Australia Property

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Securing Development Approvals (DA) is a costly and time consuming process that not many Singapore companies may have understood when they invest down under. Will be interesting to see how these companies navigate in Australia and how well Singaporean equities investors appreciate the complicate process and the expected returns on Singapore property companies investing down under.

Singapore bulls in $250m raid


The Septimus Roe office building in the Perth CBD. Source: Supplied
BULLISH Singaporean companies continue to make strides in the Australian office markets, with groups snapping up almost $250 million worth of properties in the past few weeks.

Singaporean developer Far East Organisation yesterday bought a Perth office building, called Septimus Roe, from the listed Aspen Group for $91m.

Aspen Group is selling $200m worth of property through Colliers International and Knight Frank, and last month sold a $30m stake in the Adelaide ATO building to Charter Hall.

Far East’s purchase follows a raft of plays by Singaporean companies in the office space this year, with Far East also making two Sydney purchases and Hiap Hoe buying a Perth office building for $90m.

Aspen Group chief executive Clem Salwin said most of the proceeds would be used to reduce debt. “However, we will also look to commence capital management initiatives, as well as potential reinvestment of capital in the business,” he said.

The Singaporean groups are prepared to take on more risk than the local players, which gives them a comparative advantage in the bidding process, agents said.

The returns of local property are higher than in Singapore’s tightly controlled market, which gives the companies a more bullish view on Australia.

The groups are also active in specialist areas, with Singapore-listed International Healthway Corporation last month snapping up three buildings in Victoria worth about $109m.

Colliers International brokered two of the deals in Melbourne’s St Kilda Road, as revealed by The Australian.

There has been more action in Sydney. Singaporean property group Roxy-Pacific Holdings is circling a small building in inner-city Surry Hills for about $41m. The site’s development potential could see it changes hands at ­almost double what it did last year.

Knight Frank director, city sales, John Bowie Wilson declined to comment on the transaction but noted the depth of buyer interest.

He said many Singaporean groups were larger and had more development experience than other groups in Asia.

He said that private groups from Singapore tended to be more patient in pursing their plans and many were happy to “land bank” for future projects.

Players such as Chip Eng Seng, which has bought sites in Melbourne, and Aspial, which has acquired sites in Melbourne and Cairns, were growing more confident.

Singapore-listed property developer Ho Bee Land already has projects on the Gold Coast and developer and hotelier Fragrance Group has local ambitions.

Passive players, such as Lian Beng, which has bought office towers and shopping centres, and Starhill Global REIT are also chasing more properties.

But the immediate focus remains on Singaporean developers, who often outbid locals on office blocks with residential conversion potential as they are more inclined to take on the risk of buying a site before it is ­approved by council for development, Colliers International director of capital markets Vince Kernahan said.

“A lot of the onshore developers want to buy with a development approval in place but most of the assets being sold now don’t have any DAs in place,” Mr Kernahan said.

“One of the reasons they are competitive is because they are prepared to buy properties that don’t have DA approvals but they’ll back their own ability in getting (them).”
Better value in Perth, Brisbane - Offices

Better value in Perth, Brisbane
‘If the right opportunity comes up then we think Brisbane and Perth are good markets,’ says Charter Hall managing director David Harrison. Source: News Limited
OFFICE buildings in the struggling Perth and Brisbane office markets are often better long-term investments than in Sydney and Melbourne, Charter Hall joint managing director David Harrison says.

Mr Harrison said the higher vacancies in Perth and Brisbane meant less competition from investors and properties were available at better prices.

He also pointed to incentive levels in Sydney and Melbourne of 40 per cent in some buildings. In comparison, some of the recent leasing deals struck in the group’s Perth office buildings had been at incentives “in the low 20s”, Mr Harrison said.

“I’ve got a different view on what markets are more attractive,” Mr Harrison told a JLL NSW office market presentation in Sydney yesterday.

“We’ve seen a few times in the past 15 years that the smaller markets recover very quickly and incentives in Brisbane and Perth can evaporate quickly.

“If the right opportunity comes up then we think (Brisbane and Perth) are good markets,” he said.

Mr Harrison expected lower returns for Melbourne and Sydney office towers following a recent hike in values.

JLL yesterday forecast continued strong investor demand for office buildings from sovereign wealth funds, local superannuation funds and high net worth individuals.

JLL head of office investments Rob Sewell said investors’ focus in the past year had changed from a spread across capital cities to home in on Sydney and Melbourne, pushing down yields there.

“The investors ... are turning off buying in Perth, so markets like Sydney and Melbourne have basically all the capital chasing those cities and for a specific type of product.

“That capital will actually be pricing assets to levels that have not been seen before, and they are levels that we saw in 2007, at sub-6 per cent (cap rate levels),” he said, adding this was despite high incentives and vacancies.
Melbourne's loss is Sydney's gain as Fridcorp goes west

Rebecca Thistleton
480 words
11 Apr 2014
The Australian Financial Review
Copyright 2014. Fairfax Media Management Pty Limited.
Melbourne developer Fridcorp has expanded its Sydney development plans, buying $70 million worth of land in Erskineville.

Fridcorp founder and director Paul Fridman, a BRW young rich-lister who founded the company when he was 20, has confidence in Sydney apartments.

His company is in due diligence for two other Sydney sites in areas where the off-the-plan market is surging.

His enthusiasm for new Melbourne projects has cooled as apartment approvals continue at near-peak levels amid talk of a possible oversupply around the central business district.

Fridcorp's latest acquisitions will be packaged with an adjacent Erskineville site in Sydney's inner west bought in March last year for $17.5 million.

The land will yield about $350 million worth of apartments in a staged project, "Eve". The group will have about $500 million worth of apartments on their way this year.

"It's pretty hot at the moment – we started looking at Sydney two years ago and there wasn't anywhere near the same ferocity in competition for sites there is now," he said.

"It's renewed my energy in the ­business – I've found the Sydney market to be a lot more retail-focused with more owner-occupiers. It makes us work harder and I think Sydney is making us a better developer."

Two distinct schools of thought have emerged in the off-the-plan apartment market: the projects which offer hotel-style lobbies, big gyms and heated pools, and those that don't.

While amenities can draw more owner-occupiers, higher strata fees can be off-putting.

Fridcorp invests in outdoor spaces, but the group aimed to keeping prices and strata fees lower by leaving out a gym and pool.

"We've been deliberate with our price point, we're keeping it under $1 million," Mr Fridman said.

A third of apartments in Eve will be one-bedroom, priced from $500,000 to $550,000, and the rest will be two bedrooms priced around $750,000 to $850,000.

The price tags are in line with the ­Sydney market where the median unit price is $552,500, according to RP Data, compared to $448,000 in Melbourne.

"We'll still do some Melbourne projects when the right sites and ­opportunities come up, but nothing for the sake of it," he said.

"We focus on areas where there is limited supply, there are more and more towers 50-storeys high being approved in Melbourne – I don't know where people are coming from to buy them," he said.

Fridcorp's latest Melbourne project, the 16-level Avenue building in South Yarra, will be finished in a fortnight after launching in 2011.
Melbourne's high-rise living heads for suburbs

Larry Schlesinger
412 words
10 Apr 2014
The Australian Financial Review
Copyright 2014. Fairfax Media Management Pty Limited.
Melbourne's high-rise apartment binge has extended out of the city and into the blue-chip eastern suburbs.

Across the city, high-rise apartment approvals reached a record annual rate of $4.8 billion in the first half of 2013-14, up from $3.5 billion two years ago.

Apartment approvals in the City of Yarra, which incorporates inner city suburbs like Fitzroy North, Richmond, Collingwood and Carlton North, have soared 255 per cent from $138 million last financial year to $491 million, based on annualised ABS figures for the first half of 2013-14.

In Stonnington, which includes the million-dollar suburbs of Toorak, South Yarra, Kooyong and Armadale, high-rise approvals have topped $500 million annually, and the City of Port Phillip has also attracted a surge of approvals and new projects.

Melbourne City, incorporating the CBD, Docklands and Southbank precincts, remains the epicentre of high-rise development as approvals rise to an annual rate of nearly $1.3 billion in the first half of 2013-14.

Andrew Perkins, head of research at the Oliver Hume Real Estate Group, said zoning and high land prices made these municipalities the "natural home for high-rise development". He added residents were accustomed to having new high-rise apartments built.

Oliver Hume is tracking more than 100 high-rise projects – apartments four stories and higher – being developed across the city with the potential to add close to 13,000 new units.

A third of these projects are in Melbourne City, where international developers are now well established, but there has also been an enormous influx of high-rise apartment projects in the municipalities of Yarra, Stonnington and Port Phillip, east of the city.

A spokesperson for the City of Yarra said former industrial pockets such as Collingwood and Victoria Street East have been highlighted by the state government as prime locations for infill, large-scale residential development for years, "so we've expected this growth".

RMIT professor Michael Buxton, a former senior Victorian government planner, said developers were tapping into the growing demographic of young professionals, students and short-term visitors wanting to live closer to the city.

The value of apartment approvals shrunk in the municipalities of Moreland and Boroondara, which are further out from the city and more accustomed to detached housing and low-rise flats. "There's also some natural prejudice against high-rise intrusions," Mr Perkins said.

Fairfax Media Management Pty Limited

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Faith in housing begins to fade


Housing survey.Housing survey. Source: TheAustralian < PrevNext >
THE housing market appears to have hit its peak, with expectations of growth in residential construction flatlining and the ranks of the house price bulls thinning, according to a new survey.

The survey, conducted by ANZ and the Property Council of Australia of just under 2500 property market professionals, suggests some of the heat is coming out of the market. But a separate survey by ­National Australia Bank, released yesterday, showed expectations for house prices rises were still strong.

Stockland residential head Andrew Whitson said each state was at a different stage in the residential construction cycle.

“In NSW there is strong pent-up demand for residential product because of an undersupply in housing over the past decade,” he said. Melbourne’s market was balanced, while demand in southeast Queensland was improving as the market moved into recovery mode.

The ANZ/PCA survey recorded a drop in the number of property professionals forecasting house prices will rise in Sydney and Melbourne over the next 12 months following some economic shocks in the first three months of the year.

Confidence that house prices will grow in Western Australia is also waning as the mining boom winds back, while hopes have dwindled that house prices will rise in South Australia over the next 12 months.

“Western Australia is the market that is nearing its peak — it had a strong run over the past two years and we are seeing demand maintained but it will balance out,” Mr Whitson said.

According to RP Data, house prices across Australia’s capital cities rose 2.3 per cent in the March quarter on the back of a 4.4 per cent gain in Sydney and a 5.4 per cent rise in Melbourne.

The expectation of easing house price growth follows warnings from Reserve Bank of Australia governor Glenn Stevens about the extent of household debt, which has reached record levels in recent months on the back of rising house prices.

The survey also showed that expectations for housing construction activity over the next 12 months had flatlined.

ANZ head of property research Paul Braddick said that it would be premature to call the peak as 65 per cent of respondents were still expecting construction activity to grow in the year ahead, while about 40 per cent of respondents across Australia thought house prices still had some way to go.

“I’m wary that looking at a flattening at a level like that as ­indicating a peak,” he said. “When we look at the fundamental market the momentum in prices and approvals are saying that the peak is still some way off.

“We’ve been saying for a while that in both of those cases it’s ­really likely that it will only reach that peak and turn over when the RBA tightens rates and we don’t see that until early 2015 at this stage.”

The survey also found that property participants across all commercial sectors and the residential sector are less confident than during the earlier quarter, with the index falling to 132 from 140.

Queensland respondents suffered a considerable loss of confidence over the March quarter, with the state’s confidence index falling to 135 from 152. In South Australia it fell from 130 to 110, while in the ACT the confidence index reading fell to a near neutral 103 points.

Expectations for office, retail and industrial property values also softened, albeit only slightly in most states barring a dramatic decline in expectations for growth in Queensland and WA office property values.
Property pie in the sky

Rebecca Thistleton
2300 words
17 Apr 2014
The Australian Financial Review
Copyright 2014. Fairfax Media Management Pty Limited.
Off the plan Make sure when you buy you know exactly what you are getting – and what it will be worth – writes Rebecca Thistleton.

Buyers wanting a piece of what is set to be Sydney's tallest residential tower queued in their hundreds at the future site of the $690 million Bathurst Street project last ­Saturday. Within an hour of opening, 90 of the 120 apartments released to market by Shanghai-based Greenland Group (and slated for a 2017 finish) had sold.

Sydney is not alone in rapid sales of off-the-plan apartment projects, with new unit approvals hitting record levels. The number of new apartments is also rising in Brisbane and Canberra, while Melbourne's supply levels continue to grow almost four years since the city's property market peaked.

Buying an apartment that's yet to be built is a bit like buying a pair of shoes without trying them on. Even so, owner-occupiers and investors are falling over themselves to pay anywhere from half a million dollars – often much more – for apartments yet to be built.

The trend – driven by record-low interest rates, offshore investment (non-residents are only eligible to purchase new properties) and affordability issues – is shifting ­cityscapes and how people live and invest their money.

Property commentators and investment specialists are warning punters to pay ­attention to supply levels, location and capital gains potential as more towers crop up.

Oversupply concerns and a potential interest rate rise may put people off. But for now, developers and agents are cashing in and buyers are hunting for the next unit boom suburb. What buyers should look for, says Troy Gunasekera, national manager of investment group Property Club, is a suburb with "lots of rental and buyer demand but low supply, resulting in more competition for properties and pushing up prices".More growth ahead

Last year's rise in house prices filtered through the apartment market – and there is more growth to come.

Property research firm Residex founder John Edwards says dwelling values will keep rising this year, although he cautions units are predicted to deliver lower returns than houses. "Anybody buying property over the next 12 months needs to be aware of the growth patterns – now more than ever it is important to do solid research around the market to back up your decisions with data and insight," he adds.

The best returns are expected to be in the inner suburbs – around 4 per cent to 8 per cent in the next five years. But each city's market is at a different cycle stage and therefore offers ­varying growth potential.

Almost 5000 apartments are mooted for Sydney's central business district, according to research from consultants Deep End ­Services and Landsburys. Only 8 per cent are under construction, which shows how much the city landscape is set to change over the next few years.

The biggest increase in Sydney apartments will be along the corridor between the CBD and the airport, predominately Mascot, Zetland and Waterloo, where gentrification is gaining momentum and industrial land is being snapped up for residential projects.

In Melbourne, offshore developers from China, Malaysia and Singapore are building some of the country's tallest residential ­towers around the CBD, Southbank and Docklands. Local developers are concen­trating on the inner-ring suburbs.

Apartment numbers keep growing around Melbourne's CBD, sparking ­oversupply concerns as rental yields soften and the vacancy rate increases. But the inner-ring suburbs, which are five to ­10 kilometres from the city centre, still offer among the best returns in the country, ­Residex's Edwards says, particularly Elwood, St Kilda and Richmond.

"Melbourne is defying past predictions," he says, referring to predictions the market would soften across the city.

"My feeling is that there is an oversupply of property, especially units, but demand is currently being propped up by three main factors: property developers are managing their units well; international buyers are supporting new unit sales; and higher public confidence is being driven by factors like good clearance rates at auction."Brisbane may be the next big thing

Property pundits tip Brisbane as the next city to experience a rise in values and ­investment. Neil Smoli, managing director of financial advisory service Aviate, says new infrastructure projects, projected economic growth and a housing undersupply will tip the investor market in Brisbane's favour. He avoids "hot spots" – pockets that the broader market has cottoned on to and where prices are inflated.

"Instead, we focus on markets primed to outperform over the long term. While we understand that many investors are attracted to Sydney, we won't recommend investing in property in Sydney in the ­current climate," Smoli adds.

A look at prices between the capitals also offers an insight as to why more investors are considering buying off the plan in ­Brisbane. The median unit price is $359,000, compared to $448,000 in Melbourne and $552,500 in Sydney.

Buyers in Greenland's latest Sydney venture paid from $595,000 for a one-bedroom apartment, which are 38 to 66 square metres. Three-bedroom apartments start at $2.17 million and measure between 105 square metres and 144 square metres.

While the potential for property price growth is luring buyers, economists predict an interest rate rise as early as September this year. Most agree there will be at least one increase by the end of the 2015 financial year.

Interest rate rises need to be accounted for ahead of purchase and settlement, and are part of why Loan Market mortgage ­broker Marios Rokka says the long-term ­settlements inherent in buying off the plan can be fraught with danger.

"The overall negative impact of buying off the plan is that the valuation of the property is unknown until it is complete," he explains.

This makes lending difficult.

For example, a $500,000 apartment with a 10 per cent deposit from the buyer would require a 90 per cent mortgage of $450,000.

Building apartment projects can takes about 18 months to three years. If the market dips in that time, and the final valuation comes in at $450,000, the bank's 90 per cent mortgage would be $405,000. The $95,000 shortfall between the mortgage and the original ­purchase price would fall on the buyer.

Rokka says another problem is buyers aren't always sure what value the bank is lending on – "the contract price or valuation, whichever is lower". "Be ready for additional costs. If the valuation falls, then mortgage insurance may become a cost to the loan which could negate stamp duty savings."Buying in advance

Buying so far in advance means buying a property in two years' time at today's prices, which is both a pro and a con.

Some off-the-plan buyers celebrate a rise in value between purchase and ­settlement, but with so much supply coming to market and the potential for volatility in the broader economy, counting on capital gains is ­dangerous.

The Gold Coast market is still suffering after the apartment glut and market ­downturn after the global financial crisis. Off-the-plan apartment buyers who signed contracts before the market slumped found themselves lumped with units worth less than purchase price. The result was a string of mortgagee sales which hit the market towards late 2010 through to 2012, which are still being absorbed.

Buying in over-supplied pockets becomes a problem if rental demand is overtaken by supply. Returns fall or, worse, the ­property sits vacant. An oversupply also makes it tougher for owners to on-sell their apartment.

The buoyant established housing market has made detached housing unaffordable for first-home buyers and upgraders ­wanting to live near the centre of their city. At the same time, state government stamp duty discounts on new dwellings have made off-the-plan apartments more attractive, so there are more off-the-plan buyers than ever before.

Offshore investment is also thriving as Australian property is seen internationally as a safe place to park money. Credit Suisse says Chinese buyers have snapped up $24 billion worth of Australian housing in the past seven years and will spend another $44 billion in the next seven years.

In the 12 months to February, almost 80,000 new apartments were approved. While Australia has a well-documented housing shortage, a concentration of ­apartments in one suburb could reduce ­values and returns in the short to long term.

Savvy developers are taking note and are exploring undersupplied areas. Melbourne developer Tim Gurner has lodged plans for a $600 million project in Brisbane's Fortitude Valley in an effort to capitalise on the value for money and yields to be had up north.The right terms and conditions

Similarly, fellow Melbourne developer Paul Fridman will soon launch an Erskineville project in Sydney's inner west. Fridman said the move is sharpening the business skills of Fridcorp, the company he started as a 20-year-old. Fridman will still have a ­Melbourne presence, but will focus on smaller suburban projects to avoid the ­oversupply around the city.

"In two years there may be other developments being sold off the plan similar to, or better than, the property you are buying, which could reduce the value of your ­property," Loan Market's Rokka says.

"Additionally, if the development is ­coming to its conclusion, the developer may reduce the prices of some of the apartments in order to sell, which again reduces the value of your apartment."

This is why securing the right mortgage terms and the right location are crucial. ­Residex's Edwards says finding emerging areas where demand is likely to increase ahead of supply is the key. "Many suburbs that were once considered rundown and undesirable have since transformed into property investment hot spots," he adds. "Clues are cafes and retailers opening in the area, as well as an influx of young residents with solid incomes."

Looking at predicted capital growth ­patterns, Edwards says Sydney and ­Melbourne's growth rates are expected to slow down in the next six months, and in 2015 across other cities.

But for now, Edwards says every capital city has inner-ring areas ripe with opportunities. "Although inner-ring areas often fall into the least affordable class compared to their suburban neighbours, the data ­indicates there are still opportunities for savvy investors, in the right suburbs."

For first-time buyers or investors considering off-the-plan, the process can be daunting. Troy Gunasekera, national manager of Property Club, offers some pointers.

■ Get out of the mindset that you need to invest in the area you live in. That could limit opportunities to buy in areas experiencing capital growth and rental demand. Remember growth can happen in regional areas as well as urban. Successful investing needs a business mindset.

•Target areas where new infrastructure is to be built. Suburbs close to where new roads, freeways and public transport are to be constructed will be more attractive to tenants and are a sign of where the population is expected to grow.

■ Identify commercial and social investment areas. Find areas where new shopping centres, hospitals and schools are to be built in the future. This also applies to gentrifying areas where new cafes and shops are opening.

■ Invest in areas with more demand for housing than supply. Look for areas just starting to experience an increase in house prices and with low vacancy rates. A low vacancy rate means you will be more likely to tenant an investment property quickly.

■ Invest in surrounding suburbs. If you miss out on a property in a booming area, consider the suburb next door. In many cases the surrounding suburbs are likely to become hot spots themselves with time. You can piggyback the success of the existing hot spot while likely paying less for your investment.

■ Speak to investment experts and like-minded investors.

It's the million-dollar question for any prospective home buyer – do you put your money into a brand new home or is it better buying an established property?

Buyers' agents often steer prospective home owners towards older properties because they have a track record. But many buyers feel they're buying peace of mind by buying new.

"I didn't have to worry about anything," says 28-year-old accountant John Cousins of his three-bedroom new-build apartment in Sydney's Zetland. "I knew the developer, and that I could rely on them for a good product." He bought the home from an investor shortly before settlement, and hasn't looked back.

"I was confident prices in the area were only going to get higher," he adds. "But also, I just wanted a nice place to live and it's good moving somewhere that hasn't been lived in before."

For Cousins, buying a new unit meant he could get into Sydney's housing market in a sought-after location without having to pay the world.

"Established properties the same size in the area were a lot more expensive, and the amenity wasn't nearly as good."

Melbourne buyers' agent Richard Wakelin acknowledges it can be easier to buy new apartments than old, but still advises against it.

"We would rather buy property the second time around, so that all the building issues in a new property have been ironed out, and the expectations are clear," he says. "People make assumptions based on one development that's been packaged well and that can be dangerous."

Wakelin says established property also tends to be unique and in shorter supply: a new-build apartment in a block of 200 has little unique pulling power when the time comes to sell it on.



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Watch this space, as IT leads office recovery

AUSTRALIA’S office markets are showcasing the changing nature of the economy as mining investment tapers, with Sydney and Melbourne showing signs of recovery while tenant demand in Brisbane and Perth continues to worsen.

Sub-lease space — the amount of office space a tenant has put back on the leasing market — in Sydney fell 10,500sq m in the March quarter to 1.27 per cent of total stock, the lowest since 2012, says JLL’s quarterly office market report, released today.

Sydney also had its first positive quarterly net absorption of office space since mid-2012, meaning more space was leased than vacated, but not enough to push down the city’s vacancy levels, which have remained high at 10.5 per cent, according to JLL.

The amount of empty office space in Melbourne fell slightly during the quarter to 10.4 per cent, the lowest of the capitals.

As for the resource-dependent economies, Perth recorded its seventh successive quarter of negative net absorption, with 18,600sq m more space vacated than leased. The city’s vacancy increased a percentage point to 11.8 per cent.

In Brisbane, office vacancies remain at a record 15.5 per cent, the city recording negative net absorption of minus 1600sq m.

Nationally, the rate remains at 11.7 per cent, JLL forecasting this level for the rest of the year.

Office landlord Investa’s head of capital transactions, commercial development and leasing, Michael Cook, said office markets in Perth and Brisbane would continue to “bounce around on the bottom” until there was a resolution on the carbon and mining taxes. Sydney and Melbourne were at the beginning of a slow recovery with a pick-up in movement of small tenants of about 500sq m.

In Sydney, several finance and human resources firms had decided to retain space rather than sublease it on the back of an improving global economy, Mr Cook said. “It’s not strong by any means, but it gives you a level of optimism people are starting to hire again.”

JLL head of office leasing Tim O’Conner said technology companies would play a role in the recovery, with computer antivirus company Symantec recently leasing extra space at 207 Kent Street: “The recovery in US office markets has been led by the technology sector.”

Office vacancy levels in Adelaide remained at 13.9 per cent for the quarter while Canberra recorded positive net absorption of 8600sq m and a reduction in vacancy to 11.7 per cent.
Renters give up on the dream
AAP APRIL 23, 2014 12:00AM

AUSTRALIA'S booming property market is forcing many would-be buyers to delay or even give up their home ownership dreams.

A survey of renters across Australia has found more than half believe they cannot afford a deposit, while nearly a third believe they can't afford mortgage payments.

One in four of the 1200 respondents surveyed by have avoided buying because they think the market is overpriced, while 22 per cent have found it is cheaper to rent.

Location is also a major factor for many, with 28 per cent saying they haven't bought a property because they can't afford to buy where they want to live.

Sydney home prices have jumped more than 15 per cent in the past year and Melbourne prices are up more than 11 per cent, according to figures from property information business RP Data. general manager Petra Sprekos said the survey showed houses were too expensive for many.

“A clear trend is emerging — housing affordability pressures are breeding a nation of renters,” he said.

“The great Australian dream of home ownership is fading for a significant percentage of the population either because they feel unable to obtain and manage a mortgage, or because it's too expensive to buy into the area they rent in.”

The survey also found nearly half of all first home buyers needed to rely on their parents in some way for the purchase.
Chinese look to Australia for their overseas home

Chinese look to Oz for overseas home co-founder Andrew Taylor and partner Simon Henry on the Gold Coast for the AREC conference. Picture: Adam Head Source: News Limited
AUSTRALIA has become the second most popular destination — after the US — for Chinese looking for overseas homes, according to expatriate Australian Andrew Taylor, co-founder of a leading international property portal in China.

The website, (meaning “home overseas”), ­provides a window to the world’s residential real estate for increasingly affluent Chinese investors.

For real estate agents, the site provides a toehold into the ­Chinese market.

Mr Taylor, a former REA executive, told The Australian that Chinese investors were likely to spend up to $50 billion across many international property markets this year.

Besides the 2.7 million ­Chinese with more than $US1 million in investable assets, Mr Taylor noted that Chinese wealth surveys count 60 million upper middle-class Chinese, who also fit the profile of typical purchasers of overseas property.

This high net-worth group is expected to expand at a 20 per cent compound annual growth rate over the next three years. One-third of wealthy Chinese have assets overseas, and they have a voracious appetite for overseas property investment, according to these surveys.

“The people visiting are those with the appetite, financial ability, and mobility to purchase inter­national property. We put ourselves in the luxury brand category, such as Bentley, Chanel, etc,” Mr Taylor said.

The average budget among users of the site, which has 1.5 million visits a month, for ­Australian real estate is $3.7m.

There are also those looking for much more expensive homes, Mr Taylor said. “We have an extra category of buyers — we call them super fish,” he said. “They have so much money that I can imagine they own more than the Catholic Church.

“They go to countries like Australia, and they will come to our office on their return to complain that the agents do not know how to deal with them.”

These buyers are looking for homes priced at more than $10m-$15m, he said. Chinese buyers poured $5.9bn into property investment last ­financial year, topping the list of offshore buyers, according to Foreign Investment Review Board figures. passed on “hard leads” — firm interest in a particular property — to international agents and developers for $US1.1bn worth of property in the second half of calendar year 2013.

Mr Taylor said Chinese buyers were becoming more sophisticated, grasping the breadth of the Australian market.

They have moved from chasing capital gains to seeking yield and income from what they see as long-term investments, he said. “Chinese investors look at their real estate purchases as a generational investment ... they are different.”

Aside from the well-trodden Sydney suburbs of Chatswood and Epping, the latest areas on Chinese investors’ radar are Mosman, Camperdown and East Sydney. Sydney is their top city in Australia, Mr Taylor said. Chinese buyers looked to countries with a strong economy and links with China, he said.

He noted Chinese investors have inquired about properties in NSW’s Wagga Wagga, following the announcement that major Chinese company Wuai Group had made a $400m investment in the regional city last year.

Chinese investors had already started buying outside key gateway cities in the US, Britain and Germany and were expected to follow suit in Australia, he said.

A recent analysis of real estate search behaviour by Chinese homebuyers found the Gold Coast was the most searched regional destination in Australia.

Queensland was the most popular state and cities such as the Sunshine Coast, Cairns, Rockhampton, Towoomba and Mackay were among the top 10 regional Australian destinations, the survey noted.

In NSW, Chinese buyers interested in regional Australia search for properties in Coffs Harbour, Newcastle, Wollongong and Albury, while in Vic­toria they look at Geelong and Ballarat. They also look west to Mandurah in Western Australia and south to Launceston in ­Tasmania.

In Febuary, RE/MAX Australia and New Zealand formed a tie with to give its agents better exposure in China.

Mr Taylor said the agreement means that homes in Australia and New Zealand listed RE/MAX will see the property marketed on the website.

Earlier this month, signed an exclusive marketing agreement with RE/MAX ­Portugal. Chinese investors’ interest in Portugal in January and February rose 928 per cent compared with a year ago, according to Juwai’s user data.

Aside from Spain and Portugal, cashed-up Chinese were also buying in far-flung locations such as Bulgaria and Costa Rica.

To ensure that its 2.4 million listings from 53 countries reach the maximum number of potential buyers, last month launched a Chinese-language iPhone app.

Mr Taylor and his partner, Simon Henry, another Australian, launched in 2011. (Since started, about 20 real estate sites have been launched in China, but nine have disappeared.)

Mr Taylor, who worked as a senior executive with real ­ (the REA Group) in Sydney, said the idea of developing a global real estate portal for Chinese investors occurred to him while working in Hong Kong, where he moved seven years ago.

“I noticed more mainland Chinese were buying Hong Kong property, and that they were later starting to look beyond Hong Kong,” he said.
Fever cools but demand healthy
Michael Bleby
596 words
28 Apr 2014
The Australian Financial Review
Copyright 2014. Fairfax Media Management Pty Limited.

There are signs Sydney's strong housing market is moderating after a surge in activity late last year, even as clearance rates remain high and limited stock is driving competition for properties even before they come to market.

Prices ticked down 0.3 per cent last week, even as 177 – or 72 per cent – of the week's 246 auctions tracked by research company RP Data cleared. Australian Property Monitors put Sydney's clearance rate at 78.5 per cent, the third weekend it has been below the 80 per cent level it sat at or above for the previous 10 consecutive weeks.

In Melbourne, the clearance rate of 63.6 per cent was higher than the 58.1 per cent figure of last week, which was dominated by Easter, but well below the 79 per cent peak of late February, RP Data said. APM's Melbourne clearance rate of 68 per cent was its lowest for the Victorian capital this year.

House buyers have benefited from record-low interest rates, pushing prices up 5.1 per cent in the final three months of last year. However, modest wage growth – reflected in last week's lower than expected first-quarter CPI figures – suggests that houses are once again becoming unaffordable, especially in Melbourne, where the local economy is weakening. The median growth rate slowed to 3.1 per cent in the March quarter, APM said last week.

"The Melbourne and Sydney markets have stepped down a gear over the last month," APM senior economist Andrew ­Wilson said on Sunday. "The clearance rate sort of indicates that in Sydney and definitely indicates that in Melbourne."

For now at least, demand remains strong. An unrenovated two-bedroom sandstone cottage in William Street, Leichhardt sold for $1,012,500, ahead of auction and after only six days on the market.

"I think a lot of it has to do with stock levels," said Belle Property Balmain agent Lynsey Kemp. "Interest rates are low, people are trying to get something quickly, and there's not a lot to choose from."

In Sydney's seasonally driven eastern suburbs, things are also about to heat up after a break for school holidays, said Michael Dunn, a principal at Richardson & Wrench in Double Bay.

"We've got something like 16 auctions coming up for 28 May," Mr Dunn said. "There's a large slab of property coming to the market across all price ranges – anything from $800,000 to $8 million is going to auction."

In Melbourne, the market has taken a pause over the two-week school holiday period, buyer's advocate David Morrell said.

"They're taking a breath and looking for direction," Mr Morrell told The Australian Financial Review.

Melbourne prices have fallen 0.3 per cent over the past month – the only capital city market to show a month-on-month slip in prices – although they remain up 12 per cent on the same time a year ago, RP Data figures show.

Clearance rates do not give a full picture but they show the market slowed in a week that started with Easter and finished with the Anzac Day weekend.

Nationally, 859 capital city properties went to auction this week with an average clearance rate of 64 per cent, compared with the previous week where 642 auctions were held with a clearance rate of 65.5 per cent. At the same time last year, 1658 auctions were held in capital cities with a clearance rate of 64.5 per cent.

Fairfax Media Management Pty Limited

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