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The commercial property sector continued to improve in late 2011 driven by a drop in office vacancy rates and a rise in office property values and rents, according to the RBA’s latest Financial Stability Review (FSR).
The FSR notes that office property values and rents rose by about 7% over the year, but still remain around 15% below their 2007 peaks on a national basis.
The report notes that office vacancy rates in most capital cities have stabilised or declined moderately since 2009, with larger falls recorded in Perth and Brisbane, where vacancy rates had previously increased more sharply.
“The pick-up in office property prices was evident across most capital cities. Prices and rents in the industrial property market also strengthened, though conditions in the retail property market have been more subdued,” the RBA says.
<img src="/images/stories/rbamarch29.gif">
However, the RBA makes an important distinction between the recent downturn caused by the GFC and past adjustments.
“The adjustment in the commercial property market in recent years was less severe and drawn out than the downturn in the early 1990s: office property values fell by 25% over two years from their late 2007 peak, compared with a 50% peak-to-trough fall over four years in the early 1990s.
“There was a smaller supply overhang this time, and banks appear to have delayed selling some non-performing commercial property assets until conditions improved rather than selling into a depressed market,” the central bank says.
“There were some market segments, however, where stock additions at the peak of the market subsequently put pressure on vacancy rates and rents, especially than in earlier years.
 
“Lending conditions are said to be particularly tight for residential property developments in Melbourne, given concerns about a possible oversupply of apartments in that city,” says the RBA.
The report notes a slightly better lending environment, with the “quality of banks’ commercial property exposures improved slightly over 2011, but the impairment rate remains above that for banks’ total business lending (5% versus 3%)”.
“Commercial property impairments are about one-half of banks’ total impaired business assets, even though lending to the sector accounts for only about one-third of total business lending,” says the RBA.
It also notes while European banks’ exposure to the Australian commercial property has shrunk by about 60% Asian banks have increased their exposures to the market over the past two years, though from a relatively low base.
The non-bank sector continues to struggle to lend on commercial property.
“Non-bank sources of finance for commercial property remain constrained, with little issuance of commercial mortgage-backed securities in recent years and mortgage trusts’ funds under management continuing to decline,” says the RBA.
 
 
 
 
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lschlesinger-FZcF9M3vE6

Commercial property returns improving but still below pre-GFC peaks: RBA

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The Telstra store premises on the corner of Collins and Swanston streets – one of the busiest pedestrian corners in the Melbourne CBD – has sold ahead of auction for $9.25 million.
The buyer is a private Victorian investor who has paid the equivalent of $142,308 per square metre for the 65-square-metre shop.
<img style="border-style: initial; border-color: initial;" src="/images/stories/220collins.jpg">
It is tenanted by Telstra, which took over the lease from Vodafone last year and has a seven-year lease. The shopfront has not been vacant in the last 40 years.
The shopfront generates net income of about $544,000 per annum with 5% fixed annual rental increases equating to a yield of 5.8%
CBRE’s Josh Rutman, who negotiated the sale along with colleagues Mark Wizel and Max Cookes, said the vendor – ASX-listed property fund manager Charter Hall – had received a number of “good offers” before the scheduled on-site auction. 
<img style="border-style: initial; border-color: initial; float: left; margin: 5px;" src="/images/stories/220collins2.jpg">“There was an auction before the auction,” Rutman told Property Observer.
 
The property had been listed for sale with around $9 million hopes.
The shop at 220 Collins Street is situated on the ground floor of the 1932 Art Deco Manchester Unity building, whose completion was said to signal to Melburnians the end of the Great Depression.
It was subsequently subdivided and sold down as individual units in 1996.
It stands on a prime piece of Melbourne CBD real estate opposite the Town Hall, with about 15 million pedestrians filing past every ear – 50,000 each day.
Charter Hall had held the shop premises since 1997 in one of its small unlisted retail funds.
Telstra took over from Vodafone as its tenant last year. The shopfront has not been vacant in the last 40 years.
The Manchester Unity building was the tallest building in Melbourne when it was finished in 1932.
The corner tower is built in the commercial Gothic Modern style inspired by Raymond Hood’s competition-winning Chicago Tribune Tower.
Photographs by Alistair Walsh
 
 
 
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Private investor snaps up Collins Street Telstra store premises for $9.25 million ahead of auction

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A Perth real estate agency has been fined $1,000 and been ordered pay costs of $451 after one of its property managers failed to refund a tenant a rental bond six months after a court ordered the manager to do so.
Bob Oliver Realty Pty Ltd, based in Applecross, appeared in the Fremantle Magistrates Court on March 23, 2012 charged with failing to pay back a security bond to a tenant in accordance with a court order within seven days.
Lawyers from Consumer Protection, the consumer advocacy arm of the WA Department of Commerce, told the court that the bond of $5,527 was paid to the tenant six months after the court issued an order for the bond to be paid.
The agency repaid the bond after the Fremantle Community Legal Centre lodged a complaint with Consumer Protection and an appeal against the order by the agent failed.
During sentencing, Magistrate Elizabeth Langdon said that, after 30 years of being licensed, the real estate agent should have full understanding of tenancy laws and their responsibilities.
Langdon reminded the agent that court orders need to be complied with and added that was inappropriate for the agent not to exercise proper supervision of the agency’s property manager.
Commissioner for Consumer Protection Anne Driscoll says the case highlights the need for real estate agents and property managers to dispose of security bonds in accordance with the law.
“A tenant should not have to go to such lengths and wait so long to receive bond money to which they are legally entitled,” she says.
“All agents and property managers should be well aware of the requirements of the Residential Tenancies Act and keep up to date with changes to bond requirements when they come into effect at the end of this year.”
 
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Perth real estate agency fined for taking six months to refund rental bond following court order

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Aussie Home Loans founder John Symond has warned that borrowers will burst like tomatoes unless the RBA cuts rates.
“People are like tomatoes that have been squeezed too much. At some stage they'll burst. They've had a gutful,” Symond said on Ross Greenwood’s Money News show on 2GB.
Speaking also to David Koch on Sunrise, Symond joined the likes of Yellow Brick Road’s Mark Bouris by heaping more pressure on the Reserve Bank to cut interest rates and inject some confidence into the housing market and economy in general.
“The government and they RBA are a bit out of touch by not accepting that parts of the economy, especially small businesses, is doing it really tough at the moment,” Symond said.
“As well as the Australian economy has performed relative to other economies, we could easily get into the situation where the economy could stall,” warned Symond.
“We need an injection of good news and an injection of confidence – the best way to do that is to start dropping interest rates.”
Symond said the basic principles of supply and demand suggested the housing market was unlikely to recover anytime soon, pointing out that there were currently more than 300,000 houses listed for sale on the market, the highest in Australia’s history.
“We have an oversupply of sellers versus buyers, which suggests the housing market will remain soft,” he said.
Furthermore, he also expressed concern at the increase in self-employed borrowers facing mortgage difficulties as noted in the increase in low-doc loan arrears (loans principally used by those self-employed) in the recent Fitch Dinkum Index for the December 2011 quarter.
According to Fitch, the percentage of low-doc borrowers more than 30 days in arrears increased to 6.62% in the December quarter, up from the 6.26% rate in the September quarter.
“Mortgage arrears are a worry because they are trending in the wrong direction,” said Symond.
“Houses are taking twice as long to sell, and if you’re in trouble it’s going to take you twice as long to sell your property – if you can in fact sell it.”
Symond’s criticism of the RBA follows an attack in early March from Mark Bouris over the central bank’s decision to leave rates on hold in February (following which the major banks lifted their standard variable mortgage rates).
In a series of tweets Bouris said the central bank needed to take into account that Australia had a multi-speed economy when determining interest rate settings.
“What's the basis of the RBA decision? They keep rates on hold because everything looks OK but you just need to scratch beneath the surface,” tweeted Bouris.
 
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John Symond urges 'out of touch' RBA to cut rates or borrowers will burst like tomatoes

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Australian households continue to pay down their debt and increase their savings as house prices fall, the new RBA’s March 2012 Financial Stability Review (FSR) says.
“Real net worth per household is estimated to have fallen by 6.5% over 2011, to be 11.5% below its 2007 peak… This contrasts with the rapid trend expansion in this series over the decade to 2007 when average annual growth was 6.5%,” says the RBA.
<img src="/images/stories/absmarch282.gif">
According to the RBA, the recent weakness in household wealth has been driven by dwelling prices, “which were down about 4% on an average nationwide basis over the year to December 2011 with prices declined in most cities over the year”.
“Housing market conditions remain soft; preliminary data indicate that dwelling prices have fallen a little in early 2012. At the national level, the ratio of dwelling prices to income has fallen over the past year, and is below the average of the past decade, while rental yields have begun to pick up, assisted by stronger rental growth as well as lower prices.”
As with the previous September 2011 report, the latest report notes that the household saving rate remains well above the levels recorded in the 1990s and early to mid-2000s, with households “actively shifting their portfolios towards more conservative assets such as deposits”
“The aggregate debt-to-income ratio has drifted down over the past year, with demand for new debt remaining low and many households choosing to repay their existing debt more quickly than required.
“Solid income growth is also helping to support households’ debt-servicing capacity. In aggregate, households are managing their debt levels well, though mortgage arrears rates are still a little higher than a few years ago,” says the RBA.
<img src="/images/stories/absmarch281.gif">
According to the RBA, part of the motivation for this higher rate of saving “may have been a desire to bolster wealth, given the weakness in some asset markets in recent years”.
“Another sign of the more cautious approach of households is that they have been actively shifting the composition of their financial asset portfolio away from riskier assets like equities and towards deposits.
“From the beginning of 2008 to September 2011, there were net outflows from households’  directly held equities of nearly $50  billion, while holdings of deposits increased by around $210 billion ($94 billion more than in the previous corresponding period).
“The net outflows from equities have come on top of – and were probably in reaction to – declines in equity prices over recent years, especially given that the resulting capital losses coincided with more attractive rates of return available on deposits,” says the RBA.
The comments are in line with the previous FSR report issued in September 2011, where the RBA noted that the financial position of the household sector “continues to be shaped by a more cautious attitude to spending and borrowing, as evidenced by the considerable increase in the household saving rate”.
“After trending up since the mid 2000s, the household saving rate rose further over the past year, reaching 10.5% of disposable income in the June quarter. It is now at levels similar to those last seen in the mid-1980s,” the RBA said in the last report. 
The RBA has also released a chart showing the<a target="_blank" href="/news"> 15 regions with the highest rates of mortgage arrears.</a>
 
 
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Households continuing to deleverage as house prices fall: RBA 

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The sale of CFS Retail Property Trust’s 50% share of the Myer Centre Brisbane to unlisted property trust ISPT for $366 million helped boost first-quarter commercial sales to $1.4 billion nationally. 
According to CBRE analysis of all commercial transactions, sales in the traditionally quiet first quarter fell off sharply from the December 2011 quarter, but were still 18% above the first-quarter average recorded since the GFC.
The sale of the centre on a 6.5% yield was the largest retail transaction since Lend Lease’s Australian Prime Property Fund Retail (APPF Retail) acquired a 50% interest in Cairns Central for $261 million from Westfield Group in October 2011. 
The next largest deal was the Home Hub Hills Centre in Castle Hill in Sydney purchased by the La Salle Australia Core Plus Fund from developer Fenix Real Estate for $180 million. 
Retail was the most heavily traded sector comprising 51% of turnover, ahead of the office sector, which would normally be the most traded asset class, accounting for 37% of the total.
CBRE executive director of global research and consulting Kevin Stanley says this is a sign that investors are still keen to invest significantly into the retail sector, despite facing challenges of low consumer spending in some merchandise sectors and online retailing growing in popularity. 
Australian head of retail investments for Jones Lang LaSalle Simon Rooney, who brokered the Myer Centre Brisbane sale, says it demonstrated that “institutional investors view the current period as a window of opportunity to secure strategic exposure to the dominant, core regional shopping centre market that traditionally is rarely traded”.
Click to enlarge
<a href="/images/stories/cbremarch28.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/cbremarch28thumb.gif"></a>
Industrial property accounted for 12% of sales transactions. 
Foreign investors purchasing 43% of all assets sold by volume following a year when foreign investors purchased a record 37% share of all commercial properties sold above $20 million. 
Foreign investors active over the first three months of the year were all Asia-based, including La Salle Investment Management, Pramerica, Frasers Commercial Trust and Aviva Investors. 
Beyond foreign investors, local wholesale funds (26% of all purchases) and local private investors (20%) were also active. 
Geographically, Queensland accounted for 54% of all sales – a major deviation from trend – the state usually accounts for about 20%. 
“It appears investors are looking beyond the troubles of the past few years to the stronger economic growth which is now forecast to return to the sunshine state,” says Stanley. 
Stanley says concerns during the quarter centred on financial uncertainty coming from the Eurozone which was slowing investment decision making. 
“A slow start to the investment year is not uncommon in Australia, with January a holiday month, but the first quarter volume in both 2009 and 2011 was much lower than the $1.4 billion recorded in the first quarter of 2012,” says Stanley. 
“We think the prospects for rental growth in the office sector are still the brightest of all the asset classes and local and foreign investors continue to weigh solidly into the sector,” says CBRE regional director of institutional investment properties Rob Sewell.
Sewell says 2012 first-quarter sales activity had been impacted to an extent by an unusually early Easter break, with many vendors having delayed marketing assets until the second quarter. 
“We have a number of marketing programs ready to launch post Easter, including 6-10 O’Connell Street (a 25-storey B-grade office building in the Sydney CBD),” he says. 
Sewell says many institutions are showing a preference for assets with higher cash yields rather than lower yielding growth assets given ongoing wariness in relation to occupier demand. 
“Overall, we are seeing a lot more depth in the buyer demand, with more core plus institutional investors in the market, however the bulk of the funds are still seeking new, core assets,” he says
 
 
 
 
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Commercial sales get to $1.4 billion aggregate in March 2012 quarter: CBRE

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As further signs of weakness emerged in the US housing market following the release of the latest the S&amp;P/Case-Shiller index, RP Data boss Graham Mirabito has stressed there are few points of similarity between the Australian housing market and the US housing market.

The January 2012 S&amp;P/Case-Shiller 20-city composite index dropped 0.8% for transactions recorded between November and January, the fifth straight time that US home prices have fallen, taking them to their lowest level since early 2003.
During the past 12 months, US house prices have fallen 3.8% while over the same period Australian capital city house prices are down 3.6%, according to the benchmark RP Data?Rismark Index. 
But speaking as part of a housing market panel discussion in Melbourne this week, Mirabito stressed there remained “fundamental differences” between the two markets, including differences in how property owners are taxed, the fact that all loans in Australia are full-recourse loans and “just the way Australians live” – such as their pride in home ownership and their willingness to do whatever is necessary to pay their mortgages and hold onto their homes.
“You need to understand the different drivers,” he said.
Mirabito’s comments as part of Australian Banking &amp; Finance magazine’s panel discussion also coincided with new Bloomberg figures showing a 1.6% drop in new US home purchases in February.
Mirabito pointed out that there are 3 million homes in the US owned by the banks and a further 2 million that are “effectively” also owned by the banks because the owners have not paid their mortgages in the past 12 months.
Furthermore, he noted that about 23% of US home owners are in a negative equity position, compared with the <a target="_blank" href="/news">6.1% of Australian borrowers</a> recorded in the December 2011 Equity report compiled by RP Data.
“There is still an equity buffer for most Australian home owners even with a 10% price decline," Mirabito said.
In a note on the impact of the US construction outlook on Lend Lease projects, Goldman Sachs senior REIT analyst Simon Wheatley said the investment bank was factoring in a five-year recovery period for the US housing market.
His comments follow the release of February results for the US Architecture Billings Index issued by the American Institute of Architects (AIA), which rose just 0.1 points to 51.
“The forward indicating inquiries index has accelerated to 63.4 points, up from 61.2 points. A score of 50 reflects no change in billings while above 50 represents an increase in billings,” Wheatley said
“At this stage billings are increasing, though only mildly, however the improvement in inquiries is encouraging and the spread between the inquiry index and billing index is widening, typically a leading indicator of a further improvement in billings.
“The AIA finds that there appears to be ‘persistent caution from clients (of design services firms) to move ahead with new projects’,” noted Wheatley in his Lend Lease note.
The AB&amp;F panel discussion also marked the launch of the 2012 RP Data Property Capital Markets Report highlighting the $4.54 trillion cumulative value of Australian homes, compared with an equities market worth $1.17 trillion.
The company says it does not expect “significant declines” in Australian home values due to an underlying new housing demand of 180,000 to 200,000 new houses per year, strong income growth and “a strong central bank and prudential regulatory regime”.
American flag photograph courtesy of <a href="https://www.flickr.com/" target="_blank">Flickr</a>.
 
 
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Price falls the same but fundamentals different in US v Australia property outlook: RP Data 

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Stockland, Lend Lease and FKP are more heavily exposed to the weak Queensland and Victoria residential development markets than other listed residential developers, according to research compiled by Merrill Lynch.
The following chart shows the heavy exposure of Stockland (SGP), Lend Lease (LLC) and FKP in green (Queensland) and light blue (Victoria) and smaller exposures of Mirvac (MGR), Australand (ALZ) and Peet Limited (PPC).
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/qldvicchart.gif"><img src="/images/stories/qldvicchartthumb.gif"></a>
Yesterday, following its earnings downgrade, Stockland CEO Matthew Quinn highlighted the <a href="https://www.propertyobserver.com.au/industry-news/stockland-downgrades-earnings-as-wet-weather-delays-illawarra-residential-projects/2012032754023" target="_blank">particularly soft conditions in Queensland</a> relative to other stronger markets such as WA.
“Stockland, Lend Lease and FKP remain the most exposed of the listed developers to Queensland and Victoria, with each having around 71% of their land bank in these states,” notes Simon Garing, research analyst at Merrill Lynch.
“However, we note these land banks are often in long-dated projects, mitigating near-term risk. E.g. 50% of Stockland’s Queensland exposure is in Caloundra South, with a life span of 20+ years, while 44% of Lend Lease’s Queensland exposure is in Yarrabilba, not scheduled to complete until 2041,” Garing says.
 
 
 
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Stockland and Lend Lease most exposed to weaker Queensland and Victoria residential land markets

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Ten NSW 7-Eleven service stations have sold at auction, with the assets again proving popular with retirees with self-managed super funds due to their high rental yields. 
The 10 petrol stations sold in a price range from $2.2 million to $3.9 million, with yields ranging between 5.75% and 7.7% and an average yield of 6.81%.
A 2,335-square-metre petrol station on the Princess Highway in Dapto near Wollongong, which returns annual rent of $320,000, sold with the top rental yield for this tranche of 7.75%.
 The first and second tranches of stores were auctioned in March and <a href="https://www.propertyobserver.com.au/victoria/hoppers-crossing-7-eleven-sells-for-%243.49-million-with-nine-bidders-missing-out/2011072050862" target="_blank">July last year</a> and achieved average yields of 6.96%.  A third tranche <a href="https://www.propertyobserver.com.au/retail/high-yields-for-7-elevens-continue-to-attract-investors/2011120752720" target="_blank">was auctioned in November</a> and achieved an average yield of 6.54%.
The full list of NSW services stations is:
<table cellpadding="0" cellspacing="0" border="1" style="width: 470px;"><tbody>
<tr>
<td valign="top" width="240"></td>
<td valign="top" width="113">
Size
</td>
<td valign="top" width="116">
Annual rental
</td>
<td valign="top" width="116">
 Yield
</td>
</tr>
<tr>
<td valign="top" width="240">
South Windsor, 735 George Street
</td>
<td valign="top" width="113">
47,370 sqms
</td>
<td valign="top" width="116">
$250,000
</td>
<td valign="top" width="116">
6.89% 
</td>
</tr>
<tr>
<td valign="top" width="240">
Roseville, Cnr Pacific Highway &amp; Boundary Street
</td>
<td valign="top" width="113">
2,598 sqms
</td>
<td valign="top" width="116">
$250,000
</td>
<td valign="top" width="116">
6.05% 
</td>
</tr>
<tr>
<td valign="top" width="240">
Bankstown, 180 Stacey Street
</td>
<td valign="top" width="113">
4,465 sqms
</td>
<td valign="top" width="116">
$320,000
</td>
<td valign="top" width="116">
7.33%  
</td>
</tr>
<tr>
<td valign="top" width="240">
Greenacre, 301-313 Hume Highway
</td>
<td valign="top" width="113">
8,268 sqms
</td>
<td valign="top" width="116">
$300,000
</td>
<td valign="top" width="116">
7.01% 
</td>
</tr>
<tr>
<td valign="top" width="240">
West Pennant Hills, 552 Pennant Hills Road
</td>
<td valign="top" width="113">
955 sqms
</td>
<td valign="top" width="116">
$160,000
</td>
<td valign="top" width="116">
7.10% 
</td>
</tr>
<tr>
<td valign="top" width="240">
Parramatta, 81 Victoria Road
</td>
<td valign="top" width="113">
2,802 sqms
</td>
<td valign="top" width="116">
$170,000
</td>
<td valign="top" width="116">
5.75% 
</td>
</tr>
<tr>
<td valign="top" width="240">
Dapto, 125 Princess Highway
</td>
<td valign="top" width="113">
2,335 sqms
</td>
<td valign="top" width="116">
$200,000
</td>
<td valign="top" width="116">
7.75%
</td>
</tr>
<tr>
<td valign="top" width="240">
Newport, 307-311 Barrenjoey Road
</td>
<td valign="top" width="113">
1,435 sqms
</td>
<td valign="top" width="116">
$250,000
</td>
<td valign="top" width="116">
7.01%
</td>
</tr>
<tr>
<td valign="top" width="240">
Burwood, Cnr Shaftsbury Road &amp; Parramatta Road
</td>
<td valign="top" width="113">
4,549 sqms
</td>
<td valign="top" width="116">
$170,000
</td>
<td valign="top" width="116">
6.43%
</td>
</tr>
<tr>
<td valign="top" width="240">
Minchinbury, 815 Great Western Highway
</td>
<td valign="top" width="113">
2,419 sqms
</td>
<td valign="top" width="116">
$250,000
</td>
<td valign="top" width="116">
6.79%
</td>
</tr>
</tbody></table>
The latest group of NSW properties was sold as part of a sale program kicked off by 7-Eleven following its acquisition of 295 service stations from Mobil Retail in May 2010.
Since acquiring the Mobil business, 7-Eleven has been converting the Mobil stores into 7-Eleven service stations with attached convenience stores.
All properties come with new 15-year leases to 7-Eleven with three further renewal options of five years each and 4% annual fixed rent increases. The tenant pays all outgoings except land tax.
“Over the past 12 months we have consistently achieved yields of between 6% and 7%, which is an indication of how stable these assets are,” says John Macree, NSW head of sales and investments at Jones Lang LaSalle.
Macree says retirees with self-managed super funds were again prominent buyers at what was a well-attended auction. 
At least one NSW service station was sold to an interstate buyer. “Investors are seeing the importance of having solid long-term investments with a long-term stable income stream. That is particularly important for those planning for their retirement.” 
To date, Macree says about 80% of the buyers at 7-Eleven auctions have been self-funded retirees. 
“Of those, about half were investing through a self-managed super fund structure,” he says.
This is the second time in that past six months that 7-Eleven has achieved a 100% clearance rate at auction. The company sold 10 service stations in Sydney last November.
 
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Self-funded retirees continue to snap up NSW 7-Elevens service stations, drawn by high yields 

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Listed property developer Mirvac has reaffirmed its profit and earnings guidance for the 2012 financial year <a href="https://www.propertyobserver.com.au/industry-news/stockland-downgrades-earnings-as-wet-weather-delays-illawarra-residential-projects/2012032754023">following the downgrade earlier today by Stockland</a>. 
Mirvac is forecasting operating profit of $360 million to $364 million, operating earnings per share (EPS) guidance of 10.5¢ to 10.6¢ per stapled security and distribution guidance of 8.2¢ to 8.4¢ per stapled security. 
“Mirvac is confident of delivering on our previously stated 2012 financial year forecast group operating guidance,” Mirvac managing director Nick Collishaw said after the market closed today. 
“Our development division forecast includes our target of 1,800 residential lots, which has been prepared in line with current market conditions. 
“Our stated strategy to focus on the office investment sector, and our apartment and master-planned community projects on developing the right product, at the right price point, in the right location is proving effective.” 
“As highlighted in our 2012 financial year half-year result, 68.5% of our second half of 2012 forecast development operating earnings before interest and tax (EBIT) is already secured from pre-sold contracts.” 
“This figure provides us with good visibility for the full year,” says Collishaw, who expects to provide third-quarter 2012 financial year update to the market on May 1. 
Stockland shares fell 4.4% today (14¢) to $3 while Mirvac shares were down marginally to $1.185 from $1.20 at the start of trading. 
According to Morningstar's head of property research Tony Sherlock, while there is scope for further softness in the sector, ''the bigger question is how long will this last, particularly given the RBA's reluctance to cut rates with inflation and unemployment both apparently in check''. 
''While the remaining parts of Stockland appear sound, we are not forecasting a material recovery in the residential division for at least 18 months,'' he says. 
Fairfax media reported that in a morning note to clients Macquarie Equities said the increase in mortgage rates in February had a negative impact on the residential market. 
''This has been a key factor underpinning our ongoing caution on the performance of the residential developers,'' the note says. 
''Stockland's revised guidance 'assumes sales will continue to be slow for the balance of the financial year' although we continue to highlight that soft market conditions can also adversely impact the results from the retirement business which, at this stage, Stockland have said is performing in line with expectations.''
 
 
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With good visibility, Mirvac reaffirms full year earnings and profit guidance following Stockland downgrade

The Gold Coast economy has grown by 25 per cent since 2020/21 to surpass $55 billion, but perhaps the more significant story is what sits behind the headline number.

For decades, the Gold Coast has been viewed through the lens of tourism, lifestyle and population growth. The latest State of the City Report suggests that perception is increasingly out of step with reality.

Released by Invest Gold Coast, the report ranks the Gold Coast as Australia's largest non-capital city economy and, perhaps more notably, second nationally behind Sydney for Economic Complexity, a measure that assesses the diversity and sophistication of an economy.

It's a result that places the Gold Coast ahead of Melbourne, Brisbane, Perth and Adelaide, highlighting the extent to which the city's economic base has broadened beyond its traditional industries.

Today, the Gold Coast supports more than 350,000 jobs, is home to over 83,000 businesses and generates $19 billion in annual exports. Manufacturing now accounts for 62 per cent of international export growth, while sectors including health, education, advanced manufacturing, technology and professional services are becoming increasingly important contributors to the local economy.

[smartcode_project:default project_id=150017 project_image_fid=372547]

Gold Coast Mayor Tom Tate said the report confirmed the city's evolution into one of Australia's most significant economies.

"The Gold Coast economy continues to grow at an incredible pace. This is no surprise to those of us who have watched the evolution up close," Mayor Tate said.

"As one of the most entrepreneurial, investment driven and opportunity focused economies in the country our ambition has been realised and possibilities are endless.

"The Gold Coast has built a reputation as the city that says yes. We say yes to investment, yes to opportunity and yes to people who want to build something.

"It's this mindset helping us drive major growth across health, advanced manufacturing, screen production, marine, technology and the knowledge economy."

[smartcode_project:default project_id=149670 project_image_fid=360975]

While population growth has been one of the defining stories of the past decade, the report points to a broader economic transformation taking place.

The city's knowledge economy now contributes $7.9 billion annually and supports around 31,000 jobs, while the health and wellbeing sector contributes $5.2 billion and employs more than 42,000 people. Together, the six priority sectors identified in the report account for almost $24 billion in economic output and more than 145,000 jobs.

One of the strongest examples is the Gold Coast Health and Knowledge Precinct at Southport. The 200-hectare precinct now contains more than $5 billion worth of health, education, research and innovation infrastructure and supports over 16,000 jobs.

The report also highlights the growing role of advanced manufacturing, particularly in aerospace, defence and modular construction.

Gold Coast-based Gilmour Space Technologies recently became the first Australian commercial company to attempt an orbital launch, while companies including Modscape and ModnPods are helping establish the Yatala-Stapylton corridor as one of Australia's fastest-growing advanced manufacturing hubs.

The city's entrepreneurial culture is also translating into business growth.

Since 2019/20, the number of businesses operating on the Gold Coast has increased by 22 per cent, while firms employing more than 200 people have grown by 80 per cent. The report suggests the next challenge is converting more local start-ups and medium-sized businesses into nationally significant companies.

Development activity remains another key indicator of confidence.

There are currently more than $23 billion worth of major projects underway across the Gold Coast, supported by a record 75 active cranes, a figure that now exceeds Brisbane and represents a 150 per cent increase since 2016.

[smartcode_project:default project_id=112024 project_image_fid=343235]

Importantly, the report notes the next phase of investment will need to extend beyond residential development.

While 93 per cent of crane activity is currently tied to housing, Invest Gold Coast argues future investment will increasingly need to focus on cultural, civic, infrastructure and industry-enabling projects that strengthen the city's long-term economic resilience.

Invest Gold Coast Chair Will Hodgman said the city was now benefiting from years of economic diversification.

"What is happening on the Gold Coast is the result of the city's economic base broadening, fuelled by industries with long-term, high-growth potential," Mr Hodgman said.

"This is no longer a secondary Australian economy, the Gold Coast is becoming a globally connected city with deeper capability across health, knowledge and creative industries, advanced manufacturing, technology and exports."

[smartcode_project:default project_id=108274 project_image_fid=365786]

Looking ahead, the Gold Coast's population is projected to exceed one million residents by 2046.

For a city that was once largely defined by tourism and lifestyle, the latest figures suggest the Gold Coast is becoming something more significant, one of Australia's most diverse and economically sophisticated urban economies, and increasingly one that national and international investors can no longer afford to overlook.

Joel Robinson

75 cranes, $23 billion pipeline and a $55 billion economy: Inside the Gold Coast economic boom

Ron Bakir's Homecorp has sold more than 75 per cent of the apartments in its wellness-driven Florence Residences in Surfers Paradise following its first weekend release.

The <a href="https://www.apartments.com.au/new-apartments/florence-residences-24-monte-carlo-avenue-surfers-paradise-qld-4217">26-storey project on Monte Carlo Avenue</a>, which commenced construction earlier this year, has seen a flurry of buyers secure their slice of the Gold Coast's latest wellbeing-focused offering in one of the nation's most competitive property markets.

Since the pandemic, the Gold Coast's population has grown by more than 11 per cent, a rate approximately four times faster than Sydney's, driven largely by lifestyle changes and interstate migration. While buyer activity has moderated in some markets nationally, demand for newly built dwellings on the Gold Coast continues to gain momentum as purchasers increasingly prioritise lifestyle, amenity, wellbeing, liveability and long-term investment potential.

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[smartcode_project:default project_id=150414 project_image_fid=372743]

Homecorp CEO Ron Bakir says buyers today are looking for more than just a home.

"What we are seeing is a shift in how people define value in property," Bakir says.

"What attracts residents to new developments is a desire for more than just a residence. They are looking for a place that complements their lifestyle, supports their wellbeing and reflects the way they want to live into the future.

"Lifestyle, longevity, proactive health, wellbeing, connection and a sense of community are increasingly shaping purchasing decisions, particularly on the Gold Coast, where these factors continue to be a major drawcard."

[smartcode_project:default project_id=150414 project_image_fid=372744]

Bakir says Homecorp is responding to this shift through an approach that places greater emphasis on design, amenity and experience working together to create places that feel considered, connected and enduring in value.

Inspired by Eastern European design, Florence Residences will comprise 120 apartments alongside a private residents-only wellness club featuring a resort-style rooftop pool, hot and cold plunge pools, a spa retreat, contemporary gymnasium, and a spacious yoga and Pilates studio.

The development will also feature a residents-only lounge with private dining facilities and a rooftop bar, premium outdoor entertaining areas, a hotel-style lobby lounge, generous bike parking, and pet-friendly amenities including a heated dog wash.

[smartcode_project:default project_id=150414 project_image_fid=372742]

A limited number of apartments remain available, with an exclusive collection of four-bedroom sub-penthouses set to be released in the coming months.

Florence is one of the latest additions to Homecorp's expanding multi-billion-dollar property portfolio, which also includes plans for a <a href="https://www.apartments.com.au/news/qld/homecorp-lodges-plans-for-260-million-moroccan-bathhouse-inspired-tower-in-budds-beach">$260 million development in Budds Beach</a> tailored to the growing wellness market.

A development application has been lodged for a 27-storey, 156-residence tower at 8–10 Acacia Avenue and 25–27 Oak Avenue, featuring a residents-only Moroccan spa-inspired sanctuary.

Apartments at Florence Residences are priced from $1,249,000, with construction expected to be completed by late 2027.

[smartcode_project_cta:default project_id=150414]

Buyers rush to Homecorp's Florence Residences as Gold Coast wellness trend gains momentum

The NSW Government has expanded its $1 billion Pre-sale Finance Guarantee program, broadening access for affordable housing providers and smaller residential developments as it seeks to accelerate housing delivery across the state.

The Minns Government says the program has already helped bring forward more than 600 homes across Sydney and regional NSW since launching in September 2025, with similar models now adopted in South Australia and Western Australia.

The latest changes, announced by Treasurer Daniel Mookhey and Minister for Planning and Public Spaces Paul Scully, are designed to improve access to finance for projects that have planning approval but are struggling to secure funding.

Among the key changes is an expansion of support for community housing providers. The program will now support up to 100 per cent affordable housing projects valued at up to $30 million when delivered by not-for-profit providers, while support for larger affordable housing developments will increase for projects worth up to $80 million.

The government says the changes will help accelerate the delivery of housing for low-income workers, older people, people living with disability, and those at risk of homelessness, while reducing reliance on direct grants or subsidised loans to bridge funding gaps.

The eligibility criteria for smaller residential developments have also been broadened. The previous $5 million minimum project value threshold has been removed and replaced with a requirement that projects deliver at least four homes.

Support has also increased for projects delivering fewer than 20 homes, with the guarantee now able to cover up to 75 per cent of dwellings in a development, capped at $30 million per project.

The changes are expected to particularly benefit smaller-scale and regional developments, which often face greater challenges meeting pre-sale requirements imposed by lenders.

Treasurer Daniel Mookhey said the scheme demonstrates how government can use its balance sheet to stimulate housing supply without relying solely on taxpayer-funded grants.

"The Pre-sale Finance Guarantee shows how this Government is using its balance sheet to reduce risk and unlock private investment, enabling new homes to move from design to construction faster," Mookhey said.

"This landmark reform allows us to deliver homes for working families at a lower cost to taxpayers, while also maintaining strong financial discipline."

Planning Minister Paul Scully said the program had already proven effective in bringing stalled projects to market.

"The Pre-sale Finance Guarantee has already proven it can unlock stalled projects and accelerate housing delivery by giving lenders the confidence they need to back good developments," Scully said.

"These changes will allow more affordable housing and smaller developments to access support so more homes can be built faster where communities need them most."

Housing Minister Rose Jackson said the expansion would help community housing providers overcome financing barriers that often delay projects.

"We know community housing providers are ready to build more homes, too often they're held back by barriers to finance," Jackson said.

"Expanding the Pre-sale Finance Guarantee helps remove those barriers so more affordable homes can get off the ground sooner."

The announcement was welcomed by the Property Council of Australia, which has long advocated for measures aimed at improving project feasibility and access to finance.

Property Council NSW Executive Director Katie Stevenson described the expansion as a practical intervention that addresses one of the most immediate constraints on housing delivery.

"This is exactly the kind of practical intervention we need right now, focused on getting projects out of the ground, not just approved," Stevenson said.

"It builds on a model the Property Council has worked closely with government to develop following calls for such a scheme ahead of last year's NSW Budget, so it's great to see it being expanded."

Stevenson said the reforms would help unlock projects that are ready to proceed but have been delayed by financing challenges. However, she noted that broader feasibility issues remain a significant barrier to increasing housing supply.

"The biggest challenge in NSW housing today is delivery. Too many projects have planning approval but are simply not financially viable to proceed under current settings," she said.

Speaking at the Property Council's NSW Housing Summit, Housing Minister Rose Jackson acknowledged that feasibility and financing pressures continue to constrain housing delivery, while reaffirming the government's commitment to work with industry on solutions.

Stevenson said the government's recognition of those challenges was encouraging ahead of next week's state budget.

"It's positive to see the government clearly recognising that feasibility pressures are now a binding constraint on supply," she said.

"With the Budget just days away, the focus must be on backing delivery, making sure projects stack up, finance can flow, and more homes can move from approval to construction."

The expanded Pre-sale Finance Guarantee forms part of the NSW Government's broader housing agenda, which also includes planning reforms, the NSW Housing Pattern Book, and a series of rezonings intended to increase housing capacity across the state.

NSW expands Pre-sale Finance Guarantee to unlock more affordable and regional housing

Design-led developer-builder Lowe Living has unveiled its latest residential development, Jardin House, marking its first foray into Melbourne's blue-chip City of Boroondara.

Located a short walk from Camberwell Junction, <a href="https://www.apartments.com.au/new-apartments/jardin-house-by-lowe-living-camberwell-335-camberwell-road-camberwell-vic-3124">Jardin House</a> has been designed to appeal to affluent local downsizers and established families seeking a low-maintenance alternative to the large homes that have long defined Camberwell and surrounding suburbs.

The project will comprise a collection of two and three-bedroom apartments ranging from 92 sqm to 280 sqm, alongside a limited number of penthouse residences featuring rooftop terraces spanning more than 100 sqm, with optional private pools.

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[smartcode_project:default project_id=146717 project_image_fid=372212]

Lowe Living Co-Founder and Managing Director Tim Lowe said Camberwell represented a natural next step for the developer as it expands into some of Melbourne's most tightly held residential markets.

"Jardin House is an important project for our team as it marks the next evolution of our portfolio into different well-established blue-chip pockets of Melbourne," Lowe said.

"Camberwell, with its incredible walkability, family-led neighbourhood feel and superb access to education and transport, makes it a natural choice for us."

[smartcode_project:default project_id=146717 project_image_fid=372227]

Designed by Tristan Wong Architects, with interiors by Hecker Guthrie and landscaping by Acre, the development takes inspiration from the Art Deco architecture that remains a defining feature of many of Camberwell's established streets.

A curved facade, arched openings, textured brickwork and sculpted forms reference the suburb's architectural heritage, while extensive landscaping softens the building's presence and creates a strong connection to the surrounding tree-lined streetscape.

The project will be set behind a secure gated entrance, with residents arriving through landscaped gardens designed to create a transition between the public realm and private residences.

Inside, the residences feature natural stone and timber finishes, full-height glazing, Miele appliances and generous open-plan living areas designed for long-term owner occupation.

[smartcode_project:default project_id=146717 project_image_fid=372225]

While the apartments themselves have been designed to attract discerning owner-occupiers, it is the amenity offering that sets Jardin House apart from many other boutique projects currently launching across Melbourne.

The centrepiece is a 350 sqm private bathhouse curated in partnership with Aurora Spa &amp; Bathhouse founder Lyndall Mitchell.

The wellness precinct includes mineral pools, hydrotherapy experiences, a Himalayan salt room, sauna, steam room, cold plunge pools and dedicated relaxation spaces, creating what Lowe Living describes as a private wellness retreat exclusively for residents.

[smartcode_project:default project_id=146717 project_image_fid=372222]

The collaboration follows Lowe Living's recent partnership with Aurora at Maison Savoy in Brighton, although Jardin House is the first project to incorporate both indoor and outdoor wellness experiences.

Emma Lowe, Co-Founder and Managing Director of Lowe Living, said wellness was becoming an increasingly important consideration for apartment buyers.

"Collaborating with Lyndall Mitchell from Aurora Spa &amp; Bathhouse for a second time is an intentional nod to creating residences that are more than just homes, but a way to enrich the lives of our residents through wellness and longevity," Lowe said.

The amenity offering is complemented by a Technogym fitness studio, residents' lounge, private dining spaces and concierge services.

The launch comes as developers increasingly target Melbourne's established eastern suburbs, where rising land values, ageing housing stock and growing downsizer demand are creating opportunities for boutique apartment projects.

Lowe said the company expects significant generational wealth transfer across suburbs such as Camberwell in coming years, creating further demand for luxury apartment living.

"Camberwell is a blue-chip suburb where homes regularly transact for multiple millions of dollars," he said.

"The generational change of wealth in these locations expected in the coming years is significant, so we see an opportunity to create exclusive residences that appeal to older families and downsizers in order to meet this demand."

Apartments at Jardin house start from $1,195,000. The project forms part of Lowe Living's near-$1 billion portfolio of new developments across Melbourne.

[smartcode_project_cta:default project_id=146717]

Lowe Living launches Jardin House in Camberwell

As <a href="https://www.apartments.com.au/developments/north-sydney-nsw-2060">North Sydney</a> continues its transition from a commercial centre into a more layered residential and lifestyle precinct, a new generation of apartment developments is reshaping expectations around scale, amenity, and long-term liveability.

Improved transport connections through the Victoria Cross Metro, continued investment in dining and public spaces, and a constrained supply of new luxury apartments have sharpened demand for homes that combine proximity to the CBD with the privacy and outlook traditionally associated with harbourside houses.

At 177 Walker Street, <a href="https://www.apartments.com.au/developers/aland">ALAND</a>’s new apartment development <a href="https://www.apartments.com.au/new-apartments/the-walden-north-sydney-177-walker-street-north-sydney-nsw-2060">The Walden</a> enters the market with a distinctly residential approach to high-rise living. The 30-level tower will deliver 161 residences, ranging from one-bedroom apartments through to sub-penthouses and a full-floor penthouse, all oriented to capture uninterrupted views across Sydney Harbour, the Opera House, and out toward the Pacific Ocean.

[smartcode_project:default project_id=134323 project_image_fid=6395]

Designed by <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a>, the project takes advantage of the site’s natural topography and elevated position above the harbour. Rather than relying on density alone, the architecture focuses on outlook, orientation, and spatial flow, with every apartment occupying a corner position to maximise natural light and cross ventilation.

Rothelowman says the site itself shaped much of the architectural response.

“The site has a long history in terms of its inevitable transformation and when we came in, we took inspiration from the idea of reestablishing a sense of the site’s natural terrain and fall. Our scheme aims to integrate with the terrain and the landscape, using the undulating site to slowly reveal glimpses and views of the harbour. The rotation of the tower off grid means every apartment has a view and is naturally cross ventilated. The building's colour palette is quintessentially Sydney, with bronze and sandstone and a luminescent green colour in the glass, making it very earthy and grounded in its location.”

[smartcode_project:default project_id=134323 project_image_fid=6399]

Inside the residences, the emphasis moves toward larger-format living typically associated with standalone homes. Kitchens sit at the centre of the apartments, connecting directly to open-plan dining and living areas before extending outward into expansive winter gardens and balconies. Calacatta marble, bespoke joinery, integrated appliances, and custom metal detailing are used throughout, while three distinct interior palettes, Terrace, Opera, and Harbour, allow buyers to personalise the spaces without compromising the architectural consistency of the project.

The larger residences place particular attention on separation between entertaining and private zones. In many apartments, master suites occupy the outer corners of the floorplates, allowing bedrooms to benefit from floor-to-ceiling glazing and harbour outlooks independent of the living spaces. Dressing rooms and ensuites continue the material palette through fluted detailing, freestanding baths, and layered stone finishes.

Rothelowman says the design intent centred on creating homes that feel enduring rather than transient.

“Our philosophy is all about the way people live in these spaces, and we wanted to create homes that reflect the quality of life in this unique Sydney location. The apartments showcase expansive living spaces that are generous, sophisticated, and bold, with the ability to connect with views throughout each apartment.”

[smartcode_project:default project_id=134323 project_image_fid=353235]

A separate four-storey amenity building known as The Pavilion expands the residential offering beyond the apartments themselves. Positioned alongside the tower, the building consolidates wellness, recreation, and social spaces into a dedicated resident retreat. Facilities include a 20-metre rooftop pool and sundeck, sauna, spa, ice bath, wellness studio, gymnasium, concierge service, wine cellar, residents’ lounge, private dining spaces, and dedicated co-working areas with meeting rooms and boardroom facilities.

The amenity mix reflects the buyer profile emerging in North Sydney, where owner-occupiers and downsizers are increasingly prioritising convenience, apartment scale, and long-term usability over purely investment-driven decisions.

The Walden also represents a significant milestone for ALAND, marking the company’s first major move into Sydney’s inner-city luxury apartment market after more than two decades delivering large-scale residential communities across Greater Sydney. Founder Andrew Hrsto says the Walker Street site stood apart because of both its positioning and its rarity.

[smartcode_project:default project_id=134323 project_image_fid=6390]

“As a company, we had been searching for a site in one of Sydney’s blue-chip locations, spanning the Eastern Suburbs, the Sydney CBD and the North Shore, and when we had the opportunity to purchase this site, we immediately recognised that it could be something iconic.”

At launch, The Walden recorded more than $103 million in sales, with buyers drawn to the project’s harbour positioning, apartment scale, and proximity to the Metro, which now connects North Sydney to Barangaroo in three minutes and Martin Place in five.

ALAND has commenced construction, and is expecting a completion date in 2028.

[smartcode_project_cta:default project_id=134323]

Larry Schlesinger

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