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Listed property trusts that increase their borrowings to acquire or develop property assets will increase returns to investors provided they generate returns that outperform interest charges.  
In 2006, the A-REIT sector, as represented by the S&amp;P/ASX 300 A-REIT Index was geared at 37%.
Gearing is now 29%, having been lowered by a combination of asset sales and new equity capital raising. This has also been assisted by the upwards revaluation of underlying real estate assets over the past two years. Of the larger A-REITs, none has a gearing level above 40%. A global survey of investors by UBS concluded that gearing of 30% - 50% was appropriate.  
At the height of the GFC in March 2009, some A-REITs had gearing ratios substantially above 40%. Of the ten A-REITs with gearing ratios above 40% at that time, only one is still trading on the ASX. Names such as Macquarie DDR Trust with gearing of 60%, Macquarie Countrywide (59%), Babcock &amp; Brown Japan Trust (58%), and Tishman Speyer Office Trust (56%) have all been acquired, merged or operate under new management. Pressure from lenders was significant. During the GFC the increase in corporate interest rates was part of a credit squeeze. These factors combined to reduce the net earnings of A-REITs.  
Gearing in other countries with listed REIT markets have higher gearing compared to Australia as interest rates are structurally lower. This is noted in Table 1.
Table 1: Average Gearing from Global Markets
<table cellpadding="0" cellspacing="0" border="0" frame="box" style="width: 470px;"><tbody>
<tr>
<td valign="top" width="284">
REIT market 
</td>
<td valign="top" width="284">
Average Gearing (%)
</td>
</tr>
<tr>
<td valign="top" width="284">
Australia
</td>
<td valign="top" width="284">
29
</td>
</tr>
<tr>
<td valign="top" width="284">
Japan
</td>
<td valign="top" width="284">
45
</td>
</tr>
<tr>
<td valign="top" width="284">
France
</td>
<td valign="top" width="284">
41
</td>
</tr>
<tr>
<td valign="top" width="284">
Singapore
</td>
<td valign="top" width="284">
40
</td>
</tr>
<tr>
<td valign="top" width="284">
USA
</td>
<td valign="top" width="284">
48
</td>
</tr>
<tr>
<td valign="top" width="284">
UK
</td>
<td valign="top" width="284">
48
</td>
</tr>
</tbody></table>
Source: UBS, BDO  
Negative gearing occurs when the cost of interest on debt exceeds the income return earned by an investment. Gearing increases variability of potential return outcomes because of the fixed obligation to pay interest against variable income and capital returns as illustrated in Chart 2. Gearing amplifies prospective positive and negative returns. The marginal impact of gearing between 30% and 50% is not substantial. Gearing has a substantial impact beyond 60% when prospective negative outcomes are large.  
Chart 2 - Effect of Increasing Gearing on Property
<img src="/images/stories/2013/06/markwistjune26one.jpg" width="470" height="288" alt="markwistjune26one"> 
At elevated gearing levels of 60% and higher, the risks of negative property valuation movements are exacerbated as there is a smaller protective equity buffer and higher exposure to increased interest payments on a larger debt.  
Several A-REITs have raised new debt or refinanced existing debt over the past year to take advantage of lower interest rates. A-REITs have also demonstrated an appetite to diversify the source of debt finance away from domestic banks to include offshore banks, and domestic and offshore bond markets.  Within the last three months, Commonwealth Property Office Fund raised $60 million and GPT raised $250 million through bond issues; Dexus raised $300 million in a private placement in the USA; and CFS Retail Property Trust raised $50 million in medium term notes and refinanced a $150 million bank facility. A total of $5.2 billion of debt has been raised or refinanced by the major A-REITs over the year to 31 May.  
A-REIT balance sheets are now in sound financial shape with low gearing ratios by bank credit standards, low interest rates, and stability of values in the property markets. Interest rates on debt are below yields on property assets. Property acquisitions will enhance return on equity.
Mark Wist is senior asset consultant at <a rel="nofollow" target="_blank" title="Atchison Consultants" href="https://www.atchison.com.au/">Atchison Consultants</a>.
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markwist-Vaq6S8Xoby

Increased A-REIT gearing can be a good thing for investors: Mark Wist

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With rumours that Mirvac may be interested in a possible bid for Australand following the exit of GPT, A-REITS analyst Mark Wist provides answers to the key questions behind Australand's decision to sell and what this may mean for the listed property trust sector.
Why is Australand so motivated to sell the business? 
Australand is an A-REIT listed on the Australian Securities Exchange. It has a market capitalisation of just over $2.0 billion. Australand’s major security holder is the Singapore based property group, CapitaLand Limited, which owns approximately 59% of the issued capital. CapitaLand’s stated intention following a business review is to divest its holding in Australand which is a non-core asset.
What aspects of its business would appeal to investors?
Australand has a commercial office and industrial property portfolio of $2.3 billion. It is also possible that some capitalisation rate decreases will see values increase in this portfolio. Australand has a substantial residential development business with development land held on balance sheet mainly in Sydney and Melbourne with completed value estimated at $8 billion.  It also has an office and industrial property development business.
In December 2012, GPT announced an interest in acquiring the investment property portfolio and commercial and industrial business of Australand.
GPT had a particular interest in Australand’s industrial portfolio. An acquisition of a controlling stake in Australand would have given GPT the opportunity to bolster its own industrial portfolio with quality assets, some of which had value-adding potential.
In May, GPT announced that it was no longer pursuing the proposal.
Mirvac had also expressed interest in Australand, however withdrew from the bidding process earlier than GPT.
What would be the concerns for investors?
There are two major components of the business being an investment portfolio and a residential property development business.  The combination does not attract interest from a wide range of potential providers.  Asian investors do consider both activities.
Ultimately it seems that there were two stumbling blocks to a successful conclusion to a sale of CapitaLand’s stake to GPT. First was the price of the acquisition. GPT made it clear that there was a pricing expectation mismatch between it and the vendor. Second was that GPT had little interest in Australand’s residential development business or assets. GPT could not identify a partner to acquire that part of the business and Australand for its part was only considering selling its stake in one transaction without separating the businesses or assets in the portfolio.
What does the potential sale of Australand mean for the AREIT sector?
If Australand was acquired by, it would result in further consolidation among A-REITs. In April 2012 there were 53 A-REITs listed on the ASX. In April 2013 this number had fallen to 46 despite the market capitalisation of these A-REITs increasing from $81 billion to $100 billion.
If acquisition is by cash it would release capital for re-investment prospectively back into the sector. 
Are there likely to be other consolidations in the AREITs space?
A number of A-REITs currently have the balance sheet capacity and support to acquire other A-REITs. However, it is more likely that as the sector is now trading at a premium to net tangible assets, we will see private unlisted funds seeking listing on the ASX to take advantage of the liquidity benefits associated with listing.
Mark Wist is senior asset consultant at <a href="https://www.atchison.com.au/" title="Atchison Consultants" target="_blank" rel="nofollow">Atchison Consultants</a>.
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Australand's residential and commercial mix does not appeal to investors: Mark Wist

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Performance of the listed A-REIT market is shown in Table 1.
It shows that significant positive returns have been achieved over the past three years especially in the last year.
The five-year performance is negative reflecting the substantial falls encountered during the crux of the GFC.
Volatility is also significantly lower over three years than five years reflecting more stable markets.
<img src="/images/stories/2013/04/wistapril30one.jpg" width="470" height="89" alt="wistapril30one">
The A-REIT sector has underperformed broader shares over the past five years. However, most of that underperformance occurred in year to 31 March 2009.
Over the past two years, A-REIT out-performance has been significant.  
The average annual total return for broader shares over the past five years has been 3.1% compared with -3.7% p.a. for A-REITs.  
Going in to the GFC in 2008, companies in the A-REIT sector had significantly higher levels of debt than had been employed in previous years.
Many significant companies owned property in overseas markets where asset values declined sharply.
Others were engaged in property development activities. Each of these components contributed to negative earnings. A-REIT prices declined partly as a consequence.  
Listed property companies have recapitalised balance sheets by raising new equity, selling property and reducing debt with the proceeds. As a consequence, the earnings outlook is more secure.  
Table 2 shows the average debt holdings and exposure in overseas property between 2008 and 2013 for A-REITs.
<img src="/images/stories/2013/04/wistapril30two.jpg" width="470" height="89" alt="wistapril30two">
Table 3 shows the income return from A-REITs, along with the average Australian 10-Year Government Bond yield.
<img src="/images/stories/2013/04/wistapril30three.jpg" width="470" height="87" alt="wistapril30three">
The current listed property distribution yield is 5.9% which sits significantly above the 10 year bond rate as at 31 March of 3.3% giving a premium of 2.6%.  
A-REITs have lower debt levels and reduced exposure in overseas property.
This more stable investment structure combined with high relative income yields has attracted investor interest.
As a result returns have been very strong.  At present price levels the income yields and growth prospects are attractive.
Mark Wist is senior asset consultant at <a href="https://www.atchison.com.au/" title="Atchison Consultants" target="_blank" rel="nofollow">Atchison Consultants</a>.
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Strong performance over past year for A-REITs: Mark Wist

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In February, Westfield founders the Lowy family announced the sale of its entire 7.1% stake in the Westfield Retail Trust for $664 million.
The motivation was to diversify its investments internationally. The Lowy family retains its 8% interest in Westfield Retail Trust’s stable mate Westfield Group worth approximately $1.8 billion. 
The action highlights the potential performance differential of passive asset-owning A-REITs compared to those with a higher earnings growth prognosis. 
Westfield Retail Trust is a passive property-owning A-REIT.
Earnings growth is largely generated by rental increases from assets held in the portfolio.
While rent reviews on retail property held in A-REIT portfolios continue to generate rental increases of up to 3%, renewals and new leases have seen rental reductions of up to 7% with some increases in lease incentives acting as a further drag on earnings.
The difference in the change in rental between renewal of existing leases and new leases is the re-leasing spread. Westfield Retail Trust reported the weakest releasing spread in the retail A-REIT sub-sector at -2.6%. 
Westfield Retail Trust’s forecast earnings growth is 3.0% and its estimated dividend yield for the 2013 financial year is 6.3%.
This compares to the forecast earnings growth for Westfield Group at 4.9% with an estimated dividend yield of 4.5%. The yield differential reflects the difference in anticipated earnings growth. 
Westfield Group also owns property. However, its earnings growth is boosted by profit from property development; revenue generated by higher fees from increased funds under management and increased asset management fees.
Westfield Group reported an 18% increase in net profit over the 2012 year driven largely by profit earned from development of its own shopping centres.
Development profit and fee revenue are more volatile than rental income.
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What motivated the Lowys to sell out of the Westfield Retail Trust?

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The A-REIT sector showed a total return of 33% for 2012, outperforming shares, which returned 20% over the same period.
Drivers of this outperformance included reducing debt servicing costs and an improved capital position, strong capital inflows to the sector and a surge in merger and acquisition activity in the second half of the year.
An average sector earnings yield of 7.2% and an average payout ratio of approximately 81% underline the strong income proposition offered by A-REITs.
Debt servicing costs for the larger A-REITs have reduced by 1% over the past year to approximately 5.5%. This will benefit those A-REITs with interest rate hedges expiring this year and those who can fund earnings accretive property acquisitions with debt.
With A-REIT sector distribution yields around 6% and Australian 10 year government bond yields currently around 3.5%, a significant yield premium of 2.5% exists.
Share buy backs had been a common capital management strategy in the first half of 2012 as A-REIT prices traded at a significant discount to their asset backing. However, in the final quarter of 2012, over $600 million of equity was raised including $400 million by Goodman Group and $100 million by Charter Hall Retail.
In addition, both the 360 Capital Industrial Fund and the Shopping Centres Australasia Property Group (the Woolworths property offshoot), which raised $472 million, were listed as A-REITs. Excluding Westfield Group, the A-REIT sector discount to asset backing has closed from 10% this time last year to a 5% premium.
At the end of 2012, GPT made an unsolicited bid to acquire the non-residential property and corporate assets of Australand. While the bid was rejected, the principal shareholders of Australand have indicated their willingness to exit their investment.
Mirvac has also expressed interest in acquiring Australand. It is anticipated that Australand will be acquired this year. The benefits of increased scale will a driver of corporate activity. Smaller A-REITs without the capacity to grow their balance sheets without external capital are likely to be among the targets.
While rent growth is likely to be subdued in 2013, development and redevelopment pipelines are likely to boost earnings growth. Continued low interest rates, the prospect of corporate activity, and the relatively high yield from A-REITs compared to equities and fixed interest investments are expected to be factors contributing to another positive total return in 2013.
Mark Wist is senior asset consultant at <a href="https://www.atchison.com.au/" title="Atchison Consultants" target="_blank" rel="nofollow">Atchison Consultants</a>.
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Another positive return for A-REITs in 2013 after strong 2012: Mark Wist

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Slow retail sales growth over the past year has produced a difficult retail trading environment. Retailer margins are being pressured as low turnover growth and fixed rental increases raise occupancy costs, however retail A-REITs are forecasting nominal distribution yield growth of up to 4% in 2013.
Retail sales growth remains positive overall at 2.6% per annum, although this is significantly below its long-term average of 6.2% per annum.
Department stores and household goods retailers are being particularly affected. Online sales now represent approximately 5.5% of total retail sales and are growing at around 20% per annum.
To date, this has not represented a substantial threat to high-quality shopping centres, and many retail A-REIT managers have adopted strategies to incorporate the effects of online retailing such as purchase collection centres and enhanced personal mobile device technology. The recent failure of the Click Frenzy online sale will have done little to enhance the reputation of the technology to the unconvinced.
Measures of annual turnover growth in the retail A-REITs have generally improved over the year to September 2012, however remain below long term averages at around 1% to 2%.
Fixed rental increases embedded in existing leases are reflected in average rental growth of around 2% to 3% across the retail A-REIT sector.
This contrasts with releasing and new leasing activity which shows reductions in rent of between 1.5% and 3%. Lease incentives, often in the form of contribution to fit out, range up to 20% for five-year terms for some shopping centres, particularly those with a high discretionary retail element or those which do not dominate their catchment areas.
While regional shopping centre vacancies have increased from 0.6% to 1.2% over the past two years, the average vacancy in the retail A-REITs is 0.5% demonstrating the value of active professional management.
The retail A-REITs have been active in capital management, portfolio development, acquisition and disposal in order to maintain and enhance the quality of their portfolios:
<ul>
<li>Westfield Retail Trust and Westfield Group have recently undertaken a complex asset swap and restructure of seven Australian shopping centre assets held in joint venture with AMP Capital; </li>
<li>CFS Retail Property Trust is developing Emporium, a shopping centre in the Melbourne CBD. Emporium is stage two of a project alongside the refurbished Myer building which is expected to cost in the order of $740 million;</li>
<li>Charter Hall Retail REIT has recently raised $100 million to fully equity-fund the acquisition of three sub-regional shopping centres at a 2% premium to net tangible assets (NTA); and</li>
<li>The listing of Woolworths’ proposed new Shopping Centres Australasia Property Group on the Australian Securities Exchange will increase the liquidity and diversity of retail A-REITs. The total value of the retail property portfolio will be in the order of $1.4 billion.</li>
</ul>
Retail A-REITs provide investors with an exposure to quality retail real estate portfolios and management expertise. The Shopping Centres Australasia Property Group is likely to yield an income return higher than the retail sub-sector, depending on its final share price. The additional development return potential from the Westfield transaction should increase its distribution return. Westfield Retail Trust’s share buy-back will improve its NTA. The subsector should benefit from this acquisition and development activity and result in some share price growth despite the below trend retail trading environment. Fixed rental increases at rent reviews will largely offset rent reductions at lease renewal while cost efficiencies and low interest rates will cushion slow retail sales growth for retail A-REITs.
Mark Wist is senior asset consultant at <a href="https://www.atchison.com.au/" title="Atchison Consultants" target="_blank" rel="nofollow">Atchison Consultants</a>.
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Retail A-REITs grow despite economic environment

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Woolworths has announced its intention to sell down 69 shopping centres currently held on its own balance sheet into a new fund that it intends to list on the Australian Securities Exchange (ASX) as a new A-REIT. The fund will be called the Shopping Centres Australasia Property Group (SCA Property Group).
The new fund will be the seventh substantial retail A-REIT listed on the exchange and will increase the value of total assets under management in the sector by 2.2%.
To fund the acquisition, SCA will conduct a capital raising of between $425 million and $506 million. The proposed raising would offer a discount to the net tangible asset backing of the new group of between 5% and 20%. The distribution yield of the proposed trust would be between 6.9% and 8.3% depending on the final price paid. This is considerably higher than the weighted average ASX retail sector distribution yield of 5.5%.
The portfolio of 55 Australian and 14 New Zealand neighbourhood, sub-regional and freestanding shopping centres is valued at A$1.4 billion. Of these, 13 properties are still under construction. The centres are currently 95% leased, including Woolworths rental guarantees, somewhat below the A-REIT sector average of 99%. Woolworths will contribute 61% of the gross rental income. The weighted average lease term of the proposed fund is 15.8 years, compared with an ASX retail sector average of approximately 7.3 years. Gearing of the proposed fund is 27%, which is in line with the ASX retail sector gearing of 29%. 
Woolworths will have no ownership of the new company, which would have a separate board and management team. 
Woolworths shareholders will have the opportunity to vote on the proposal at the its annual general meeting on November 22. Should it be given approval to proceed and should the listing application be successful, the trust would start trading on November 26.
Mark Wist is senior asset consultant at <a href="https://www.atchison.com.au/" title="Atchison Consultants" target="_blank">Atchison Consultants</a>.
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Woolworths to create new A-REIT

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The Australian Real Estate Investment Trust (A-REIT) sector outperformed the broader equities market over the year to September 30. A-REITs returned 28.9% compared with 14.5% for equities.
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/2012/09/wistoct3.gif"><img src="/images/stories/2012/09/wistoct3thumb.gif"></a>
And they are forecast to continue to provide both distribution and capital growth. This is expected to be as a result of lower debt service costs, the opportunity to redevelop portfolio assets and the potential for a reduction in the currently high distribution yield premium to the risk-free rate.
A-REITs have been taking advantage of low interest rates by refinancing. While there is a cost associated with refinancing, the benefit to earnings of a lower ongoing interest rate is lower debt service costs. Among those A-REITs to have refinanced with lower debt costs are Centro Retail Australia and Goodman Group.
Tight vacancy rates across the office and retail sectors will encourage the redevelopment of assets held in portfolios. On completion of property redevelopment, the rental yield on costs is high relative to outright asset acquisition. The asset value will increase as a result of the redevelopment. This redevelopment income into A-REITs will compensate for slowing office leasing activity, lower specialty and department store sales, which have put pressure on rent growth and slower residential development lot sales. Mirvac and Westfield Group are among the A-REITs with substantial asset redevelopment pipelines.
The 10-year government bond rate is the risk-free rate. The difference between the A-REIT yield and the bond rate represents the premium offered by A-REITs.
This premium compensates for the business risks associated with A-REITs. The current A-REIT sector distribution yield is 6.2%, which sits significantly above the benchmark 10-year bond rate of 3%, giving a current premium of 3.2%. The five-year average A-REIT yield premium is 1.8% above the 10-year government bond rate. The difference of 1.4% between the current premium and the five-year average represents potential for capital gain from yield tightening as the premium reverts to mean.
This combination of lower debt funding costs, the potential redevelopment activity of properties already held in portfolios and the relatively high yield premium will provide the scope for A-REIT distribution and capital growth over the coming year.
Mark Wist is senior asset consultant at <a href="https://www.atchison.com.au/" title="Atchison Consultants" target="_blank">Atchison Consultants</a>.
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A-REITS set for capital growth as sector outperforms equities

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No equity capital has been raised by A-REITs since March 2011. This is in stark contrast with 2009-10, when almost $17 billion of equity was raised to restore balance sheets. As new equity was issued at a significant discount to net tangible assets (NTA) and not offered as rights issues, this equity was dilutive for existing unit holders. 
For the past year, share buy backs have been a common capital management strategy among A-REITs. Conducting a share buy back when shares are priced at a discount is an effective way to increase NTA. 
In order to fund these buy backs, most A-REITs have undertaken asset sales. This has amounted to $1.1 billion of domestic asset sales and $12 billion of offshore asset sales since the beginning of 2011. Among those conducting the asset sales programs have been: 
<ul>
<li>Westfield Group, which has sold $1.2 billion of non-core assets in the United States. It proposes to buy back up to $1.9 billion of shares of issue, although has conducted only 0.3% of this target to date;</li>
<li>Dexus, which will use part of the proceeds of the sale of a $750 million portfolio of US industrial assets to fund its $200 million buy back;</li>
<li>Stockland has sold $972 million of office and industrial assets this financial year in pursuit of its residential, retail and retirement asset strategy. A portion of the proceeds are being directed to an on-going buy back programme of approximately $675 million;</li>
<li>GPT which is selling its Homemaker assets for a reported $195 to extend its buy back from 5% to 10% for approximately $550 million. </li>
</ul>
Other assets up for sale include GPT’s share in Sydney’s MLC Centre with a value of approximately $750 million; a 50% share in three of Centro Retail Australia’s prime assets worth approximately $665 million and Investa’s interest in its $200 million office asset at 231 Elizabeth Street, Sydney. 
Australian assets worth approximately $3.7 billion are reported to currently be on the market for sale by A-REITs.
Mark Wist is senior asset consultant at <a target="_blank" title="Atchison Consultants" href="https://www.atchison.com.au/">Atchison Consultants</a>.
 
 
 
 
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A-REITs have sold $12 billion worth of assets since the beginning of 2011

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The long-term prognosis for Australian residential real estate is sound. <place>Australia</place>’s population is forecast by the Australian Bureau of Statistics to grow from around 22.4 million in 2011 to 30.9 million in 2031, an increase of 34.6%. This underwrites residential property demand. The deficiency in numbers of dwellings increased from an estimated 22,700 in 2006 to an estimated 124,400 in 2011 according to BIS Shrapnel. This supports price stability. 
A-REITs such as Mirvac, Stockland and Australand have exposure to the residential property sector through residential property development. These A-REITs also have exposure to other asset classes such as office and retail. Recent sentiment towards those A-REITs with significant residential property exposure has been negative. Stockland recently revised down its 2012 financial year earnings estimate as a result of deterioration in the number of lot sales and settlements and adverse weather in NSW disrupting development. This revision was released only six weeks after the group reaffirmed earnings estimates in its first-half results announcement. The result was a 7.3% fall in the share price in the month of March. Compounding this have been tougher lending requirements for both home buyers and property developers. 
A-REIT balance sheets are sound and gearing levels are moderate. The larger diversified groups are able to pre-fund infrastructure works which are important in establishing buyer confidence and aesthetic appeal in a green-fields residential development. Sales volumes are currently more robust in lower value residential property. As a consequence, groups like Stockland are adjusting their planning to accommodate a higher proportion of lower price and smaller lot size residential product. 
Despite the current funding and sentiment challenges, those A-REITs with the capacity to deliver suitable residential product to meet the market will flourish over the medium to longer term.
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The place for residential property in A-REITs

Buyers considering a residence at boutique Gordon townhouse development <a href="https://www.apartments.com.au/new-townhouses/lume-gordon-43-47-dumaresq-street-gordon-nsw-2072">Lume</a>&nbsp;now have another reason to bring forward their decision.

For a limited time, purchasers of a residence at Lume will receive a BMW iX3 50 electric SUV, valued at more than $120,000, as part of their purchase. The offer is designed to add value for buyers while complementing the lifestyle envisioned for the architecturally designed Upper North Shore development.

Scott Timmins, Development Manager at <a href="https://www.apartments.com.au/developers/winim">WINIM</a>, said the partnership was created to provide buyers with a compelling reason to act.

"In today's market, buyers need a compelling reason to act now, and the BMW partnership was designed to create that catalyst. We wanted to add genuine value for our future purchasers. Choosing the all-electric BMW iX3 50 also reflects the values behind LUME, forward-thinking design, innovation and a more sustainable way of living. It's a premium incentive that complements the lifestyle our buyers aspire to and rewards those who commit early."

[smartcode_project:default project_id=7354 project_image_fid=374893]

Delivered by WINIM in partnership with Burtonwood Investment Partners, Lume comprises 14 architecturally designed two, three and four-bedroom townhomes created for families seeking the space of a freestanding house with the ease of modern, low-maintenance living.

The three-storey residences, designed by award-winning architecture practice <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a>, have been tailored for families and multi-generational living, featuring private internal lifts, flexible lower-level spaces, generous open-plan living and entertaining areas, media rooms, and landscaped outdoor spaces with custom outdoor kitchens.&nbsp;

Inside, engineered oak flooring, bespoke dining joinery with integrated wine fridges and backlit bars, sculptural porcelain bathrooms, Parisi freestanding baths and Astra Walker tapware create interiors that balance functionality with refined finishes.

Each townhome has been designed to combine generous internal spaces with sustainability initiatives such as EV charging infrastructure, while <a href="https://www.apartments.com.au/landscape-architect/arcadia-landscape-architecture">Arcadia</a>'s landscaped communal areas, centred around a restored creek line and native planting, encourage residents to connect with nature and spend more time outdoors.

[smartcode_project:default project_id=7354 project_image_fid=269527]

Rothelowman's Gary Tsui said the architecture was conceived to respond carefully to its Upper North Shore setting.

"Our vision was to create elegant, uplifting homes that draw on and positively contribute to the local character through meticulously considered design and an interaction with the surroundings."

The communal landscape has been designed as more than an open space between homes. Arcadia's Ben Newell and Kate Phillips said the adjoining reserve provided an opportunity to create a distinctive natural retreat for residents.

"Just as waterways carve their way through Ku-ring-gai's landscape, a raised boardwalk weaves through the reserve, connecting the homes to this tranquil oasis."

[smartcode_project:default project_id=7354 project_image_fid=374892]

Located just 300 metres from <a href="https://www.apartments.com.au/developments/gordon-nsw-2072">Gordon</a> Village and Gordon railway station, Lume offers convenient access to Sydney's CBD while placing residents close to some of the North Shore's leading schools, including Ravenswood, Pymble Ladies' College and Knox Grammar. Lane Cove National Park, Gordon Golf Club and a range of cafés and restaurants further reinforce the family-focused lifestyle on offer, with the BMW iX3 50 complementing everything from local trips around Gordon to weekend drives and city commutes.

Construction is underway with completion expected in mid-2027.

[smartcode_project_cta:default project_id=7354]

Joel Robinson

Boutique Gordon townhomes now come with a BMW iX3 50

Two apartments have sold for more than $10 million at EADE Byron Bay, setting some of the highest apartment prices ever achieved in the coastal town and underlining the growing appetite for luxury beachfront apartments in Australia's most popular coastal locations.

The $210 million project by Vitale Property Group has now secured more than $70 million in sales, led by residences that changed hands for $12.75 million and $11.75 million.

The record-breaking transactions reinforce the shift occurring in Byron Bay's premium property market, where affluent downsizers and lifestyle buyers are increasingly opting for high-end apartments over large beachfront homes.

<a href="https://www.apartments.com.au/new-apartments/eade-byron-bay-29-shirley-street-byron-bay-nsw-2481">EADE Byron Bay</a> occupies a rare 6,000 sqm absolute beachfront site on the corner of Shirley and Milton Streets overlooking Main Beach and The Wreck surf break, just 350 metres from Byron Bay's town centre.

The 25-residence development is the first beachfront apartment project approved in Byron Bay in more than a decade and is currently under construction, with completion expected in May 2027.

[smartcode_project:default project_id=145590 project_image_fid=359521]

The project has attracted a mix of local Byron Shire residents downsizing from larger homes, alongside interstate buyers from Sydney, Melbourne and Brisbane seeking a permanent coastal lifestyle without compromising on space.

Designed by <a href="https://www.apartments.com.au/architects/hayball">Hayball</a> and with interiors by <a href="https://www.apartments.com.au/interior-designers/alexander-co">Alexander &amp; Co</a>, EADE comprises&nbsp;10 garden apartments ranging from 284 sqm to 622 sqm, nine with private pools, five full-floor apartments and 10 rooftop residences with private plunge pools, expansive outdoor entertaining areas and uninterrupted ocean views.

[smartcode_project:default project_id=145590 project_image_fid=359527]

<a href="https://www.apartments.com.au/developers/vitale-property-group">Vitale Property Group</a> Managing Partner Chris Vitale said the project's combination of scale, location and limited future supply was driving buyer demand.

"There isn't another beachfront holding in Byron Bay of this size and position that could be developed again," Vitale said.

"Buyers are responding to the scarcity and the irreplaceability of a site of this calibre and to floorplans they can't find elsewhere in the market.

"We are seeing buyers place significant value on quality, space, design, resort-style amenities and the rarity of the location. The sales achieved to date demonstrate that discerning purchasers recognise the long-term significance of what is being created at EADE Byron Bay.

"Many are coming from larger homes in the Byron region, or from Sydney, Melbourne and Brisbane, and are after the space, security and convenience, without the upkeep of a house."

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[smartcode_project:default project_id=145590 project_image_fid=359523]

The Byron Bay project follows Vitale Property Group's delivery of the Mondrian Hotel and Private Residences at Burleigh Heads, with EADE continuing the developer's focus on luxury coastal developments.

Residents will have access to a resort-style swimming pool, gymnasium, sauna, cold plunge pool, concierge services and dedicated workspaces, while the project is targeting an 8-Star Green Star rating.

EADE Byron Bay is being exclusively marketed by Projx Australia in conjunction with WHITEFOX Projects.

WHITEFOX National Projects Director Phillip Rand said demand had been driven predominantly by owner-occupiers.

"We are seeing buyers at EADE place significant value on quality, space, design, resort-style amenities and the rarity of this location," Rand says.

"The sales achieved to date demonstrate that purchasers at this level recognise the long-term significance of what is being created at EADE Byron Bay."

Residences at EADE Byron Bay are currently priced between $4.75 million and $15.95 million.

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Vitale breaks Byron Bay records with EADE sales flurry 

When buying an apartment, most people compare the big-ticket items first. Floorplans. Kitchens. Balcony size. Natural light. The view.

But there's one everyday consideration that often doesn't come up until after moving in: how parcels are delivered.

As online shopping has become part of everyday life, parcel deliveries have shifted from an occasional event to a regular occurrence. Australians spent a record $82.6 billion shopping online in 2025, with almost one in every four retail dollars now spent digitally.

For apartment residents, that can present a challenge.

If nobody is home to accept a delivery, parcels may be redirected to a nearby Post Office, left in a building lobby or common area, or require building management to step in. In higher-density buildings, where dozens or even hundreds of residents may receive deliveries each day, parcel management has become an increasingly important part of everyday living.

That can create a range of frustrations. A missed delivery often means making time to collect a parcel elsewhere, while packages left unattended in foyers or mail areas can create clutter and increase the risk of theft. What seems like a minor inconvenience can quickly become a recurring issue for residents who shop online regularly.

It's one of those details that rarely features in a display suite but can have a noticeable impact once residents move in.

As a result, buyers are beginning to look beyond traditional apartment features and consider how a building supports day-to-day convenience, including whether there are secure options for receiving deliveries.

Australia Post's Parcel Lockers provide one solution.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/CkF2oKmlACg?si=C50sDaoUUn2nuLmq" title="YouTube video player" width="560"></iframe>

Rather than having a parcel delivered directly to an apartment, eligible deliveries can be sent to a nominated Parcel Locker. Once the parcel arrives, residents receive a notification through the AusPost app or SMS and can collect it using a QR code or one-time PIN at a time that suits them.

The Parcel Locker network now includes more than 1,500 locations nationwide, with installations at Post Offices, shopping centres, transport hubs and an increasing number of residential developments. By providing a secure collection point, Parcel Lockers help reduce missed deliveries and avoid parcels being left unattended in common areas.

For developers, parcel infrastructure is becoming another way to improve the resident experience. Rather than relying on concierge staff or leaving parcels in communal spaces, secure collection points help streamline deliveries while preserving the presentation and functionality of shared areas.

For buyers, it's a reminder that the best apartment features aren't always the most obvious.

A generous floorplan or quality finishes might help narrow the shortlist, but the conveniences that simplify everyday life, whether that's EV charging, secure bike storage or reliable parcel delivery, often become the features residents appreciate most once they're living there.

The apartment feature many buyers don't think about, until their first missed delivery

<a href="https://www.apartments.com.au/developers/hg-developments">HG Developments</a> is doubling down on Maud Street in Newstead, filing plans for a new apartment tower just a few doors down from its under-construction Aire Newstead development.

Recently submitted to Brisbane City Council, the proposal is for an 18-storey building designed by bureau^proberts, which has drawn heavily on Brisbane's subtropical design principles while referencing the suburb's industrial heritage.

A total of 64 apartments are planned for the amalgamated 1,518 sqm site at <a href="https://www.apartments.com.au/new-apartments/17-21-maud-street-newstead-qld-4006">17–21 Maud Street</a>, a short walk from the Brisbane River and Newstead Riverwalk.

<img alt="First look: HG Developments plans 18-storey subtropical apartment tower for Newstead" data-entity-type="file" data-entity-uuid="a400c7fd-bd15-48f8-a63b-10ede92efe00" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Maud%20st%20bldg.png?VersionId=.0vPmjpbC7CNP7kqGWa6L7rGIwsNExaw" />

"The building is defined by a series of vaulted motifs that reinterpret the arches, colonnades and layered facades evident throughout Newstead's historic built fabric," the Urban Design Report states.

"Combined with recessed glazing and generous balconies, these elements create a layered building envelope that provides shade, weather protection and opportunities for natural ventilation whilst establishing a distinctive architectural identity."

The proposal comprises 64 two, three and four-bedroom apartments across 18 residential levels, positioning it alongside a growing number of taller residential projects transforming Newstead's northern precinct. The tower incorporates extensive subtropical landscaping, with cascading planter boxes, deep planting at street level and a landscaped rooftop recreation area.

<img alt="First look: HG Developments plans 18-storey subtropical apartment tower for Newstead" data-entity-type="file" data-entity-uuid="1d8140f4-8b98-45cd-b1b8-1efe8c8e266b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Maud%20st%20podium.png?VersionId=VAZtbCoD44YCJ57N99fQCAKeSJx7ldZs" />

Bureau Proberts has prioritised passive environmental design throughout the project, with generous balconies, recessed glazing and operable façades helping reduce solar heat gain while maximising natural ventilation. River views become available from the upper levels, while the building has been orientated to capture prevailing breezes from both the Brisbane River and the west.

The architects say landscape is intended to be integral to the building rather than an applied element.

"Vertical greenery, cascading planter boxes and elevated gardens are woven throughout the architecture, softening the built form and strengthening the connection between residents and the subtropical environment."

"Through the integration of landscape, high-quality materials and passive design principles, the development delivers a refined residential address that celebrates Newstead's heritage character while contributing positively to Brisbane's evolving subtropical identity."

Newstead has remained one of Brisbane's most active apartment markets in recent years, with a number of developers continuing to back the inner-city suburb.

HG Developments is currently delivering the 40-apartment Aire Newstead at 25 Maud Street. Fortis recently launched the 65-apartment <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> on Kyabra Street, while builder-developer BPG and Don O'Rorke's Consolidated Properties are both expected to launch their respective Newstead projects before the end of the year.

HG Developments doubles down in Newstead with second Maud Street apartment development

Walk past a new apartment development promoting its sustainability credentials and it's easy to picture rooftop gardens, mature trees, landscaped courtyards and residents surrounded by nature.

But in many cases, that's not actually what those sustainability ratings guarantee.

Australia's leading environmental rating tools have played a significant role in improving the energy efficiency and environmental performance of buildings. Yet despite their focus on reducing emissions, many don't require developers to include trees, biodiversity or meaningful green space.

In other words, a building can achieve one of the country's highest sustainability ratings while containing little more than concrete, glass and hard landscaping.

That disconnect has led to the emergence of a new movement across Australia's property industry: nature-based cities.

The concept goes beyond designing buildings that consume less energy. Instead, it encourages developers to treat nature as essential infrastructure, integrating biodiversity, tree canopy, living landscapes and green spaces into projects from the earliest stages of planning.

Research has consistently linked access to nature with better physical and mental health, cooler neighbourhoods, improved biodiversity, stronger climate resilience and more connected communities. As Australia's cities continue to become denser, advocates say those outcomes should be considered just as important as energy efficiency.

Nature Based Cities (NBC) was established in 2022 to help accelerate that shift.

Founded by Hamton Executive Chairman Paul Hameister OAM, the not-for-profit was created after research highlighted a significant gap in Australia's sustainability framework. While existing environmental rating tools rewarded energy performance and emissions reductions, they placed little emphasis on the inclusion of living landscapes.

"We've always wanted to do more, and we know other developers who want to do more, but the ESD rating tools just aren't there," Hameister says.

"In Australia, you can have a five-green-star rated building that's concrete and glass with not a blade of grass.

"The focus is on reducing emissions, which is laudable, but there hasn't been enough attention paid to protecting and re-establishing nature. We need both for the health of the environment and for communities."

Since its launch, NBC has developed independent design guidelines and accreditation frameworks that encourage developers to prioritise ecology, biodiversity, tree canopy, walkability and living landscapes alongside traditional sustainability measures. The organisation first focused on medium and high-density residential developments before recently expanding into precinct-scale communities and masterplanned neighbourhoods.

Jan Talacko, founder of sustainability consultancy Ark Resources and a member of the Nature Based Cities Advisory Council, says the initiative addresses an area that has largely been overlooked by the property industry.

"Throughout my 25 years of working collaboratively with all stakeholders in the property sector, I've always favoured a pragmatic approach to sustainable design which encourages initiatives that not only meet environmental expectations but also improve amenity," Talacko says.

"Whilst we are making steady progress in relation to energy and carbon emissions from buildings, there has been much less emphasis on encouraging biodiversity and tackling the urban heat island effect.

"The Nature Based Cities initiative responds to a gap in the suite of tools currently used by the property development sector, which don't provide sufficient incentive, or recognition, for the integration of landscaping and greenery."

For apartment buyers, the shift is also changing the questions worth asking.

Rather than assuming a sustainable building will naturally include abundant green space, buyers are increasingly being encouraged to look beyond environmental ratings and ask what nature is actually being delivered. How much tree canopy will the development create? Has biodiversity been considered? Are landscaped spaces designed for people as well as appearance?

As Australia's cities continue to grow upwards and outwards, the next generation of sustainability may not simply be measured by lower emissions, but by how successfully developments bring nature back into everyday urban life.

Mark Wist

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