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Dixon Advisory’s US Masters Residential Property Fund is trading just above its June 29 listing price on the National Stock Exchange.
As of noon on June 30, 2011, the stock was trading at $1.61 a share, pushing the value of the stock to $69.86 million.
On its first day of trading 42,200 shares were bought by brokerage RBS Morgans at a price of $1.61.
The stock listed at $1.60.
The fund, the only one in Australian to offer direct investment in the US residential property market, attracted $69.5 million from investors in the build-up to listing on June 29.
Investors in the fund include self-managed super funds and private investors.
The fund will look to buy properties in the New York metropolitan area, often referred to as the Tri-State Area. This is made up of the populated areas of New Jersey, New York and Connecticut, all within “typical commuting distance of Manhattan”.
The NSX is a specialist stock exchange for the listing of company, property and debt securities.
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lschlesinger-FZcF9M3vE6

Australian fund that invests in US housing trading at listing price

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In all categories of retailing, Australian retailers pay significantly higher rents than offshore retailers in comparable markets, according to research by Morgan Stanley.
The findings will add weight to calls by newsagents and booksellers, among others, for greater market regulation of rents. Newsagents and booksellers argued for more regulation in their submissions to the Productivity Commission’s inquiry into retailing.
The investment bank compared Australian retailers to comparable ones in the US and UK with similar sales densities, rather than make what it calls “futile” across-the board comparisons.
The biggest gaps in rental costs are to be found in the speciality retail sector, where Australian retailers pay rents about three times higher (and sometimes more) than similar US business.
Westfield Speciality Retail pays the most for shop space, an average of US$1,428 per square metre, followed by Premier Investments (Peter Alexander, Just Jeans, Portmans etc), which pays US$1,202 per square metre.
In comparison, US competitor Limited Brands (Victoria’s Secret, Pink, La Senza) pays only US$421 per square metre while clothing retailer GAP pays US$424 per square metre.
A smaller but still substantial gap exists in department stores rents for Australian giants Myer and David Jones, which pay US$227 per square metre and US$206 per square metres respectively.
Only the UK’s Marks &amp; Spencer (US$216 per square metre) pays more than Myer.
Upmarket US department store group Saks, which has its flagship Fifth Avenue store on the most expensive retail strip in the world (annual rents of US$23,888 per square metre) pays $149 per square metre, while at the cheaper end of the US market, JC Penny pays just US$47 per square metre.
In the electronics category JB Hi-Fi pays US$512 per square compared, with US-based retailer Best Buy, which pays US$288 per square metres on average.
<img src="/images/stories/morganstaleychart.jpg">
In its submission to the Productivity Commission, the Westfield Group defended the rents it charges retailers, saying they are a product of market forces.
However, collapsed bookseller REDGroup highlighted rental costs as a major issue facing retailers, and the Australian Newsagents Federation claimed in its submission that Australia’s 1,500 newsagents are at the mercy of their landlords when it comes to negotiating rents and leasing terms.
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Australian retail rents the highest in the world: Report

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Australia’s listed property sector is forecast to return 4.8% earnings per share growth for investors in 2012, according to Merrill Lynch analyst Simon Garing.
On the back of A-REITS returning to their “low-beta roots”, meaning they offer low risk but low potential returns, Garing expects the sector to “outperform in challenging times, where investors seek defensive exposure”.
He bases his predictions on the property sector, excluding residential, showing stable or improving conditions across the board.
During the June 2011 quarter there was a 428% increase in transactions in the commercial sector as investors bought office and retail assets, according to a CB Richard Ellis analysis of the market
BT Investment Management property portfolio manager Julia Forrest is also upbeat about A-REITs, saying the lacklustre performance of the sector to date in 2011 is “misleading”. Winston Sammut of Maxim Asset Management also says a number of A-REITs have performed well “beneath the surface”.
These he lists as Centro Retail Group, Charter Hall Office REIT, Investa Office Fund and EDT Retail Trust.
Charter Hall Office REIT, the subject of a management takeover battle involving three hedge funds and Moss Capital, is also the top pick of Phoenix Portfolios managing director Stuart Cartledge.
It comes as the REIT boosts its line of credit with Westpac by $25 million to $100 million to take advantage of further investment opportunities.
However, not all fund managers are upbeat about REITs.
In its June market insights report, Russell Investments recommends investors leave their REITS portfolio weighting at the current allocation and is forecasting modest earnings growth in 2012.
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REITs forecast to deliver 4.8% growth: Merrill Lynch

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The Brisbane market has become saturated with high-rise apartments, with aggregate stock levels sitting at 1,683 apartments, or more than two years’ worth of supply.
At current clearance rates it will take 26 months to sell the current stock of apartments, according to the latest Midwood Investment report for the May 2011 quarter.
New projects added to the Brisbane stock count include the “ultra-high rise” 289 Infinity apartments being developed by Meriton on George Street in the Brisbane CBD, 77 apartments in Capitol on Peel Street, South Brisbane, Madison Heights and 286 apartments in the Madison Heights development in Bowen Hills.
The highest stock levels are in Fortitude Valley (381 apartments for sale) – where Alex Perry Residential is marketing the first of its apartment blocks – followed by the Brisbane CBD (348) and Bowen Hills (325 apartments).
The stock built up comes as Queensland lost its crown as the population growth capital of Australia for the first time in nine years, attracting 89,083 new residents in the year to June 2010, compared with 105,421 new residents in NSW.
In addition, unconditional sales of new apartments in Queensland has remained stagnant for the three month period ending 31 May 2011, according to the according to the Midwood Report.
Total unconditional sales for new apartments in the state’s major growth regions totalled 405, compared with 464 in the same period a year ago.
Sales of new high-rise apartments were particularly sluggish, with Gold Coast recording 51 unconditional sales and Brisbane 189 sales.
Brisbane sales are up on the February quarter, when 116 sales were recorded, but down on the 206 apartments sold in the November 2010 quarter.
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Brisbane market saturated with apartments

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{yoogallery src=[images/stories/june29newcastle]}
Photographs courtesy of Newcastle Tourism
Property investors looking for a regional residential investment outside of the major metropolitan areas could find strong growth opportunities among the approximately 41,000 houses in 37 suburbs in the municipality of Newcastle.
According to the BIS Shrapnel Residential Property Prospectus for 2011-14, prices in Newcastle are tipped to increase 18% over the next three years, the same pace as Sydney, as more Sydneysiders migrate north of the Hawkesbury River.
While the most recent ABS population figures for Newcastle show decreasing population growth – down to 1.2% for the greater Newcastle area over 2010, compared with annual growth of 1.3% from 2005 to 2010, BIS forecasts a pick-up on due to a housing shortage in Sydney and a combination of higher prices and increased interest rates.
Newcastle is one of just two regional markets in Australia (the other being Gladstone, Queensland) to be rated as offering strong buying proposition by the St George/RP Data National Hotspots Report.
A two-hour drive North of Sydney, Newcastle comprises about 157,000 residents. The majority of houses are detached (75%) and just 14% are units. Investors make up just over a third of the market.
The report recommends investors look out for opportunities either close to major working nodes such as the John Hunter Hospital or close to the CBD, but avoid properties close to industrial sites.
Further out from the city, houses close to public transport and retail amenities as well as those close to the waterfront could be good investments.
David Turner, branch director of WBP Property Group Newcastle, describes the current state of the Newcastle’s property market as “two-speed”, “with demand for dwellings in the lower price range remaining steady and property in the upper range performing less favourably”.
Turner picks the centrally located suburb of New Lambton, which he says has performed well during the last year due to its offer of good value homes. New Lambton house prices have risen from $382,500 in June 2010 to $502,500 in April 2011, a reflection of “variety of stock”
“February’s median price of $440,000 is probably a closer reflection of median value which still represents an increase over the previous 12 months,” he says.
Another pick is the suburb of Hamilton, just 3.5 kilometres from the Newcastle CBD, where prices have risen from $540,000 in June 2010 to $590,000 in April 2011.
“Hamilton enjoys a central location with good access to services and amenities. Long-term trends have shown a steady increase and recently a more significant rise in property values in the area,” Turner says.
Local agent Andrew McGavin, director at Dalton Partners, says demand is particurlarly strong in the inner-city suburbs (those closest to the coast), where there is a shortage of properties up for sale.
“We can’t get enough properties to meet the demand,” he tells Property Observer.
McGavin picks the beach suburb of Merewether, along with neighbouring Merewether Heights and Adamstown – all about 3 kilometres from the Newcastle CBD – as potential hotspots.
“These are affordable family areas in the $400,000 to $600,000 range,” he says.
As for investor interest, McGavin says the market is not currently overrun, but there are “the odd few”. Primarily buyers are owner-occupiers.
Recent sales in Merewether include a four-bedroom two-storey house on 8 Flowerdale Avenue, which sold for $667,500.
Properties in Merewether heights have sold for as low as $480,000 (four-bedroom, one-bathroom house at 9, The Grove) and as much as $680,000 (four-bedroom, two-bathroom at 8 View Street).
Property analyst and hotspotting.com.au director Terry Ryder is also bullish on Newcastle and the nearby Hunter Valley, predicting both growth in house prices and rents for the area in his June newsletter.
A possible uplift in property values in Newcastle is also tipped by Kerry McLeish in the Newcastle office of property valuers Herron Todd White.
McLeish says substantial investment around the port area should increase the capacity of coal loading and infrastructure expenditure, translating into higher local wages. 
“Newcastle has taken some time to transition from an industrial- reliant urban area into a more balanced and well-rounded local economy; however, it looks like to the outside eye that we have replaced industry with mining,” McLeish says
 Key Newcastle numbers
<table border="1" cellspacing="0" cellpadding="0"><tbody><tr>
<td width="308" valign="top">
(As of January 2011)
Median price: $387,000
12-month change in median price: 13.8%
10-year average annual change in median price (10 years): 10.4%
Median weekly rent $350
Indicative gross rental yield 4.7%
Avg discount: -5.5%
Average time on market (days): 54
Average hold period (years): 8.4
Source: RP Data 
 
</td>
<td width="308" valign="top">
(As of March 2011)
Median house price: $365,000.
12 month changes in median price: 1.4%
March quarter change in median price: 0.2% Lower quartile price: $300,000
Upper quartile price: $470,000
 Source: REIA
</td>
</tr></tbody></table>
Regional attributes
Capital growth expectations are supported by the Newcastle CBD’s position as a major administrative centre for the region, while surrounding suburbs contain significant working nodes including a significant mining sector within the Hunter region, according to RP Data/St George.
It also benefits from excellent public transport and major roads, which support travel throughout the region. Beside buses, Newcastle has two train lines with a number of stations within the region, while travel by car is relatively easy via the Newcastle Freeway and the Pacific Highway.
The southern suburbs benefit from the Newcastle Inner City Bypass, while the western suburbs can travel to the CBD via the Newcastle Link Road, which also adjoins the Freeway.
As a major city, Newcastle has a number of major shopping centres scattered throughout the inner-ring as well as two major hospitals the John Hunter Hospital and the Royal Newcastle Centre.
It also home to the University of Newcastle.
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Hotspot: Newcastle tipped for strong growth

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Eastern Australia Agriculture, backed by Hong Kong-based Pacific Alliance Group, is one of at least four potential buyers of the 93,000-hectare private cotton irrigation property Cubbie Station in Dirranbandi, in southern Queensland.
Final offers for the three properties that make up Cubbie Station, which have total water storage capacity of 537,000 megalitres, are expected next month.
The station, at the centre of the federal government’s water buyback scheme, was placed into voluntary administration in 2009 with John Cronin, James Harris and Colin Nicol of McGrathNicol appointed as deed administrators of the Cubbie group of companies on July 6, 2010.
Since 2009, Cubbie Station has been controlled by NAB and Suncorp.
Attempts by Jones Lang LaSalle and the Royal Bank of Scotland to sell the irrigation plant last year were unsuccessful, the AFR reports.
The company is expected to deliver a bumper 2012 crop of $150 million on the back of heavy rains in 2011.
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Four vying for Cubbie Station irrigation property

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Bulky goods retailers are being forced to pays thousands of dollars in rent on premises they must wait months to use, according to the Bulky Goods Retailers Association.
The BGRA represents 54 brands including Bunnings, Harvey Norman, IKEA and JB Hi-fi.
Currently retailers must submit a development approval application even if few structural changes needed before they move in, the BGRA argues in its submission to the Productivity Commission’s retailing inquiry.
Approval times range from four to eight weeks for a non-food retail business and up to six months for industrial premises after lease agreements have been signed.
“Currently the delays inherent in the DA system mean that a tenant, having signed a lease, then has to pay rent for premises in which they cannot operate, in some cases for several months, resulting in significant costs to business,’ the BGRA says.
It argues small retailers could save $250 a day on early rent commencement and those leasing industrial premises could save $1,000 a day if the Council of Australian Governments adopts NSW’s Commercial and Industrial Code.
The BGRA claims the code “provides a rapid and cost-effective alternative to the DA process”.
“The NSW Commercial and Industrial Code has thus enabled many forms of retail development, including bulky goods retail, to achieve swifter development approvals where the proposed development has minimal environmental impact because complying development applications must be determined within 10 days. “Where a proposed development is classified as exempt development, no planning approval is required,” the BGRA says in its submissions paper.
Despite the code being in place in since 2009, most NSW councils still require that retailers submit a development approval application.
 
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td width="122" valign="top">
 
</td>
<td width="130" valign="top">
Retail (non-food)
 
</td>
<td width="122" valign="top">
Retail (food)
 
</td>
<td width="122" valign="top">
Industrial
</td>
</tr>
<tr>
<td width="122" valign="top">
Project fit-out value:
</td>
<td width="130" valign="top">
$150,000 (110m2)
</td>
<td width="122" valign="top">
$150,000 (110m2)
</td>
<td width="122" valign="top">
$1,000,000 (10,000m2)
</td>
</tr>
<tr>
<td width="122" valign="top">
Indicative assessment cost - Council:
</td>
<td width="130" valign="top">
$2,400
</td>
<td width="122" valign="top">
$2,900
</td>
<td width="122" valign="top">
$9,000
</td>
</tr>
<tr>
<td width="122" valign="top">
Indicative assessment cost - Certifier:
</td>
<td width="130" valign="top">
$1,900
</td>
<td width="122" valign="top">
$1,900
</td>
<td width="122" valign="top">
$7,000
</td>
</tr>
<tr>
<td width="122" valign="top">
Processing time
 
</td>
<td width="130" valign="top">
4 to 8 weeks (average 4 weeks)
</td>
<td width="122" valign="top">
5 to 9 weeks (average 5 weeks)
</td>
<td width="122" valign="top">
12 to 26 weeks (average 12 weeks/84 days)
</td>
</tr>
<tr>
<td width="122" valign="top">
Potential early rent commencement savings
</td>
<td width="130" valign="top">
$4,500+
(based on $250/day)
</td>
<td width="122" valign="top">
$6,250+
(based on $250/day)
</td>
<td width="122" valign="top">
$74,000+
(based on $1,000/day)
</td>
</tr>
</tbody></table>
Source: BGRA submissions to Productivity Commission
 
The BGRA forecasts the bulky goods retail sector, which includes retailers of electronics, whitegoods, furniture and automotive parts, will generate sales of nearly $64 billion in 2012. 
In April, Jones Lang LaSalle reported that bulky goods retailers along with the regional shopping centre sub-market were driving the increase in the supply pipeline in the first three months of 2011.
Bulky goods retailers that have increased their expansion this year include Bunnings, which plans to open 150 stores nationally over the next four years in response to the roll out of Woolworths’ new hardware brand Oxygen.
 
Total retail space under construction nationally expanded to 676,170 square metres in the first quarter of 2011, according to Jones Lang LaSalle – substantially higher than the trough of about 470,000 square metres in late 2009, but is still well below the peak reached in mid-2008, when more than 1.4 million square metres of retail space was under construction across the country.
NAB identified bulky goods as the worst performing retail property sector in Australia in its March 2011 update.
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Bulky goods retailers baulk at paying for premises awaiting occupation approval

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A private investor has paid a premium for two 7-Eleven sites in Melbourne, due to have been auctioned by Jones Lang LaSalle as part of a batch 15 stores on July 20.
The two early sales are the 2,738-square-metre Blackburn South site at 2 Canterbury Road with annual rent commencing at $140,000 and the 1,463-square-metre Lilydale site on the corner of Maroondah Highway and Cave Hill Road, bringing in $130,000 in annual rent.
Jones Lang LaSalle agent Steve Bolton says the net yield on the Blackburn site is 6.98% and the net yield on the smaller Lilydale site 8.45%.
The sale prices are undisclosed but did meet price expectations.
Prices are expected to range between $1.5 million and $4 million for the eight stores in the Sydney metropolitan area and the remaining five in the Melbourne metropolitan area.
Bolton says the Lilydale and Blackburn properties were sold ahead of auction on the basis that the price offered may not be achieved on auction day.
Premium offers for other sites that exceed auction expectations may also be considered ahead of the July 20 auction.
“Each offer will be considered on an individual basis,” he says.
Jones Lang LaSalle agents Ben Galanos and John Macree, along with Bolton, are marketing the remaining sites, which are expected to yield investors returns of between 7.5% and 8.5% on passing rentals.
The stores, purchased as part of 7-Elevens acquisition of 250 retail sites from Mobil Retail in 2010, each include service station, convenience store and customer parking.
All stores come with 15-year leases to 7-Eleven with renewal option of three times five years and offer fixed annual rental increases of 4%. 
Bolton says there has been “excellent interest” in the retail sites, which Jones Lang LaSalle has been selling in tranches on behalf of 7-Eleven since early 2011.
Expressions of interest in the latest batch of stores up for sale have come from a range of potential buyers including petroleum operators, superannuation groups and some institutions.
Though they are being sold of individually, Bolton says they can be bought in batches.
“The sale can be tailored to suit the buyer,” he says.
Tenants of the stores pay all outgoings except land tax.
The eight NSW stores range in size from the smallest in Kensington, Sydney on the corner of Anzac Parade and Todman Avenue, which is 1,429 square metres and offers annual rent of $150,000, to the South Strathfield store at 577 Liverpool Street, measuring 4,998 square metres and offering returns of $200,000 in rent annually.
The smallest Victoria store is in Bayswater East, on the corner of Dorset Road and Mountain Highway, measuring 1,932 sqm and generating annual rent of $140,000, and the largest is the 5,575-square-metre Hoppers Crossing store on the corner of Old Geelong and Heaths roads, returning $210,000 per year.
The tranche of 15 will be sold by public auction on July 20, 2011.
Since being purchased by 7-Eleven, the properties have been refurbished and re-opened as 7-Eleven stores.
Earlier this year, seven properties in Thomastown, Clifton Hill and Noble Park in Victoria, Blacktown East, West Gosford and Long Jetty in NSW and Robina in Queensland were successfully auctioned by Jones Lang LaSalle with net yields ranging between 7.28% and 7.95%.
Jones Lang LaSalle director David Bowden says since March some sites have been sold on an individual basis and demand among investors has been strong.
“The purchasers have been attracted by land rich investment properties in prime locations with secure long-term leases and fixed rental increases,” he says.
7-Eleven Stores is the biggest convenience retailer in Australia, operating about 600 stores, and is owned by the Withers/Barlow family.
It ranks in the top 30 of BRW’s Top 500 Private Companies listing.
What’s for sale:
<table border="0" style="width: 470px;"><tbody>
<tr>
<td>Site</td>
<td>Site area</td>
<td>Annual rent</td>
</tr>
<tr>
<td>New South Wales</td>
<td></td>
<td></td>
</tr>
<tr>
<td>Artarmon, 477 Pacific Highway</td>
<td>1,548sqm</td>
<td>$210,000</td>
</tr>
<tr>
<td>Granville, corner Parramatta Road and Harbord Street</td>
<td>1,499sqm</td>
<td>$200,000</td>
</tr>
<tr>
<td>Lambton, 21 Croudace Street</td>
<td>1,932sqm</td>
<td>$190,000</td>
</tr>
<tr>
<td>Narrabeen, 1497 Pittwater Road</td>
<td>1,619sqm</td>
<td>$270,000</td>
</tr>
<tr>
<td>South Strathfield, 577 Liverpool Road</td>
<td>4,998sqm</td>
<td>
$200,000
</td>
</tr>
<tr>
<td>Blaxland, 137 Great Western Highway</td>
<td>1,809sqm</td>
<td>$190,000</td>
</tr>
<tr>
<td>Kensington, corner Anzac Parade and Todman Avenue</td>
<td>1,429sqm</td>
<td>$150,000</td>
</tr>
<tr>
<td>Edensor Park, corner Cowpasture and Elizabeth roads</td>
<td>7,451sqm</td>
<td>$260,000</td>
</tr>
<tr>
<td>Victoria</td>
<td> </td>
<td></td>
</tr>
<tr>
<td>Bayswater East, corner Dorset Road and Mountain Highway</td>
<td>1,932sqm</td>
<td>$140,000</td>
</tr>
<tr>
<td>Brandon Park, corner Springvale and Ferntree Gully roads</td>
<td>2,720sqm 
</td>
<td>$190,000</td>
</tr>
<tr>
<td>Hoppers Crossing, corner Old Geelong and Heaths roads</td>
<td>5,575sqm</td>
<td>
$210,000
</td>
</tr>
<tr>
<td>Epping, corner Dalton and Childs roads</td>
<td>5,204sqm</td>
<td>$150,000</td>
</tr>
<tr>
<td>Tullamarine, corner Mickleham and Melrose roads</td>
<td>1,864sqm</td>
<td>$180,000</td>
</tr>
</tbody></table>
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Two sell as 7-Eleven tempts investors

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The inner-Sydney suburbs of Pyrmont and Ultimo, where the best gross office rents are on average 43% lower than the nearby CBD, are likely to get an influx of big businesses over the next five years.
Pyrmont and Ultimo are identified as city fringe markets with the biggest percentage difference in office gross rents compared with the corresponding CBD market, according to analysis from CB Richard Ellis.
CBRE regional director of office services James Patterson expects the gap between Ultimo/Pyrmont rents and the Sydney CBD to be maintained, as rents in both areas are likely to rise in the next three to five years.
“On a national basis, some of the markets with older and smaller office stock, which have suffered higher vacancy rates recently, are those with the widest gap between CBD and city fringe rents,” he says.
The second-most discounted fringe market is Melbourne’s St Kilda Road, where office rents are 35% lower than the Melbourne CBD.
“St Kilda Road in Melbourne is a good example with a rental gap of 35% relative to the CBD. Anecdotal evidence suggests leasing enquiry is starting to pick up in St Kilda Road at present, and the lower rents there are certainly compelling,” Patterson says.
Overall, gross rents in the fringe areas immediately adjacent to CBDs are on average 32% lower than comparable space in the centre of the city.
This stark difference in rental rates is one of the compelling factors forcing businesses to consider moving to the fringe of CBDs or to split operations between a CBD head office while relocating other functions to city fringe locations, according to CBRE executive director of global research and consulting Kevin Stanley
Other contributing factors, Stanley says, are forecasts of CBD office rent rises of between 12% and 24% over the next three to five and a lack of sufficiently large and appropriate floor space.
<img src="/images/stories/cbrejune28.jpg">
“Looking back in history, the gap between CBD rents and the fringe markets never closes, although it may vary depending on the cycle,” Stanley says.
“With CBD rents forecast to rise, we expect this gap to be maintained or increase in the next three to five years, although the cost of building may also punch up rents for new buildings in fringe markets.”
The rental gap between the Brisbane city and fringe markets has remained fairly consistent and is quite large, despite a fall in rents over the last few years.
New buildings recently constructed in Breakfast Creek, Fortitude Valley and Bowen Hills are likely to be popular options for corporations and government departments, according to Stanley.
“Our analysis shows that, despite the downturn in Brisbane, more affordable rents can still be found in quality buildings on the fringe, even if those buildings need to be built specifically for the tenant,” he says.
In Adelaide, the gap between fringe and city is about 24%, lower than the national average of 32%, suggesting less financial benefit in being located outside of the city core.
In Perth, the strength of the economy has caused the higher rents of the CBD to spread to neighbouring locations, such as West Perth.
“With the business cycle now gearing up again, the same pressures are likely to re-emerge as vacancy rates fall in the CBD and rents start to rise both there and in West Perth, providing few options for tenants to escape high gross rentals,” says Stanley.
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CBD fringe suburbs draw office tenants with lower rents

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Banks are tightening up their balance sheets by reducing their exposure to off-shore wholesale funding sources, Guy Debelle, the RBA’s assistant governor of financial markets, has told investors in Sydney.
Speaking at a conference on banking risk, Debelle says the reduced reliance on off-shore wholesale funding comes at the same time as banks are repaying their foreign liabilities.
According to Debelle, the asset quality of a bank is the primary determinant of its financial strength.
“While the funding structure of a financial institution warrants close scrutiny, an investor in that institution should pay the greatest scrutiny to the asset side of the balance sheet,” Debelle says.
Besides noting a significant drop in the share of short-term wholesale funding and a corresponding rise in long-term wholesale funding, Debelle says a “noteworthy development” that has escaped attention is that “banks have raised less of this wholesale funding from offshore than has matured over the three of the past four quarters”.
“That is, in net terms, the banks have been repaying their foreign liabilities,” he says.
In May, rating agency Moody’s downgraded the credit ratings of Australia's big four bank to Aa2 due to concerns about their reliance on wholesale funding.
In the past Australia’s big banks have turned to offshore wholesale lenders to fund 40% of their lending books.
However, they are expected to reduce their offshore borrowings by up to a third over the next two years from about $US150 billion annually to around $US100 billion, according to a report in SMH. Debelle says Australian banks' use of offshore funding sources was particularly visible through 2009 but is now a much smaller share of the global market “given they are raising relatively less and banks in the rest of the world are raising relatively more”.
“This is likely to remain the case for the foreseeable future,” he says.
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RBA welcomes banks' reduction in reliance on off-shore funding

Eddy Haddad's <a href="https://www.apartments.com.au/developers/level-33">Level 33</a> is levelling up its approved Wollongong development, as the coastal city south of Sydney continues to prove popular in the high-density development space.

Level 33, a longtime developer in the Wollongong area, has gone through the NSW Government's Housing Delivery Authority to upsize its approved two-tower development on the corner of Crown Street and Gladstone Avenue, just 100 metres from Wollongong Station.

The developer currently has approval for 252 apartments across two buildings rising to 19 storeys. It is now seeking approval for 33 and 38-storey towers that would deliver 467 apartments, including 67 affordable homes.

Designed by <a href="https://www.apartments.com.au/architects/bka-architecture">BKA Architecture</a>, the development would comprise apartments above a three-level podium with around 1,100 sqm of retail space, along with basement parking for 448 vehicles.

According to the Urban Design Report by BKA, the proposal has the capacity to "reinforce the precinct's identity by strengthening links between health, education, and transport services, while also contributing to Wollongong's ongoing evolution as a key regional centre."

Wollongong is somewhat in vogue. Between Level 33 and Urban Property Group, the two developers have several thousand apartments planned across the city.

Level 33 is currently delivering Easterly Wollongong, one of its most boutique projects to date with just 21 high-end apartments, as well as Atchison &amp; Kenny, a 329-apartment development due for completion later this year. The developer also plans to redevelop the 13,088 sqm WIN Grand megasite into a new $500 million precinct with nearly 600 apartments and has more than 900 apartments planned for the former Bunnings Warehouse site at the intersection of Gipps and Flinders streets.

Urban Property Group is also playing a major role in the city's transformation. Its five-tower Keira Place precinct will deliver more than 800 homes, and it has recently lodged plans for a further 300 apartments near Wollongong Station.

Joel Robinson

First look: Level 33 upsizes Wollongong apartment towers

Just a week after filing plans for the final stage of its major Keira Place masterplan, <a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has unveiled another significant housing proposal in Wollongong, this time targeting a prominent site opposite North Wollongong Station.

The developer has lodged a State Significant Development Application for a 38-storey mixed-use tower at <a href="https://www.apartments.com.au/new-apartments/4-4a-flinders-street-north-wollongong-nsw-2500">4-4A Flinders Street</a>, around one kilometre north of the <a href="https://www.apartments.com.au/new-apartments/keira-place-wollongong-120-122-smith-street-wollongong-nsw-2500">Keira Place precinct</a> currently taking shape on the edge of the CBD.

<img alt="First look: Urban Property Group plans 38-storey North Wollongong tower as Keira Place expansion gathers pace" data-entity-type="file" data-entity-uuid="2b6428f1-6405-4038-8476-897de440e90d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/flinders%20podium.png?VersionId=QLqEvK0OuCEwRC47oHNftrw2B1YqaHF8" />

Designed by Studio.SC, the proposal comprises a 38-storey mixed-use development containing 303 apartments, including 45 affordable housing units, alongside 174 co-living residences. The scheme also includes ground-floor retail space, extensive landscaping and public domain improvements.

Studio.SC noted in the proposal it "outlines a vision for a landmark transit-oriented mixed-use development centred around North Wollongong Station, designed to support the city’s future growth while responding to the NSW Government’s housing and planning reforms."

The architecture firm said the proposal responds to the opportunities and constraints shaping future growth within the 400-metre catchment of the station and represents "a coordinated and future-focused approach to urban intensification, contributing to the long-term evolution of North Wollongong as a connected, walkable and high-density station precinct."

The site occupies a strategic corner bounded by Flinders Street, Station Street, Stafford Street and the Princes Highway, directly opposite North Wollongong Station.

<img alt="First look: Urban Property Group plans 38-storey North Wollongong tower as Keira Place expansion gathers pace" data-entity-type="file" data-entity-uuid="7863adad-1f71-4022-b850-f44b252738fd" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/flinders%20podium%20a.png?VersionId=WsU7av0g8_8R2tGHWxgHeFSlhu7yeY1V" />

The proposal follows Urban Property Group's recent submission for the second and final stage of Keira Place, which would deliver a further three buildings comprising 657 homes opposite Beaton Park. It builds on the first stage, which features 150 apartments across two towers and recently commenced construction.

Urban Property Group CEO Patrick Elias said breaking ground on the first stage marked a significant milestone for Wollongong and reflected the developer's long-term commitment to regional cities.

"Today's groundbreaking is about turning approvals into homes and moving quickly to deliver much-needed housing in Wollongong's city centre," Elias said.

"Keira Place will provide a diverse mix of homes close to jobs, transport and services, while setting a high benchmark for quality, durability and consumer protection."

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/urban-property-group-unveils-trio-of-towers-for-next-stage-of-new-wollongong-precinct-keira-place">Urban Property Group unveils trio of towers for next stage of new Wollongong precinct, Keira Place</a>

First look: Urban Property Group plans next major Wollongong tower

<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.

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.

Larry Schlesinger

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