Whilst it’s too early to tell exactly what direct policy effects — if any — the installation of Malcolm Turnbull as new prime minister will have on Australia’s property industry, it’s clear that as Australia’s 29th prime minister he will be putting much needed focus on the economy.
Lagging in the polls for many months, the coalition government has been heavily criticised for losing traction in managing the economy and communicating with business. With a current global backdrop of volatility in markets, stability is craved by most investors and with a sagging local economy strong leadership is required. And some political stability would help, too.
After being elected as prime minister-designate Malcolm Turnbull was forthright in the need for focusing on our economy.
“We need to have in this country, and we will have now, an economic vision, a leadership that explains the great challenges and opportunities that we face, that describes the way in which we can handle those challenges, seize those opportunities, and does so in a manner that the Australian people understand so that we are seeking to persuade rather than seeking to lecture,” Mr Turnbull said.
“It will be a thoroughly Liberal government committed to freedom, the individual and the market.”
It’s well known that Australian business leaders warm to Turnbull and that they are frustrated with the instability that has dominated Canberra for the last four years. Australia needs further economic reform as challenges continue to arise especially with the proliferation of the digital economy and declining resources industries.
It appeared overnight after his election that currency traders endorsed Mr Turnbull with the Australian dollar reaching through US71c.
Mr Turnbull’s free market approach has been well documented. Mr Turnbull is a former investment banker and head of Goldman Sachs in Australia, corporate lawyer, and technology entrepreneur who helped set up internet provider OzEmail making a fortune in the process.
It remains to be seen whether he can last the current parliamentary cycle and institute some real reform and stability, but the message from business and investors is clear: the government must get its economic management in order.
Acknowledgement: Story by Staff Writer From: The Urban Developer
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Brokers, banks and processing companies have been “inundated with mortgages” as pressure builds to convert spring sales into pre-Christmas settlements.
ME Bank’s national manager of brokers, Stewart Saunders, said the mutual had been a little surprised by just how many loans started arriving on Monday 1 December.
“The first week of December for us was an all-time record week, which would’ve been 30 per cent more settlements than we’ve ever had in a week,” he toldThe Adviser.
“We’re expecting very strong settlements this week, with the 19th of December geared to be one of the historic days in the history of settlements.”
First Mortgage Services’ general manager of sales and relationships, Chris Evans, said the mortgage processing company had experienced a surge from the last week in November.
“December gets really busy because everyone wants to go on holiday, so they want to get rid of as many files as possible and bring settlements early,” Mr Evans said.
“Also, people want to move in while they’re having holidays, so we’ve been inundated with mortgages and queries.”
Mr Evans said December volumes are usually about 20 per cent above First Mortgage Services’ monthly average.
“That puts a lot of pressure on, because there are only so many staff to go around. We’re doing overtime almost every night and weekend work to keep up,” he said.
“But keep in mind we’ve got to prepare the documents, the documents then have to be signed by the customers, returned to us and then we’ve got to book it in. So we get really busy from the beginning of November.”
Smartline executive director Joe Sirianni said the Christmas deadline puts enormous pressure on brokers.
“They’ve just got to work harder and longer. There are no shortcuts. It’s a difficult time of year, because you’re trying to balance family things with work,” Mr Sirianni told The Adviser.
“These days, most banks are clear about what has to be lodged by what date to settle prior to Christmas. They have clear cut-out dates, so if it hasn’t been lodged by a certain date then it won’t settle.”
Mr Sirianni said if previous years are anything to go by, activity will slump after Christmas and remain subdued until the Australia Day long weekend.
Acknowledgement: Story by Nick Bendel From: The Adviser
APRA and ASIC have announced a widespread investigation into interest-only loans, high LVRs and investor loans in the Australian mortgage market.
The prudential regulator has proposed a three-point plan to target high LVR loans, lending to property investors and to monitor loan affordability tests for new borrowers.
“In the context of historically low interest rates, high levels of household debt, strong competition in the housing market and accelerating credit growth, APRA has indicated it will be further increasing the level of supervisory oversight on mortgage lending in the period ahead,” APRA said in a statement.
However, the prudential regulator will not introduce across-the-board increases in capital requirements, or caps on particular types of loans, to address current risks in the housing sector.
DEMAND in residential land is set to remain strong in Sydney next year, with a recovery in land sales picking up pace in Brisbane, the Gold Coast and the Sunshine Coast.
But land sales in Melbourne and Adelaide will slow, according to forecaster BIS Shrapnel’s residential outlook.
Researcher Angie Zigomanis said a decade of weakness in Sydney’s land market had set up demand for a number of years.
“The peak in land prices in 2004-05 meant that a significant premium had to be paid to buy a new house compared to the cost of an established home,” Mr Zigomanis said.
About 5500 new lots are estimated to have been completed this year, with BIS Shrapnel forecasting the completion of 8100 lots each year for the next five years.
Demand for land in Melbourne and Adelaide is expected to show moderate growth in 2015 because there is not the same level of pent-up demand as in Sydney and south-eastern Queensland.
The report found that pressure on land prices had meant developers have been producing smaller lots on average, with increased densities allowing developers “to account for increasing costs”.
“Median lot sizes have shrunk by between 16 per cent and 28 per cent across the capital cities over the past decade,” Mr Zigomanis said. “Developers have tried to keep headline lot prices lower in order to keep the cost of a new house competitive with the existing stock in the outer fringe suburbs, thereby encouraging demand for land.”
When managing the delivery of any development, especially one with multiple stakeholders or complex planning considerations, there are always a number of potential obstacles to consider.
Here are some tips from the coal-face about five common development traps and how to avoid them:
1. Never forget that time is money
Although there may be a complex issue that’s demanding all your attention, it’s important to keep all your other balls in the air at the same time. Otherwise, if one drops, it could start a chain of events (and costly delays) that may affect your bottom line.
2. Always surround yourself with the best team of consultants and contractors.
While it may be tempting to go with a cheaper option, there’s every chance a low-quality provider won’t be able to deliver the best outcome, meaning you may need to put out spot fires later on. It’s always important to consider quality versus cost the first time around so you can budget accordingly and avoid costly hiccups.
3. Do your homework.
Thorough due diligence is vital towards delivering a successful project. A development site may look viable on paper but if an un-budgeted issue goes undetected through the acquisition or tendering process – such as contamination or environmental complexities – it can blow a sizeable hole in your cash-flow, erode profitability and leave you scrambling to secure extra funding at the project’s front end.
4. Always consider all the options.
Never assume there is only ever one solution for a development issue. That said, once the preferred development solution is identified and agreed on – lock it in and focus on delivering your goal. Nothing erodes profitability and delays development timeframes like indecision.
5. Always confirm your communication objectives and reporting requirements upfront.
Communication is essential towards the smooth delivery of any project. Always ensure open lines of communication, agree on expectations upfront and lock in regular meeting arrangements to ensure the swift turn-around of decisions and approvals, otherwise, refer back to point number one!
Investors are in standby mode for the next wave of big ticket deals, worth in the billions, as public and private trusts undertake strategic reviews of their portfolios.
In the recent 2014 earnings reporting season, companies including Scentre and CFS Retail, among others, said they were undertaking a strategic review of business which would likely result in asset sales.
These would be spread across office, retail and industrial properties, and already there are more than $2 billion being offered to the market in series of offmarket and advertised deals.
In one deal, Washington H. Soul Pattinson and Company is selling two logistics facilities covering 90,000 square metres in a deal estimated to be worth about $150 million.
WHSP put in $45.4 million in equity to develop the centres in Brendale, north-west of Brisbane, and 133-145 Lenore Drive, Erskine Park, in Sydney’s outer west, which carry 15 year leases to the fashion group that includes brands such as Rebel, Ray’s Outdoors and Amart Sports.
The properties are being marketed for sale in one-line by Michael Fenton from JLL and transaction adviser Hugh Williams from Pitt Street Real Estate Partners.
Mr Fenton, JLL’s Australian head of industrial said the portfolio has already received strong interest from both domestic and international groups due to the scale of the offering, long term leases and new state of the art facilities in prime industrial locations.
The real estate investment trusts (REIT) and owner occupiers are very active in South West Sydney, according to Colliers International director, Adrian Balderston.
Acknowledgement: Carolyn Cummins, Commercial Property Editor, Sydney Morning Herald. From: www.smh.com.au
Gone are the days when apartments were just standard unit blocks.
Today, unit blocks are taking on a modern community focus with inclusions like communal spaces, retail facilities and even an open air cinema. It is all part of a growing trend that aims to inspire residents through community art and engagement programs and creative architecture.
Curtis Field, director of residential project marketing at Colliers International, said developers were placing an emphasis on creating inspiring places for residents.
“More and more developers are creating places from the resident’s point of view,” he said. “Rather than the primary focus always being ‘what can we build the most of for the least input’, there has been a move to ‘If I were going to live here, what would I want?’”
At Crimson Hill, in Sydney’s north shore suburb of Lindfield, Defence Housing Australia (DHA) have commissioned internationally-renowned artist Jason Wing, to create a mural as part of its latest release of apartments, Dunstan Grove. The artwork will focus on reflecting the historic and environmental significance of the site and celebrate its indigenous heritage.
“Crimson Hill’s vision fits wonderfully with Jason’s unique themes and influences, including the changing face of Australia’s communities and celebration of the Australian environment,” DHA’s managing director Peter Howman said.
Upon completion, Crimson Hill will have 345 residences including premium architecturally designed homes and apartments for more than 700 residents.
The new development at Woolooware Bay, in the Sutherland Shire, will bring together 600 new dwellings made up of 600 apartments, penthouses, villas and townhouses together with a town centre with retail, lifestyle, entertainment and health services. Residents will have access to new public open spaces including a landscaped public boulevard and Foreshore Park with pedestrian and bicycle links along the mangrove boardwalks, access to Bay Central and Bay Health. The development will also feature a supermarket, gym and sport medical facilities, restaurants, a rooftop sunset cinema, pools and barbecue areas throughout.
“We wanted to build an environment that emphasises the best qualities of coastal living with all the modern amenities one would expect of a development of this calibre,” Angus Henderson, from architectural firm Turner, said.
At Southbank, in Wolli Creek, developers Winten Lyon are creating local community spaces for its future residents. They are currently working with the local council to activate local ovals for greater community use and they have plans for an open air cinema and other community events. The development site will include three buildings ranging from 10 to 15 storeys and upon completion will have 317 apartments in studio, one, two and three-bedroom configurations.
Acknowledgement: Brendan Wong Real estate reporter, Daily Telegraph. From: news.com.au
NEW HOUSING figures are clawing their way back up with new figures revealing billions worth of new houses and units approved for construction.
Melbourne has the highest value of construction throughout the country according to an Housing Industry Association report with more than $385 million worth of property already given the go ahead. South Morang, about 22km from the Melbourne CBD is not far behind with $277 million worth of construction slated to go ahead. The Homebush Bay and Silverwater region in New South Wales is also expected to undergo a building surge with more than $257 million worth of development approved.
The HIA has analysed which are Australia’s hottest housing markets by combining the value of approved developments with population growth. It rates the ACT as Australia’s hottest housing market with Crace, about 9km from Canberra the top performing area. It had an annual population growth of 58.1 per cent during 2012, 2013 and $112 million worth of new dwelling approvals. Bonner, about 13km from Canberra, was the second strongest performer with its population up by 43.3 per cent and $121 million worth of building approved.
In the top twenty the ACT took out the top three spots. There were eight Victorian locations, four in Western Australia, three in New South Wales and two in Queensland. According to the HIA figures new dwelling commencements in Australia rose to 162,000 during 2012, 2013. Both Tasmania and South Australia didn’t make it into the top twenty list this year. HIA senior economist Shane Garrett says the two states had not made it into the list for the past two years. “However, the gradually improving situation in both markets means that we can look forward to them battling it out at the national level in the near future.’’
Acknowledgement: Michelle Hele, Real Estate Online Editor. From: News Corp Australia