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As food guru Jamie Oliver prepares for the September opening of his new restaurant at leased premises in 107 Pitt Street in the Sydney CBD, demand for retail space from restaurants, cafes and takeaways continues to remain strong and defy the overall retail trend.
Oliver is currently refitting his first Jamie's Italian in Australia, which will cater to up to 200 guests at the Pitt Street location.
According to CB Richard Ellis agents James McNeill and Leif Olson, the arrival of the English restaurateur will enhance the city's array of international eateries.
In its latest report on the NSW retail market, CBRE notes that the café, restaurant and takeaway subsector has achieved annual sales growth of 5.8% for the year to June 2011.
In contrast to the fashion sector, down 5.2% for the year, Olson says the food sector is up as NSW households have “wined and dined their way through the first half of the year”.
As a result CBRE retail is fielding “a number of enquiries from noted Sydney establishments seeking opportunities in the lower north shore and eastern suburbs”.
This growth has come against a backdrop of lacklustre overall retail growth in Sydney, with prime rents falling by 11% over the previous year to an indicative $2,473 per square metre and further rental reductions expected in the short term as national retailers closed underperforming stores to focus on Pitt Street Mall locations.
BlackRock Property Trust, landlord of the building at 107 Pitt Street, where Oliver has lease space, notes that it has been successful in concluding leasing transactions throughout the March quarter of 2011.
The café, restaurant and takeaway subsector is further benefiting from City of Sydney’s introduction of the Liquor Amendment (Small Bars and Restaurants) Bill 2007, designed to stimulate the CBD’s laneways.
“Sydney’s western corridor is a particularly popular small bar precinct, as the location captures foot traffic from the surrounding offices. Among recent additions to the western corridor are Shirt Bar and Grandmas Bar,” McNeill says.
Commenting on the launch of his Sydney eatery, Oliver says Australia has always been close to his heart since he first visited around a decade ago.
“I get a lot of wonderful tweets and emails from Australians who have eaten at Jamie’s Italians in the UK, so now to have a Jamie’s Italian open in Sydney is really special for me,” he says.
Other notable food retail openings include Westfield's Food on Five food court in the new Pitt Street Mall flagship mall, Cuban restaurant and bar La Bodeguita Del Medio at 125 York Street and Stitch Bar at 61 York Street.
Development applications have also been lodged for a new Fratelli Fresh in the basement of the Burns Philp building at 7 Bridge Street and a new Pie Face store at the corner of Bridge and George streets.
John Bowie Wilson, director of CBD sales and investment services at Colliers, told the Sydney Morning Herald the expansion of the food and beverage offerings was ensuring owners of inner-city buildings were able to fill vacancies left by traditional retailers.
"While traditional retailers are losing market share to websites, food and beverage operators still need shopfronts," he says "The lower price point of cafes and restaurants and the non-discretionary nature of food sales mean that turnover has not declined to the extent of other retail categories.”
Other recent sales of restaurants and cafes have included the Spicy Sichuan Restaurant in Cunningham Street for $4.3 million; Fratelli Fresh store and cafe in Hickson Road for $3 million; 8 Quay Street in Haymarket for $8.2 million and the Belgium Beer Cafe in Harrington Street for $4.2 million.
Colliers has also noted increasing inquiry levels from international operators who viewed the Sydney economy as more robust than other global centres.
According to the CBRE report, consumers are continuing to adopt a “wait and see” approach to retail expenditure with fashion retailing, one of the harder hit subsectors.</body></html>

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Jamie Oliver's Sydney premises highlights appetite for eatery space

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An oversupply of grapes, changes in retail conditions, overseas competition and the strong Australian dollar are the key reasons Cheviot Kirribilly Vineyard Property Group (CKP) is selling its 953-hectare South Australian vineyard portfolio.
Cheviot is one of several vineyard owners forced to sell this year due to the deteriorating market conditions.
“When CKP group … was conceived, there was a greater equilibrium of grape supply and demand and the ability to sell fruit on multi-year supply contracts to established winemakers,” Cheviot said in an ASX note dated July 13.
According to CKP, the return-on-capital model that the industry has operated under for the past 15 years has broken down.
“In crude terms grape growers must now ‘find a route to market’ for their products,” Chevriot says in its ASX note.
The properties are being marketed by Colliers agents Tim Altschwager and Nick Dean, with expressions of interest closing on August 16.
<table cellpadding="0" cellspacing="0" border="1"><tbody>
<tr>
<td valign="bottom" colspan="4" width="609">
Cheviot Kirribilly Vineyard Portfolio
</td>
</tr>
<tr>
<td valign="bottom" width="180">
Property
</td>
<td valign="bottom" width="128">
Region
</td>
<td valign="bottom" width="150">
Total Area (approx.)
</td>
<td valign="bottom" width="150">
Vineyard Area (approx.)
</td>
</tr>
<tr>
<td width="180">
Kirribilly Estate Stage 1
</td>
<td width="128">
Clare Valley
</td>
<td width="150">
251ha
</td>
<td width="150">
214.81ha
</td>
</tr>
<tr>
<td width="180">
Tullymore Vineyard
</td>
<td width="128">
Clare Valley
</td>
<td width="150">
199.90ha
</td>
<td width="150">
148.83ha
</td>
</tr>
<tr>
<td width="180">
Angas Creek Vineyard Stage 1
</td>
<td width="128">
Adelaide Hills
</td>
<td width="150">
78.01ha
</td>
<td width="150">
59.48ha
</td>
</tr>
<tr>
<td width="180">
Angas Creek Vineyard Stage 2
</td>
<td width="128">
Adelaide Hills
</td>
<td width="150">
64.56ha
</td>
<td width="150">
48.34ha
</td>
</tr>
<tr>
<td width="180">
Birchmores Vineyard
</td>
<td width="128">
Langhorne Creek
</td>
<td width="150">
293.44ha
</td>
<td width="150">
268.15ha
</td>
</tr>
<tr>
<td width="180">
Woodstock Road Vineyard
</td>
<td width="128">
Langhorne Creek
</td>
<td width="150">
66.80ha
</td>
<td width="150">
41.17ha
</td>
</tr>
<tr>
<td width="180">
TOTAL PORTFOLIO
</td>
<td width="128">
 
</td>
<td width="150">
953ha
</td>
<td width="150">
780ha
</td>
</tr>
</tbody></table>
Source: Colliers
“Due to the quality of the portfolio and premium locations within regional South Australia, we expect strong interest from offshore investors, particularly those that are looking for an established vineyard asset, strategically positioned in relation to the other tourist destinations including the city of Adelaide,” Altschwager says.
In the week since beginning to field expressions of interest, Dean says inquiries have been restricted to local industry participants.
As a general rule, he says vineyards have been selling at discounts of 30% to 50% off the values achieved four years ago.
CKP has not disclosed sales prices or valuations but expects “sales prices will be well below the last public valuations provided in June 2009”.
In June 2009 Knight Frank valued the six vineyards at $42.3 million, a reduction of $3.2 million (7%) due to conditions prevailing in the industry at the time.
Dean says the market is now improving but it is still a buyers’ market.
“The market is coming off a very low base. This time last year there was no market,” he says.
“There is an important segment of buyers who think things won’t get any worse.”
The CKP portfolio consists of six vineyards, the biggest being the 293-hectare Birchmores Vineyard in Langhorne Creek.
The portfolio is for sale by private treaty either as a whole or as separate vineyards, with expressions of interest closing August 16 at 11am.
Each of the vineyards have natural (Adelaide Hills) or licensed water rights (Clare and Langhorne Creek). Dean says location and water assets are important to investors.
“The Langhorne Creek vineyards are highly efficient producers of good-quality fruit, the Adelaide Hills vineyards are renowned for their chardonnay and sauvignon blancs, while the Clare Valley vineyards are efficient producers based in cool climates,” Dean says.
Dean and Altschwager would not reveal price expectations for the South Australian properties, but price expectations for the 45-hectare Pettavel vineyard in Victoria, being sold by Knight Frank agents Michael Hede and Leigh Morris on behalf of receivers, are between $5 million and $6 million
Prices of between $2 million and $3 million are expected for the 129 hectare Strathmore Vineyard also being sold by Hede and Morris.</body></html>

SA vineyards up for sale as downturn puts the squeeze on wineries

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Listed property trust investment in NSW retail properties has increased dramatically in the past 12 months.
A-REITs purchased nearly a third (32%) of NSW retail properties sold during the 12 months to June 2011, according to CB Richard Ellis’s latest Sydney Metropolitan Retail MarketView.
This is up from just 14% of transactions purchased by A-REITs during the previous 12-month period.
Major purchases by A-REITs during this period include CFS’s purchase of DFO Homebush in July 2011 for $135 million and Charter Hall buying a 50% interest in sub-regional shopping centre Lake Macquarie Fair and Mt Hutton Shopping Centre in Lake Macquarie, NSW, for $33 million.
Private investors accounted for half of all NSW purchases during the period, generating $261 million in sales.
According to CBRE, A-REITs, along with private investors, have shown interest in Sydney retail properties valued under $30 million as they look to reduce their exposure to overseas assets.
Interest is focused on regional and sub-regional shopping centres. However despite the demand, investment stock supply remains limited.
Yields have held steady at 6% for regional centres, at 7.54% for sub-regional centres and at 7.88% for neighbourhood centres. Regional centre vacancies have dropped to just 0.56%.
<a href="/images/stories/cbrejuly18large.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/cbrejuly18.gif"></a>
Other key findings include a significant portion of retailers shifting back to Pitt Street Mall, resulting in a spike in prime CBD retail vacancies in Sydney.
“King and George streets have been impacted the most; however, high-end retailer demand for stand-alone locations on these streets continues, as demonstrated by the relocation of Burberry and Louis Vuitton, “according to said CBRE retail services senior manager Leif Olson.
Olson says the opening of the second stage of Westfield Sydney has resulted in tightening vacancy, with demand exceeding supply on Pitt Street Mall.
“Pitt Street Mall vacancy remained below 1% despite the total CBD retail vacancy reaching 3.1% in the past six months,” he says.
Sydney prime rents have fallen by 11% during the previous year to an indicative $2,473 per square metre as at June 2011.
Further rental reductions are expected in the short term as national retailers closed underperforming stores to focus on Pitt Street Mall locations.
NSW retail expenditure was flat during the first half of 2011, with consumer spending patterns unlikely to increase as the year unfolds.
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NSW retail property attracts investors

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About 15% of first-time property investors on the Gold Coast plan to use their self-managed super funds to buy their first investment properties, according to a recent survey.
Nearly 6% intend to use their SMSFs to purchase the property in its entirety, and about 9% expect to use their super to help supplement other sources of funding, according to Mortgage Choice’s First Time Property Investor survey.
Gold Coast SMSF property investment intentions are head-and-shoulders above any other region in Australia, with just 6% of Sydney investors and 5% of Melbourne investors planning to tap into their super funds when making their first acquisition.
A higher proportion of Gold Coast respondents to the survey were baby boomers (38%), compared with 27% nationally. Generation X was also represented more highly on the Gold Coast (53% of survey respondents, vs. 45% nationally).
One baby boomer respondent living on the Gold Coast says: “I think there will be another super drop in the next 12 to 18 months, so feel property is safer”.
“For many people, the older they become the closer ensuring they have enough super for a comfortable retirement moves to the forefront of their financial concerns,” Mortgage Choice spokeswoman Kristy Sheppard says.
According to the survey, Queensland is the preferred destination for 22% of Australian property investors, followed by Victoria at 21%. NSW ranked a joint third with South Australia and WA at 18%.
Leanne Pilkington, general manager of Laing &amp; Simmons, says high prices in Sydney are driving investors to look to markets like Queensland and Victoria.
“Sydney is so expensive. It’s just not affordable, compared, in particurlar, to Queensland,” she recently told the AFR.
“Investors need to look at other options because they can’t invest in Sydney,” she adds.
According to SMSF administrator Multiport, DIY funds allocation to direct property rose to 14% in March 2011 from 12% at the end of March last year, with residential property gaining traction at the expense of commercial properties such as small offices and industrial warehouses.
A similar study carried out in 2009 did not break down the responses into regions, but found that around 4.5% of first-time investors planned to use their SMSF to either to buy an investment property outright or to help fund its purchase.
In 2011, the overall figure is down slightly to 4%.
The most popular properties sought by first time investors are small houses with between one and three bedrooms, followed by larger houses and one- and two-bedroom units.
The survey accumulated responses from more than 1,000 people who plan to buy an investment property by July 2013.
Click to download 16 Questions Self-Managed Super Fund Trustees Should Ask Before Investing in Property.
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Despite downturn, property still popular for Gold Coast super investors

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The decision by ASIC to enforce tougher disclosure requirements on the unlisted property sector has thrown the spotlight on the options for investors looking to include property in their portfolios.
According to David Curtis, portfolio manager at A-REITs specialist Reliance Investment, “current market dynamics” dictate that A-REITs are appealing, particularly to retail investors.
“Ultimately, pricing is the biggest reason,” he says.
“You can buy any number of REITs from big, well-known companies (Westfield, GBPT, Dexus, etc) at a reasonable discount to underlying asset backing. This gives investors a little bit of comfort because they’re buying something they know is worth ‘X’ at only 0.8 of ‘X’”
Criticism of A-REITs as a preferred investment vehicle has come from ASX-listed fund manager Centuria, which claims that listed property trusts do not offer much in the way of diversification and are risky.
Curtis disagrees.
“Absolutely, this was the case during the GFC when A-REITs traded like a general equity, but it’s no longer true.”
Curtis says the “beta profile” of A-REITs, which measures volatility, was very similar to the broader equity sector during the crisis, but this has now changed considerably.
“Beta has gone from 1, when it was trading in line with equities, to 0.5, meaning it is now half as volatile as the broader equity market,” he says.
According to Curtis, a big brand A-REIT like GPT, which makes up about 8% of the total A-REIT sector by market capitalisation, offers retail investors access to one of the best-quality, most diversified portfolios in the country.
On the other hand, he contends that retail investors who put their money in unlisted trusts would normally only be able invest in one or two asset funds.
“These may have leases with one or two tenants, so they are in fact less diversified, generally speaking than if they’d invested in A-REITs,” Curtis says.
A-REITs are like equities, says Centuria
In his criticism of A-REITs, Centuria CEO John McBain says listed property as an asset class behaves like equities. Centuria’s wholly owned Centuria Property Funds has more than $1 billion worth of property under management in 29 unlisted property funds.
“In tracking the market and the index alongside the equities in the portfolio they provide no real diversification should the share market begin to slide, as recent performance figures show,” McBain says.
In addition to offering little in the way of diversification, McBain claims a second issue for investors is the “volatility of returns” generated by A-REITs, which he says are “far higher than unlisted [property trusts]”.
“High volatility means that total returns can be greatly diminished by poor timing of purchases and sales by investors who make decisions driven by strong sentiment – as we have seen in the current market,” McBain says.
“So, while in the case of listed property an investor might have the perceived benefit of lower liquidity risk, other risks such as correlation with a volatile sentiment-driven index [and] with a poorly performing index may well countervail it.”
On the other hand, McBain says the performance of unlisted property, while to an extent reliant on the broader property market, is also dependent on two more rational and controllable factors: the quality of the underlying core assets and, just as critical, the quality of its management.
“It is far less volatile and, historically, has offered much steadier returns than its unlisted counterpart.
“Unaligned to an index, the right unlisted vehicle can offer investors the benefit of genuine diversification throughout the investment cycle,” he says.
Current performance
A good benchmark of the current performance of the unlisted sector is the Mercer/IPD Pooled Property Fund Index, which tracks the performance of 17 property funds with a net asset value of $37.2 billion.
Over the quarter to June 2011, the index delivered a total return of 2.2%. Over the year to June 2011, total return was 9.8% after gearing and fees. Of this, distributed income was 6.1% and capital return was 3.6%.
Diversified funds were the top performers, with a total return of 10.5% for the year, followed by office sector funds with 9.7%, retail funds with 9.1% and industrial funds posting 8.9%.
Overall, the average annual distribution yield for the core wholesale property sector as at June 2011 remained steady 5.8%, comparing favourably with the 10-year Australian Government Bond rate of 4.7%.
Commenting on the performance of the sector in the June quarter, Anthony De Francesco, managing director of IPD Australia and New Zealand, said the result “confirms a stabilisation in investment performance for the unlisted core wholesale property sector”.
According to Russell Investments, the outlook for REITs is modest, reflecting a stabilising property market.
In its June market report, the investment firm says the Australian listed real estate sector is currently trading an average discount to net tangible assets of -3.3%
Investment should suit the investor
Curtis concedes that there are both pros and cons to invest in either unlisted or listed property trusts.
“A benefit of A-REITs is that they are liquid, meaning you can buy and sell them at any point when the stock exchange is open for trading.
“For some investors this is really important,” he says.
The downside though is that prices do change and some investors don’t like the volatility.
“Others don’t care about volatility. It all comes down to your personal preferences,” he says.
As for unlisted trusts, he agrees with McBain that the price does not move around as much, but the down side is they are illiquid.
“It can be difficult to get your money out if your circumstances change,” he says.
Such circumstances came to fruition during the GFC, when many investors found they could not withdraw their investments due to funds being frozen.
“This is still the case for some unlisted funds,” Curtis says.
At the end of the day, the key is to have a balanced portfolio and be aware of what you are buying.
“At any point, one will be more appealing than other,” he says. At the moment he believes A-REITs have the edge.
McBain disagrees: “Unaligned to an index, the right unlisted vehicle can offer investors the benefit of genuine diversification throughout the investment cycle.”</body></html>

Listed and unlisted property trusts offer investors different incentives

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Westpac expects the RBA to cut interest rates by 25 basis points in December, with further cuts expected during 2012 to take the official cash rate down to 3.75% by 2013.
The bank’s expectations are more conservative than interest rate markets, which it says are pricing in a 25-basic-point rate cut by October and a 50% chance of a follow-on move by February next year.
The bank is not alone in its dramatic shift in interest rate expectations.
ANZ now also expects the RBA will not need to raise the cash rate again before early 2012 and says the market is now pricing in rate cuts in 2011 – “a dramatic change from a couple of weeks ago”.
The expectation of a freeze on rates is based on a “bigger than anticipated loss of momentum in the non-resource sectors of the economy and especially in the labour market”.
The change in sentiment follows the release of the Westpac-Melbourne Institute Consumer House, with its price expectations index falling sharply from 37.8 in April to 15.3 in July.
Although most consumers still expect prices to rise over the next year, consumers are much less positive, with the index at its lowest level since May 2009.
Overall, 42% of consumers expect house prices to rise over the next year – the proportion of optimists dropping below the 50% mark for the first time since May 2009, when it came in at just 33%.
Just over 32% of consumers now expect prices to remain steady, with 26% expecting declines – up from 17% in April and the highest proportion since May 2009 when just over a third of consumers expected price falls.
"Consumers haven't turned pessimistic on prices but the shift in momentum bears close attention given the fragile consumer mood more generally," Westpac senior economist Matthew Hassan told The Sydney Morning Herald.
Westpac says the first rate cut is likely to be influenced by offshore factors.
“The catalyst for the first move is likely to be further adverse developments in Europe and their knock-on effects on global financial markets. Among the many other side-effects will be an ongoing negative impact on business and consumer confidence in Australia that is likely to become more pervasive as conditions deteriorate,” writes Westpac chief economist Bill Evans in the bank’s latest interest rate bulletin.
“I recently visited fund managers and central banks in Europe and could not find anyone who expected the current crisis to be resolved without an extended period of financial market turmoil.”
However, he does not expect the cut to be a one-off.
“Interest rates are too high in Australia, given the state of the non-mining sectors of the domestic economy, and a downward adjustment is required to avert a damaging round of contraction. This rate adjustment is likely to take a similar form to previous easing cycles,” he says.
There have been three easing cycles since the deep recession of the early 1990s:
<ul>
<li>July 1996–July 1997 (–250bps); </li>
<li>February 2001–December 2001 (–200bps) and September 2008–April 2009 (–425bps).</li>
</ul>
“These cycles were short and sharp and delivered a considerably larger cumulative cut than we envisage in the current circumstances,” he says.
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Interest rates heading down in December 2011: Westpac

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Investing in a serviced apartment in a major CBD location is a way for residential investors to get a foothold in a hybrid commercial asset.
The most recent tourist accommodation figures put out by the ABS paint a picture of strongly performing serviced apartment markets in the major centres, while those in regional areas appear to struggle.
In Sydney, Melbourne, Brisbane and Perth occupancy rates are all above 80 – higher than their respective state occupancy rates and well above the national average of 66%.
A growing number of serviced apartment guests are spending more money per room per night in CBD apartments than they were a year ago.
This current rise comes on top of extraordinary growth in the sector’s market share over the past decade, with serviced apartments now accounting for 25% of all room nights sold throughout Australia each year, according to research by CBRE.
Demand from the corporate market has fostered more recent development in urban areas.
The CBRE Hotels Traveller Accommodation Development Database shows serviced apartments now represent, on average, just under 70% of all new traveller accommodation to enter the market over the past decade.
Market growth is set to continue with serviced apartments representing 75% of new projects currently planned or under construction.
CBRE Hotels Queensland associate director Paul Nyholt says the growing popularity of the sector has attracted considerable interest from developers – particularly given the current funding constraints in regard to traditional hotel product.
“At a time when it is difficult – if not impossible – to economically support the construction of a new build hotel in one line, serviced apartments are bridging the feasibility divide,” Nyholt says.
Headwinds 
 
Despite the popularity of serviced apartments with business travellers and leisure seekers, investing in the sector presents its challenges.
While serviced apartments represent a relatively cheap investment opportunity – one-bedroom apartments can be bought with spare change from $200,000; two-beds for under $300,000, according to CBRE analysis of the sector – serviced apartments have the potential to underperform, can involve potentially complex strata agreements and are subject to the fluctuations of tourist demand.
“Investors need to understand that they are purchasing an investment that relies on the dynamics of the traveller accommodation market and the ability of that market, the operator and the structure of the offering to support the purchase decision,” says CBRE Hotels regional director Ken Smith
“To counter the poor investment performance of many past projects and to support the sustainability of the sector, future developments will need to be economically supportable not just successfully marketed,” he says.
Serviced apartments must also compete with hotels for clientele.
According to Smith, they can be at a disadvantage due to limited marketing and poorer brand recognition compared to the internationally branded hotels.
Many international markets, he says, are unaware of the serviced apartment product.
Furthermore, while there are relatively clear classifications of hotels to aid consumer choice, Smith says a “lack of consistency and clarity in the categorisation of serviced apartments leads to inconsistently-rated properties and subsequently consumer confusion”.
Searches by Property Observer of cheaper serviced apartments for sale uncovers many that appear to be in shabbier, older-looking buildings, suggesting the potential for higher maintenance and upkeep costs.
Future outlook
 
The most comprehensive survey of the serviced apartment market to date has been carried out by IBIS World.
It forecasts growth for the sector of 1.7% from 2011 to 2016 compared with 3.7% over the previous five years.
Investment in the sector is set to remain strong due to increasing market demand and preferences for serviced apartments as they offer more space and facilities for guests over hotel and motel accommodation.
Guaranteed investor returns on apartment purchases are estimated at 7.5% in 2010-11, according to IBIS World.
The researcher says that while rental fees and utility costs are high and increasing due to increased land costs in recent years, and utility fees are rising, the cost structure of a serviced apartment is not expected to change significantly over the next five years.
Investors, though, should be aware of a number of challenges facing the sector.
“The serviced apartments industry is sensitive to factors that affect domestic travel patterns and the level of international visitors arriving in Australia, such as real household disposable income changes and travel availability time. Another factor is the dollar,” the IBIS World report says.
IBIS World identifies business travellers as key market for serviced apartments – a travel demographic affected by economic conditions, business sentiment, business profit growth and use of communications technology as substitutes for travel.
Like CBRE, the IBIS World report also highlights competition from the hotel sector and says serviced apartments are sensitive to the supply of total accommodation rooms including hotels rooms, which can affect room tariffs in both sectors.
Other global and economic factors including GDP growth in East Asia, the US and Europe and the prevailing consumer sentiment can have significant impacts on the returns generated for investors.
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Growth tipped for CBD apartments, but investors warned to tread carefully

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Mortgage brokers have interpreted a move by St George Bank to reverse its decision to withdraw trail commissions as a sign that lenders are looking to strengthen relationships with the distribution channel.
The bank has decided to reintroduce a 15-basis-point, year-one trail commission.
St George has also increased its upfront component from 50 basis points to 65 basis points, as long as at least 80% of a broker's loan applications are accepted by the bank.
In September 2010, the bank announced it would strip its 0.15% first year trail commission payment altogether, in a move designed to reward elite brokers with higher upfront payments.
The backflip on trail commission has been welcomed by Aussie Home Loans and Mortgage Choice – two of the biggest players in the broker space.
Aussie executive director James Symond told The Australian he had seen a “noticeable difference” in the way lenders interacted with brokers in the last six months. He expects other lenders to look at their credit criteria and commission structure in the current flat market.
Mortgage Choice CEO Michael Russell said the move was pleasing.
"The message from the bank is, we really value the relationship we have with brokers and understand the pain of losing first-year trails," he says.
The changes will see St George approaching the rate it paid brokers prior to the GFC.
The major banks asserted their dominance of the market and the collapse of the non-bank sector to slash upfront broker commissions and in most cases, remove the trail component.
St George, a subsidiary of Westpac, has been almost entirely reliant on mortgage brokers to grow its mortgage book outside its NSW market.
Westpac was the first major bank to reduce broker commissions, in April 2008, with the other major lenders following suit soon after.
Mortgage brokers have been battered by increasing headwinds since the GFC, with the sector undergoing massive consolidation, a reduction in commissions and the introduction of a national licensing scheme.
Despite this, brokers remain a key distribution channel for banks, accounting for up to 40% of their mortgage book originations.
Figures put out by the Market Intelligence Strategy Centre in July revealed the number of mortgage broking firms operating in Australia had contracted by 26% in the year to March 2011.
The figures showed there were 119 broker aggregators and firms, with the total value of business flowing through to those brokers dropping to $11.6 billion due to poor housing construction conditions and a weak economy.
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Brokers see better bank relations after St George commission move

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Analysts say shopping centre landlords such as Westfield, which have quality portfolios, are insulated against the current tough trading conditions anchor tenants such as David Jones are experiencing.
It follows David Jones, which has nine out of its 37 department stores in Westfield shopping centre, issuing a profit downgrade yesterday with total sales for the fourth quarter of the 2011 financial year expected to be about 11% lower than forecast.
Analysts claim landlords of marginal shopping centres are at a greater risk in the current retail environment.
News of the David Jones downgrade came as a third shopping centre in the Austexx group, the Spencer Street Fashion Station at Southern Cross Station in the Melbourne CBD, was placed in the hands of receivers following the collapse of Torquay Central, in regional Victoria, and the Flinders Plaza in Townsville in the last two months.
David Jones CEO Paul Zahra blamed the downgrade on an unprecedented rapid deterioration in trading conditions.
However, analysts say the link between the troubles facing David Jones and Westfield are “somewhat tenuous”, with John Kim from investment group CLSA telling the AFR that while anchor tenants lease 56% of space in Westfield stores, they generate just 17% of income.
Furthermore, Kim says rents paid by department stores are not tied to sales, with David Jones holding leases averaging 15.4 years and Myer leases of 11.1 years.
According to Kim, other anchor tenants including Myer, Woolworths, Coles, Target and Kmart are performing well.
As a result, brokers are recommending Westfield Retail Trust, the subsidiary which accounts for the group’s 54 shopping centres in Australia and New Zealand, as a buy and are expecting a Westfield earnings forecast upgrade in August.
Rental growth is expected to remain positive, but at a subdued level.
Westfield will also benefit from an increase in demand for retail space from international brands targeting Australia.
Apple is set to spend more than $10 million on its first retail site in Brisbane, British clothing operator Topshop is eyeing up vacated Borders stores for its expansion and European fashion giant Zara is also set to open a flagship store in Brisbane.
The David Jones downgrade comes six months after the Productivity Commission launched its inquiry into the state of the Australian retail sector.
Retailers such as Coles and Myer and the collapsed REDGroup – all anchor tenants in many Westfield shopping centres – have complained of retail rents and occupancy costs being among the highest in the world.
In its submission to the commission, Westfield defended the rents it charges, arguing they are determined by market forces and fair given the foot-traffic generated through their shopping centres.
David Jones is yet to make a submission to the Productivity Commission.
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‘Quality’ shopping centres insulated against tenant woes: analysts

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Investing in property, especially those near coastal areas or waterways, could become significantly more expensive if the government forges on with a proposal that mandatory flood cover be included in insurance policies.
The Insurance Council of Australia, which represents the nation’s biggest insurance companies, has rejected the proposal by the National Disaster Insurance Review estimating it will cost $5,000 to $7,000 in additional premiums to cover each of these homes against the risk of flooding.
It is on top of home and contents insurance premiums increasing between 20% and 40% in each state, mainly as a result of reinsurers increasing the cost of the cover they proved to insurers due to the recent spate of natural disasters.
Global reinsurer Munich Re estimates the Queensland and Victoria floods in December 2010/January 2011 resulted in insurance losses of $2.4 billion, while losses as a result of the Japanese tsunami are estimated at about $28 billion.
Century21 chairman Charles Tarbey sees a flow on effect if flood cover becomes mandatory.
"The issue is that investors have to cover costs, and will likely pass these additional insurance costs on. 
"If buyers find these premiums to be prohibitive they may not purchase properties in these areas, which will have an impact on the availability of rental stock, and we already have a shortage in many areas as it is,” he tells Property Observer.
For those who already own investment properties in these areas, Tarbey says rental rates will likely increase, “however the cost of owning the property could cause the investment to underperform.”
The proposal comes six months after the Queensland floods, with the state’s reconstruction authority reporting that hundreds of people might not be back in their homes by the start of the 2011 wet season.
Head of the reconstruction authority, Major-General Mick Slater, says 860 of the 2,500 damaged homes in North Queensland have been repaired.
In its response to the proposal from the National Disaster Insurance Review, the ICA has repeated its calls for a focus on risk mitigation strategies.
“Risk and premiums are inextricably linked and essentially we are arguing that the risk element needs to be attacked,” says ICA chief executive Rob Whelan.
“Let’s reduce the risk by having appropriate mitigation and then the cost of insurance will decline,” he says.
In illustrating its position, the ICA compares the role of flood insurance to that of comprehensive vehicle and third-party car insurance:
“The community and government do not expect that cheaper or subsidised car insurance for at-risk drivers will stop accidents on the road occurring. Indeed, reducing the price signal for hazardous driving activity in this instance may have the opposite outcome by removing one of the hip-pocket consequences of risky driving behaviour. Affordable car insurance cannot substitute for risk mitigation activities that lower the occurrence of accidents.”
The peak insurance body estimates that 7% of residential property in Australia is exposed to predictable and repetitive flooding, causing an average of $400 million to $450 million in damages per year.
It claims the private insurance market is working when it comes to dealing with flood risk, with 85% to 92% of submitted claims accepted by insurers.
“Flood insurance has been widely available for every property in Australia since 2006. “Market provision of cover is accelerating, with 54% of policies selected by consumers currently providing cover, [and] this is expected to exceed 84% in the next 18 months.
“There is no issue with availability.”
The ICA has also rejected proposals for a government flood pool, which it says will raise the cost of living.
“A new pool will require further government bureaucracy and complexity and will increase the cost of living for ordinary Australians. “The majority of insurers do not support the creation of a system that will pool flood premiums in government hands, preferring instead a model targeting those in need of premium support, with direct subsidies,” it argues.
However, the ICA say there is room for improvement “through market reforms and government action on risk mitigation and community support”.
“This is the true community problem that requires reform by government to achieve lasting solutions, without which any government or private market flood insurance solution is not sustainable over the long term,” the ICA says.
The proposals set out by the NDIR, chaired by former APRA board member John Trownbridge, do include proposals to mitigate flood risk.
These include a commitment to ensuring a measureable reduction in the number of flood-exposed residential properties in each LGA is achieved each year for the next 20 years.
Other government proposals include:
<ul>
<li>Providing public access to all publicly funded flood mapping conducted in Australia, followed by a program to harmonise Australian flood mapping practices to be aligned with world’s best practice.</li>
<li>Through COAG, implementing legislation ensuring flood risk disclosure, to provide all property owners and tenants with flood risk information during title transfer or development application, when a lease is entered into for occupation or use of a property and annually to the resident and to the ratepayer for the property.</li>
<li>Implementing a national policy for land use planning whereby no residential property is constructed on at-risk land, without enforcement of development controls that reduce the risk to less than a one-in-100-year type flood event.</li>
</ul>
 
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Premiums to soar if flood cover becomes mandatory: insurers

<a href="https://www.apartments.com.au/developers/arada">Arada</a> has wasted little time expanding its ambitions in Campsie, lodging plans for a second major project in the rapidly transforming town centre just months after unveiling its three-tower One Campsie proposal on Beamish Street.

The UAE-backed developer has now taken aim at one of the suburb’s most strategically positioned sites, filing a State Significant Development Application for a <a href="https://www.apartments.com.au/new-apartments/10-north-parade-campsie-nsw-2194">33-storey mixed-use tower</a> at 10 London Street and 43 North Parade, directly opposite the future Campsie Metro Station. The proposal is currently on public exhibition and represents another significant vote of confidence in Campsie's emergence as one of Sydney’s key transit-oriented growth centres.

Designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a>, the development would deliver 156 apartments above a podium containing retail and commercial space, creating a new residential and commercial gateway to the town centre. The scheme also includes a four-level above-ground parking podium and a dedicated residential amenity floor featuring wellness and recreation facilities. At least 10 per cent of the apartments would be allocated as affordable housing for a period of 10 years.

The proposal occupies a 1,631 sqm site bounded by London Street, North Parade and Dispensary Lane, immediately adjoining the future Metro station precinct and just metres from Beamish Street’s retail and dining strip. According to the Urban Design Report, the project seeks to deliver "a great place that prioritises human-scaled experience and provides spatial improvements to the area."

<img alt="First look: Arada doubles down in Campsie with 33-storey Metro-front tower plans" data-entity-type="file" data-entity-uuid="175a8324-015b-4856-abe3-ce6f23199fa7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/podium%20campsie.png?VersionId=742UGwXFhFBX4GEl6wX4PYIWREAgn6il" />

Woods Bagot describes the tower as a key marker within Campsie's next phase of growth.

"Located directly opposite the new Campsie Metro Station on North Parade, 10 London Street is a thoughtfully composed 33-storey mixed-use tower that contributes to the ongoing transformation of the town centre," the Architectural Design Report states. The report says the project is intended to provide "high-quality homes within a vibrant, connected urban environment, while helping define Campsie's future skyline."

A strong emphasis has been placed on the public realm. The ground floor incorporates over 500 sqm of retail space and active frontages along both London Street and North Parade, while the podium is wrapped by extensive landscaped planting intended to soften the building's scale and strengthen the pedestrian experience. The development would also widen surrounding footpaths and improve connections between the Metro station and the broader town centre.

Above the podium, residents would have access to more than 1,400 sqm of communal amenities, including a pool, gym and landscaped recreation spaces. A distinctive green-wall treatment extending across four podium levels forms a major architectural feature, helping differentiate the project within the emerging high-density precinct.

The tower's design is closely tied to the broader Campsie Town Centre Master Plan and the arrival of Sydney Metro. The Urban Design Report notes the proposal "directly supports the Campsie Town Centre Master Plan by delivering new homes in a location explicitly identified for growth, improved accessibility, and high-quality urban renewal." It adds that the project contributes to the master plan's vision for a strengthened town centre supported by thousands of new homes around the future Metro station.

<img alt="First look: Arada doubles down in Campsie with 33-storey Metro-front tower plans" data-entity-type="file" data-entity-uuid="bfd17654-253e-489a-bade-6278d63db412" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/base%20campsie.png?VersionId=3roJPMQGs36dazpkhvpvbDDP73Ld.Ica" />

The application follows Arada's recently lodged One Campsie project at 124–142 Beamish Street and 16–18 Ninth Avenue, where the developer is seeking approval for 346 apartments across three towers rising 24, 32 and 39 storeys. Together, the two proposals would cement Arada as one of the most influential developers shaping Campsie's future urban form.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-arada-files-for-trio-of-apartment-towers-in-campsie-town-centre">First Look: Arada files for trio of apartment towers in Campsie town centre</a>

Arada entered the Australian market in 2024 and has rapidly assembled a significant development pipeline across Sydney. Alongside its Campsie holdings, the developer is soon to launch <a href="https://www.apartments.com.au/new-apartments/wattle-green-2-fishburn-crescent-castle-hill-nsw-2154">Wattle Green</a> in Castle Hill, and has expanded its local operations following its acquisition of construction firm Roberts &amp; Co.

Located around 14 kilometres south-west of the Sydney CBD, the site sits at the centre of one of Sydney's fastest-changing middle-ring precincts. The Metro conversion of Campsie Station, combined with Canterbury-Bankstown Council's master planning framework, is driving significant residential intensification around Beamish Street and North Parade, with thousands of new homes expected over coming decades.

Joel Robinson

First look: Arada doubles down in Campsie with 33-storey Metro-front tower plans

For the first time in a long time, Australia's inflation story is starting to look more like a landing than a fight.

The latest Consumer Price Index figures from the Australian Bureau of Statistics showed annual inflation eased to four per cent in May, down from 4.2 per cent in April. On the surface, that might not seem like a major move. Inflation remains above the Reserve Bank's target range and some categories continue to record stubborn price growth.

But the significance of this result lies less in where inflation sits today and more in what it means for where interest rates are likely heading next.

The biggest takeaway is that inflation continues to move in the right direction.

Markets had been bracing for another sticky result after a period where progress appeared to stall. Instead, headline inflation came in softer than expected, helped by falling fuel prices and easing transport costs. Annual transport inflation halved from 6.6 per cent in April to 3.3 per cent in May, while automotive fuel prices fell 11.9 per cent during the month following lower oil prices and the impact of reduced fuel excise measures.

While petrol prices don't solve Australia's affordability challenges, they are one of the most visible and immediate costs for consumers. Falling fuel costs feed through the economy quickly, helping ease pressure on household budgets and business operating expenses.

The ABS data also showed headline inflation is now sitting at its lowest annual level in several months, reinforcing the broader trend that price growth is gradually moderating.

That trend is important because it aligns with what many economists and lenders have been saying for the last month.

Prior to this week's inflation data, ANZ, NAB and Commonwealth Bank had all shifted their forecasts, now believing the Reserve Bank had likely reached the peak of the interest rate cycle. Following the May inflation release, ANZ reaffirmed that view.

In its latest economic update, ANZ said it expects quarterly trimmed mean inflation to come in at 3.7 per cent for the June quarter, slightly below the Reserve Bank's forecast of 3.8 per cent. Importantly, the bank said that outcome, when combined with slowing economic activity, "supports our view that the cash rate has peaked".

The Reserve Bank has spent the better part of three years attempting to bring inflation under control through higher interest rates. If Australia's major banks are correct and rates have now peaked, the conversation shifts from how much higher rates could go to when they might begin coming down.

Westpac's caution comes from underlying inflation. The trimmed mean, the measure most closely watched by the Reserve Bank, increased from 3.4 per cent to 3.6 per cent annually. Housing inflation remains elevated at 6.5 per cent, reflecting ongoing increases in rents, electricity costs and new dwelling construction.

Electricity prices remain particularly problematic, rising 21.1 per cent over the past year following the removal of government rebates.

Housing construction costs are also showing signs of renewed pressure. ANZ noted new dwelling costs rose 0.9 per cent in May and are now running at an annualised pace of 8.6 per cent over the past three months. Builders continue to face higher labour, fuel and material costs, a reminder that inflationary pressures have not completely disappeared.

Housing affordability has deteriorated largely because of higher interest rates rather than higher property prices alone. Even modest reductions in mortgage rates would improve borrowing capacity, increase buyer confidence and reduce repayment pressure on existing homeowners.

While August is far from a certainty, the latest inflation result has strengthened the view that the next move in rates is more likely to be down than up. For borrowers, buyers and the development sector, that alone represents a significant shift from the conversation that dominated much of the past two years.

The inflation result the property market was waiting for

Commercial property group FiveX is doubling down on its move into the residential space.

The group, founded by Joshua and Marko Berger more than five decades ago, has followed up its plans for a 39-storey tower on North Sydney's Alfred Street with a proposed 61-storey tower in Chatswood.

The new tower at <a href="https://www.apartments.com.au/new-apartments/815-pacific-highway-chatswood-nsw-2067">815 Pacific Highway</a>, which would be one of the tallest proposed in Chatswood in recent years, will comprise 490 apartments, 76 of which will be dedicated affordable housing and managed by Evolve Housing for a minimum of 15 years.

The project will replace the long-standing Panorama Building, originally known as the BMA Tower, a 14-storey office building completed in 1972 and designed by Hungarian-born architect Hugo Stossel. At the time of its completion, the building was the tallest structure in Chatswood and became a local landmark due to its distinctive curved form and external glass lift.

<img alt="FiveX" data-entity-type="file" data-entity-uuid="956bd299-3864-47a0-8ea6-162b5524c5d8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%201.02.03%E2%80%AFPM.png?VersionId=EWx7teUr7RcYrI9mgRytwppwt5AdUDtb" />

fjcstudio is behind the designs. Its Architectural Design Report argues the ageing commercial building no longer reflects Chatswood's role as one of Sydney's key strategic centres and that the site is ideally positioned to support significantly higher residential density.

"The site is located at the heart of Chatswood, within the TOD accelerated rezoning area that supports higher density development around the new Metro station," the report states.

"The site's role within a walkable 400-metre radius catchment is where housing, employment, retail and community uses are encouraged to cluster in support of transit-oriented living."

<img alt="fjc" data-entity-type="file" data-entity-uuid="8d198f5e-cc71-4175-9357-be6ec7207473" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%201.18.27%E2%80%AFPM.png?VersionId=5WUFc3IYBPvhQMBUYLCsjJhzdcVeYodE" />

The proposal has undergone two rounds of review by the NSW State Design Review Panel, with the design evolving through an extensive assessment process focused on design excellence, public realm outcomes, residential amenity and the integration of affordable housing.

fjcstudio says the residential component provides a diverse mix of apartment typologies, supporting a broad demographic and contributing to housing supply in a highly accessible location close to major transport, employment and retail infrastructure.

The application follows FiveX's plans for a 39-storey tower at <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">275 Alfred Street</a>, which it <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">submitted through the same NSW Government pathway</a> in December. That's for 184 apartments.

Recent activity in Chatswood includes Hyecorp launching its Archer Street project, Celine, and Develotek securing approval for a 34-storey tower.

First look: FiveX targets Chatswood skyline with 61-storey tower after North Sydney plans

Bridgewell Capital and SLD Development seem to be bullish on the Killara apartment market, filing plans for a second new development next to the Killara Golf Club.

The new plans are for 79 apartments across an amalgamated 4,989 sqm site on Buckingham Road.&nbsp;The project has been designed by BKA Architecture and is being assessed under the NSW Government's Low and Mid-Rise Housing and Infill Affordable Housing reforms. It is just 300 metres from&nbsp;Killara train station.

The majority of the apartments are three-bedrooms (46), with 23 two-bedroom apartments, seven one-beds, and three four-bedroom apartments. 17 of the apartments&nbsp;are proposed as affordable housing, representing 15 per cent of the project's gross floor area, allowing the development to access additional floor space and height incentives available under the NSW Housing SEPP.

There will be 131 resident and visitor car spaces, and more than&nbsp;1,450 sqm of communal open space. Landscaped areas would account for approximately 45 per cent of the site.

<img alt="Killara" data-entity-type="file" data-entity-uuid="75ef5ef7-a53b-4932-a8f1-38f63169eec9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%2011.04.00%E2%80%AFAM.png?VersionId=d_lG1A1StDaMQilljy25Fr8SF1BnAmKE" />

The site currently contains three detached dwellings and occupies a prominent position on the eastern side of Buckingham Road, with frontage to an area that has already begun transitioning towards higher-density housing. Existing apartment buildings of up to six storeys surround the site, while the Killara Golf Club forms its southern boundary.

The application has been lodged as a State Significant Development due to the affordable housing component and the scale of the project.

According to the design report, the proposal has been shaped by the area's evolving planning framework, which is encouraging greater housing density around transport infrastructure.

"The site sits along a growth area anticipated to undergo transformation in line with broader trends across New South Wales, driven by the implementation of the Low and Mid-Rise and Transport-Oriented Development State Housing Policies," the report states.

"Being within 800 metres walking distance to Killara Train Station, the project seeks to provide high-quality apartments designed for various family sizes, located in a vibrant landscaped setting."

The Upper North Shore suburb has become one of the most closely watched testing grounds for the NSW Government's housing reforms. A number of developers have moved quickly to consolidate sites around railway stations across suburbs including Killara, Lindfield, Gordon and Roseville, where the new planning settings are creating opportunities for apartment developments that would previously have been difficult to achieve.

The likes of Aqualand, Hyecorp, Holdmark and Vermont Property Group have projects in the region.

Bridgewell has several developments in the pipeline. Last September they submitted plans for <a href="https://www.apartments.com.au/news/nsw/bridgewell-capital-seeks-55-apartment-project-in-killara">55 new apartments</a> at&nbsp;23-25 Lorne Avenue in Killara, just the other side of Regimental Park from their new project. In May they filed for <a href="https://www.apartments.com.au/news/nsw/first-look-bridgewell-plots-120-apartments-and-childcare-centre-in-maroubra-town-centre">120 apartments in Maroubra</a>.

&nbsp;

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First look: Bridgewell, SLD Development double down on Killara Golf Club

Sydney developer&nbsp;<a href="https://www.apartments.com.au/developers/central-element">Central Element</a>&nbsp;is doubling down in Drummoyne, lodging plans for a boutique apartment development on St Georges Crescent, only one-kilometre down the road from its first Drummoyne development, Bianca.

The new project at 15A-21 St Georges Crescent,&nbsp;a&nbsp;1,701sqm north-facing site overlooking Iron Cove, will have 45 apartmnts across 10 levels. Eight of the units will be dedicated to affordable housing.

The site sits within walking distance of Drummoyne Village, Birkenhead Point, ferry services and the Bay Run, and offers harbour views towards the Sydney Harbour Bridge and CBD skyline.

Designed by MHN Design Union, the development will deliver a mix of one, two and three-bedroom apartments, alongside resident amenity including a gym, landscaped communal open space and three levels of basement parking.

The project has been lodged under the NSW Government's Low and Mid-Rise Housing reforms, with Drummoyne Village identified as a town centre capable of accommodating additional housing supply.

Central Element acquired the site earlier this year as part of its continued expansion across Sydney's eastern suburbs, lower north shore and inner west.

The developer's current pipeline includes luxury apartment projects Pearl Bondi and a separate development on Lamrock Avenue in Bondi, a residential project in Barry Street, Neutral Bay, and a mixed-use seniors living community in Greenwich.

Central Element Managing Director Nathan Chivas said the project would address a shortage of new owner-occupier housing opportunities in Drummoyne.

"While we're seeing a significant shift across Canada Bay as major infrastructure investment, population growth and planning reform drive a new chapter for the region, in suburbs like Drummoyne there remains a genuine shortage of new boutique luxury housing opportunities for owner occupiers," Chivas said.

"Sites of this nature are increasingly difficult to secure, particularly those that combine a north-facing aspect with direct water outlook. Our St Georges Crescent project responds directly to the market demand, offering a level of exclusivity, outlook and lifestyle in the highly sought after suburb."

The development application has been lodged with the City of Canada Bay Council, with the project expected to launch to market in early 2027.

&nbsp;

Larry Schlesinger

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