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<p>Australia’s main CBD markets have recorded a decline in office vacancy rates throughout the first half of 2018, with Sydney and Melbourne CBDs continuing to exhibit their strength as vacancy rates in both markets fell to their lowest levels in more than 10 years.</p>
<p>The findings come in the Property Council of Australia’s (PCA) release of its mid-2018 Office Market Report. </p>
<p>Here's Savills Australia's analysis starting with the national outlook, then state by state:</p>
<p><strong>National overview</strong></p>
<p>Savills Australia’s Associate Director for <a href="http://www.savills.com.au/research/australian-research.aspx" target="_blank" title="Savills Research">Capital Strategy and Research</a>, Shrabastee Mallik, said there had been a clear difference in performance between the Sydney and Melbourne CBDs and the other main CBD markets, with the resource-reliant Perth and Brisbane office markets feeling the effects of the mining downturn until about six months ago.</p>
<p>“A renewal in economic growth globally in 2017 saw a renewal in demand for Australian resources and subsequent rises in commodity prices, leading to significant growth in corporate profits, particularly in the mining sector,” Ms Mallik said.</p>
<p>“We are now seeing this having a positive effect on the previously struggling Perth and Brisbane office markets, with subsequent falls in vacancy rates in these markets.”</p>
<p>Ms Mallik went on to say that a turnaround in these markets was already evident, with further improvements in 2018 likely when activity on the ground and various forward-looking economic indicators were considered.</p>
<p>“Low rents and high incentives in Perth and Brisbane are providing the impetus for businesses to acquire space in the CBDs, with recentralisation likely to be a key theme in the short to medium term,” she said.</p>
<p>“While there is concern that the Sydney and Melbourne CBD office markets appear to have peaked in terms of performance, when we consider forward-looking economic indicators, such as economic growth forecasts – particularly in the services and education sectors, which are key market-drivers for these markets – these fears would appear to be largely unfounded."</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/8/3/office%20vacancy%202.jpg" alt=""></p>
<p>Source: Savills</p>
<p><strong>New South Wales</strong></p>
<p>In the first half of 2018, the Sydney CBD office vacancy rate fell to its lowest level since the Global Financial Crisis in 2008, after a steady decline for the past eight quarters.</p>
<p>The strength of the market has been further highlighted by face rents rising to record high levels across all grades.</p>
<p>“We have seen a large number of tech and IT firms centralising and organically growing in the CBD after decentralisations due to cost pressures during the 2008 to 2010 period,” Savills NSW State Director for <span><a href="http://www.savills.com.au/services-and-sectors/leasing/office-leasing.aspx" target="_blank" title="Office Leasing">Office Leasing</a></span> in Sydney, Rob Dickins, said.</p>
<p>“These firms are now profitable and chasing and trying to retain talent in a very competitive industry sector."</p>
<p>“We have obviously also seen the emergence of co-working groups such as WeWork, Regus and Spaces, among others, which are now significant occupiers of space in the CBD.”</p>
<p>Mr Dickins said demand from smaller occupiers was still evident, with a spike in leasing activity in the sub-1,000sq m category, driven largely by the opportunity and capital cost savings in speculatively fitted tenancies.</p>
<p>“While net absorption has been low, this is largely as a result of reduced available space in this category, due to the absorption associated with government projects, and the redevelopment and change-of-use projects currently underway,” he said.</p>
<p><strong>Victoria</strong></p>
<p>The Melbourne CBD experienced a reduction in vacancy rate as a result of tenant migration to higher-quality office space, predominantly A Grade space, as well as some tenants taking on expansion space. </p>
<p>Savills Australia’s State Director for <span><a href="http://www.savills.com.au/services-and-sectors/leasing/office-leasing.aspx" target="_blank" title="Savills Office Leasing">Office Leasing</a></span> in Melbourne, Mark Rasmussen, said that the Melbourne CBD office market continued to maintain strong growth across all office building grades and all sectors.</p>
<p>“Continuing falling vacancy due to lack of supply and steady demand has resulted in maintaining the trend of increasing rentals and lower lease incentives,” he said.</p>
<p>“The strong economy, positive market sentiment and continued migration – of tenants to the CBD and the increasing population – is underpinning demand."</p>
<p>“The co-working sector, education market and growth across Melbourne’s increasingly diversified market is adding further upward pressure to rents.”</p>
<p>Mr Rasmussen said the fourth quarter of 2019 would see the market peak, with record low vacancy rates and rental rates continuing to climb after decades of remaining “stubbornly low”, when compared to most other Australian marketplaces.</p>
<p>“While the 2020 and 2021 new supply numbers are locked in and significant, the pent-up demand will see the new higher rent levels being maintained, with increases in incentives back to 2016 and 2017 levels likely,” he said. <span> <br></span></p>
<p><strong>Queensland</strong></p>
<p>Following a slight spike in the total office vacancy rate in Brisbane’s CBD in December 2017, vacancy rates dropped after strong leasing activity in the first six months of 2018. </p>
<p>“With rents and incentives in the Brisbane CBD now very similar to the surrounding fringe office market, we have seen a number of recentralisations from large firms in the finance and insurance sectors consolidating space in the CBD, as they take advantage of large floor plates in refurbished prime grade buildings,” Savills Australia’s State Director for <span><a href="http://www.savills.com.au/services-and-sectors/leasing/office-leasing.aspx" target="_blank" title="Savills Office Leasing">Office Leasing</a></span> in Brisbane, John McDonald said.</p>
<p><strong>South Australia</strong></p>
<p>Adelaide’s CBD office vacancy rate appears to be in a holding pattern, as the “flight to quality” trend continues to partially offset the migration from potentially non-competitive space, to prime-grade space concentrated within specific buildings.</p>
<p>Increasing competition on the supply side for prime-grade stock had previously led to a rise in backfill vacancy within secondary space as these tenants relocated but this trend seems to be subsiding, as the gap between prime and secondary vacancy rates begins to shrink. </p>
<p>This observation comes on the back of owners looking to reposition buildings on a floor-by-floor basis to retain existing tenants.</p>
<p>Savills Australia’s Director for <span><a href="http://www.savills.com.au/services-and-sectors/leasing/office-leasing.aspx" target="_blank" title="Savills Office Leasing">Office Leasing</a></span> in Adelaide, Adam Hartley, said the majority of demand for office space in Adelaide was for prime-grade space, although the market was seeing lower levels of take-up.</p>
<p>“We are starting to see signs that incentives are tapering off, particularly for prime or refurbished space,” he said.</p>
<p>“We have seen examples of tenants securing a net incentive of around 35 percent – this time last year, that figure would have been around 40 percent.”</p>
<p>Mr Hartley said he was expecting to start seeing a shift in the technical vacancy rate in the second half of the year.</p>
<p>“There have been a number of economic metrics that have constrained tenant decision-making throughout the past nine months, including the state election and the last stage of abolishing stamp duty cuts for non-residential property transfers being finalised,” he said.</p>
<p>“On that note, there are several green shoots emerging, which will begin to benefit office take-up in the CBD – defense announcements being key, as well as general public infrastructure investment that is underway."</p>
<p>“These industries bode well for take-up of engineering or project space in the short-term,” he concluded </p>
<p><strong>Western Australia</strong></p>
<p>Perth’s office leasing market is unlikely to see any further increases in the technical vacancy rate in the medium term, as the market is no longer facing the high volume of incoming new supply that it was through 2015 and 2016.</p>
<p>While the period of tenants rationalising space is over, the “flight to quality” trend remains a key driver in the market, as does recentralisation back to the CBD.</p>
<p>Savills Australia’s Director for <span><a href="http://www.savills.com.au/services-and-sectors/leasing/office-leasing.aspx" target="_blank" title="Savills Office Leasing">Office Leasing</a></span> in Perth, Shelley Ritter, said demand for prime-grade space was continuing to drive a reduction in the overall vacancy rate, and it was becoming “increasingly challenging for larger tenants to secure contiguous floor options, especially in premium-grade space”. </p>
<p>“The differential between prime and secondary space that began to emerge mid-2015 has never been this wide, a trend which is beginning to drive down incentives, particularly in premium and A Grade space,” she said.</p>
<p>Ms Ritter said there had been some “marked improvements” in the state’s economy, with long-term outlooks suggesting a return to a more sustainable investment level in regards to the mining and resource sector. </p>
<p>“Some of the state’s biggest and best-known mining producers have announced commitments to new projects, and investment in emerging sectors such as lithium is rising,” she said.</p>
<p>“We know that there is circa 70,000sq m in active leasing requirements currently in the market for new or expansion space from some of these large occupiers.</p>
<p>“These companies will play a significant role in office take-up for the next three to five years, with indirect organic demand expected to be created on the back of this from other industries, such as finance, legal, property and business services.”</p>
<p>Ms Ritter said a conservative outlook would suggest that the weight of this demand, together with a “somewhat cautious” development pipeline, will contribute to a decline in vacancy rate.</p>
<p>“Our view, however, is that this will potentially occur much faster than the market anticipates,” she said.</p>
<p><strong>Australian Capital Territory</strong></p>
<p>Canberra’s office market offers stable rental growth unlike any other office market in Australia, due to the strong government sector presence, according to Pip Doogan, Savills Australia’s Director of <a href="http://www.savills.com.au/services-and-sectors/leasing/office-leasing.aspx" target="_blank" title="Savills Office Leasing">Office Leasing</a> in Canberra.</p>
<p>“While other markets are often subject to economic cycles, the nature of the government tenants in Canberra means that lessors are protected against significant rises and falls in rents,” she said.</p>
<p>Savills Australia data shows that on average, net face rents for Canberra’s A Ggrade assets grew 2.8 percent throughout the 12 months to June 2018, largely in line with the 10-year Compound Annual Growth Rate (CAGR) of 1.95 percent per annum. </p>
<p>“Interestingly, rental growth across B Grade assets was more pronounced, with net face rents growing 8.5 percent throughout the past financial year, far exceeding the 10-year CAGR of 0.7 percent per annum,” Ms Doogan said.</p>
<p>Ms Doogan noted that a slight increase in incentives across secondary-grade assets has meant that growth on an effective basis has been flat. </p>
<p>“Based on leasing deals we are currently looking at and witnessing, there appears to be a divergence in rental growth in prime and secondary grade buildings,” she said.</p>
<p>“Given the wide range of buildings available in Canberra (based on quality), lessees are able to negotiate more favorable terms on secondary-grade space, while the pendulum remains firmly in the landlord’s favour, particularly in those sub-precincts with record low vacancy rates.”</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/8/3/office%20vacancy%203.jpg" alt=""></p>
<p>Source: Savills</p>
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Savills on what the future holds for Australia's office market

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<div>A subsidiary of co-working giant, WeWork, has pre-committed to a 10 year lease of the heritage-listed, 66 King St building</div>
<div> </div>
<div>They have pre-committed to leasing the entire building (pictured above), which is owned by Sydney-based developer Mr Phillip George.</div>
<div> </div>
<div>Mr George is undertaking a $50 million upgrade to the more than 70 year old building, through Taylor Constructions, and will be tenanted by the WeWork owned Gravity co-working brand following completion of the renovation in late 2019.</div>
<div> </div>
<div>Owned since 2007 by Mr George, the 14 level building, located between on the corner of King and York Streets, will cover 7,300 square metres of A Grade commercial and retail space and works have now commenced.</div>
<div> </div>
<div>The art-deco building is heritage listed and described as "an example of art deco-modern American commercial gothic architecture, with two major light wells and a rooftop terrace, to be converted to a bar and restaurant."</div>
<div> </div>
<div>Mr George said “The building is perfect as a co-working environment as it is well located in the middle of the city, close to major transport links and featuring versatile, dynamic spaces well suited to the Gravity brand."</div>
<div> </div>
<div>“The building’s many heritage features, including a marble entrance, stairway and light wells, will be refurbished to create a truly A Grade boutique building in the heart of Sydney’s CBD”, he concluded.</div>
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<div><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/8/8/66%20King%20Street.jpg" alt=""></div>
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<div>CBRE’s Stuart McSorley and Nick Read who negotiated the lease said they believe the refurbishment of the building was pivotal to securing the lease.</div>
<div> </div>
<div>“Upon completion, the building will include new end of trip facilities, rooftop terrace and refurbishment and restoration of the existing heritage features,” Mr McSorley said.</div>
<div> </div>
<div>The site will also feature three retail shops and an underground basement space suited for a bar or other venue for the many office workers now congregating in the centre of the city where there are improved transport links and retail outlets.</div>
<div> </div>
<div>Having sold Mrs Crocket’s Food Group in 2004, Mr George transitioned and is now a property owner and developer with a wide range of residential, industrial and commercial projects worth more than $750 million across Australia.</div>
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WeWork to take up a 10 year lease at refurbished King St building

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<p>Miron Solomons, Matt Pontey and Nick Lumley are selling 10 Oxford Street, Woollahra, home to St Claude's restaurant, via a public auction on August 30 2018.</p>
<p>St Claude's is a contemporary French bistro in the heart of Woollahra which was originally opened as Claudes restaurant in 1976, forming part of Sydney's 'golden restaurant age'. It reopened as St Claude's in 2015.</p>
<p>"This area has transformed from one of Sydney's prime shopping strips into a suburb awash with top restaurants, wine bars and cafes," said Miron Solomons, National Director, Investment Services at Colliers International.</p>
<p>"This is an opportunity to purchase a quality freehold asset with a strong 5x5 lease and iconic tenant in one of Sydney's most affluent areas."</p>
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Woollahra institution is on the market

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<p>Jennifer Cunich has departed the role of CEO of the Australian Institute of Architects.</p>
<p>The institute's board terminated Ms Cunich's appointment last Friday, The Australian Financial Review reported.</p>
<p>Neither side commented publicly on the reason for the departure.</p>
<p>Cunich took up the role two years ago.</p>
<p>"Change is a very difficult thing to embrace for organisations," Ms Cunich (pictured below) told the paper.</p>
<p data-gtm-vis-first-on-screen-7770372_137="3136" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/8/8/jennifer%20cunich.jpg" alt=""></p>
<p data-gtm-vis-first-on-screen-7770372_137="3136" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">"I am very proud of what I did. I've secured the finances.</p>
<p>"We have surpluses, I have implemented a massive digital transformation program worth about $1.4 million."</p>
<p>The institute confirmed her departure in a statement.</p>
<p>"The Institute thanks Jennifer for her contribution during her two years of service and wishes her well for the future," it said.</p>
<p>Ms Cunich took up the role when the 150-year-old institute was suffering financial problems, in part related to the development of its own Melbourne CBD building.</p>
<p>At the time of her appointment, Ms Cunich said one of her first tasks at the peak body for architects was to restore its relevance in the eyes of the whole profession including the needs of firms at the bigger end of the design and construction industries.</p>
<p>The institute has total membership across all categories at more than 11,000 members.</p>
<p>Cunich was a former Victorian executive director at the Property Council of Australia where she held the position for nine years having been previously been the executive director for the Property Council in the Australian Capital Territory for six years.</p>
<p>Clare Cousins, who established her Melbourne practice, Clare Cousins Architects, in 2005, has been appointed acting CEO.</p>
<p> </p>
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Jennifer Cunich departs The Australian Institute of Architects

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<p>Franz<span>é</span> Developments has proposed plans for the biggest new hotel project in the Geelong region for two decades.</p>
<p>The burgeoning expansion of one of Australia's fastest growing regional cities has been bolstered with Franzé Developments securing planning approval from the Department of Environment, Land, Water and Planning for its $150 million Geelong development – the largest mixed-use project in the region.</p>
<p>Located at 44 Ryrie Street within the Geelong Activity Centre Zone, the 2,700 square metre gateway site will comprise 1,000 square metres ground floor retail, 7,400 square metres office space, 24 residential apartments and a 180 bed hotel, all connected by a highly activated street level plane with public access.</p>
<p>In a coup for Geelong's hotel and tourism sector, global hotel operator The InterContinental Group signed a 20-year management agreement to operate the 180 bed hotel in late 2017. The $75 million Holiday Inn Hotel &amp; Suites in Australia and the largest new hotel project in the region in almost 20 years.</p>
<p>Paul Franzé, Founder and Managing Director of Franzé Developments says he is thrilled to receive approval for the gateway site as Geelong develops into the region's epicenter for retail, tourism and employment due to its strong population and economic growth.</p>
<p>"Our vision for the Ryrie Street site is to deliver a truly mixed-use project that responds to the Central Geelong Action Plan which will see Geelong evolve from its manufacturing roots to a city of culture and innovation.</p>
<p>Geelong is now one of Australia's fastest growing regional cities, with population expected to grow by more than 150,000 people in the next 20 years, and the urban environment and amenity needs to respond accordingly.</p>
<p>"Geelong has a diverse and strong economy with over 17,000 businesses and a highly skilled labour force. It continues to attract new residents and investment due to its livability and proximity to Melbourne, combined with increasing employment opportunities and affordability."</p>
<p>Architectus, the design studio behind 1 Bligh Street, Sydney and 383 La Trobe Street, Melbourne (in collaboration with architect Ateliers Jean Nouvel), has been appointed as the project design team, with Hansen Partnership managing the project's urban planning.</p>
<p>It is located on a prominent corner at the intersection of Ryrie and Fenwick Streets.</p>
<p>"The design of 44 Ryrie Street draws upon the history of both the city and the site. The materiality, rhythm and scaling of the buildings reference the iconic wool stores of Geelong, and the grain of the city's rich heritage fabric. Creating an active mixed use development that incorporates hotel, residences, office and a vibrant retail ground plane, the project stiches seamlessly into the adjacent cultural precinct and builds on the investment in the area to become a gateway to Geelong's city centre," says Matthew Smith, Managing Principal at Architectus.</p>
<p>The orientation of the site forms a 90 metre northern frontage to Ryrie Street with a physical split, creating a public thoroughfare linking Ryrie Street to Cuzens Place. </p>
<p>Colliers International, in conjunction with MP Burke Commercial, is managing the leasing campaign for the 7,400 square metre office space across ten levels with a generous double-height lobby. The apartments are expected to start selling in October 2018.</p>
<p>The site, which was home to John Orchard Furniture and was previously an intercity bus depot, was purchased from John Orchard for $7 million in 2017.</p>
<p>Demolition is underway and construction is scheduled to commence in late 2018, with completion expected in mid 2020.</p>
<p>The Holiday Inn Hotel is scheduled to open in 2020 and will target the longer stay segment of the tourism market. The property will include an all-day dining restaurant and bar, swimming pool, gym, parking and 300 square metres of meeting facilities, including a function room for 250 people.</p>
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$150 million Geelong gateway development gets the green light

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<p>Adelaide, the capital city of SA, has begun it's recovery on the HTW commercial office property clock for August, according to valuation firm Herron Todd White latest report.</p>
<p>Meanwhile, Echuca has dropped a notch to a declining market position from the previous peak of market point in HTW’s Office property clock in June. Canberra however has transitioned to a starting to a starting recovery position from its bottom of the market position in June.</p>
<p>At the bottom of the property cycle, Cairns joins Townsville and Launceston. Others in the same position are Darwin, Perth, Brisbane and Hobart.</p>
<p><a href="https://www.propertyobserver.com.au/images/2018/8/6/August%20Office%20Property%20Clock%20HTW.JPG" target="_blank">Click to enlarge</a></p>
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<p>"There has been a revolution in office real estate and the way it’s adapting to the demands of the modern workspace have a direct impact on owners, tenants and their workforce," the report stated.</p>
<p>"Some markets have thrived as a result, while others have failed to keep up," they concluded</p>
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Adelaide's office market has begun its recovery: HTW property clock

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<p>Jewish Care Victoria has listed the former Mark &amp; Dina Munzer Community Residential Aged Care facility in Melbourne’s Caulfield North. </p>
<p>Gary Peer &amp; Associate, inconjunction with CBRE, are handling the sale of the 52-58 Northcote Avenue property. </p>
<p>The 3,683 sqm site has remained vacant since the aged care facility’s closure in March 2017.</p>
<p>The property is expected to attract the attention of local and overseas developers, aged care operators and not-for-profit and charitable organisations looking to establish new headquarters.</p>
<p>Jewish Care Victoria CEO Bill Appleby said the property did not align with the organisation’s recently released Strategic Plan, which would determine its key strategic priorities for 2018-2020.</p>
<p>Gary Peer &amp; Associates’ Philip Kingston said the former aged care facility was the most significant allotment the firm has handled for public sale. </p>
<p>“The property is more than double the size of any landholding in the notoriously quiet street, and more than 1,000sqm bigger than anything we have handled in the Caulfield precinct over the last five years,” Mr Kingston said.</p>
<p>The property features all the amenities required of an aged care facility, including 45 beds, full line commercial kitchens and formal living and dining areas. </p>
<p>Offers close September 6.</p>
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Jewish Care Victoria lists Caulfield North parcel for sale

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<p>A Bayswater retail property could revisit its banking roots, after being sold under the hammer to a local community bank franchise. </p>
<p>Originally constructed as a banking chamber in 1975, the 83 Whatley Crescent property was purchased by Bayswater Community Financial Services Limited.</p>
<p>It was bought at auction for $1.06 million. </p>
<p>Located directly opposite Bayswater Train Station, the property comprises a 335sqm building most recently occupied by an Elders Real Estate office.  </p>
<p>CBRE’s Michael Milne and Ben Younger managed the sale. </p>
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Banking on Bayswater with $1.06 million WA auction aquisition

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<p>Colliers International are selling a Bondi trophy asset, located in the suburbs strongest retail position.</p>
<p>It comes with price expectations of more than $10 million.</p>
<p>The mixed use holding, 62 Hall Street (pictured above), contains a ground floor pharmacy and six apartments to be sold at auction on August 30th.</p>
<p>“Hall Street is now considered the heart of Bondi as it is not as volatile to the seasons as Campbell Parade, so it doesn’t fall victim to the fluctuations of trade as experienced by the beachfront retailers,” stated Miron Solomons from Colliers International.</p>
<p>The property is located opposite Toga’s Boheme development, and adjacent to popular Hall Street retailers including Da Orazio Pizza and Porchetta, Gelato Messina plus the Adina Hotel and Harris Farm.</p>
<p>“The building is near new, with multiple defensive income streams from both retail and residential tenancies.</p>
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Mixed-use Hall Street, Bondi asset on the market

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<div>Moody's Investors Service says that mortgage delinquencies will increase over the next two years.</div>
<div> </div>
<div>The forecasts suggests a record number of interest-only (IO) mortgages converting to principal and interest (P&amp;I) loans, will continue to the rise.</div>
<div>  </div>
<div>When IO loans convert to P&amp;I, borrowers have to make higher monthly repayments, and this 'payment shock' can lead to mortgage delinquencies and makes IO loans riskier than P&amp;I loans. </div>
<div>  </div>
<div>Moody's data shows that the 90 days past due delinquency rate for mortgages that have converted to P&amp;I from IO is 0.94%, double that of IO loans that have not yet converted and 0.24 percentage points higher than all securitised mortgages. </div>
<div> </div>
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<a href="https://www.propertyobserver.com.au/images/2018/8/3/MOODY%201.jpg" target="_blank">Click here </a>to enlarge:</div>
<div><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/8/3/MOODY%201.jpg" alt=""></div>
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<div>Refinancing interest-only mortgages is also becoming more difficult, which will in itself contribute to an increase in mortgage delinquencies. </div>
<div>  </div>
<div>Moody's conclusions are contained in its just-released report, "RMBS - Australia Mortgage delinquencies to increase as record number of IO loans to convert to P&amp;I". </div>
<div>  </div>
<div>Banks in Australia originated a significant volume of IO loans in 2014 and 2015, which means a record number of these loans are scheduled to convert to P&amp;I over 2019 and 2020, when their five-year IO period ends. </div>
<div> </div>
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<a href="https://www.propertyobserver.com.au/images/2018/8/3/MOODY%202.jpg" target="_blank">Click here </a>to enlarge: </div>
<div><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/8/3/MOODY%202.jpg" alt=""></div>
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<div>IO loans accounted for more than 40% of all mortgages originated by banks for much of 2014 and 2015, with this figure peaking at 46% in June 2015. </div>
<div>  </div>
<div>At current mortgage interest rates, monthly repayments on loans that convert to P&amp;I from IO will increase by around 30%, which can lead to delinquencies. </div>
<div>  </div>
<div>With RMBS, IO loans accounted for around 32% of all loans in such deals on average as of November 2017. However, on an individual deal basis, the share of IO loans ranges from 0% to 50%. </div>
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<a href="https://www.propertyobserver.com.au/images/2018/8/3/MOODY%203.jpg" target="_blank">Click here</a> to enlarge:</div>
<div><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/8/3/MOODY%203.jpg" alt=""></div>
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<div>"Therefore, the degree to which individual deals will be exposed to potential delinquencies as loans convert to P&amp;I from IO will depend on each deals' exposure to IO loans and their IO period maturity profile," the report noted.</div>
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Moody's forecasts payment shock for Australian IO mortgage holders

<p>An entity directed by HSN's Rafi Assouline and Rebel Property's Allen Linz has filed plans for an impressive new precinct in Woolloomooloo.</p>

<p>The major mixed-use development would transform a prominent William Street site into a new residential village anchored by affordable housing and a large public park.</p>

<p>The proposal, submitted as a State Significant Development Application, covers 164-172 and 174-194 William Street, a 6,398 sqm site between Forbes Street and Dowling Street on the southern edge of Woolloomooloo.</p>

<p>Designed by fjcstudio in collaboration with Bangawarra, Studio Bright and Tribe Studio Architects, the scheme would deliver 227 apartments across four residential buildings ranging in height up to 18 storeys, alongside retail space, public domain improvements and a new publicly accessible park.</p>

<p><img alt="Rebel" data-entity-type="file" data-entity-uuid="0eb59b7c-914a-4a5c-b849-3a56749f5e93" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.18.51%E2%80%AFAM.png?VersionId=mxM6EEqeoLjrCiTlCzTKTvzpKuh6kSkH" /></p>

<p>It's another design scheme for Rebel, who took <a href="https://www.apartments.com.au/news/nsw/first-look-rebel-property-group-takes-woolloomooloo-precinct-to-nsw-government">concept plans to the NSW Gov late last year</a>.</p>

<p>The latest plans will be a mix of 167 build-to-sell apartments and 60 affordable apartments, with the affordable housing component representing 15 per cent of the project's gross floor area. The apartment mix includes 12 one-bedroom, 53 two-bedroom, 89 three-bedroom apartments and 13 penthouses, while the affordable housing component would comprise 42 one-bedroom and 18 two-bedroom apartments.</p>

<p><img alt="Rebel" data-entity-type="file" data-entity-uuid="3b3d4553-8a8c-4af5-aa8c-519ffb1e28c6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.20.12%E2%80%AFAM.png?VersionId=_Yb6ibN7eDnOtQjCNDK2eviORa4qzgv." /></p>

<p>Rebel Property is seeking to take advantage of the NSW Government's infill affordable housing bonus provisions under the Housing SEPP, which provide additional floor space and height in exchange for the delivery of affordable housing for a minimum of 15 years. The planning pathway allows a 30 per cent increase in floor space ratio and building height where 15 per cent of the development is dedicated to affordable housing.</p>

<p>&nbsp;</p>

<p>At the centre of the development is a 1,356 sqm sunlit public park designed to become a new community gathering space at the gateway to Woolloomooloo. The park would be complemented by a network of pedestrian laneways connecting William Street with the surrounding streets, improving permeability through what is currently a largely impermeable block.</p>

<p><img alt="Rebel" data-entity-type="file" data-entity-uuid="257af931-a393-4007-8c6d-7219796df58d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.20.51%E2%80%AFAM.png?VersionId=KAHy94GrhaReFsWTGDKfy39EDJ8gEEv4" /></p>

<p>The design team says the public domain has been heavily influenced by the site's topography and Aboriginal cultural heritage, drawing on the escarpments, gullies and landscape characteristics that historically defined the area before urbanisation. The landscape design has been developed in partnership with First Nations consultancy Bangawarra.</p>

<p>The project would be delivered across four separate buildings. The William Street East and William Street West buildings, designed by fjcstudio, would contain the majority of the apartments. Melbourne-based Studio Bright has designed the Forbes Street building, while Tribe Studio Architects is responsible for the Dowling Street building.</p>

<p>Rebel had secured approval for the concept plans late last year.</p>


Joel Robinson

First look: HSN, Rebel, advances Woolloomooloo precinct plans

<p>A locally heritage-listed furniture showroom on Water Street is set to become the centrepiece of a new mixed-use residential development as local developer&nbsp;<a href="https://www.apartments.com.au/developers/keylin-group">Keylin</a> seeks approval for <a href="https://www.apartments.com.au/new-apartments/lotus-on-water-street-290-water-street-fortitude-valley-qld-4006">Lotus on Water Street</a>, a 15-storey project on the Fortitude Valley side of Spring Hill.</p>

<p>The proposal spans 290 Water Street and 137-141 Warry Street, combining several properties into a 2,869 sqm site that sits between Fortitude Valley, Spring Hill and the rapidly evolving Victoria Park precinct. Keylin's plans would deliver 132 apartments alongside new retail, hospitality and commercial space, while retaining and repurposing the historic Brunswick Home Furnishers Showroom that fronts Water Street.</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/jackson-teece">Jackson Teece</a>, Lotus on Water Street comprises a 12-storey residential tower rising above a three-storey podium and communal rooftop terrace. The development includes 76 apartments classified as multiple dwellings and a further 56 units proposed as short-term accommodation, designed to be flexibly used as either accommodation or permanent residences. The apartment mix comprises six one-bedroom, 54 two-bedroom and 16 three-bedroom homes.</p>

<p><img alt="First look: Keylin unveils heritage-led Lotus on Water Street tower in Fortitude Valley" data-entity-type="file" data-entity-uuid="9822bb79-6c49-49c9-95ba-319e8c8d81c3" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/fortitude%20valley%20front.png?VersionId=ioW8zbN4UVebbLetTFuv92t.HkdgfR5e" /></p>

<p>Residents would have access to an extensive rooftop recreation level spanning more than 1,200 sqm of communal open space. Plans include a pool, gym, sauna, infrared sauna, yoga area, library, private dining room, barbecue facilities and landscaped entertainment spaces, making the rooftop the project's largest shared amenity offering.</p>

<p>At street level, the proposal focuses on the adaptive reuse of the heritage buildings along Water Street, where 518 sqm of retail and commercial space is planned across shop, office and food and drink outlet uses. A permeable residential lobby would be positioned between the retained heritage buildings, creating a pedestrian connection between the historic streetscape and the new tower behind.</p>

<p><img alt="First look: Keylin unveils heritage-led Lotus on Water Street tower in Fortitude Valley" data-entity-type="file" data-entity-uuid="269cf3e0-7d13-48bf-a318-05a00deb5c10" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/fortitude%20valley%20podium.png?VersionId=DLXmTCLsp6GOcLpQ0h.0z7wKCw59EhN_" /></p>

<p>The heritage retention strategy is central to the scheme. The development application notes that the Brunswick Home Furnishers Showroom and adjoining heritage buildings will remain, with only non-significant structures on the site earmarked for removal under a previously issued Heritage Exemption Certificate. Levels one and two of the new podium are recessed behind the heritage façades to maintain their prominence within the streetscape.</p>

<p>Jackson Teece has drawn inspiration from the site's manufacturing history when designing the podium. The planning documents state that the façade incorporates perforated metal screening that references the woven and rattan furniture historically produced on the site. Cascading and climbing plants are integrated throughout the podium to soften the building's presentation and screen parking levels behind. The landscape strategy also informs the project's name, Lotus on Water Street, drawing on the historic Spring Hollow waterholes that once ran through Spring Hill and the blue water lilies associated with Meeanjin, Brisbane's traditional name.</p>

<p>The proposal also incorporates the neighbouring property at 141 Warry Street, currently occupied by a healthcare service. The existing building would remain, with nine dedicated parking spaces allocated within the new development to support its ongoing operation. In total, Lotus on Water Street proposes 117 car spaces, including 110 resident spaces and seven visitor bays, alongside 100 bicycle spaces.</p>

<p><img alt="First look: Keylin unveils heritage-led Lotus on Water Street tower in Fortitude Valley" data-entity-type="file" data-entity-uuid="70cf07bc-4fd8-4e70-92dd-be8b21c4e4f0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/fortitude%20valley%20site.png?VersionId=txlxrJImM0Sm_vTzHVKh5DDUkyL_CiiA" /></p>

<p>The site sits within the Spring Hill East Precinct of the Spring Hill Neighbourhood Plan and is positioned around 650 metres from both Fortitude Valley Station and Exhibition Station. It is also within walking distance of the King Street precinct, Royal Brisbane and Women's Hospital, Herston Quarter and Victoria Park, which is earmarked to become a major venue precinct ahead of the Brisbane 2032 Olympic and Paralympic Games.</p>

<p>Planning documents describe the location as a key gateway between Spring Hill and Fortitude Valley and highlight the area's increasing importance as new transport infrastructure and Olympic-related investment reshape Brisbane's inner north. The development team argues the project will contribute additional housing supply while activating a section of Water Street that has historically received less investment than other parts of the Valley.</p>

<p>Keylin has become increasingly active across Brisbane and southeast Queensland, assembling sites in strategic inner-city locations. They are currently selling and delivering <a href="https://www.apartments.com.au/new-apartments/oria-spring-hill-447-gregory-terrace-spring-hill-qld-4000">Oria Spring Hill</a>, just over 140 apartments due for completion in 2027.</p>


Keylin plans heritage-led Lotus on Water Street apartment development in Fortitude Valley

<p>Roseville is poised for a wave of new apartment development following the NSW Government's rezoning of land around Roseville Station under its Transport Oriented Development program.</p>

<p>The new planning controls have unlocked significant development potential within walking distance of the station, with a number of sites expected to be amalgamated and redeveloped in the coming years as developers seek to take advantage of the increased density allowances.</p>

<p>One of the more restrained developments in the precinct, and set among the first to be delivered having commenced well before the recent changes, is Hyecorp's Juliet. The boutique apartment project is already well under construction and remains on track to welcome residents by the end of the year, offering a markedly different proposition to many of the larger-scale developments now likely to emerge across the suburb.</p>

<p>[smartcode_project:default project_id=7395 project_image_fid=278194]</p>

<p><a href="https://www.apartments.com.au/new-apartments/juliet-roseville-64-pacific-highway-roseville-nsw-2069">Juliet</a> will comprise just&nbsp;34 one-, two-, and three-bedroom apartments opposite Roseville Station. For Hyecorp, which has delivered projects across Sydney's Lower North Shore for more than three decades, Roseville presented a rare opportunity to address a growing gap in the market.</p>

<p>"<a href="https://www.apartments.com.au/developments/roseville-nsw-2069">Roseville</a> has long been one of the North Shore's most tightly held and desirable suburbs, offering a unique combination of village charm, established greenery, excellent transport connections, and proximity to some of Sydney's best schools and lifestyle amenities," Hyecorp said.</p>

<p>"We recognised a growing demand from local homeowners seeking to downsize without leaving the community they have built their lives around. The location presented a rare opportunity to create homes that cater specifically to that buyer profile."</p>

<p>[smartcode_project:default project_id=7395 project_image_fid=278196]</p>

<p>The six-level development has been designed by <a href="https://www.apartments.com.au/architects/pbd-architects">PBD Architects</a> as a collection of residences that feel more like homes than apartments. The brief centred generous floorplans, abundant natural light, quality finishes, and strong connections to outdoor space.</p>

<p>PBD Architects drew inspiration from Roseville's established garden suburb character, creating a building that sits comfortably within its surroundings rather than dominating them. The architecture incorporates natural materials, soft forms, layered landscaping, expansive balconies, and generous setbacks to strengthen the connection between residents and the suburb's leafy environment.</p>

<p>"The focus was on designing spacious, house-like residences for discerning owner-occupiers and downsizers who wanted to remain on the North Shore without compromising on comfort, privacy, or design," PBD said.&nbsp;</p>

<p>"Every apartment was to feel considered, timeless, and highly functional."</p>

<p>[smartcode_project:default project_id=7395 project_image_fid=278195]</p>

<p>Inside, residences feature engineered timber flooring, stone kitchen benchtops and splashbacks, integrated Fisher &amp; Paykel appliances, ducted air conditioning, and large outdoor entertaining areas designed to take advantage of district and treetop views.</p>

<p>Residents will also have access to a rooftop barbecue and lounge area, alongside practical amenities including parcel lockers, EV charging capability, bicycle storage, a dog wash bay, and a basement car wash facility.</p>

<p>The majority of purchasers so far have been local owner-occupiers from Roseville, Lindfield, Chatswood, Killara, and the broader Upper North Shore, many of whom are transitioning from larger family homes.</p>

<p>"Buyers are looking for spacious, house-like apartments that allow them to downsize without feeling like they are sacrificing comfort or functionality," Hyecorp noted.</p>

<p>"They value large kitchens, generous living areas, ample storage, quality finishes, secure parking, lift access, and low-maintenance living."</p>

<p>[smartcode_project:default project_id=7395 project_image_fid=278204]</p>

<p>Juliet sits directly opposite Roseville Train Station and within walking distance of Roseville Village, while Chatswood's retail and dining precinct is only minutes away. The development is also surrounded by some of Sydney's most established schools, including Roseville College, Ravenswood, Pymble Ladies' College, and Knox Grammar, as well as nearby parklands and golf courses.</p>

<p>Juliet is currently more than 75 per cent sold ahead of its anticipated completion in late 2026.</p>

<p>[smartcode_project_cta:default project_id=7395]</p>


Juliet to sit quietly amid Roseville apartment boom

<p>Sherpa Property Group has unveiled the third instalment of its Flourish series, securing full approval for the two-tower, $500 million Flourish Soleira development in Palm Beach.</p>

<p><a href="https://www.apartments.com.au/new-apartments/flourish-soleira-1150-1154-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> will rise from a prominent site in the commercial heart of Palm Beach, the long-time home of Cash Converters and a range of local retailers.</p>

<p>The project will introduce a new retail and dining precinct at ground level, beneath 286 apartments.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=370959]</p>

<p>“We’re very committed to not only providing affordable residential offerings that are much needed in Palm Beach, but also delivering a vibrant new commercial heart that complements the extraordinary growth of the southern Gold Coast,” Sherpa Property Group founder Christie Leet said.</p>

<p>The development will sit under Sherpa's Flourish brand, which is aimed at providing a pathway into the beachside suburb for locals, first-home buyers and downsizers. In a move designed to assist first-home buyers entering the market, Sherpa has reserved all one and two-bedroom, one-bathroom apartments exclusively for eligible first-home buyers.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=370964]</p>

<p>“Our vision through Flourish is to create a vibrant retail and lifestyle focal point within the Palm Beach centre zone, delivering thriving communities underpinned by lifestyle-rich locations,” Leet said.</p>

<p>“So far, Flourish has been an incredible success, and we hope to carry this momentum as we progress the next two Flourish projects in Palm Beach.”</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=371430]</p>

<p>Located across 1150-1164 Gold Coast Highway and 3 Sixth Avenue, the development will comprise two towers. The northern tower will deliver 154 apartments, while the southern tower will add a further 132 residences, helping address ongoing demand for new apartments in the tightly held coastal suburb.</p>

<p>Flourish Soleira will also feature the most extensive rooftop amenity offering ever delivered in Palm Beach.</p>

<p>The two towers will be connected by a skybridge, with residents gaining access to a rooftop recreation deck featuring a full-width swimming pool, hot and cold plunge pools, wellness spaces, a gymnasium, private dining facilities, massage treatment rooms, barbecue areas, a basketball court, golf simulator, indoor and outdoor dining spaces, sun lounges and extensive landscaping.</p>

<p>LPS Group is expected to start construction later this year.</p>

<p>Sherpa is already well advanced on construction of its debut Flourish project, Flourish Amargo, located just around the corner from Soleira. Meanwhile, Flourish Oasis, positioned opposite Amargo, recently commenced construction and has nearly sold out its collection of 47 apartments.</p>

<p>[smartcode_project_cta:default project_id=150017]</p>


Sherpa unveils $500m mixed-use Palm Beach precinct, Flourish Soleira

<p>Are mortgage holders set to get a reprieve from the RBA in 2026?</p>

<p>Big Four bank NAB believes so. They are now expecting the next move from the RBA to be a cut, rather than a hike, which they had pencilled in for August. They are unsure of the timing of the cut however, they note in their latest&nbsp;NAB Economics RBA Watch.</p>

<p>NAB Chief Economist, Dr Sally Auld, said recent data suggests the economy has lost momentum and the outlook for rates has shifted, noting that the broader economic backdrop has changed since earlier in the year.</p>

<p>“The next move in the cash rate is likely to be down, but the timing is uncertain," Dr Auld said.</p>

<p>"In February, growth was above trend, the economy was operating above capacity and there was uncertainty over the restrictiveness of rates. None of these conditions exist today,” she outlined.</p>

<p>Dr Auld said recent data pointed to softer momentum across the economy while acknowledging that at the same time, uncertainty remains a key feature of the outlook.</p>

<p>“Both Q1 GDP data and the NAB business survey suggest momentum in the economy has slowed, meaning that growth has likely peaked for the cycle. That said, we are cognisant there is still considerable uncertainty around the outlook, both with respect to activity and inflation.”</p>

<p>Dr Auld said inflation risks and labour market outcomes would be important to watch.</p>

<p>“On the prices side, we are still forecasting above target core inflation through to mid-2027. Margins will compress and weaker labour market outcomes are a risk.”</p>

<p>She said tighter financial conditions are expected to weigh on housing and activity.</p>

<p>“Tighter financial conditions will be reflected in a slowing in house price growth and housing credit growth. In summary, we have greater conviction that the next move in rates is down, but less conviction on the timing.”</p>


Staff reporter

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