Builder-developer&nbsp;<a href="https://www.apartments.com.au/developers/graya">Graya</a> has secured a prime Newstead site from fellow developer Fraser, subsequently lodging plans for The Silo, a major mixed-use residential project in Newstead designed around a new public laneway linking the James Street precinct with the wider Gasworks and Newstead neighbourhood.

Proposed for the corner of Chester and Morse streets, the <a href="https://www.apartments.com.au/architects/bureauproberts">Bureau^Proberts</a>-designed project places its strongest emphasis at ground level, where retail, landscaping and a new cobblestone pedestrian connection would open the site to the surrounding neighbourhood. The design team describes The Silo as “more than a residential building”, positioning the development as an extension of Newstead’s public realm rather than a standalone apartment tower.

“A new cobblestone laneway and landscaped connection between James Street and Gasworks unlock a missing pedestrian link, improving walkability and stitching together two of Brisbane’s significant urban destinations,” Bureau Proberts said in its Urban Design Report.

<img alt="First look: Graya plans The Silo as new pedestrian link between James Street and Gasworks" data-entity-type="file" data-entity-uuid="0ea1b06a-75f5-40a5-b2c5-33c97bc86052" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/silo%20bldg.png?VersionId=KmjsAtNePu57_B31EM_DJ5T6KPJHtcmo" />

The Silo is planned as a mixed-use development incorporating apartments alongside a bar and centre activities including food and drink outlets, indoor sport and recreation, office and retail uses.

Architecturally, Bureau Proberts has conceived the building as a collection of vertically expressed, stepping forms rather than a single uniform tower. The composition rises from an articulated podium before being broken by a triple-height landscaped recreation level, with the upper section becoming more compact before terminating in a landscaped rooftop garden.

The project's name and architectural language draw directly from Newstead's industrial history. Patterned off-form concrete is proposed as the principal façade material, complemented by slender metal rod balustrades and extensive planting. The cylindrical and vertically ribbed elements give the building its silo-like expression, while curved balconies and planted edges introduce a softer subtropical layer.

“The Silo reinterprets its robust forms, scale and materiality through a contemporary subtropical architectural expression, creating a building that acknowledges its industrial legacy, while responding to the way the precinct is occupied today,” Bureau^Proberts said.

The recreation level is one of the defining breaks in the tower. Plans include a lap pool, mature subtropical planting and shared resident facilities within an elevated communal garden. Landscaping continues through the podium and onto the rooftop, where a further garden forms what the architects describe as a “subtropical crown” to the building.

<img alt="First look: Graya plans The Silo as new pedestrian link between James Street and Gasworks" data-entity-type="file" data-entity-uuid="f8451036-35a4-49a9-8d88-2ef4438eba3d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Silo%20Lane.png?VersionId=h8N31_rYmCEqoNrpt4kbYVQhJGZn60LH" />

At street level, the development has been designed to establish a more permeable block. Retail and hospitality tenancies address the public realm, while landscaped pedestrian spaces lead into the new laneway connection. Renders in the design report show the proposed “Silo Lane” as a substantial opening through the podium, framed by cylindrical concrete forms with cascading planting above.

The Silo continues Graya's move into larger apartment developments after building its reputation across high-end residential projects in Brisbane and the Gold Coast.

Joel Robinson

Graya buys Frasers Newstead site, plans The Silo between James Street and Gasworks precincts

<a href="https://www.apartments.com.au/developers/wickton">Wickton</a>’s completed Linacre Rise development in Hampton is giving Bayside downsizers the opportunity to move into a spacious apartment near the beach, with the developer covering stamp duty for a limited time.

The 27-residence development has been designed for buyers who want to simplify their living arrangements without giving up the space, warmth and quality associated with a long-term family home. Most apartments have already been secured by Bayside locals, leaving a select collection of two and three-bedroom residences and penthouses available.

Two-bedroom apartments are priced from $1.275 million, three-bedroom residences from $2.25 million and penthouses from $3.375 million, with the completed homes available to inspect and move into now.

[smartcode_project:default project_id=95289 project_image_fid=366760]

<a href="https://www.apartments.com.au/buildings/linacre-rise-hampton-8-10-linacre-road-hampton-vic-3188">Linacre Rise</a> occupies an elevated position on one of <a href="https://www.apartments.com.au/developments/hampton-vic-3188">Hampton</a>’s quiet, tree-lined streets, around 250 metres from the bay and 500 metres from Hampton’s village centre. Its setting gives residents access to the beach, local cafés, shops and Hampton Train Station while retaining the feel of an established residential neighbourhood.

Architecture and interiors by <a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a> draw on the warmth and permanence of traditional brickwork, with the building integrated into terraced landscaping by <a href="https://www.apartments.com.au/landscape-architect/john-patrick-landscape-architects">John Patrick</a>. Ground-floor apartments are elevated above the street and include private garden courtyards, while several upper-level residences have generous balconies and outlooks toward the bay.

Inside, the residences favour natural materials and generous proportions. Herringbone-pattern European oak flooring, natural stone benchtops, premium joinery and Swiss V-ZUG appliances are among the key inclusions, while integrated storage has been incorporated across kitchens, bathrooms, studies and living areas.

The kitchens have been planned as practical spaces for both everyday use and entertaining, with substantial island benches, detailed cabinetry and adjoining dining and living zones. Full-height wardrobes, plush bedroom carpeting and carefully considered lighting reinforce the residential character Wickton sought to retain for buyers moving from larger homes.

[smartcode_project:default project_id=95289 project_image_fid=366769]

A Linacre Rise purchaser said the completed apartment had delivered the space, outlook and construction quality they had been seeking.

“The unit is very light, has views to die for over the bay, all construction materials and fittings are premium quality, we have secure parking for three cars, EV charging at very competitive rates, the neighbours are friendly and there is just a lovely ambiance about the place,” the purchaser said.

Environmental features include solar panels, shared electric vehicle charging stations, rainwater harvesting for toilet flushing and landscape irrigation, double-glazed windows and water-efficient fixtures and appliances.

[smartcode_project:default project_id=95289 project_image_fid=366762]

The development was built by Balmain &amp; Co, with Wickton managing the broader development process through its in-house team.

For downsizers, the project’s completed status removes much of the uncertainty associated with buying off the plan. Purchasers can inspect the finished apartments, understand their outlook and proportions, and move in without waiting for construction to conclude.

The remaining selection includes north-oriented balconies, corner configurations and penthouses with elevated bay views. The developer-paid stamp duty initiative is available for a limited time, with potential savings of up to $200,000 depending on the residence purchased.

[smartcode_project_cta:default project_id=95289]

Limited-time stamp duty offer at completed Linacre Rise apartments in Hampton

Luxury apartment buyers have long prioritised design, space and finishes, but increasingly they're placing equal importance on something less tangible: how easily they can live without relying on a car.

At <a>Richmond Square</a>, <a href="https://www.apartments.com.au/developers/fortis">Fortis</a> believes that convenience begins beyond the apartment itself, with the mixed-use precinct earning a near-perfect Walk Score of 99.

The development has been planned around the idea that some of the most valuable amenities aren't contained within a building, they're the restaurants, cafés, parks, transport connections and daily conveniences that can all be reached on foot.

Located just behind Swan Street and Church Street, <a href="https://www.apartments.com.au/new-apartments/richmond-square-1-wiltshire-street-richmond-vic-3121">Richmond Square</a> places residents within one of Melbo​u​rne's most established lifestyle precincts while offering a quieter residential setting removed from the busiest thoroughfares. East Richmond Station is moments away, trams run along both Swan and Church Streets, and the MCG, Melb​​ourne Park, Yarra River trails and the CBD are all within walking distance. At the same time, the precinct itself will introduce a curated mix of dining, retail, hospitality and wellness offerings, creating a destination that extends well beyond its residential buildings.

[smartcode_project:default project_id=13181 project_image_fid=348530]

For Fortis, that combination of location and scale was what made the site unique.

"<a href="https://www.apartments.com.au/developments/richmond-vic-3121">Richmond</a> is one of Melb​o​urne's most established and distinctive inner-city neighbourhoods, with a rare combination of dining, culture, recreation, public transport and proximity to the CBD," the developer said.

"The opportunity at Wiltshire Street was particularly compelling because the site sits slightly removed from the activity of Swan and Church Streets while remaining only moments from everything that makes the area desirable."

Rather than developing a standalone apartment building, Fortis consolidated 15 individual properties to create one of the larger development parcels assembled on Mel​b​ourne's city fringe in recent years. That allowed the team to deliver a genuine mixed-use precinct comprising 107 residences across Wiltshire House and Carmine House, premium office space, hospitality venues, retail, wellness offerings and a future 57-room hotel.

"The scale of the site allowed Fortis to think beyond a standalone apartment building," the developer said.

"Richmond Square could be planned as a complete lifestyle precinct, bringing homes, workplaces, dining, retail, hospitality and wellness together around a series of activated public spaces. The aim was to create a destination that feels connected to Richmond rather than separate from it."

[smartcode_project:default project_id=13181 project_image_fid=348533]

The emphasis on walkability has also resonated with buyers.

Interest has been strongest from established owner-occupiers, particularly downsizers from Richmond and Melb​ourne's inner east who want to remain close to familiar restaurants, workplaces, family and social networks while moving into a more secure, lower-maintenance home. The project is also attracting Mornington Peninsula and interstate buyers seeking a Melb​ourne residence they can lock up and leave between visits.

Many are looking for generous living spaces, room to entertain, quality finishes and confidence in the project team, but location remains one of the biggest deciding factors.

"For many buyers, Richmond Square provides a way to simplify the practical side of home ownership without reducing the quality of their lifestyle," the sales team said.

"Location is also a major driver of interest. Buyers can remain connected to the CBD, major sporting events, the arts centres, local restaurants, cafes and bars and their family while living in a private and secure residence that is easy to lock up and leave for weekends or longer periods away."

[smartcode_project:default project_id=13181 project_image_fid=348549]

The residences themselves have been designed with that buyer in mind. Award-winning architecture practice SJB and interior designers Hecker Guthrie have created spacious two and three-bedroom apartments and penthouses that prioritise generous living areas, natural light, bespoke joinery and private terraces. Above, a rooftop sanctuary by Acre includes landscaped lawns, bookable dining rooms, barbecue facilities, wellness spaces and panoramic views across the CBD, the MCG and Port Phillip Bay.

Fortis believes Richmond Square reflects a broader evolution in apartment living, where the surrounding neighbourhood becomes just as important as the residence itself.

"Richmond Square introduces a different proposition: generously proportioned residences within a genuinely mixed-use, hospitality-led destination," the developer said.

"The project's location and Walk Score of 99 further support a lifestyle where residents can complete many everyday journeys without relying on a car."

Fortis has assembled an experienced team that includes <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, <a href="https://www.apartments.com.au/interior-designers/hecker-guthrie">Hecker Guthrie</a>, <a href="https://www.apartments.com.au/landscape-architect/acre">Acre</a> and builder <a href="https://www.apartments.com.au/builders/hacer-group">Hacer Group</a>, reflecting the developer's commitment to creating projects with enduring design quality and meaningful connections to the communities in which they sit.&nbsp;

Richmond Square is an expression of that philosophy, bringing together homes, workplaces, hospitality and wellness within one of Me​lb​ourne's most walkable neighbourhoods.&nbsp;

Construction is now almost complete, providing purchasers with growing confidence ahead of its expected September 2026 completion.

[smartcode_project_cta:default project_id=13181]

Walk Score of 99 places Richmond Square at the heart of Melbourne's most connected lifestyle

<h3 data-end="19" data-section-id="1dvgwoe" data-start="0">Summary</h3>

<ul data-end="634" data-start="21">
	<li data-end="170" data-section-id="1o77v31" data-start="21">Walker Corporation has lodged plans for a second major residential development in the Maroochydore City Centre, a 29-storey tower known as Celeste.</li>
	<li data-end="327" data-section-id="1lb0y6t" data-start="171">The Plus Studio-designed proposal at Lot 30 Sunshine Coast Parade would deliver 208 apartments, including four four-bedroom sub-penthouses and penthouses.</li>
	<li data-end="487" data-section-id="za720" data-start="328">The application comes as Walker doubles down on Maroochydore following the strong sales campaign at SOL by Walker, where the first tower is nearing sell-out.</li>
	<li data-end="634" data-section-id="5sovec" data-start="488">Walker is a key partner in the transformation of the Maroochydore City Centre, which is expected to ultimately deliver at least 4,000 new homes.</li>
</ul>

Walker Corporation is doubling down on Maroochydore following the successful sales campaign at its first residential project in the emerging CBD.

The national developer has filed plans for <a href="https://www.apartments.com.au/new-apartments/celeste-30-sunshine-coast-parade-maroochydore-qld-4558">Celeste</a>, a new 29-storey apartment tower at Lot 30 Sunshine Coast Parade, just metres from its under-construction SOL by Walker development.

The plans, prepared by Plus Studio, would see 208 apartments delivered across a 100-metre tower on the 2,376 sqm site, which fronts Sunshine Coast Parade, First Avenue and Future Way within the Maroochydore Priority Development Area.

<img alt="Walker" data-entity-type="file" data-entity-uuid="17038209-6fea-4ed2-855d-fd4df65b3d02" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-10%20at%2010.24.16%E2%80%AFAM.png?VersionId=iZD.oVXcQn.aLpUytDAW.CWjxP4puWMy" />

The proposed apartment mix comprises 36 one-bedroom apartments, 48 two-bedroom apartments, 72 two-bedroom apartments with an additional multipurpose space, and 48 three-bedroom apartments.

The upper levels would be capped by two four-bedroom sub-penthouses and two four-bedroom penthouses, taking the total apartment count to 208. The preliminary yield study also provides 262 car spaces, 114 resident bicycle spaces and storage for each apartment.

It represents Walker's next major residential move in the new Maroochydore CBD after the success of SOL by Walker, its $220 million two-tower project nearby.

SOL launched to market in early 2025 and has since seen strong demand, particularly from local owner-occupiers. By February this year, Walker said the first SOL tower was nearing sell-out, with a strong waitlist also emerging for its recently released penthouse collection.

Construction is already underway on SOL, with the first tower expected to be completed in late 2027 and the second to follow in early 2028.

[smartcode_project:default project_id=147777 project_image_fid=319846]

<h2 data-end="2518" data-section-id="1b2dyo5" data-start="2459">Celeste to rise 100 metres over Maroochydore City Centre</h2>

Celeste would take a different form to the twin 19-storey buildings at SOL.

Plus Studio has designed a single 100-metre tower above an activated podium, with the architecture responding to the site's prominent position and three street frontages.

The podium would incorporate commercial tenancies and public art, with sweeping façade elements wrapping the street edges. The scalloped concrete podium has been inspired by the patterns created in sand at low tide, while extensive landscaping would continue vertically through the tower.

The ground level plans show three commercial tenancies addressing Sunshine Coast Parade alongside the residential lobby and landscaped public realm. The podium would then accommodate several levels of car parking before the residential tower rises above.

<img alt="Celeste" data-entity-type="file" data-entity-uuid="121f77b1-71c5-46d7-9b36-0a7d474211ca" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-10%20at%2010.24.47%E2%80%AFAM.png?VersionId=MGrg9Hb7HgzLN0Lelq_xrXNAruVl77ia" />

Plus Studio said the tower had been designed to maximise views from each apartment, taking in the Maroochy River, Sunshine Coast hinterland, Cotton Tree and Maroochydore Beach and ocean.

Those views have also shaped one of the project's key features, with Walker proposing to put the primary resident amenity on Level 29 rather than lower within the building.

The rooftop would feature a 284.9 sqm pool area with an infinity edge, along with a cold pool, spa, sauna, 93.2 sqm gym, sunset lounge, BBQ and dining areas, pool deck and private dining space. Cabanas and day beds are also shown across the recreation level.

The two penthouses would extend across the upper levels and each feature private terraces and plunge pools.

<h2 data-end="4202" data-section-id="v5f4ix" data-start="4160">Walker's growing Maroochydore footprint</h2>

Celeste further reinforces Walker's commitment to the transformation of Maroochydore City Centre.

Walker is one of the key partners delivering the new CBD alongside Sunshine Coast Council and SunCentral Maroochydore, with the broader 62-hectare Priority Development Area occupying the former Horton Park Golf Course and surrounding land.

The precinct is ultimately expected to accommodate at least 4,000 new homes as Maroochydore evolves into the Sunshine Coast's principal commercial and residential centre.

When SOL secured approval in February 2025, Walker Managing Director and CEO David Gallant described it as the "first of many residential projects" the company planned for the Maroochydore City Centre.

Celeste now provides the clearest indication yet of what comes next.

The site sits immediately within the new CBD, with the design report identifying Sunshine Plaza and surrounding parkland within walking distance and Maroochydore Beach around a five-minute drive away.

For Walker, the timing of the application comes as its first residential bet on the new CBD appears to have been vindicated.

SOL has progressed from planning approval to construction while its first release has approached sell-out, giving Walker confidence to push ahead with another 208 apartments and take its residential pipeline in the Maroochydore City Centre to around 450 dwellings across the two projects.

Celeste remains subject to planning approval, with the architectural material describing the scheme as a preliminary yield study that may change through the assessment process.

Walker doubles down on Maroochydore with 29-storey Celeste apartment tower

For most Australians, buying an apartment is one of the biggest financial decisions they'll ever make

The location, floorplan and price are often the first considerations, but in recent years another question has become increasingly important: who is actually delivering the project?

A series of high-profile builder collapses, construction delays and defect concerns have fundamentally changed how many Victorians approach buying off the plan. The collapse of Porter Davis in 2023, which reportedly left around 1,700 homes unfinished, became one of the most visible examples of the risks that can emerge when a construction company fails. <a href="https://www.equifax.com.au/sites/default/files/lpassets/pdf/Final-Business-Market-Pulse-June-Sector-Deep-Dive-Report-2.pdf">Similar challenges across the broader construction sector</a> have left buyers asking more questions before signing a contract.

As Victoria continues encouraging higher-density housing to address supply shortages, transparency is becoming just as important as location or price.

One tool increasingly entering the conversation is the <a href="https://icirt.com/">Independent Construction Industry Rating Tool (iCIRT)</a>, an independent assessment framework designed to help buyers better understand the developer or builder behind a project. Originally developed by Equifax in consultation with government and industry as part of NSW's Construct NSW reforms, the system has since expanded nationally.

<h2 data-end="1519" data-section-id="7nmx3" data-start="1492">What is an iCIRT rating?</h2>

Most Australians are familiar with independent ratings in everyday life.

We compare ANCAP safety ratings before buying a car. We look at Health Star Ratings in supermarkets. Banks rely on credit assessments when lending money.

Until recently, however, there has been very little independent information available to help apartment buyers assess the business responsible for delivering a residential project.

That gap is what iCIRT was designed to address.

Builders, developers and other construction professionals with an iCIRT rating have demonstrated high-trust characteristics through an independent, evidence-based assessment across six criteria: Character, Capability, Conduct, Capacity, Capital and Counterparties. This involves a rigorous review of financial health, past project track record, and ethical conduct. Crucially, an iCIRT rating could help provide property buyers with confidence that they are working with a professional who has demonstrated the capability, capacity, and willingness to return and rectify issues.

Importantly, iCIRT is not a recommendation to purchase a particular property, nor is it a traditional credit rating. It is an independent assessment framework designed to provide objective information about a construction business using a <a href="https://icirt.com/sites/default/files/2025-08/iCIRT-Methodology-Issue1-May-2021.pdf">published methodology</a>.

The system has been widely adopted in New South Wales, where more than one-third of medium and large residential builders and developers now hold an iCIRT rating, representing over two-thirds of the state's residential building market by value as of 2025/26.

<h2 data-end="3126" data-section-id="h6ohtj" data-start="3084">Why buyers are doing more due diligence</h2>

For many buyers, particularly those purchasing off the plan, the biggest risk isn't whether they'll like the kitchen finishes.

It's whether the project will be delivered on time, to the expected quality, and by a company capable of completing the development.

<a href="https://icirt.com/sites/default/files/2026-07/iCIRT%202025%20Consumer%20Survey%20Report%20v05.pdf">Consumer research commissioned by iCIRT</a> found more than half of respondents believed current protections do not adequately safeguard buyers from builder insolvencies or defective projects. Other research found 88 per cent of prospective buyers would seek independent ratings or due diligence before purchasing, while 90 per cent said trust in construction professionals is essential.

That doesn't mean buyers should rely on a single rating alone.

Independent legal advice, understanding the contract, and seeking financial advice all remain important parts of the due diligence process.

However, an independent assessment can provide another source of information alongside those traditional checks.

<h2 data-end="4138" data-section-id="pquzxc" data-start="4094">Trust is becoming a competitive advantage</h2>

The conversation isn't only changing for buyers.

Developers are also recognising that trust has become an increasingly important part of the sales process.

Five years ago, purchasers typically asked about floorplans, finishes and settlement dates.

Today, sales teams are increasingly being asked about the developer's experience, financial stability, previous projects and construction partners.

For companies with strong governance and established delivery records, an independent iCIRT rating provides another way to demonstrate those credentials before buyers even visit a display suite.

According to Equifax, the assessment can also help businesses drive sales and <a href="https://icirt.com/resources-for-business/icirt-rating-helps-scion-secure-high-value-projects">secure high-value projects</a>, as well as identify operational improvements and <a href="https://icirt.com/resources-for-business/mirvac-reinforces-brand-trust-and-quality-independent-icirt-rating">attract top talent</a>.

<h2 data-end="4962" data-section-id="1j54ng5" data-start="4912">Beyond buyers: lenders are paying attention too</h2>

The influence of independent construction ratings is also extending beyond consumers.

According to Stamford Capital's Real Estate Debt Capital Markets Survey, an increasing number of lenders now incorporate iCIRT ratings into their due diligence processes when assessing residential development finance applications.

The survey found lender adoption has continued to rise, with many respondents saying independent assessments provide additional insight into governance, counterparties and delivery capability beyond traditional financial analysis. Some lenders also reported declining funding applications where businesses had poor or no ratings.

As construction costs remain elevated and access to development finance becomes more selective, demonstrating credibility is becoming increasingly valuable.

<h2 data-end="5801" data-section-id="1qazuxs" data-start="5772">What it means for Victoria</h2>

Victoria's apartment market is entering a new phase.

The state is seeking to accelerate higher-density housing while simultaneously introducing reforms aimed at improving confidence in residential construction.

For buyers, that means there are more tools available than ever before to research the businesses behind a project.

For developers, it signals that transparency is becoming another point of differentiation in an increasingly competitive market.

Buyers are asking more questions than ever before and increasingly expecting independent information, not just marketing material, before making one of the biggest financial commitments of their lives.

Find out how to get iCIRT rated <a href="https://www.icirt.com/sites/default/files/2025-08/iCIRT-Infographic-Assessment-Process-Final.pdf">here</a>.

<hr data-end="6469" data-start="6466" />
The information contained in this article is general in nature and does not constitute personal, financial, legal or tax advice. It does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it and, where appropriate, seek independent professional advice.

This article contains links to third-party websites. These links are provided for convenience only. Equifax Australia does not control and is not responsible for the content, accuracy or privacy practices of external sites.

Copyright © 2026 Equifax Australia Information Services and Solutions Pty Ltd. All rights reserved.

Buying off-the-plan in Melbourne? How independent iCIRT ratings are set to change Victorian property

Prominent New Zealand apartment and hotel operator, <a href="/developers/safari-group">Safari Group</a>, is offering up a prime investment opportunity for Australians to purchase off the plan in one of the world’s most popular ski destinations.

They recently took to market Mountain Oak Queenstown Apartments, in the growing precinct of Remarkables Park in Frankton, near the airport and at the foot of The Remarkables - the mountain range the locals like to call “The Remarks”.&nbsp;

Sydney investors have shown interest in the one, two and three-bedroom apartments that secure high-season occupancy six months over the year, primarily over summer and winter months.

They average 90 per cent occupancy across their portfolio over January, February, March, August, November and December, while shoulder season months of April, July, September and October are still occupied 70 per cent of the time, with the growing appeal of Queenstown becoming not just a hotspot for the snow, but a lifestyle destination.

Even in the low seasons of May and June, occupancy levels reach around 40 per cent.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_auto/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Ext_Cam15_Sunny.jpg?VersionId=SJAROUM_1s.Tr5ciMk4EEj5oAt_Vewmv" />

Safari’s Safari Hotels arm can also manage the holiday letting for an investor, from the listing on holiday accommodation websites such as Airbnb and Booking.com to the cleaning and maintenance of the investment. They’ve been in the short stay management business for 15 years and offer 24/7 support for investors, an important convenience benefit for any overseas investor

Another major drawcard for Australians is that New Zealand doesn’t have a stamp duty policy - so the entry price of NZ$639,000 (AU$586,000), is all that is payable on completion.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/313_Livingv2_WEB.jpg?VersionId=nV229fM0ZeYpoxOrX372HyGjfwY_LR8c" />

Safari is starting construction of the 141 apartments in Q2 this year, with a two-year build estimated to complete in mid-to-late 2027.<img alt="" data-entity-type="" data-entity-uuid="" height="15" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXczFpFAb7WuA6f4f9TtKWcqXyNwR8qqtakWv352ERkpqNlP3KwIo8YKxw67jZNHfpjEGIZGv5MQTbnvLZwNt8iu9IVdOrswOjCvBZ4zhSoOOLrpt6etVEZTN1gkBho0r_R72zdHNA?key=yq3daOanqHSb88QFd8jGYKdb" title="Click and drag to move" width="15" />​

The apartments will feature modern amenities and contemporary designs with expansive windows capturing sweeping views of The Remarkables mountain range.&nbsp;

Interiors are equipped with modern finishes, premium appliances, and secure electronic key-locked doors, ensuring a comfortable living experience for residents and guests alike.

With its strategic location near Coronet Peak and Cardrona Alpine Resort, as well as key retail and dining precincts such as Market Street, Five Mile Shopping Centre, and Remarkables Market, Mountain Oak offers a strong proposition for investors seeking high rental yields and capital appreciation in one of New Zealand’s most sought-after locations.&nbsp;

Queenstown’s sustained demand for visitor accommodation and rental properties is underpinned by a shortage of housing options, attracting both local and international buyers.

Safari Group offers low-touch investment proposition in Queenstown’s popular ski fields district

<html><body>
The CBD hotels sector continues to out-perform all other commercial property sectors with expectations dimming for offices and retail property returns, according  the latest NAB’s quarterly survey of commercial property players.
The NAB Commercial Property Index rose slightly to -17 points in the fourth quarter of 2012 from a low of -19 points in the previous quarter.
However, this was solely due to a sharp increase in the CBD Hotels index as capital growth and rental expectations fell in all other commercial property markets.
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/2013/02/nabsurveyfeb20.gif"><img src="/images/stories/2013/02/nabsurveyfeb20thumb.gif"></a>
“Recovery expectations also postponed in all markets, with property professionals less optimistic about prospects for longer-term capital and income growth,” says the report authored by NABs’ head of research Peter Jolly and chief economist Alan Oster.
On a state-by-state basis, WA was identified as the strongest market, but NSW the most optimistic state by the end of 2014 with Victoria lagging.
“Debt and equity funding still a problem for developers and consumer confidence continues to be identified as the main challenge for property firms in the next year.”
The results are based on a December survey of 270 commercial real estate agents and property managers, property developers, asset/fund managers and commercial property owners and investors.
The CBD Hotel Index rose to +58 points in the December quarter, with more respondents anticipating future capital value.
“CBD hotel operators are benefiting from strong demand for CBD hotel rooms and limited supply additions, which is contributing to revenue per available room (revPar) and room rate growth,” says NAB.
CBD hotels was the only sector to record a rise in capital values over the December quarter (up 1.7%) with retail property recording the greatest decline in value (-1.4%) followed by industrial (-1.2%) property.
Office property values slipped by a relatively modest 0.6% over the quarter.
The outlook is also strongest for CBD hotels with respondents anticipating capital growth of 3% over 2013 and 4% over 2014.
Modest growth is predicted for industrial property (0.3% and 1.2%) and offices (0.1% and 1.2%) with expectations gloomiest for retail property with values forecast to decline by 0.2% this year, before a modest rise of 0.8% in 2014.
NAB says the lower expectations for capital growth and rental growth in the office property market are due to the domestic economy entering a soft patch along with weaker employment conditions seen in the finance/ business/ property sectors in the latest quarterly NAB Business Survey, which has weighed down on confidence.
“With the economy continuing to weaken and unemployment set to rise noticeably through 2013, the outlook for commercial office property has also weakened,” says NAB. 
Commercial property landlords hoping for a better rental return in 2013 will be disappointed.
The NAB survey found that rents contracted in all markets in the final quarter of the 2012 led by retail (-2.1%) with rents down in all states.
Retail participants in the survey are slightly less pessimistic this quarter about rental expectations, expecting average rents to fall 1.5% this year and by 0.4% in 2014. There are more subdued expectations in the office market with rents to remain flat in 2013 and grow by 1% by 2014
Rental expectations for industrial property also revised down with rents to grow 0.8% in next year and 1.7% in 2014.
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lschlesinger-FZcF9M3vE6

Little for office and retail landlords to cheer about as commercial property outlooks dims: NAB survey

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Real estate funds manager, investor and developer Folkestone will shortly secure settlement on the sale of 41 dwellings in the first stage of its key Karratha residential development The Ranges.
Reporting its first interim results since restructuring, Folkestone announced a net profit after tax for the six months ending December 31 of $30,000 compared to a net profit after tax of $700,000 in the corresponding period in 2011 following a number of acquisitions and sales of non-core parts of the business.
Folkestone managing director, Greg Paramor said the company had been very active over the reporting period, and had completed its transformation “from a pure real estate developer to a real estate funds manager, investor and developer providing real estate wealth solutions to private clients and select institutions.”
<img alt="karrathafeb20one" height="345" width="470" src="/images/stories/2013/02/karrathafeb20one.jpg">
“Over the past 18 months, we have sold legacy assets, recycled capital and established a funds management platform that now offers listed and unlisted real estate funds to private clients and a number of institutional investors” said Paramor, who was co-founder and CEO of Mirvac from 2004 to 2008.
Stage 1 of the Ranges comprises 2.2 hectares with a “Tourism” zoning and development approval for 108 single level, one bedroom villas with pool and BBQ facilities.
Folkestone has a 25% interest in the project.
The settlements of the first 41 dwellings in Stage 1a  to individual investors is due to commence in March 2013.
The development is designed to provide accommodation to business travellers to Karratha in the Pilbara, WA’s resource heartland and the focus of a number of long?term LNG  and other resource projects.
<img alt="karrathafeb20two" height="346" width="470" src="/images/stories/2013/02/karrathafeb20two.jpg">
A further 14 dwellings in Stage 1b have been sold and a marketing campaign for the balance of the 53 dwellings in Stage 1 is underway.
Construction of a further 32 villas is expected to commence mid-2013.
Folkestone also settled on a further 7.1 hectare adjoining rear?lot to the project following negotiations with the WA Government and the local indigenous community regarding Native Title clearance issues.
During the reporting period, Folkestone acquired the Austock property funds management business.
Folkestone also completed its joint-venture (with AMP) Noone Street, Clifton Hill residential development featuring 87 dwellings in the inner suburb of Melbourne, acquired in June 2007. The final apartment was settled on September 20.
The project delivered a cash return of $9 million, of which $300,000 occurred in the reporting period.
Folkestone also launched its first real estate income fund at Sydney Olympic Park, the first in a series of such funds.
The Fund acquired a new 5,920 square metre commercial building at 7 Murray Rose Ave, Sydney Olympic Park for $29.25 million, leased to Thales Australia, as its new Australian headquarters.
Offering a commencing annualised yield of 8.1%, the high number of applications to invest in the unlisted fund meant that it closed oversubscribed.
Paramor says he expects economic and financial markets to remain “challenging but believe there will be a number of attractive investment opportunities in both the residential and non?residential sectors in the next 12 months”.
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Restructured Folkestone prepares for first Karratha residential settlements

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Of the 278,222 square metres leased in the Sydney CBD in 2012, the 'property &amp; business services' sector was the dominant sector, leasing 42% of the stock, or 115,678 square metres, according to Savills.
Demand from the ‘finance and insurance’ and the ‘property and business services’ sectors, which make up the majority of tenants in Sydney, continues to build.
The two sectors combined accounted for more than 78% of leases signed during the last 12 months totalling a massive 215,528 square metres. Much of this is precommitment for projects completing in 2015/16.
<img height="311" width="470" src="/images/stories/2013/02/feb20offices/sydney_office_leasing_2012.gif" alt="sydney_office_leasing_2012">
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Chart of the week: Who is leasing office space in the Sydney CBD?

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Shopping centre owner and manager Federation Centres has reported an interim net profit $115.91 million for the six months to December 31 - its first complete first-half results under its new brand following the restructuring of the debt-laden Centro business.
The profit compared with a loss of $100 million recorded in the previous corresponding period, when it was known as Centro Retail Australia.
Federation Centres also reported a healthy balance sheet with its gearing down to 29.9% after entering into a number of joint-ownership agreements.
Last week, in its first significant deal under its new name, Federation Centres agreed to sell half-shares in four malls and a convenience centre to the Industry Superannuation Property Trust (ISPT), one of Australia’s biggest unlisted property trusts for $371.4 million.
This follows Federation Centres selling 50% interests in three shopping centres - Galleria (WA), The Glen (Victoria) and Colonnades (SA) - to the Perron Group for $690 million in June last year.
Federation Centres expects its gearing to fall to 24.2% once it completes the ISPT transaction.
The results show the group manages 78 properties in its portfolio.
It owns 40 malls outright, 34 are parts of syndicates and seven are joint-ventures.
The portfolio is valued at $6.6 billion and has an occupancy rate of 99.5%.
It is well spread across Australian metro regions with the highest presence in NSW (34%), Victoria/Tasmania (25%) and WA (22%).
Federation Centres reported 2% growth in retail sales.
It has a development pipeline over five years of $1.1 billion – with Federation Centres' share being around half of this at $591 million.
Federation Centres also continues to simplify its previously complex mix of unlisted shopping centre syndicates with $548m of assets acquired by the group and $438m sold on market.
The company expects $1.2bn of assets expected to be transacted by 2015 with $500m to be sold on market and $700m potentially acquired by the group, subject to further capital recycling initiatives
Chief executive Steven Sewell said the company had “entering a new era” where it can utilise its sound financial position and work with its strategic alliances to enhance its portfolio of Australian shopping centres, “with the clear objective of providing sustainable returns for investors”.
“The portfolio continues to benefit from a strong exposure to non-discretionary spending. All retail categories showed growth, although department store sales remained subdued.
“Supermarkets and specialty retailers, which make up approximately 75% of Federation Centres’ total annual sales, achieved annual sales growth of 1.7%," he said.
"The mini major category, with 8% of sales, increased turnover by 8%. Department store sales, which represented 3% of turnover, improved by 0.1%.
“Full-year earnings are now forecast, subject to any unforeseen events, to be in the range of 15.5 to 15.75 cents per security with distributions paid to investors representing a payout ratio of between 80% and 90%"
 
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Federation Centres emerges from Centro with stronger balance sheet and back in the black

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There was a noticeable drop in the number of houses and units available to rent in January, but this is mainly attributable to seasonal factors, says SQM Research director Louis Christopher. 
The national vacancy rate tightened by 0.4 percentage points from 2.3% to 1.9% over January with just over 54,000 properties available for rent across the eight capital city markets compared with 63,000 in December. 
All capital cities recorded tightening rental markets led by Melbourne where the vacancy rate tightened from 3.6% in December to 3% in January with 2,600 fewer rental properties available for lease. 
Perth remains the tightest capital city rental market with its vacancy rate tightening from 0.9% to 0.8% - a distressing sign for Perth renters. 
Other capital city vacancy rates are: Adelaide (1.4%), Brisbane (1.9%), Canberra (1.5%), Sydney (1.6%), Darwin (1.4%) and Hobart (1.9%). 
SQM Research points out that the January decline in vacancies is similar to that of the month’s preceding the Christmas period, “strengthening the assumption that December’s elevated figures were due predominantly to seasonality”.  
Year on year, SQM Research has record a modest national increase of 0.1% with many of the capital cities’ vacancy rates remaining relatively the same. 
Canberra and Darwin however, have recorded the most dramatic yearly differences with Canberra increasing by 0.8% in vacancies and Darwin by 0.4%. 
“Thus as it currently stands, the rental market although loosening somewhat since the corresponding period of the previous year (January 2012) remains for the most part - tight, with the majority of capital cities excluding Melbourne, continuing to record vacancy rates of under 3%,” says Christopher. 
“Having said this, SQM Research believes with a housing recovery commencing in many parts of the country, the rental crisis that many localities have been experiencing over the past 12 months, may slowly begin to be alleviated, with potential first home buyers who have been sitting tight, now beginning exit the rental market to purchase their own homes. 
“Taking into account seasonality, vacancy rates have proven to be very steady over the past two years now for the major capital cities. We note that in Hobart, there appears to be a tightening in vacancies once again, which may help existing real estate investors in what has been a severe downturn for that city.
“When considering more micro localities, there are some clear pockets of oversupply and under supply such as Melbourne’s Southbank, which is recording a very high vacancy rate of 10.9% right now.  This goes to show it is important to consider the local factors as well as the greater macro tides.”
Vacancy rates for individual postcodes are available on the SQM Research.
SQM’s calculations of vacancies are based on online rental listings that have been advertised for three weeks or more compared to the total number of established rental properties.
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Rental market tightens in January to national vacancy rate of 1.9% mainly due to seasonality: SQM

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Mixed-use development sites accounted for the highest number of properties listed for distressed sale in 2012 with the rising trend of distressed sales set to continue in 2013 - led by Queensland.
Distressed property listings surged 36% in the second half of 2012 on the back of 5,207 companies going into external administration in the first half of the year, according to a new report by Colliers International. 
Around 816 distressed properties were advertised for sale across the country in 2012, up by 5% from the 777 properties on the market in 2011.  
The second half of 2012 is expected to yield a similar number of company collapses (the monthly average to November is 900 compared with 883 in 2011) meaning a similar high number of distressed properties will be listed for sale by administrators and banks in 2013.
According to the Colliers report author Felice Spark, there was sharp spike in the number of distressed properties coming to market in the November – 177 properties compared with a monthly average of 68 in 2012 – as banks increasingly brought distressed assets to a more active market. 
While Spark expects a spike in the amount of distressed real estate coming to market in 2013, she says a market correction has taken place “with prices now having dropped as low as they can go to support sales”. 
“It is unlikely that market conditions will worsen in 2013, but also unlikely that we will see much improvement over the next 12 to 24 months. 
“With little change expected, now is as good a time as any to go to market. Recent distressed sales activity has revealed market interest from prospective buyers and prices holding strong,” she says. 
Development sites overtook industrial property in 2012 in terms of number of distressed assets on the market across Australia, followed by the industrial, commercial, residential and rural and agribusiness sectors. 
<img height="286" width="470" src="/images/stories/2013/02/distressedpropertyFeb19chart.gif" alt="distressedpropertyFeb19chart">
“While 2011 saw the number of distressed assets on the market increase across all property sectors over 2010; it was more of a mixed bag in 2012,” says Spark. 
“Three sectors, in particular, saw a big spike in the number of distressed assets coming to market; being development sites, rural and agribusiness, and mixed-use developments. 
"Pubs/hotels, retail and healthcare and retirement all saw a minor increase in distressed property," she says.
An example of a recent successful distressed development site sales ws a 1,271 square metre property <a target="_blank" href="https://www.realcommercial.com.au/property-industrial+warehouse-nsw-lurnea-500341419">at 124 Hoxton Park Road, Lurnea in Liverpool</a> in Sydney’s outer west, which sold above the reserve for $1.405 million in August last year.
It had previously sold for $700,000 in 2000 and had been listed for sale for $1.6 million in August 2007. 
The property, which is zoned for high density residential, was put up for mortgagee-in-possession sale after the owner had trouble re-financing his loan. 
On a state-by-state basis, Queensland continued to have the lion’s share of distressed property sales, increasing slightly from 2011 levels and maintaining an almost 50% share of distressed properties nationwide.  
Queensland saw a marginal increase of 3.5%, going from 382 properties to 395 properties, whilst South Australia saw an increase of 20 properties to 32 properties. 
Victoria witnessed a substantial spike during 2012 of 56%, going from 61 properties to 95 properties.
Spark says the banks have now begun pushing through, forcing properties to be put to market, with a trend towards secondary or regional-based property.
Industrial led the way in Victoria in 2012 representing approximately 40% of appointments.
NSW saw a decline in the number of distressed properties on the market, falling back slightly from 256 properties to 242 properties.
Conversely, the industrial, commercial and residential sectors all witnessed declines in the number of distressed properties on the market in these sectors.
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Distressed property listings set to spike in 2013 led by defaulting development sites: Colliers International

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The Sydney and Melbourne CBDs have maintained their rankings among the top 10 most expensive markets to rent prime retail spaces as international retailers clamour to get access to Australia’s nation of shopaholics.
International retailers are looking to open around 300 shops in Melbourne, Sydney, Perth and Brisbane over the next few years, according to figures compiled by Colliers International in a new White Paper.
Top Shop, Zara, Gap and Apple are all looking to add to their store presences while the likes of Swedish fashion store H&amp;M and Japan’s Uniqlo are all planning to open a swathe of stores in capital city markets.
Uniqlo, is leading the charge, seeking 40,000 square metres of space across 25 stores followed by Zara, which is seeking 30,000 square metres of space with plans for 20 stores and Top Shop (and its men’s store Topman) seeking 27,000 square metres across 15 stores.
Apple and Canada’s Lululemon Athletica both expect to reach around 30 stores each.
Sydney ranks as the fifth most expensive prime retail market in the world, charging on average $10,700 per square metre with Melbourne ranking eighth with an average prime retail rent cost per square metre at just under $9,000, according to the latest global rents report from CBRE for the fourth quarter of 2012.
Hong Kong is the most expensive prime retail market in the world – an incredible $46,000 per square metre – followed by New York at $31,400 per square metre.
<table cellpadding="0" cellspacing="0" border="1"><tbody>
<tr>
<td valign="top" width="154">
Retailer
</td>
<td valign="top" width="154">
Space sought
</td>
<td valign="top" width="154">
Current number of stores
</td>
<td valign="top" width="154">
Planned future stores
</td>
</tr>
<tr>
<td valign="top" width="154">
Uniqlo
</td>
<td valign="top" width="154">
40,000 sqm
</td>
<td valign="top" width="154">
0
</td>
<td valign="top" width="154">
25
</td>
</tr>
<tr>
<td valign="top" width="154">
Zara
</td>
<td valign="top" width="154">
30,000 sqm
</td>
<td valign="top" width="154">
6
</td>
<td valign="top" width="154">
20
</td>
</tr>
<tr>
<td valign="top" width="154">
Topshop/Topman
</td>
<td valign="top" width="154">
27,000 sqm
</td>
<td valign="top" width="154">
2
</td>
<td valign="top" width="154">
15
</td>
</tr>
<tr>
<td valign="top" width="154">
H&amp;M
</td>
<td valign="top" width="154">
20,000 sqm
</td>
<td valign="top" width="154">
0
</td>
<td valign="top" width="154">
10
</td>
</tr>
<tr>
<td valign="top" width="154">
Williams-Sonoma
</td>
<td valign="top" width="154">
20,000 sqm
</td>
<td valign="top" width="154">
0
</td>
<td valign="top" width="154">
10
</td>
</tr>
<tr>
<td valign="top" width="154">
Apple
</td>
<td valign="top" width="154">
15,000 sqm
</td>
<td valign="top" width="154">
18
</td>
<td valign="top" width="154">
30
</td>
</tr>
<tr>
<td valign="top" width="154">
Gap
</td>
<td valign="top" width="154">
12,000 sqm
</td>
<td valign="top" width="154">
3
</td>
<td valign="top" width="154">
15
</td>
</tr>
<tr>
<td valign="top" width="154">
Abercrombie &amp; Fitch
</td>
<td valign="top" width="154">
10,000 sqm
</td>
<td valign="top" width="154">
0
</td>
<td valign="top" width="154">
10
</td>
</tr>
<tr>
<td valign="top" width="154">
Lululemon athletica
</td>
<td valign="top" width="154">
7,500 sqm
</td>
<td valign="top" width="154">
18
</td>
<td valign="top" width="154">
30
</td>
</tr>
<tr>
<td valign="top" width="154">
Hollister
</td>
<td valign="top" width="154">
7,000 sqm
</td>
<td valign="top" width="154">
0
</td>
<td valign="top" width="154">
10
</td>
</tr>
</tbody></table>
Source: Colliers International
CBRE notes that in Sydney, demand from international retailers (especially from the US) is high with “many new brands set to enter the market in 2013”.
Josh Loudoun, CBRE’s head of retail services in Australia and NZ, says Australia remains “an attractive destination for international retailers.
“New openings are performing well and fuelling demand for additional stores with international groups continuing to express interest in prime CBD locations,” he says.
Loudoun says he is seeing significant interest from international groups looking to capitalise on the proposed changes to George Street, but Melbourne remains the ‘go to’ destination mostly due to the availability of prime locations on Collins Street and Bourke Street Mall.
“Australia continues to rank highly on the world stage for rent levels, which is supported by the shortage of prime locations, and Australian retailers achieving some of the highest profit margins in the world,” he says.
“We forecast this will continue despite the pressure of on-line retailing as new market entrants will continue to fight for prime locations.”
Nora Farren, researcher and author of the Colliers White Paper, notes that of stores already opened in Australia, there appears to be an even split between high Street and shopping centre locations, with Sydney and Melbourne the preferred markets.
The average store size requirement is around 800 square metres, but ranges from just 150 square metres for boutique stores to 2,000 square metres for department stores.
The majority of international retailers entering Australia come from the fast fashion and general apparel sectors with the retailers identifying Australian consumers retailing appetite in the first instance from online sales, based on the value and volume of products being shipped to these stores.
US department stores Nordstrom, Saks Fifth Avenue, Macy’s and Bloomingdale’s all offer shipping to Australia, and openly consider the market as one of their biggest online customers
Farren says she does not expect to see many more large retailers in Australia, with most of the major chains already here, but expects that more specialist retailers will start coming in “certainly higher end fashion retailers, particularly the niche fashion retailers from Europe and US”.
“It remains to be seen if the Australian taste is sophisticated enough to embrace them,” says Farren.
The arrival of overseas brands is not good news for local retailers with less prime retail space available and many without the bargaining power to negotiate lower rents.
“The sophistication and bargaining power of these international retailers often means they pay less or will seek to pay less rent per square meter for the quality of space they occupy, and tend to commit to longer lease terms than local retailers.
“The criticism often levelled at centre owners by other tenants is that the rent of international retailers is being subsidised by other local retailers,” says Farren.
Dolce &amp; Gabbana recently signed a lease for 320?square metres of the Mayfair Building on Collins Street in Melbourne, owned by Charter Hall and Cbus Property while Chanel, Prada and Apple have recently opened their first Perth stores.
UK brand Miss Selfridge will open a pop-up store within the Glue Store at Westfield Bondi Junction, before moving into stand-alone stores.
In its recent results filing Challenger Diversified Property Group said the lease of the former Border’s site in its refurbished Jam Factory on Chappell Street in South Yarra to Top Shop had exceeded expectations. Challenger also signed <a target="_blank" href="https://www.propertyobserver.com.au/retail/challenger-secures-italian-pizza-tenant-konpizza-for-refurbished-jam-factory/2013021859321?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=news">Italian pizza chain Konopizza</a> to lease its first shop in the mall.
The new Myer Emporium being built by in the Melbourne CBD by Grocon for Colonial First State’s Global Asset Management and due to open towards the end of the year is set to include a number of international retailers making their debuts in the Australian market.
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Zara, Topshop and Uniqlo lead retail property push into Australia

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Interesting <a target="_blank" href="https://www.macrobusiness.com.au/2013/02/the-history-of-australian-property-values/">article</a> from Philip Soos charting Australian residential property history. Such debates often become polarised between those who own property (“prices always trend up”) and those who don’t (“housing bust!”). Typically what follows is degeneration into cheap shots (cf. “landlords are parasites”, “Soos is a uni student”), but there’s plenty of that dirge on the internet already.  I’m a reasonably intelligent bloke and well aware that when the easing cycle reverses prices might fall, but I challenge whether the close to 70% who are property owners are necessarily the “greater fools” that they’re portrayed to be in Soos’ article and scores of appended comments.
Diversification
Before delving further, I’ll clarify that I’m not simply suggesting placing an enormous leveraged bet on Australian residential property at today’s prices. A holistic financial plan should involve an element of averaging as the average investor is notoriously poor at market timing.  In my book I also discussed the importance of diversification and noted that a sensible portfolio should include a range of asset classes e.g. Australian property, UK property (close to London), an averaging strategy into UK index funds, holdings in Australian equities and cash. Diversification into non-correlated asset classes such as precious metals and art, may also be preferable.
Graphs from 1861…
As a historian specifically interested in industrial and economic history from this era, I take interest in charts detailing trends from 1861. However, let’s be frank, residential property trends of 1861 bear zero relevance to the modern era.  As compared to my native UK, Australia achieved high rates of home ownership in the 19thcentury. My adopted city of Sydney had home ownership rates reaching 28% in 1891 as compared to only 10% in the Britain of 1900. However, data from the era of the horses and cart era pre-dating WWII is not relevant.
As a Pom I was often presented with such charts in the 1990s past as irrefutable proof that property is wildly over-priced, but over a reasonable period of time homeowners and property investors remain way ahead of those in other asset classes (and in and around London prices simply continue to increase).  Of more relevance is the significant increase in household debt, particularly the gearing up in response to banking deregulation and the structural shift to lower interest rates.
Ethics
Admittedly, when I first got into property, I hadn’t considered whether it is an ethical practice. It’s common to vilify owners of property as leeches, but we can’t have the milk and beef from the capitalism cow. If Australia continues populating at a frantic pace someone needs to own rentals or the system fails.  If you're taking aim at the cost of land/dwellings/renting, you’re picking the wrong target: the only route to change is through amendments to government policy, regulation and tax laws. Carping at landlords alters nothing.
Theory
It’s immature when faceless Tweeters dismiss Soos’ theories due to age (if you want to see what genuine student tripe looks like track down my analysis of Sheffield’s steel industry history/welfare state – utter dross). However, when it comes to finance and investment, there IS a key difference between theory and practice.  My suggestion for the long-term future of residential property has been that since interest rates fell from the nosebleed ~15% level, over an extended future time horizon prices are likely to some extent correlate to the growth in household incomes. Over the short term I’ve no more idea than Keen or anyone else what lies ahead.
Household incomes have flown along in Australia in the modern era, in part due to high inflation in recent decades and an increase in the number of two-income households. Absent a return to high inflation it’s likely that household income growth will be lower in the future, although it’s a fair bet that Australia’s moderately inflationary environment will prevail given that is the Reserve’s stated target.
Practice
Suppose you buy a home today for $300,000 and take on a mortgage of $240,000. If price growth does correspond to a growth in household incomes of, say, 4% per annum, what do you think that property might be worth over a working lifetime of 45 years?
I won’t type the number (it’s close to a sixfold increase) as I’d doubtless be certified as a raving loon. Run some numbers and you’ll note that due to compounding growth even if the estimation is wildly over-optimistic by a staggering percentage, the vast implied margin of safety determines that you still don’t lose out. More pertinently, you will OWN an unencumbered asset which you may choose to sell and downsize to assist in funding your retirement, or rent out at tomorrow’s doubtless exorbitant rental values.
An alternative to “buying now” is renting and investing in a diversified portfolio of ‘productive assets’. My suggestion in this case is to implement a prudent averaging strategy into a well-diversified LIC which invests in the industrials index with its superior dividend streams.  Two problems. Firstly, the spiralling cost of renting a decent property (if you believe that rents will become reasonable as the population booms you retain greater faith in political leadership than me). Secondly, in today’s world of overseas travel, credit card binges, impulse-buying and rampant consumerism, do Australians tend to diligently set aside a sizeable percentage of their income into a diversified portfolio of assets? Erm, no.
Ownership assets
We might reasonably expect to live in retirement for 20-30 years. If you’re to remain financially secure through such a time horizon you require a material retirement lump sum or annuity, and, ideally an unencumbered dwelling.  Debate continues on the impending fortunes or otherwise of our economy. However, if you believe interminably in the ‘Mad Max’ scenario that capitalism fails and only farmland and guns retain value, then unless you’re a trained mafioso, you’re doomed regardless. In a variation on Pascal’s wager, the only rational investment approach is to believe that capitalism continues to re-invent itself and prevails. You need to own income-producing assets, be they equities, real estate, commodities or cash.
Now, suppose you'd taken the market-timing advice of the purveyors of doom since 2008, when Keen made his infamous “house prices will crash by 40%” prediction. Over the last half decade you'd have sold your house, watched the cost of renting increase horribly, and, following the more recent dreadful advice to short-sell the world’s fourth largest iron ore producer, sent yourself into a financial tailspin (if undertaking a leveraged CFD play, perhaps bankrupt). Worse still, property prices have tracked upwards.
Let’s be absolutely clear: if your financial plan involves owning nothing and then speculatively selling shares you don’t even own (into a raging bull market and without using a sell-stop order) in the vain hope of buying them back cheaper down the road – your destiny is likely to be drawing the Age Pension and adding to the Government’s pre-existing headaches. To build a sound financial future you need to own income-producing assets with a longer-term growth component.
Speculation: looking out
Are property owners "speculators"? It’s true that in the short term property ownership often involves holding cost (even with mortgage rates dropping to ~5.00%) . But over time rents tend to increase. Investment properties generate income as well as long-term compounding growth. As Ben Graham highlighted, the word 'speculation' comes from the Latin noun specula, a “look out”. So let’s “look out” at what’s on the horizon for Australia:
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<a href="/images/stories/2013/02/wargentfeb15.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2013/02/wargentfeb15thumb.gif"></a>
<a target="_blank" href="http:www.abc.gov.au">Source: abs.gov.au</a>
ABS projections will not be accurate and nor do they profess to be, but the populations of Australia’s four major capital cities look likely to skyrocket. Again, we turn to policy: what are we doing to hold down the cost of land and new developments? Unless I'm missing something: nothing.  A major problem will unfold during Australia’s “Great Rebalancing”. It’s hoped that low interest rates and housing construction will plug the gap/hole/crater left by the phenomenal boom in mining investment, but who’s going to buy the new housing? If no-one, then who will construct it?
New developments are expensive and often inappropriately designed or located. Thus both homebuyers and investors clamour towards the “better value” established dwellings, particularly those located in comfortable, commutable proximity to the four major capitals.  Naturally, prices will continue to peak (cue high-fiving property owners) and trough (self-congratulatory squeals of delight from renters) cyclically and much depends on the success of the mining boom transition from construction to production, but will capital city prices collapse permanently to well below where they were before the financial crisis? With the prevailing levels of intervention, that seems unlikely. The housing affordability debate will never go away, of course - even if prices and interest rates fall it will continue as it does in every decade.
Policy
This will be dismissed as a spruik, but if you’re genuinely concerned about the price of Australian housing you need to pick the right target: the Australian government. The challenges facing leadership with regards to housing are vast but not insurmountable: improved transport links, increasing the supply of appropriate land and dwellings, reforming the tax laws. If you think our leaders are equal to the task…you have more faith in them than I do.
Pete Wargent holds a range of finance and property qualifications and is the author of <a target="_blank" href="https://petewargent.blogspot.com.au/">Get a Financial Grip – a simple plan for financial fr</a><a target="_blank" href="https://petewargent.blogspot.com.au/">eedom.</a>
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It seems unlikely that capital city house prices will crash: Pete Wargent

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Room for Debate: Could an Australian housing bubble be forming?

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Across the capital cities and based on all sales recorded over the 2012 calendar year, 31% of house sales and  46% of unit sales were transacted at a price below $400,000. Aggregating the figures together for dwellings shows that about 34% of all capital city homes sold for less than $400,000 over 2012.  As you can see in the table below though, the largest proportion of these sales was in Hobart where 67.6% of all house sales and 82.5% of all unit sales were priced under $400,000.  Similarly, Adelaide recorded 49.7% of all house sales and 70.7% of all unit sales with a sale price lower than $400,000.  Maybe not so coincidentally, not only are these Australia’s most affordable capital cities, but Tasmania and South Australia are also showing the highest rates of unemployment.
At the other end of the spectrum is Canberra where only 8.6% of house sales were priced lower than $400,000.  Detached house sales under $400,000 were also comparatively rare in Darwin (23.0%) and Sydney (24.7%).
The city with the largest premium (ie $2 million plus) is Sydney where 3.0% of all house sales were priced at $2 million or higher and just shy of 1% of Sydney units were at this price or higher.
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Outside of the capital cities, housing prices are typically much lower. Take <a target="_blank" href="/news">Newcastle</a>, one of Australia’s largest regional cities, as a case in point. The median house price at Newcastle is $395,000, compared with Sydney’s $660,000, and the median unit price is $340,000 compared to $489,000 in Sydney. Some 51% of houses sold over the past year were at price points below $400,000, and 68% of unit sales were priced lower than $400,000.
As far as housing affordability goes, the vast majority of regional cities provide a substantial saving on the cost of housing compared to the capital cities.  The drawback to many of these areas, though, is that job opportunities are often scarce. If we saw more government and private sector businesses choosing to locate their headquarters in regional locations, the labour market conditions would an improve and it would be easier to attract new residents.
<a target="_blank" href="https://blog.rpdata.com/2013/02/where-can-you-buy-a-house-or-unit-under-400000-across-the-capital-cities-and-major-regional-markets/?utm_source=feedburner&amp;utm_medium=feed&amp;utm_campaign=Feed%3A+RPDataResearchBlog+%28RP+Data+Research+Blog%29">A series of thematic maps</a> provides some geographic context. Areas shaded in the red have recorded at least 80% of house or unit sales at a price below $400,000 over the 2012 calendar year.  The concentric circles mark the 10-kilometre, 20-kilometre and 50-kilometre points from the capital city GPO. The white space on the maps is typically areas where the number house or unit sales are either very low or non-existent.
The spatial trends are pretty clear and should come as no surprise. The vast majority of affordable sales are generally located in the outer fringes, with very few suburbs showing a high proportion of house sales lower than $400,000 within 20 kilometres of the city. This trend is particularly the case in the larger capitals, although there are a few exceptions. The proportion of unit sales priced under the $400,000 mark show an improvement in proximity, demonstrating the more affordable price points that medium and high density housing options provide.
Tim Lawless is national research director of <a target="_blank" href="https://www.myrp.com.au/">RP Data.</a>
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