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GUEST OBSERVATION
Since the start of quantitative easing in the US and UK in the aftermath of the global financial crisis, yields on fixed interest investments have fallen significantly.
This has encouraged investors to seek investments with higher yields. One of the attractive asset classes has been real estate investment trusts (AREITs). AREITs provide both attractive yields and prospective capital growth.
What Attractions?
AREITs have a history of providing investors with strong and growing distribution income through growth in rental income. Investors have been embracing REITs in recent years for their attractive income yields.
Table 1 compares the income return of AREITs and the 10 year Australian government bond yield for 15 years to 31 December 2014. The average income yield of AREITs over 15 years to 31 December 2014 is 1.6% higher than that of the average10 year government bond yield.
Table 1- AREITs Income Yield vs Government Bond Yield – 15 Years
<table style="width: 455px;" border="0" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="bottom" nowrap width="285">
 
</td>
<td valign="bottom" nowrap width="170">
Average Yield (%)
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="285">
AREITs
</td>
<td valign="bottom" nowrap width="170">
6.8
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="285">
10 Year Government Bond
</td>
<td valign="bottom" nowrap width="170">
5.2
</td>
</tr>
</tbody></table>
In the current environment, AREITs provides attractive absolute earnings yields of 6.0% and a margin of 3.0% over the 10 year government bond yield. Chart 1 compares the AREITs earnings yield and 10 year government bond yield. AREITs have been providing significantly higher earnings yields than that of the 10 year government bond since March 2011.
Chart 1 – Australian Listed Property Earnings Yield vs Government Bond Yield
<img src="/images/2015/03/04/nui%20mar%204%20one.png" alt="">
Source: RBA, IRESS
In addition to yield, investors have benefited from capital gains. Large numbers of investors who have found the yields from AREITs attractive have invested in listed property trusts, pushing up AREITs prices. Over the one year period to 31 January 2015, the AREITs price has risen by 29.1%.
When Interest Rates Rise?
Investors will be concerned that AREITs will become less attractive when interest rates rise. While we acknowledge that this is a valid concern, there are some offsetting factors.
Firstly, although higher interest rates will cause higher costs of borrowing, the rise of interest rates is also a signal of a strengthening economy. Higher growth in the economy will increase the demand for commercial real estate, improve occupancy rates and rental income. Hence, any increase in cost of borrowing may be offset by the landlord’s ability to raise rental rates, which will flow through to higher distributions to investors.
Secondly, the AREITs sector today does not show the same risky characteristics as it did during the GFC. Table 2 below shows that AREITs, on average, have reduced their gearing levels, as measured by debt/asset ratios, since the GFC. The highly geared trusts, which are more likely to suffer from negative cash flow impacts when interest rates rise, are less exposed than in 2009. It is believed that the burden of rising interest rates on AREITs will be much less.
Table 2- AREITs - Average Gearing Levels
<table style="width: 460px;" border="0" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="bottom" nowrap width="171">
 
</td>
<td valign="bottom" nowrap width="132">
GFC 
(Dec-09)
</td>
<td valign="bottom" nowrap width="113">
Current 
(Dec-14)
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="171">
Average Gearing (%)
</td>
<td valign="bottom" nowrap width="132">
34.0%
</td>
<td valign="bottom" nowrap width="113">
30.0 %
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="171">
Gearing Range (%)
</td>
<td valign="bottom" nowrap width="132">
24.0% - 61.0%
</td>
<td valign="bottom" nowrap width="113">
0%-40.9 %
</td>
</tr>
</tbody></table>
Source: UBS, ASX
Moreover, the spread between AREITs earnings yields and 10-year government bond yields remains wide. This point is demonstrated in Chart 2 by comparing the margin of the current earnings yield of AREITs with 10 year government bond yield and the long-term average. The current margin of 3.0% is above the long term average of 2.2%, which provides a buffer when interest rates rise.
Chart 2 –Property Earnings Yield vs Bond Yield - Margin
<img src="/images/2015/03/04/nui%20mar%204%20twol.png" alt="">
Source: UBS, IRESS
Interest rates have remained low for a long time. AREITs provide stable income and prospective capital growth. When interest rates rise, investors still have some support from rising rents, the wide yield spread and the lower gearing levels. Prices may fall but only marginally.
Ming Niu is an analyst at <a href="https://atchison.com.au/" target="_blank">Atchison Consultants</a>.
This article has been updated since initial publication.
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Will AREITs remain attractive once interest rates start to rise? Ming Niu

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GUEST OBSERVATION
As property development involves significantly more components of risk factors, higher returns are required above rental income generating property returns.
Property investment strategies include: core; core-plus; value-add; opportunistic; and development. Each strategy exhibits different characteristics which have been evaluated and quantified.
The differences in required returns and prospective volatility of returns are demonstrated in Figure 1.
Figure 1: Effect of Increasing Risk
<img src="/images/2014/11/06/nui%20nov%206%20one.jpg" alt="">
Source: Atchison Consultants
Investors in property across the risk spectrum encounter multiple risk factor exposures. Key risk factors include:
<ul>
<li>Property</li>
</ul>
There are risks inherent in direct property investment. They reflect the potential variability of property return due to macroeconomic events, such as rental market changes, economic activity involving demand and supply and change in transaction costs.
<ul>
<li>Planning and zoning</li>
</ul>
In the preliminary stages applying for and obtaining the planning and zoning approvals can be a protracted process. Time taken in the process results in consequential increase in holding costs for outlays during the process. 
<ul>
<li>Construction</li>
</ul>
Construction risks are viewed from a cumulative perspective as each stage cannot commence until the preceding stage has been completed. Activities are grouped by the three key stages of construction comprising in-ground, structure and fit-out and completion with resulting holding costs.
<ul>
<li>Settlement</li>
</ul>
Settlement risk considers the potential for a downturn in financial markets, in particular property markets and the prospective failure of pre-committed contracts for sale or lease to settle.
<ul>
<li>Leasing</li>
</ul>
This represents the prospect that on completion of a property development or expiry of a lease, it cannot be leased or released for an extended time. 
<ul>
<li>Capital works</li>
</ul>
Capital works risk represents the potential extensive time during which rental income is not being generated when capital works are being undertaken.
<ul>
<li>Capital management including gearing</li>
</ul>
Capital management includes structuring equity and debt financing terms which are suitable for specific property acquisition and development.
<ul>
<li>Asset management risks</li>
</ul>
Inefficient asset management would result in delay in successful leasing, which consequentially results in lower rental income.
Risk factors result in the opportunity cost of time when these factors are incurred. Premiums for these risk factors would be measured on the basis of the opportunity cost being core property expected return over the time period when return income is not being received.
Table 1 illustrates the property investment strategies and their prospective required rate of return range.
Table1: Australian property strategies and expected returns
<table style="width: 400px;" border="0" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="bottom" nowrap width="172"> </td>
<td valign="bottom" nowrap width="228">Property Return Range per annum (%) </td>
</tr>
<tr>
<td valign="bottom" nowrap width="172">Core</td>
<td valign="bottom" nowrap width="228">8 – 10%</td>
</tr>
<tr>
<td valign="bottom" nowrap width="172">Core Plus</td>
<td valign="bottom" nowrap width="228">9 – 12%</td>
</tr>
<tr>
<td valign="bottom" nowrap width="172">Value Add</td>
<td valign="bottom" nowrap width="228">12 – 15%</td>
</tr>
<tr>
<td valign="bottom" nowrap width="172">Opportunistic</td>
<td valign="bottom" nowrap width="228">14 – 25%</td>
</tr>
<tr>
<td valign="bottom" nowrap width="172">Development</td>
<td valign="bottom" nowrap width="228">25 - 45%</td>
</tr>
</tbody></table>
Source: Atchison Consultants
Ming Niu is an analyst at <a href="https://atchison.com.au/" target="_blank">Atchison Consultants</a>.
This article has been updated since initial publication.
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The property risk factor spectrum: How it can affect returns

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GUEST OBSERVATION
Value-add property includes a range of investment strategies, including buying assets at a discount to replacement costs; undertaking a releasing strategy; renovation and refurbishment of assets; redevelopment; strata subdivision of a property; land subdivision and rezoning of an industrial site.
Returns are delivered through the capture of market valuation enhancement as a consequence of insightful property management and capital expenditure, by improving property utilisation and improving occupancy. Upon completion the upgraded property asset may generate a higher and more reliable income.
Return and Factor Characteristics
Commercial factors associated with value-add property imply a periodic absence of income reflecting the time engaged in negotiating and concluding leasing or sale outcomes or implementing other value add strategies. The prospective return characteristics of value-add property and core property across the property spectrum are shown in Figure 1.
Figure 1: Effect of Increasing Commercial Factors
<img src="/images/2014/04/15/ming%20apirl%2015%20one.png" alt=""> Source: Atchison Consultants
Investment strategies illustrated in Figure 1, being core and value-add, exhibit different property factors and reflect increasing risk for which investors seek a higher return. Value-add property investment sits at the higher end of the spectrum, indicating an expected internal rate of return range of 12-20% per annum. Figure 1 also illustrates that as commercial risks are increased, the downside potential also increases.
Current Environment
Core property has the least risk for property investment. Given the prevailing prudent investing sentiment after the global financial crisis, these assets appealed to risk-averse investors. Investment opportunities providing enhanced returns above core property returns, may be generated by value-add property assets.
Investment in value-add property can be implemented through value-add property funds, or single asset syndicates. Participation tends to be limited to wholesale or sophisticated investors.
The conversion of secondary quality office space into residential apartments is a continuing trend. Lack of sites for residential use across capital city CBD markets, combined with softer investor demand for older office stock, has led to innovative managers offering funds which will participate in such projects.
A recent example of a value-add syndicate involved commercial office property in Sydney CBD which was 80% leased to two international corporate tenants. The building was purchased well below replacement cost reflecting a relatively poor lease structure. Value enhancement of the property is planned through upgrading the ground floor lobby entrance and external presentation of the building. This will result in the renewal of the lease with an existing tenant. In addition, the manager has identified a prospective tenant which will take the occupancy rate from 80% to 89%.
Ming Niu is an analyst at <a href="https://atchison.com.au/" target="_blank">Atchison Consultants</a>.
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The merits of a value-add property strategy

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In November 2012, the Australian government introduced a Significant Investor Visa (“SIV”) for migrants as prospective permanent residents who invest $5 million into complying investments in Australia for a minimum period of four years. Complying investments include Australian government bonds, ASIC regulated managed funds and direct investment into Australian proprietary companies. This initiative has brought opportunities and challenges in Australian property.
Opportunity
SIV will draw capital flows into Australia. Under the new visa scheme, the Australian government expects to attract 700 new residents annually and $3.5 billion in complying investments. As the majority of SIV applicants to date are Chinese, known for their keen interest in Australian property investments, it is reasonable to expect that a sizable portion of SIV funds will flow into the property market, with estimates of $2 billion per annum of new capital.  On a cumulative basis this is material for a total commercial property market valued at $700 billion. Investors may participate in property investment syndicates, which purchase existing properties or participate in property development projects.
With the aid of advisors and Australian fund managers arranging financial affairs for migration purposes, SIV applicants will gain an initial exposure in Australian investments. As familiarity and trust between SIV applicants and Australian fund managers grow, participation in wider investment products is possible with additional savings from SIV applicants. Although the initial $5 million from successful SIV applicants is committed to complying investments, excess funds are not restricted. Australian fund managers will be in a strategic position to build long term relationships with SIV clients, providing holistic solutions for their financial needs.
Table 1 shows current SIV statistics from the creation of this visa on 24 November 2012 to 31 October 2013 which provides support for the target of 700 new residents annually.
Table 1: Significant Investor Visa key indicators - November 24, 2012 - October  31, 2013
<table style="width: 470px;" border="0" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="bottom" nowrap width="293">
Indicators
</td>
<td valign="bottom" nowrap width="64"> </td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
Expression of Interests (EOIs) submitted:
</td>
<td valign="bottom" nowrap width="64">
825
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
Invitations issued:
</td>
<td valign="bottom" nowrap width="64">
631
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
Applications lodged:
</td>
<td valign="bottom" nowrap width="64">
498
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
Primary visas granted:
</td>
<td valign="bottom" nowrap width="64">
65
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
Applicants from China:
</td>
<td valign="bottom" nowrap width="64">
91%
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
 
</td>
<td valign="bottom" nowrap width="64"> </td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
Applications on hand (31 Oct 2013)
</td>
<td valign="bottom" nowrap width="64">
422
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
- Less than 3 months:
</td>
<td valign="bottom" nowrap width="64">
41.2%
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
- 3-6 months:
</td>
<td valign="bottom" nowrap width="64">
38.6%
</td>
</tr>
</tbody></table>
Source: Department of Immigration and Border Protection
Challenges
Converting SIV investors into a viable funding source for property investment or development lies with the development of syndicates which will include a number of SIV investors. Property syndicate managers will need to accommodate a number of investors from different cultural ethnicity and business practices.
Another challenge of SIV funding lies with the liquidity of funding. The SIV legislation requires the applicant to have $5 million invested into complying funds for four years. This exceeds most development project lifespans. SIV Investors may switch within four years, as long as the switch is done within 30 days into another complying fund.
SIV poses as an opportunity for raising capital into property syndicates. Property syndicate managers will need to acknowledge and manage the unique nature of SIV investors in order to tailor solutions around this initiative.
 
Ming Niu is an analyst at <a href="https://atchison.com.au/" target="_blank">Atchison Consultants</a>.
 
                      
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Significant Investor Visa – a new source of capital for property investment syndicates? 

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A comparison of the performance of prime and secondary office property demonstrates that prime at 9.0% per annum has outperformed secondary office property at 8.6% per annum over the 28 years from 1985 to 2012 by 0.4% per annum. Through cyclical market fluctuations, performance outcomes vary. Secondary property returns are more volatile, however secondary office property can outperform prime property in the stable return periods and the subsequent initial upswing phase of market cycle.

Prime properties are located in major commercial centres with great public transport accessibility, built with quality design externally and internally, which are energy efficient, and have tenants which are financially strong. Absence of any of these criterion means that an asset will generally be rated as secondary property.

Total Return

In broad terms, prime and secondary office returns have followed the same cycle over the past 28 years, indicating that that they are significantly influenced by the same fundamental demand and supply forces. Chart one compares annualised total returns for prime and secondary office property in Australia over the period from 1985 to 2012.

Chart one – Prime and secondary office property annual total return 1985 - 2012

<img alt="niu_nov_8_chart_one" height="279" src="/images/stories/2013/11/08/niu_nov_8_chart_one.png" width="470">

Source: IPD

Table one compares the performance of prime and secondary property over different periods. Four periods have been selected which highlight the different market conditions.

Table one – Prime v secondary office property returns

<img alt="niu-nov-13-chart-one" height="105" src="/images/stories/2013/11/13/niu-nov-13-chart-one.gif" width="470">

Source: IPD

There are three key observations:

<ul>
<li>
	During the stable return period from mid 1990s to mid 2000s, secondary office properties outperformed. The higher risk of secondary office property through higher vacancy was rewarded through the higher returns achieved over the period reflecting the higher income yield of secondary office property.
	</li>
</ul>
<ul>
<li>
	Prime office properties have led the initial recovery in returns, however secondary offices gained more momentum in the later phases of upswings and surpassed prime property from 2005 to 2007. Investors sought higher returns and were willing to accept more risk in the positive market.
	</li>
</ul>
<ul>
<li>
	Returns for prime property have surpassed secondary property in the recovery stage from periods of weak return in the property market. Two examples are recoveries after the “recession we had to have” in early 1990s and global financial crisis (GFC) in 2008. Property market falls led investors to be more risk averse with a preference for prime properties with more secure rental income. As a result, prices of prime office property have recovered from weakness in advance of secondary office property.
	</li>
</ul>
Income return

Income return provides a further performance measure that differentiates prime fraom secondary office property. Chart two tracks the changes in prime and secondary office rents from 1985 to 2012. Secondary office properties have generated a higher income return that is also more variable than prime office properties.

 

 

 

 

 

 

 

 

 

 

 

 

 

Chart two – Prime and secondary office property - income returns 1985 - 2012

<img alt="niu-nov-8-chart-two" height="276" src="/images/stories/2013/11/08/niu-nov-8-chart-two.jpg" width="470">

Source: IPD

The difference in variability between prime and secondary income returns reflects the fact that prime offices fulfils the majority of market demand as an economy rebounds. However, in a sustained economic recovery, with limited availability of prime properties, tenants that could not secure or afford prime office space compromise by securing secondary property. That spill over of demand leads to improved rents in the secondary office property.

\Conversely, in an economic downturn when there is a lot of vacant space, tenants will secure prime office buildings and prime office rents will fall less than secondary rents. Secondary property will suffer more from increased vacancy. Secondary offices are generally let to less financially resilient tenants for relatively shorter terms, therefore downsizing and subsequent non-renewal of leases by tenants in a weak economy is more likely. Secondary property vacancy rates and therefore rental income are more variable.

Investment in commercial property can be implemented in a variety of ways. Prime office properties are larger in size and value and can be invested in through AREITs or wholesale unlisted property funds. Secondary properties can be invested in through retail unlisted property funds or through property syndicates.

Prime office has shown outperformance in the recent market as investors are still relatively risk averse after the GFC. Signs of recovery in corporate earnings in Australia indicate that the market is heading for a stable period. Secondary office properties will be rewarded by stable rental income at higher income yields so that higher total returns are expected in the immediate future.

 

 

<hr>
Ming Niu is an analyst at <a href="https://atchison.com.au/" target="_blank">Atchison Consultants</a>.

 

<h2>Recently listed properties:</h2>

[smartcode_project:default project_id=4939]

[smartcode_project:default project_id=27575]

[smartcode_project:default project_id=24323]
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Prime v secondary office property: Which one is more likely to outperform?

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Links between interest rates and housing prices have been complex. Reductions in interest rates generally stimulate housing markets, as mortgage payments are lowered and making the housing market more affordable for home buyers.
This indicates an inverse relationship between the direction of mortgage interest rates and housing prices with house prices rising when interest rates fall.
The inverse relationship was largely observable until the financial crisis in 2007.
In the financial meltdown in 2007 and 2008 interest rates fell sharply, as did housing prices. The inverse relationship was broken, at least temporarily.
The peak of the financial crisis period in 2007-2008 is seen as an anomaly due to the credit freeze, which started with the collapse of subprime structured loan market.
Initially it was a shock to financial markets that turned into systemic stress in the economy and ultimately peaked with the collapse of Lehman Brothers and other financial companies.
Interbank lending froze as banks struggled to maintain liquidity and borrowers were left without access to credit.
This included home loans, with housing demand dropping due to a lack of finance.
Revisiting historical data reveals further anomalies in the inverse relationship between house prices and mortgage rates.
During the housing bubble of 1987-89 house prices rose around 40% while mortgage rates also significantly increased.
The period from 2007 to 2012 highlights a timeframe where a positive relationship was in place, where prices and interest rates rose and fell largely in unison, though with varying magnitudes.
Chart 1 – Relationship between Mortgage Rate and Residential House Price  
 <img alt="niu_aug_14_chart" src="/images/stories/2013/08/niu_aug_14_chart.png" width="470" height="307">
Source: REIA, RBA
Positive correlation over the period from 2007 to 2012 raises questions about why the negative relationship between rising mortgage interest rates and rising housing prices does not always hold.
Rising mortgage interest rates do not occur in isolation, as it reflects an expanding economy with growing consumer confidence and inflation. 
Higher borrowing costs dampen housing price increases. On the other hand, other economic factors emerge such as limited new supply and population growth that would have supported housing prices.
Aside from mortgage interest rates, other economic factors cause increases in housing prices.
In a rebounding economy, growth in employment, real wages, and inflation rate are expected. This will improve affordability for the workforce and switching from renting to buying, increasing demand for houses, and consequently creating upward pressure on housing prices.
In Australia the demand for employment encourages migration which also increases demand for houses and underpins prices.
On the contrary, when the economy slows, housing prices may be weak.
As unemployment increases, the ability of households to meet housing repayments diminishes, even with a reduction in interest rates. Affordability will be diminished until growth in employment emerges.
A consistent inverse relationship between the movement in mortgage interest rates and house prices is not evident.
Anomalies occur, reflecting wider economic influence and variable time frames between interest rate changes and demand and supply.
With weakening economic growth in Australia, slowing employment growth in 2013-2014 and a cautious sentiment, significant increases in house prices are unlikely despite lower interest rates.
Ming Niu is an analyst at <a href="https://atchison.com.au/profile.htm" target="_blank">Atchison Consultants</a>.
 
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Identifying the links between mortgage interest rates and housing prices: Ming Niu

Around 400 additional homes could be built at Southwark Grounds on Port Road, lifting total site capacity from 1300 to around 1700 dwellings.

A recently approved code amendment would allow apartment towers of up to 14 storeys in some areas of Renewal SA’s redevelopment of the former West End Brewery.

Renewal SA Acting Chief Executive Shane Wingard said he welcomed the code amendment, with the increase in heights and homes making a positive impact on the supply of high-quality, well-connected housing close to the city.

“By going higher across some parts of Southwark Grounds, we are adding a substantial number of very well-located homes with little impact on project delivery time or planned open space,” Mr Wingard said.

Since the project officially launched in 2025, Mr Wingard said more than 12,000 enquiries had been received about living at Southwark Grounds.

“The very strong early interest we’ve seen since homes were first released in the precinct reinforces our plans to create more housing opportunities,” he said.

The Southwark Grounds code amendment was launched in December last year, with community engagement undertaken over five weeks from January.

It proposed increasing maximum building heights from eight to 14 storeys on the eastern section of Southwark Grounds, and to 12 storeys across the remainder of the site, with minimum building heights ranging from two to four storeys.

The code amendment was implemented through an Early Commencement policy in late January, allowing developers to quickly explore the viability of increased height and housing yield while other planning processes continue.

One of the first developers delivering apartment sites have already finalised redesigns to increase the number of apartments following the code amendment.

Samaras’ development adjacent to the future Colonel Light Park is now planning to deliver 125 apartments across 11 storeys, significantly greater than original plans of around 50 apartments across four storeys.

The developer is also exploring the potential for additional affordable housing outcomes.

Most of the apartments at Southwark Grounds will be delivered within a master-planned precinct on a large parcel of land on the eastern portion of the site, covering around two-thirds of its 8.4 hectares.

Wingard said detailed precinct planning over the coming months may identify further opportunities to increase yield further that could see total apartment numbers at Southwark Grounds, exceed this number.

Affordable homes at Southwark Grounds will also see a net increase, with Renewal SA maintaining its commitment to a minimum of 20 per cent affordable housing across the development.

&nbsp;

&nbsp;

Civil works have begun across the site, with construction under way on the first new roads surrounding a townhouse precinct in the south‑west corner of Southwark Grounds. This includes Renewal SA’s 17 Founder’s Row homes, which are on track for completion by Christmas.

“We expect to have people living at Southwark Grounds by the end of the year, so delivering roads and public spaces for those residents is among our highest priorities.”

Construction of 40 townhouses off Anderson Street, known as West Village and being delivered by Contour, is forecast to begin in mid‑2026. Kolabb’s Anderson Lane development will follow shortly after, delivering a further 26 townhouses.

Southwark Grounds is a state government‑led urban renewal project now set to deliver around 1,700 homes over the next decade.

Homes will be supported by a supermarket, a range of retail and hospitality offerings anchored by a revitalised Walkerville Brew Tower, a childcare centre, car parking and well‑connected public spaces.

Joel Robinson

400 new homes planned for Adelaide's former West End Brewery site

Brisbane developer&nbsp;<a href="https://www.apartments.com.au/developers/cavcorp">Cavcorp</a> has lodged plans for a new mixed-use residential development at <a href="https://www.apartments.com.au/new-apartments/55-wyandra-street-teneriffe-qld-4005">55 Wyandra Street</a>, Teneriffe, anchored by an 85-metre public laneway designed to reconnect the suburb’s riverfront with the Gasworks precinct.

The buildings, known as Teneriffe House and Teneriffe Lane, would replace the existing Queensland Cotton head office site with a 15-storey residential tower transitioning to eight storeys toward Helen Street. The project has been designed by Plazibat Architects and lodged as a code assessable development application for 93 apartments across a 3,401 sqm mixed-use site within the Newstead and Teneriffe Waterfront neighbourhood plan.

Central to the scheme is the transformation of an existing service easement into a publicly accessible cross-block connection linking Wyandra and Helen Streets. Cavcorp says the new laneway will act as both a pedestrian shortcut and a landscaped civic space between the Teneriffe Riverwalk, ferry terminal, and Gasworks precinct.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="26e7f058-b065-4de8-b13d-a2b8cb64dfcc" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/bldg.png?VersionId=sELS0ZKYi361oYipUa1BIKfe_.DLZoFV" />

“The revised proposal delivers a legacy public-realm cross-block link, permanently secured for community use, transforming an existing private easement into a safe, high-quality pedestrian connection between the Teneriffe heritage riverwalk and the Gasworks–Long Island precinct,” the planning report states.

The laneway will sit beneath a large subtropical loggia integrated into the podium levels of the development. The design incorporates deep landscaping, water gardens, lobby spaces, business lounges, and ground-floor apartments to create what Cavcorp describes as a climate-responsive “urban verandah.”

The tower itself has been designed as a slender form with recessed floorplates and curved translucent corners inspired by contemporary Japanese architecture. The building height aligns with the Commercial Road precinct controls, which permit towers up to 15 storeys within proximity to Longland Street.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="a8a17d40-43b6-4718-b3fd-67676fcbb485" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/pers%202_1.png?VersionId=i3VwDtp5AmL_8InW7w4qRbDFEpb744Jt" />

The project will comprise a mix of larger-format apartments aimed at owner-occupiers, downsizers, and families. The proposed apartment mix includes 11 loggia apartments across the lower levels, 50 four-bedroom Sky-Terrace apartments from levels three to seven, and 32 Sky-Pool Homes occupying the upper tower levels. The Sky-Pool Homes will feature private thermal plunge pools integrated into oversized balconies.

According to the application, the apartments are intended to reinterpret the scale and character of Teneriffe’s woolstore conversions and Queensland homes within a vertical residential format.

“The sky-pool homes build on Cavcorp’s previous projects and introduce a distinct apartment typology to Teneriffe, informed by both local and international precedent and responding to an identified market demand for enhanced safety, space and amenity,” the planning submission notes.

A major focus of the proposal is its five-level wellness and lifestyle offering, extending from the basement through to the rooftop.

Amenities proposed include a rooftop Swim &amp; Racquet Club with a 25-metre Olympic lap pool and tennis court, coworking spaces and libraries, golf simulators, wine storage, concierge facilities, business lounges, pet wash areas, and rooftop longevity-focused wellness spaces with spas, outdoor fitness zones, and landscaped terraces.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="944b352c-49b9-4247-a4c6-5967b4b69fda" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/amenity.png?VersionId=Ed_qKjAtMwFT.5gfl3jiA9QwdWxSMsaX" />

All parking will be concealed within basement levels accessed from Wyandra and Helen Streets. Cavcorp says the deep-basement engineering approach allows the entire ground plane to prioritise landscaping, pedestrian movement, and active frontage rather than vehicle infrastructure.

The development continues Cavcorp’s concentration in Newstead and Teneriffe, where the Brisbane developer has delivered a number of apartment projects including Lucent, Le Bain, and Luminare, as well as the Long Island Wellness Precinct nearby. Several of those projects have received national design and architecture awards, including recognition under Brisbane’s “Buildings that Breathe” program.

Cavcorp unveils wellness-focused Teneriffe House and Teneriffe Lane apartment buildings

Focus Group Investments has lodged plans for a new apartment development at <a href="https://www.apartments.com.au/new-apartments/64-70-hanover-street-fitzroy-vic-3065">64–70 Hanover Street</a> in Fitzroy, seeking to utilise the Victorian Government’s recently introduced Great Design Fast Track pathway to accelerate approvals for the project.

The proposal is among the latest developments to emerge through the state-led initiative, which was established to fast-track well-designed residential projects in activity centres and transport-connected inner-city locations. The pathway allows qualifying developments that meet elevated design and housing benchmarks to bypass traditional council planning timeframes and instead be assessed directly by the Department of Transport and Planning.

Designed by SJB, the development will comprise a mix of apartments above activated lower levels, with a strong focus on architectural articulation, landscaping, and communal amenity. The design response seeks to balance the industrial character of Richmond’s former warehouse precincts with a more contemporary residential form.

<img alt="First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Richmond apartments" data-entity-type="file" data-entity-uuid="abea51cc-d85b-479e-9aef-a589f3b37ca7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ground.png?VersionId=e1Kf8EyPWwyiVumtqQ4rM5S4GpOR3CCz" />

Proposed are 63 new dwellings, a wide ranging mix of studio, one-, two-, and three-bedroom apartments, and townhouses and duplexes. They will be spread across a part-three, part-eight storey building.

The Planning and Urban Context Report by Tract says the development is of an "exemplary architectural standard" and has been carefully crafted by SJB Architects.

"Dwellings&nbsp;will benefit from excellent access to natural light, cross-ventilation opportunities and extensive communal space," the report noted.

The architectural material highlights the project’s integration of landscaped elements and communal spaces throughout the building. The proposal also incorporates sustainability initiatives aligned with the Victorian Government’s push for higher-performing apartment developments under the fast-track program.

The Great Design Fast Track was unveiled by the Victorian Government in 2024 as part of a broader housing supply strategy aimed at accelerating the delivery of new homes. Projects assessed through the pathway must demonstrate high-quality architecture, sustainability outcomes, and housing diversity while being located close to public transport and existing infrastructure.

<img alt="First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Richmond apartments" data-entity-type="file" data-entity-uuid="afdbe834-8dc4-4a77-a943-ba07bc927348" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/site_11.png?VersionId=0J657j.TaChAZfp93wqJYBTqSsnREJx2" />

Focus Group, founder and led by Paul De Lutiis, is increasingly active across Melbourne’s inner suburbs, targeting well-connected urban renewal locations suited to medium and higher-density residential development. The Fitzroy proposal continues that strategy, leveraging the area’s strong transport links, established retail amenity, and proximity to the CBD.

Fitzroy has been one of the most popular spots for developers and buyers in recent years. The likes of PACE Development Group, SMA Projects, Crema Group and Chapter Group, currently selling projects in the suburb.

First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Fitzroy apartments

The Gold Coast Planning Committee has supported the preliminary approval for the Benowa Gardens Urban Village project following an extensive community consultation and assessment process.

The proposal will now proceed to a full council vote on June 2.

The application sought approval for a masterplanned urban village on the existing Benowa Gardens Shopping Centre site, combining new housing, retail, dining, health and lifestyle amenities within a walkable, integrated precinct.&nbsp;

The proposed redevelopment includes around 413 apartments integrated above a revitalised mixed-use centre featuring a full-line supermarket of 4,000 sqm, 6,000 sqm of specialty retail and dining space across around 30 retailers, a 7,000 sqm health and wellness precinct, and roughly 9,630 sqm of office and medical suites.&nbsp;

<img alt="$1b Benowa Gardens Urban Village moves to Full Council following Planning Committee support" data-entity-type="file" data-entity-uuid="fb36ae47-80bc-45f0-9914-31b0c7b6007d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/PR26576%20Ashmore%20Road%20C4%201121%20FI.jpg?VersionId=6mRKk2uU4r67TmTt39DKGUlvFRbTVqWa" />

The broader masterplan also includes very significant traffic and transport improvements, wide pedestrian walkways, upgraded pedestrian and cycle connections, and enhanced public areas designed to create a more connected and walkable community environment.&nbsp;

Centre owner Patrick Lu said the milestone reflected months of detailed planning, technical assessment and ongoing communication with local residents, businesses, schools and stakeholders.

“We appreciate the time, consideration and care Council officers and the Planning Committee have given this proposal throughout the assessment process,” Lu said.

“We also sincerely thank the local community for engaging with us, sharing feedback and participating in the consultation process over many months.

<img alt="$1b Benowa Gardens Urban Village moves to Full Council following Planning Committee support" data-entity-type="file" data-entity-uuid="32fd1fc3-d0e6-485f-ac57-9916c9bcb818" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/PR26576%20Ashmore%20Road%20C5%201121%20FI_2.jpg?VersionId=fz8qQKDBLQ7MyFRc856Zccfbh9nFwLOe" />

“We understand projects of this scale bring questions and concerns, which is why we have worked hard to listen carefully, provide information transparently and continue refining elements of the proposal where possible.

“Our vision has always been to create a well-designed, community-focused urban village that responds to the changing needs of the Gold Coast, while delivering improved amenity, housing diversity, healthcare access and local lifestyle benefits.

“This proposal is about creating a genuine live-work-play environment where residents can access everyday services, schools, healthcare, dining, shopping and green space within walking distance, while also supporting local jobs and economic activity.”

<img alt="$1b Benowa Gardens Urban Village moves to Full Council following Planning Committee support" data-entity-type="file" data-entity-uuid="50dfbd04-590e-4fc6-983b-766880947867" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Dining%20Day%20Time%20-%20High%20Resolution.jpg?VersionId=BP7ZoKJ0DdL_8iRkkC8VVx99moICV6kg" />

Lu said the proposal had evolved significantly through consultation and technical review, particularly around traffic, pedestrian and student safety and neighbourhood connectivity.&nbsp;

Melissa Griffin, Director at Urbis, said the recommendation recognised the strategic importance of delivering more housing and services within established urban areas already supported by infrastructure.

“This proposal represents the type of thoughtful, integrated growth that planning frameworks across South-East Queensland are encouraging,” Ms Griffin said.

“The project seeks to place housing, retail, healthcare and employment opportunities together in a highly accessible location close to schools, transport and existing services.

“Importantly, the process has involved significant technical assessment and community engagement to ensure local issues and feedback were properly considered throughout the planning pathway.”

$1 billion Benowa Gardens Urban Village heads to council vote following Planning Committee support

Surfers Paradise is officially set for its first new residential development with a 45-storey skybridge connecting the two towers.

John Camilleri’s Celestino Developments has been given the green light by the Gold Coast City Council to develop its major beachfront precinct across its huge 4,000 sqm oceanfront site at <a href="https://www.apartments.com.au/new-apartments/63-79-garfield-terrace-surfers-paradise-qld-4217">63–79 Garfield Terrace</a>, just five months after its <a href="https://www.apartments.com.au/news/qld/first-look-exclusive-billionaire-winx-breeder-s-bold-two-tower-surfers-paradise-play-with-45th-storey-skybridge">submission in late 2025</a>.

The approved scheme will deliver two towers rising 55 and 48 storeys, connected by a skybridge positioned on level 45 that will house a range of resident-only wellness and entertainment spaces.

In its notice of approval, the Gold Coast City Council said the&nbsp;proposed overall built form has been designed to complement the scale, intensity and protect the adjacent amenity and surrounding streets through the use of varied setbacks, site cover and architectural elements.

<img alt="First look exclusive: Billionaire Winx breeder’s bold two-tower Surfers Paradise play with 45th-storey skybridge" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-30%20at%209.53.48%E2%80%AFAM.png?VersionId=ADyPJ_TFbJvSU9wZFOiCBnlPtgF7VWqW" />

Designed by <a href="https://www.apartments.com.au/architects/dbi">DBI</a>, the development will comprise 275 apartments across the two towers, including a mix of two-, three-, and four-bedroom residences, as well as several penthouses. The apartments will sit above a landscaped podium featuring more than 90 metres of beachfront pool frontage, private resident lawns, lounges, and wellness spaces.

DBI said the design draws heavily from the movement and form of the coastal environment, with curving balcony lines and sculpted façades intended to soften the scale of the towers while maximising ocean outlooks and passive shading outcomes.

“The project occupies a rare, uninterrupted oceanfront site and has been shaped by a design philosophy that merges architectural elegance with environmental responsiveness and a carefully curated lifestyle experience,” DBI said in planning documents submitted to the Gold Coast City Council.

The most distinctive element of the approved project is the skybridge linking the two towers at level 45. The elevated communal space is planned to include executive lounges, formal dining areas, wellness facilities, and panoramic ocean-facing outlooks.

“The skybridge enhances the identity of the development, promotes social interaction, and delivers a lifestyle experience not found elsewhere on the Gold Coast,” DBI said.

At podium level, residents will have access to a suite of resort-style amenities, including resident lounges, private dining rooms, a yoga lawn, gymnasium, plunge pools, and treatment spaces. The beachfront pool has been designed with separate lap, lounge, and children’s areas extending across the width of the site.

The project will also introduce new food and beverage offerings along the Enderley Avenue and Oceanway frontages, contributing additional activation to the beachfront precinct.

Ming Niu

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