, Asia Pacific capital markets Megan Walters.
Many global private equity groups and fund managers have offices in Singapore, which could account for the city-state’s dominance, Dr Walters noted.
At least 12 Singapore-listed companies are looking for Australian property investments but are yet to buy, including the likes of the Tong Eng Brothers, Koh Brothers Group, Cambridge Industrial Trust, Hong Fok Corp and Bonvest Holdings, according to analysts in Singapore.
Singapore’s property market has weakened, pushing many developers offshore. Virtually all the listed property companies in Singapore have reported lower profits and shrinking margins, due to high land costs, rising labour costs, falling demand and increasing inventories.
At the end of June, official figures showed that nearly a third of completed units, largely in the luxury segment, remained unsold.
“You can’t run fast like in the past. In the past perhaps you can sell 100 units within one or two months. Now, to sell 100 units, you take nine months,” Koh Wee Meng, CEO of Fragrance Group, told Forbes magazine recently.
Mr Koh, who has splashed $156m on sites in Melbourne, believes conditions “will continue to be tough”.
Meanwhile, the falling Australian dollar is making investing here more attractive.
In August, Frasers Centrepoint paid $2.6bn to take over Australand, while City Development (CDL), Singapore’s second largest developer, looked at Leighton Properties, now reported to be in due diligence with Stockland.
CDL’s executive chairman Kwek Leng Beng has told the market CDL was seeking property platforms in Japan and Australia.
CDL, which already has acquired hotels in Perth and Brisbane for $175m, is believed to be looking for sites in Australia.
Land prices in sought after areas in Singapore have been rising at three times the pace of apartment costs, with plot values rising by an average 30 per cent a year since early 2011, according to agents in Singapore.
During a briefing last year Mr Kwek said buying land at the prevailing high prices would be “suicidal”.
Alistair Meadows, JLL’s international group head in Asia, said offshore investors generally started with direct investments, and it was a natural progression to look at potential corporate targets.
“It is inevitable that if they are committed to the long term (in Australia), they will look at establishing a platform or a joint venture which will give them operational capability around development,” said Mr Meadows.
He points to the tie-up between Far East Organisation, controlled by brothers Robert and Philip Ng, and Toga Group, as an example.
Singapore’s luxury apartment developer Hiap Hoe, which has spent more than $300m on acquisitions in Melbourne, formed a joint venture with Australian developer Probuild last year.
Many others are going it alone, and Australian site prices are increasing rapidly, making it more difficult for groups without local knowledge.
“It is hard to replicate the same returns when buying land at today’s prices,” said Marc Giuffrida, executive director, CBRE’s global markets group. “If they are unable to build up a land bank, they are not able to expand.”
The latest crop of Singapore buyers includes small to mid-sized companies — several venturing offshore for the first time. Unlike big players, like CDL, which have gone further afield (mostly to Britain), smaller companies are deterred by the distance and high cost of entry to western markets.
In the past, smaller Singaporean companies would have invested in Malaysia, Hong Kong or even China.
But Mr Giuffrida says: “They are faced with the same issues in all those markets. It is a magnification of the same problems in Singapore. These countries will not provide the diversification that they seek.”
Ironically, they are bidding up prices in Australia — just as Chinese developers are bidding up land prices in Singapore, he said.
The Singapore listed Figtree Holdings, an industrial property developer, set a record price for a site without development approval in Melbourne.
Even at that price, Patrick Callaghan, director DTZ Melbourne, told The Australian: “The big thing to the purchaser is that the cost of acquisition (in Australia) is the same as that of the construction cost (in Singapore).”
08-12-2014, 10:18 PM
Chinese giant Greenland eyes local, offshore partners
THE AUSTRALIAN DECEMBER 09, 2014 12:00AM
Greg Brown
Property Reporter
Sydney
Chinese giant Greenland Holding hopes to pursue its next round of Australian projects with local or offshore partners as part of an ambitious growth plan, according to Australian managing director Sherwood Luo.
Mr Luo pointed to its joint venture bid with James Packer’s Crown Resorts to develop the multi-billion-dollar Queens Wharf casino, hotel and apartment project in the Brisbane CBD. “It shows we are happy to share our growth and work with our Australian partners,” Mr Luo told the Australia-China Property Developers & Investors Conference in Sydney yesterday.
“Greenland is always learning from local and overseas developers and are willing to share our experience.”
The group is the sole developer for its first local apartment projects, Lucent in North Sydney and the Greenland Centre in the Sydney CBD. It is yet to begin building a mooted 1500 apartment project near Melbourne’s Flemington Racecourse.
Also at the conference, veteran property developer Sid Londish lauded the free-trade agreement between Australia and China, saying Australia desperately needed offshore investment. The 90-year-old said that Chinese business investors were calculated risk takers.
However, Mr Londish said a bubble was emerging in the Australian residential market. He also added that the aged care real estate sector would be the best asset class for future growth.
Research from Colliers International released today says investors will further diversify from core properties into other markets and sectors.
Colliers International managing director of capital markets and investment services John Marasco said new sources of foreign capital would be seen next year. “New investors that could possibly emerge in 2015 include Taiwanese insurance companies and Japanese pension funds. More sovereign wealth from China is also likely,” he said.
THE AUSTRALIAN DECEMBER 09, 2014 12:00AM
Greg Brown
Property Reporter
Sydney
Chinese giant Greenland Holding hopes to pursue its next round of Australian projects with local or offshore partners as part of an ambitious growth plan, according to Australian managing director Sherwood Luo.
Mr Luo pointed to its joint venture bid with James Packer’s Crown Resorts to develop the multi-billion-dollar Queens Wharf casino, hotel and apartment project in the Brisbane CBD. “It shows we are happy to share our growth and work with our Australian partners,” Mr Luo told the Australia-China Property Developers & Investors Conference in Sydney yesterday.
“Greenland is always learning from local and overseas developers and are willing to share our experience.”
The group is the sole developer for its first local apartment projects, Lucent in North Sydney and the Greenland Centre in the Sydney CBD. It is yet to begin building a mooted 1500 apartment project near Melbourne’s Flemington Racecourse.
Also at the conference, veteran property developer Sid Londish lauded the free-trade agreement between Australia and China, saying Australia desperately needed offshore investment. The 90-year-old said that Chinese business investors were calculated risk takers.
However, Mr Londish said a bubble was emerging in the Australian residential market. He also added that the aged care real estate sector would be the best asset class for future growth.
Research from Colliers International released today says investors will further diversify from core properties into other markets and sectors.
Colliers International managing director of capital markets and investment services John Marasco said new sources of foreign capital would be seen next year. “New investors that could possibly emerge in 2015 include Taiwanese insurance companies and Japanese pension funds. More sovereign wealth from China is also likely,” he said.
08-12-2014, 10:21 PM
Top-tier property trusts tipped to absorb Murray proposals
THE AUSTRALIAN DECEMBER 09, 2014 12:00AM
Sarah Danckert
Property Reporter
Melbourne
Susan Lloyd-Hurwitz
Mirvac CEO Susan Lloyd-Hurwitz has spoken out about changing the negative gearing system. Picture: Renee Nowytarger Source: News Corp Australia
ANALYSTS and fund managers are tipping top-tier property groups exposed to the residential sector, including Lend Lease, Stockland and Mirvac, will be only be temporarily affected if key recommendations from the Murray inquiry affecting property investments are implemented by the government.
The cornerstone of the Financial System Inquiry, chaired by former Commonwealth Bank chief David Murray, are recommendations that will require Australia’s banks to hold more capital to safeguard against possible financial crises.
Crucially for the property industry, the FSI also recommended a curb on new borrowing by self-managed super funds and put its weight behind changing negative gearing provisions, which is being reviewed in a soon-to-be released tax white paper.
Stockland chief executive Mark Steinert and Mirvac CEO Susan Lloyd-Hurwitz have previously spoken out about changing the negative gearing system, which provides tax breaks on the costs of investment properties.
A high-level fund manager, who declined to be named, said the changes could benefit property developers as they would make housing more affordable and drive more sales. Mirvac, Lend Lease and Stockland declined to comment until after reviewing the report.
Morgan Stanely analyst David Lloyd said he expected real estate investment trusts to alter the timeline of some projects before any changes were brought in.
“A potential consequence of the impending tax white paper is a pull forward of investor activity as investors attempt to beat any changes to negative gearing and capital gains tax,” Mr Lloyd said.
He said the near-term impact from the FSI was likely to be a growth headwind for the economy. “Changes to negative gearing and capital gains tax could be negative for housing-exposed AREITs.”
Morningstar analyst Tony Sherlock said Stockland, Lend Lease and Mirvac would wear a small impact from the changes.
“If they do prohibit self-managed super funds from borrowing it would be a temporary dampener on the (residential) market,” Mr Sherlock said. He said Mirvac had noted that investors accounted for about half the sales at their apartment projects.
“Off-the-plan apartments are very popular with self-managed super funds.”
THE AUSTRALIAN DECEMBER 09, 2014 12:00AM
Sarah Danckert
Property Reporter
Melbourne
Susan Lloyd-Hurwitz
Mirvac CEO Susan Lloyd-Hurwitz has spoken out about changing the negative gearing system. Picture: Renee Nowytarger Source: News Corp Australia
ANALYSTS and fund managers are tipping top-tier property groups exposed to the residential sector, including Lend Lease, Stockland and Mirvac, will be only be temporarily affected if key recommendations from the Murray inquiry affecting property investments are implemented by the government.
The cornerstone of the Financial System Inquiry, chaired by former Commonwealth Bank chief David Murray, are recommendations that will require Australia’s banks to hold more capital to safeguard against possible financial crises.
Crucially for the property industry, the FSI also recommended a curb on new borrowing by self-managed super funds and put its weight behind changing negative gearing provisions, which is being reviewed in a soon-to-be released tax white paper.
Stockland chief executive Mark Steinert and Mirvac CEO Susan Lloyd-Hurwitz have previously spoken out about changing the negative gearing system, which provides tax breaks on the costs of investment properties.
A high-level fund manager, who declined to be named, said the changes could benefit property developers as they would make housing more affordable and drive more sales. Mirvac, Lend Lease and Stockland declined to comment until after reviewing the report.
Morgan Stanely analyst David Lloyd said he expected real estate investment trusts to alter the timeline of some projects before any changes were brought in.
“A potential consequence of the impending tax white paper is a pull forward of investor activity as investors attempt to beat any changes to negative gearing and capital gains tax,” Mr Lloyd said.
He said the near-term impact from the FSI was likely to be a growth headwind for the economy. “Changes to negative gearing and capital gains tax could be negative for housing-exposed AREITs.”
Morningstar analyst Tony Sherlock said Stockland, Lend Lease and Mirvac would wear a small impact from the changes.
“If they do prohibit self-managed super funds from borrowing it would be a temporary dampener on the (residential) market,” Mr Sherlock said. He said Mirvac had noted that investors accounted for about half the sales at their apartment projects.
“Off-the-plan apartments are very popular with self-managed super funds.”
10-12-2014, 10:51 PM
Picture one of cyclic and structural change
FRANK GELBER THE AUSTRALIAN DECEMBER 11, 2014 12:00AM
CAN it be that it is only now that the government and commentariat have discovered the economy is fundamentally weak, only having been propped up by the strength of mining? All of a sudden we’ve had to invent a new term — an “income recession” — to describe it. All of a sudden, the wheels are falling off. And hence, goes the logic, we have need to reduce interest rates.
What did they expect? The mining boom brought with it a high dollar that undermined the competitiveness of domestic trade-exposed industries. It was the high dollar that drove the structural change away from the balanced growth we had before the mining boom and towards servicing high levels of resources investment.
That was the price we paid for the mining boom. And apart from mining and health the rest of the economy has been weak since the global financial crisis. This is a very unbalanced economy.
Now, the much anticipated fall in mining investment has begun and we’re expecting a 40 per cent decline in mining construction over the next four years. The major impact is yet to come.
Falling commodity prices are underwriting a dramatic fall in the profitability of mining, putting smaller company’s under extreme cost pressure. Among our major exports, it started with coal, spread to iron ore, and now the fall in oil prices will hit gas. Mining profits are falling dramatically. That’s a large part of the weakness of the total profits underwriting the “income recession” story. The other part is the weakness of wages and taxes in the soft economy.
The problem is that we are still waiting for a recovery in non-mining business investment and the structural change that will make this a very different economy in five years’ time.
The positive side is the fall in the Australian dollar. This “new discovery” of the weakness of the economy has undermined the investment that has been holding the Australian dollar high. The dollar is falling more quickly than we could have hoped, improving the competitiveness of export and import-competing industries and hastening the structural change back towards balanced growth.
That’s why I don’t think reducing interest rates will help. The recovery in housing is already well entrenched. And there would be little impact on non-mining business investment until capacity constraints emerge. The only thing it would help would be to further weaken the currency if perchance the dollar’s decline ran out of steam. Indeed, the danger is that the dollar could overshoot.
Mind you, the Australian dollar still has a long way to fall to underwrite balanced growth.
The economic picture is one of weakness. Yet property investment markets have been strangely unaffected by the softness of the economy and leasing markets. This global environment of low interest rates and strong local and offshore investor demand is causing a firming of yields. Initially, it was for prime property, but now it has spread to secondary markets. The weight of money has driven up prices. Much of this investment has been non-discriminatory, seemingly with little regard for the cyclicality of different markets.
Are prices too high? While there may be some good deals for individual properties, in market terms there aren’t any bargains out there. In fact, some markets will fall. The property markets are out of synch.
Even the best markets are now a tinge overvalued. Sydney and Melbourne offices, retail property and some industrial markets are in this category. They’ll do well but not brilliantly. The trick is to add value.
Others are dismal. On our forecasts, the Brisbane office sector is overvalued by 25 per cent and Perth offices by 35 per cent. The problem is long-term oversupply. How can it be that their yields are so firm and prices so high? Don’t they understand how bad it will be?
Given the high level of incentives now evident in many Australian property markets, it doesn’t make sense that they are not reflected in valuations. We’d take them into account in a discounted cashflow for the purchase of an individual property, wouldn’t we?
And it’s not just overseas investors turning up with bags of money. Some of our own real estate trusts and super funds are making the same mistakes.
Property won’t go gangbusters. It’s a long road with lots of challenges. In some markets supply is too strong, in others too weak.
Meanwhile, structural change and cyclic shifts in the economy will have an impact on demand. Mining-related demand will fall. Business services, where output and employment are currently falling, will recover. Tourism and education services will be boosted by a lower dollar. These will play havoc with the demand in the different office, industrial, retail, hotel and residential markets.Who will do well? The property fund managers servicing strong investment demand. Residential developers in the markets that remain strong. Service providers.
The economy won’t collapse. Rather, we face two more difficult years before the lower dollar and non-mining business investment offset the impact of the fall in mining investment to drive strong growth. The picture is one of cyclic and structural change. There are still good opportunities in property, there are significant pitfalls. We need to be careful about the markets we invest in.
Frank Gelber is chief economist at BIS Shrapnel.
FRANK GELBER THE AUSTRALIAN DECEMBER 11, 2014 12:00AM
CAN it be that it is only now that the government and commentariat have discovered the economy is fundamentally weak, only having been propped up by the strength of mining? All of a sudden we’ve had to invent a new term — an “income recession” — to describe it. All of a sudden, the wheels are falling off. And hence, goes the logic, we have need to reduce interest rates.
What did they expect? The mining boom brought with it a high dollar that undermined the competitiveness of domestic trade-exposed industries. It was the high dollar that drove the structural change away from the balanced growth we had before the mining boom and towards servicing high levels of resources investment.
That was the price we paid for the mining boom. And apart from mining and health the rest of the economy has been weak since the global financial crisis. This is a very unbalanced economy.
Now, the much anticipated fall in mining investment has begun and we’re expecting a 40 per cent decline in mining construction over the next four years. The major impact is yet to come.
Falling commodity prices are underwriting a dramatic fall in the profitability of mining, putting smaller company’s under extreme cost pressure. Among our major exports, it started with coal, spread to iron ore, and now the fall in oil prices will hit gas. Mining profits are falling dramatically. That’s a large part of the weakness of the total profits underwriting the “income recession” story. The other part is the weakness of wages and taxes in the soft economy.
The problem is that we are still waiting for a recovery in non-mining business investment and the structural change that will make this a very different economy in five years’ time.
The positive side is the fall in the Australian dollar. This “new discovery” of the weakness of the economy has undermined the investment that has been holding the Australian dollar high. The dollar is falling more quickly than we could have hoped, improving the competitiveness of export and import-competing industries and hastening the structural change back towards balanced growth.
That’s why I don’t think reducing interest rates will help. The recovery in housing is already well entrenched. And there would be little impact on non-mining business investment until capacity constraints emerge. The only thing it would help would be to further weaken the currency if perchance the dollar’s decline ran out of steam. Indeed, the danger is that the dollar could overshoot.
Mind you, the Australian dollar still has a long way to fall to underwrite balanced growth.
The economic picture is one of weakness. Yet property investment markets have been strangely unaffected by the softness of the economy and leasing markets. This global environment of low interest rates and strong local and offshore investor demand is causing a firming of yields. Initially, it was for prime property, but now it has spread to secondary markets. The weight of money has driven up prices. Much of this investment has been non-discriminatory, seemingly with little regard for the cyclicality of different markets.
Are prices too high? While there may be some good deals for individual properties, in market terms there aren’t any bargains out there. In fact, some markets will fall. The property markets are out of synch.
Even the best markets are now a tinge overvalued. Sydney and Melbourne offices, retail property and some industrial markets are in this category. They’ll do well but not brilliantly. The trick is to add value.
Others are dismal. On our forecasts, the Brisbane office sector is overvalued by 25 per cent and Perth offices by 35 per cent. The problem is long-term oversupply. How can it be that their yields are so firm and prices so high? Don’t they understand how bad it will be?
Given the high level of incentives now evident in many Australian property markets, it doesn’t make sense that they are not reflected in valuations. We’d take them into account in a discounted cashflow for the purchase of an individual property, wouldn’t we?
And it’s not just overseas investors turning up with bags of money. Some of our own real estate trusts and super funds are making the same mistakes.
Property won’t go gangbusters. It’s a long road with lots of challenges. In some markets supply is too strong, in others too weak.
Meanwhile, structural change and cyclic shifts in the economy will have an impact on demand. Mining-related demand will fall. Business services, where output and employment are currently falling, will recover. Tourism and education services will be boosted by a lower dollar. These will play havoc with the demand in the different office, industrial, retail, hotel and residential markets.Who will do well? The property fund managers servicing strong investment demand. Residential developers in the markets that remain strong. Service providers.
The economy won’t collapse. Rather, we face two more difficult years before the lower dollar and non-mining business investment offset the impact of the fall in mining investment to drive strong growth. The picture is one of cyclic and structural change. There are still good opportunities in property, there are significant pitfalls. We need to be careful about the markets we invest in.
Frank Gelber is chief economist at BIS Shrapnel.