High-profile apartment defect cases have changed the way many NSW buyers approach purchasing, putting greater scrutiny on building quality, strata records and the parties behind a development before a contract is signed.

The industry buyers are assessing today, however, is also different from the one in which cases such as Opal Tower and Mascot Towers emerged.

NSW has introduced a series of regulatory measures aimed at strengthening oversight of apartment construction, including Building Commission NSW, the Residential Apartment Buildings Act 2020 and the Strata Building Bond and Inspections Scheme. Under the latter, developers are required to lodge a bond, with independent inspections forming part of the process for identifying defects in new strata developments.

Those changes provide another layer of protection, but they haven't removed the importance of buyer due diligence.

[smartcode_project:default project_id=5743 project_image_fid=372394]

For purchasers considering an apartment, that means looking beyond the residence itself. Building and strata history, strata reports, the track record of the builder and developer, the condition of common property and any known or planned expenditure by the owners corporation can all form part of assessing a building before purchase.

Whether the development is already complete can also materially change what can be assessed.

An off-the-plan purchaser is necessarily buying before the finished product exists. A completed apartment, by comparison, can be walked through before contracts are signed, allowing the purchaser to see the finishes, common areas and broader building as they have actually been delivered rather than relying solely on plans and renders.

It also removes exposure to some of the uncertainties that exist between an off-the-plan purchase and completion, including construction delays, cost pressures and builder insolvency during the delivery period.

[smartcode_project:default project_id=5743 project_image_fid=927]

<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a> National Sales Director Ben Hamblett said that greater focus on tangible evidence is increasingly evident among apartment purchasers.

“The biggest shift we're seeing is buyers wanting proof, not promises,” Hamblett said.

“That's exactly why we deal in completed stock - you can inspect the building before you commit - and why we've backed every purchase with a cash bond against special levies.”

At <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> in Parramatta, that emphasis on a completed, inspectable product is already in place.

The 413-apartment, 46-level tower at 12 Phillip Street is being marketed by Projects by Equitifund, allowing prospective purchasers to inspect the residences, common areas and resident facilities before committing.

[smartcode_project:default project_id=5743 project_image_fid=375255]

The Lennox also introduces another layer to the due-diligence conversation through Strata Surety.

The vendor-funded arrangement provides purchasers with a cash-backed bond held in their own solicitor's trust account from settlement. According to Equitifund, the bond covers any special levy raised during the applicable cover period and is provided at no cost to the purchaser.

Special levies can create an unexpected cost for apartment owners where an owners corporation needs funding beyond its existing strata contributions. Under NSW strata law, a special levy requires approval by owners at a general meeting.

Equitifund Executive Chairman Greg Huxley said Strata Surety was designed to provide something more concrete than reassurance about that potential exposure.

“Buyers have every right to ask hard questions about strata risk - the industry has given them plenty of reasons to,” Huxley said.

“Our answer isn't a reassurance, it's a bond. Strata Surety puts real money behind that confidence, held by the buyer's own solicitor, not by us.”

[smartcode_project:default project_id=5743 project_image_fid=375281]

For The Lennox, its completed status also means purchasers can assess not only the apartment itself, but a building that has already been occupied and operating for several years.

Completed in 2021, the $300 million development, designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, comprises one, two, three and four-bedroom apartments, with open-plan living areas extending to private balconies. Interiors incorporate engineered timber flooring, stone benchtops and integrated appliances, while many upper-level residences have views across the river and surrounding district.

Its established amenity can similarly be inspected in operation. Resident facilities include the Watermark precinct with a 20-metre pool, outdoor terrace, barbecue areas, gym, fitness studio and conference room, while ground-floor retail addresses the river walk and surrounding public space.

The Lennox is also home to the Southern Hemisphere's first fully robotic residential car park, which has now operated for several years. Its nine-level basement combines three conventional parking levels with six automated levels, accommodating 327 vehicles using technology from German firm Lödige Industries.

[smartcode_project:default project_id=5743 project_image_fid=925]

The riverfront address puts The Lennox close to much of central <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a>'s existing infrastructure, including Parramatta Station, Westfield Parramatta, Parramatta Park, and the Church Street dining precinct.

The remaining apartments form part of a limited release secured by Equitifund, following the sale of the majority of residences before and shortly after completion.

The regulatory environment around NSW apartment construction has changed considerably since the defect cases that reshaped public discussion around the sector. For purchasers, however, regulation is only one part of the equation. The ability to investigate a building's history, review its strata position and, where possible, inspect what has actually been delivered remains central to making an informed apartment purchase.

At The Lennox, its completed status provides that opportunity before contracts are signed, while Strata Surety adds a financial backstop against special levies beyond the protections already provided under NSW strata law.

[smartcode_project_cta:default project_id=5743]

Joel Robinson

Buying with confidence: What NSW apartment buyers should check beyond the defect headlines

Too often, heritage buildings become the podium for a contemporary tower. At <a href="https://www.apartments.com.au/new-apartments/623-collins-607-623-collins-street-melbourne-vic-3000">623 Collins</a>, <a>Sterling Global</a> challenged its design team to reverse that process.

The brief to <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> was deliberately simple: "Don't design around the heritage. Design from it." It became the philosophy behind a project that draws inspiration not only from two landmark heritage buildings, but from Collins Street itself, a street layered with architectural history and civic significance.

That philosophy has shaped one of <a href="https://www.apartments.com.au/developments/melbourne-vic-3000">Melbourne</a> CBD's most considered residential projects, where the 1924 State Savings Bank and neighbouring Batman's Hill Hotel have become the architectural foundation for 623 Collins rather than remnants preserved beneath a new development.

[smartcode_project:default project_id=145324 project_image_fid=372749]

Rather than approaching the site as a blank canvas, <a href="https://www.apartments.com.au/developers/sterling-global">Sterling Global</a> saw the existing buildings as the beginning of the story.

"Sites like this rarely become available," the developer said.

"623 Collins wasn't simply an opportunity to develop a prominent CBD site. It was an opportunity to restore and reimagine one of Melbourne's important heritage landmarks while contributing to the continued evolution of Collins Street. For us, the existing buildings weren't constraints. They were the beginning of the story."

Instead of mimicking the ornate heritage architecture, Plus Studio studied the proportions, rhythm and craftsmanship of the original buildings before translating those characteristics into a contemporary 42-storey tower.

[smartcode_project:default project_id=145324 project_image_fid=372748]

"The brief challenged us to create a contemporary landmark that respected Melbourne's architectural history without becoming nostalgic," Plus Studio said.

"Rather than mimicking heritage, we sought to understand its proportions, rhythm and material language before translating those qualities into a distinctly contemporary architectural expression."

The practice says the State Savings Bank and Batman's Hill Hotel became the project's primary source of inspiration, allowing the heritage buildings and contemporary architecture to exist "in conversation rather than contrast." Generous planted terraces further soften the transition between old and new, creating elevated green spaces while reinforcing the dialogue between the restored podium and the contemporary tower.

That dialogue continues throughout the interiors, where Melbourne designer Fiona Lynch developed a material palette inspired by the idea of alchemy, balancing contrasting materials that reference both the Neo-Grec detailing of the original bank and contemporary urban living. The result is a series of spaces that feel timeless rather than trend-driven.

[smartcode_project:default project_id=145324 project_image_fid=354343]

The project will deliver 316 residences across four collections, Heirloom, Signature, Reserve and the Penthouse Collection, with each responding differently to its position within the building, from the restored heritage podium through to the upper levels of the tower. The Heirloom Residences retain defining heritage elements including original heritage windows, generous proportions and high ceilings, while the tower introduces contemporary homes with expansive layouts and elevated views.

Amenities have likewise been designed to support long-term city living rather than short-stay convenience. Residents will have access to concierge services, wellness facilities including a pool, cold plunge, sauna, steam room and gym, alongside private lounges, entertaining spaces and dedicated resident clubs.

Sterling Global says that approach is resonating with buyers seeking permanence rather than novelty.

[smartcode_project:default project_id=145324 project_image_fid=354347]

According to the sales team, purchasers are looking for enduring architecture, generous floorplans, heritage character and long-term value, with many commenting that 623 Collins "doesn't feel like another apartment development" because of the way the architecture has been curated around the site's history.

Situated on the prominent corner of Collins and Spencer streets, the project occupies one of Melbourne's most recognisable gateway sites, marking the western entrance to the city's best-known street. For Sterling Global, it also reflects a broader shift in city-making.

"Rather than maximising development yield, the project embraces adaptive reuse as a design philosophy, allowing heritage to inform architecture, interiors and the overall resident experience," the developer said.

"The result is a building that feels uniquely connected to Melbourne."

[smartcode_project_cta:default project_id=145324]

How Sterling Global designed 623 Collins from Melbourne's history

Avant Townhomes is adding to Ivanhoe’s family-sized housing options with <a href="https://www.apartments.com.au/new-townhouses/three-82-ivanhoe-382-upper-heidelberg-road-ivanhoe-vic-3079">Three 82</a>, a collection of just 16 four-bedroom townhomes on Upper Heidelberg Road.

The <a href="https://www.apartments.com.au/developers/intrapac-property">Intrapac Property</a> townhome division has taken a contemporary approach to the traditional family home, pairing larger floorplans with the lower-maintenance format of a townhouse.

[smartcode_project:default project_id=152069 project_image_fid=374394]

Designed by <a href="https://www.apartments.com.au/architects/arcadia-studio">Arcadia</a>, with landscaping by Landsite, the homes feature generous open-plan living and dining areas that connect directly to outdoor spaces, with layouts also designed to maximise natural light and privacy.

Natural stone is used throughout the interiors, including in kitchens that pair stone surfaces with bespoke cabinetry, considered storage and SMEG appliances.

The four-bedroom layouts include built-in wardrobes and a main bedroom with its own ensuite, while family bathrooms service the additional bedrooms. Each home also includes a lock-up double garage and intercom entry.

[smartcode_project:default project_id=152069 project_image_fid=374399]

Energy efficiency has been incorporated into the design through solar panels, double glazing and reverse-cycle heating and cooling, with the homes targeting 7-star energy ratings.

Rather than incorporating extensive communal facilities, Three 82 has been conceived around private residential amenity, with the 16-home scale keeping the focus on individual homes and their own indoor and outdoor spaces.

The development is located at 382 Upper Heidelberg Road, around one kilometre from Ivanhoe Village's cafés and retail and a short drive from Eaglemont Station and Ivanhoe Station.

[smartcode_project:default project_id=152069 project_image_fid=374393]

Several of Ivanhoe's established schools are also nearby, including Ivanhoe Girls' Grammar and Ivanhoe Grammar School. The address also provides access to the suburb's parklands and the wider Yarra River corridor.

<a href="https://www.apartments.com.au/project-marketer/nelson-alexander">Nelson Alexander</a> has been appointed to handle sales.

Construction is underway and progressing well, with Three 82 currently tracking toward completion in Q2 2027.

[smartcode_project_cta:default project_id=152069]

Three 82 brings boutique four-bedroom townhome collection to Ivanhoe

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.

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

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

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The former <a href="/news">South Melbourne</a> headquarters of the Royal College of General Practitioners sold with vacant possession for $9.9 million two years ago has been resold for $14.35 million through Lemon Baxter.
The 2012 buyers, a joint venture between Guy Nelson’s Alpha Partners and the JAK Investment Group, refurbished and re-leased <a href="/expert-insights/investing/the-royal-college-of-general-practitioners-south-melbourne-hq-fetches-healthy-9-million">the then vacant building</a>.
Nelson was formerly Macquarie’s head of property, and JAK is owned by Nelson’s former colleagues Adam Jane and Daniel Knights.
The four level Palmerston Crescent property with 2,794 square metre space had been the home of the medicos for 18 years.
The Royal College of General Practitioners, which relocated to <a href="/news">East Melbourne</a>, had been there since 1982.
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South Melbourne office flip yields $4 million in two years

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Agent: Terry Hassan<img src="/images/2014/05/19/hassan-profile.jpg" alt="" style="float: right;">
Position: Associate director, sales and leasing
Company: Knight Frank
Office location: South West Sydney
How long have you been in the industry? 
I have been in the real estate industry for over 10 years.  I firstly began my career in Western Sydney where I was a residential agent for a number of years before moving to BB Retail Capital (BBRC) and specialised in retail leasing. For the past six years, I have worked in commercial, retail and industrial
What’s happening in the area you specialise in?
The south-west is arguably Sydney’s fastest growing region with a growing number of new developments in the pipeline, coupled with land rezoning and the recent announcement of the Badgerys Creek Airport, the region is thriving with residential and industrial development.
Describe the most interesting property you have sold
I believe every property is interesting and has its own merit, although one that stands out would most likely be a deal that was negotiated over a term of 12 months. This included a number of issues in rezoning, council objections and even a court battle so all in all, I learnt a great deal and this was a very interesting transaction.
What are the ingredients to being successful in your job?
I believe success is not about how much money you make but what impression you leave on your client. Without a doubt, attitude would have to be the most important ingredient to being successful in your job as an agent. Even if the world is falling apart around you, remember to stay positive.
What aspects of your role do you enjoy the most?
I thrive on being in an auction environment; there is nothing better than being amongst a fast paced, exciting auction.
Where would you invest a spare $750,000?
At the moment I would say industrial as demand will only continue to increase and its capital growth is higher than residential.
Which football team do you support?
"The family club" - Canterbury Bulldogs.
What’s your favourite app or techno gadget?
Most people might find this fairly boring, although I would need to say my mortgage calculator. It calculates stamp duty and loan repayments within seconds and is super easy to use.
How do you use social media?
I’m a huge fan of <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/terry-hassan-sales-and-leasing/44/4a/436" target="_blank">LinkedIn</a>. By actively using it over the years, it has helped lift my personal profile in the property sector and also meet and network with property professionals Australia wide.
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po-LsXgBTHBmX

In profile: Knight Frank's associate director, sales and leasing, Terry Hassan

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GUEST OBSERVATION
Lessons learnt by management about gearing in the GFC are being applied now as AREITs acquire assets with debt on accretive terms. Yields on property are higher than interest rates on loans, so that return on equity is enhanced.
Gearing can change the characteristics of an investment significantly and in the worst case, force the sale of the underlying assets when prices are depressed. AREITs can enhance returns for investors through gearing, when they are generating total returns that are greater than the interest rate on debt.
Gearing increases downside risks. A major contributor to the AREIT sector fall of close to 70% between 2007 and 2009 was excessive gearing including paying distributions from unrealised profits funded by debt.  Valuations of property assets fell during the GFC and loan covenants were tightened by banks, causing breaches of loan covenants prompting banks to call for loan repayments. AREITs were forced to sell assets at distressed prices and raise capital at significant discounts to NTA.
Chart one illustrates the gearing levels of GPT Group (GPT), Federation Centres (FDC), Mirvac Group (MGR) and the sector over seven years to 31 December 2013.
Chart one – AREIT sector – Gearing Levels 
 <img src="/images/2014/05/29/binesh%20may%2029%20one.png" alt="">
* Previously Centro Retail Australia (CER)
Source: Company financials, UBS, Atchison Consultants (2014)
As shown in Chart one, the three AREITs have all reduced their gearing levels since the GFC. AREITs have re-focused on the fundamentals of property ownership and management and recapitalised through equity raisings resulting in lower gearing levels.
Over the twelve month period to 31 December 2013, AREITs have undertaken bond issuances mainly in overseas markets in order to finance property acquisitions or refinance existing debts. Mirvac Group has increased its gearing level by 5% over the period from 31% to 36% financing property acquisitions. Gearing below 40% does not place any strain on bank loan covenants.
A total of $5.8 billion of debt has been raised over the year to 31 December 2013. This reflects the prevailing low interest rate environment and consequently attractive financing conditions for new property acquisitions. Currently, interest rates on debt of 4.6% are below yields of 5.5% to 8% on property assets in the market.
In the current low interest environment, AREITs will continue acquiring assets at yields above loan interest rates, which is accretive for returns on assets for investors. Provided that levels of debt are judiciously managed, AREITs have the potential to enhance return on equity for investors whilst minimising the potential for breaching loan covenants.
Binesh Seetanah is an analyst at <a href="https://atchison.com.au/" target="_blank">Atchison Consultants</a>.
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bseetanah-MkzVfc9t4h

AREITs applying the gearing lessons learnt in the GFC

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Singapore’s Frasers Centrepoint Limited has trumped Stockland Group’s bid for Australand Limited, offering $4.48 per share.
Stockland had previously made a $2.5 billion bid for the residential and commercial developer through a share swap deal. Frasers Centrepoint has countered with a $2.59 billion off-market takeover offer. The Singaporean company has now entered into an exclusive four week due diligence period with Australand.
Frasers Centrepoint's bid has likely knocked Stockland out of the running for Australand, with Stockland <a href="/expert-insights/investing/stockland-finally-ups-australand-offer-to-4-35-per-security">calling their $4.35 per security bid a "final offer"</a>. Australia's largest diversified property group <a href="/expert-insights/investing/stockland-swoops-on-australand-stake-in-possible-takeover-precursor">purchased a 19.9% stak</a>e in Australand in March. 
According to Lim Ee Seng, group chief executive of Frasers Centrepoint, the Singaporean listed company intends to extend its business interests in Australia through the purchase.
“The Proposal will catapult FCL [Frasers Centrepoint Limited] to being one of Australia’s leading real estate companies with a portfolio of scale and quality. Australia is a core market for FCL,” he said.
“The Group chose to enter the Australian market over a decade ago due to favourable fundamentals including its transparent regulatory environment, strong corporate governance, as well as its deep and mature property market. We already have an established platform and good brand recognition in Australia, but real estate is a business where scale and depth matters. This Proposal will be the catalyst that will help FCL to deepen our roots and accelerate our growth in a market that we believe will continue to offer long-term growth prospects.”
Frasers Centrepoint Limited’s bid of $4.48 per stapled security is 4% up from yesterday’s closing price of $4.31. Under the proposal Australand’s shareholders are entitled to keep the expected first half 2014 distribution of up to 12.75 cents per share. They will also be entitled to any additional distribution expected for the second half of 2014 on a pro rata basis for the period between 1 July 2014 and when the offer becomes unconditional, again with a maximum value of 12.75 cents per share.
As of 31 March 2014, Frasers Centrepoint’s assets totaled approximately S$11.4 billion ($9.74 billion at today’s exchange rate). 
This article has been amended to correct an error in the Singapore dollar value of Frasers Centrepoint's total assets. 
 
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Frasers Centrepoint makes surprise $2.59 billion bid for Australand

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May saw the number of homes listed on the market grow by 5.2%, according to SQM Research.
A total of 366,413 homes were on the market in Australia last month, with five Fridays for the month boosting numbers. The research firm believes that <a href="/expert-insights/buying/market-frenzy-fading-with-asking-prices-at-a-standstill-and-stock-levels-stagnating-sqm-research">stock levels have stagnated</a>, with last year’s “frenzy in the market” fading. 
The total number of listed homes for May, by capital city:
<ul>
<li>
Adelaide: 16,879 Stock on the market was up 4.3% from April (16,182 homes listed). Listings were down 6.0% from May 2013 (17,959). 
</li>
<li>
Brisbane: 27,966 Stock on the market was up 8.1% from April (25,852 homes listed). Listings were up 0.7% from May 2013 (27,766). 
</li>
<li>
Canberra: 3,542 Stock on the market was up 7.9% from April (3,283 homes listed). Listings were down 11.4% from May 2013 (3,998). 
</li>
<li>
Darwin: 1,543 Stock on the market was up 9.7% from April (1,407 homes listed). Listings were up 21.7% from May 2013 (1,268). 
</li>
<li>
Hobart: 4,499 Stock on the market was up 1.7% from April (4,422 homes listed). Listings were down 4.2% from May 2013 (4,696). 
</li>
<li>
Melbourne: 47,492 Stock on the market was up 6.4% from April (44,622 homes listed). Listings were down 2.2% from May 2013 (48,511). 
</li>
<li>
Perth: 22,207 Stock on the market was up 8.3% from April (20,507 homes listed). Listings were up 5.7% from May 2013 (21,011). 
</li>
<li>
Sydney: 25,699 Stock on the market was up 12.9% from April (22,762 homes listed). Listings were down 6.4% from May 2013 (27,468). 
</li>
</ul>
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How many homes were listed in your capital city last month?

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GUEST OBSERVATION
When should a young person start getting paid as an adult?
It depends on where the money is coming from, according to current government policy - policy that is sending conflicting messages about the true value of young people to Australia’s economy.
In March, the Fair Work Commission (FWC) decided to alter the General Retail Industry Award so that 20 year olds would receive the “adult” rate of pay instead of the current rate of 90%. They will now be eligible for the full adult rate once they have been in the job for six months. This means that 20-year-olds will be treated virtually the same as those aged 21.
And yet in May, the federal budget proposed that unemployed people under the age of 25 would no longer qualify for the Newstart allowance of $510 a fortnight, currently available to people after they turn 22. People under 25 will have to apply for the lower Youth Allowance of $414 a fortnight at the full rate.
Currently, the Australian Chamber of Commerce and Industry (ACCI) is <a href="https://www.theaustralian.com.au/national-affairs/policy/business-push-on-sunday-penalties/story-fn59noo3-1226940798835#mm-premium" target="_blank">leading a campaign</a> to lower Sunday penalty rates, arguing that it will create jobs for young people.
These measures send contradictory messages about when young people officially join the mainstream “adult” workforce. Let’s look at each in turn.
First the FWC decision. The Australian Retailers Association has argued that changes to the system of junior rates could discourage employers from appointing young people. But as Damian Oliver from the University of Sydney has <a href="https://theconversation.com/adults-in-all-but-pay-the-case-for-increasing-youth-wages-16030" target="_blank">pointed out</a>, some employers already pay young people in this age group at the adult rate.
Parts of the manufacturing and construction industries - significant employers of young males - have already removed junior rates for many categories of workers aged 18 to 20. Coles and Woolworths, the two largest employers of young people in the retail sector, have already removed junior rates for 20 year olds from their enterprise agreements.
Casual work is on the rise
At the same time, young people face an increasingly casualised workforce, with access to full-time secure work happening later in life. The steady decline of full-time job opportunities over the last 20 years has meant that many teenagers must make do with part-time and casual work, in which associated entitlements such as access to flexible holidays are not available. Combine this with the ever-increasing challenges of entering the housing market and young people find that the secure markers of “adulthood” enjoyed by previous generations are often out of reach. Recognition of a fair level of pay commensurate with “adults” is one of the few concessions available in a fluid job market.
Recent surveys of business show concern that young people lack loyalty to their employers. Loyalty is a two-way street. Recognition of the value of young people’s labour through wage levels, with the expectation that in return young people will stay with employers, is one way of addressing this concern, so the FWC decision is potentially positive in this regard.
The Australian Industry Group has suggested: “The emphasis should be on preserving employment in the industry, not on imposing higher costs,“ but a more sophisticated response is required that both ensures fairness as well as providing youth employment and training opportunities. Arguably, wage rates could be traded off against traineeships with a qualification at the end or other benefits.
A less sophisticated approach is to lower penalty rates. ACCI Chief executive, Kate Carnell, <a href="https://www.smh.com.au/small-business/trends/acci-prioritises-youth-unemployment-20140521-38naz#ixzz33XBhZTkq" target="_blank">recently suggested</a> that “With youth unemployment rates going up, and the policies announced in the budget… you could get more jobs, especially with the young market, very quickly with movement on weekend penalty rates”.
With major employers of young people such as retailers joining the campaign, there is some justification to potentially opening up job opportunities. But again, the value of young people’s work (and rest) is ambivalent. While it may create jobs, it may also inadvertently contribute to the broader lack of security that permeates the youth labour force. And the argument that these jobs will lead to secure employment becomes problematic given that teenagers in part-time work are only <a href="https://www.fya.org.au/wp-content/uploads/2011/11/FYA_HYPAF_Full_Report_PDF.pdf" target="_blank">slightly more likely</a> to move into full-time employment than those who are unemployed.
Earning or learning
Under the government’s new earning or learning regime, jobseekers under the age of 30 will have to wait six months before receiving unemployment benefits, depending on their work history. In one stroke, this policy effectively extends the age of transition from school to work by five years. It does this by treating young people under 30 as one category, consisting of those who apparently need economically punitive motivation to seek work. Advocates of this policy may characterise this as an “incentive”, but the outcome is the same: if you’re young and not earning or learning, you will not be supported by government support derived from societal taxation.
What this does is to extend the economic definition of unemployed youth to the age of 30. It stands in contrast to the FWC’s implied judgement that 20 year-olds should be treated the same as those aged 21. The latter decision affords entitlements to a fair wage to younger Australians, the former denies entitlements to later in life. One step forward, two steps back.
At the heart of the FWR decision is that “the discounted rate for all 20-year-old retail employees is not a fair and relevant minimum safety net”.
Beneath these decisions is a social question: “When does a young person become an adult?” Prior to this decision, 18 year-olds working in retail are paid 70% of the full adult rate (i.e. the wage applied to those over the age of 21). 19-year-olds are paid at 80% of the wage, and so on until at age 21 they are recognised as “adults”.
What changes between the ages of 20 and 21? Based on the evidence, the Commission found there to be “little difference in the duties and responsibilities assigned to 20 and 21-year-old retail employees”. And what changes between the age of 21 and the age of 30?
A consistent message needs to be sent to young people about their economic status as “adults”. Recognising their work through providing the adult wage level is one small way of doing this, while addressing the discrimination evident in the way young people are paid.
The FWC described the decision to change the retail award as a special case and that this would not necessarily lead to similar findings for other awards. The federal government’s policy to alter conditions for receiving Newstart Allowance has yet to make its way through the Senate.
When viewed in combination, these approaches to youth employment suggest we are some way off from sending a consistent message to young people about the value of their work to the economy.
Lucas Walsh is associate professor and associate dean (Berwick), faculty of education at Monash University.
This article was originally published on <a href="https://theconversation.com">The Conversation</a>. 
Photo courtesy of Flickr/<a href="https://creativecommons.org/licenses/by/2.0/" target="_blank">Creative Commons</a>.
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jake-cSmGT7VXVf

Earning, learning or confused: Mixed signals on jobs for young

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Previously, I looked at <a href="/expert-insights/investing/the-pros-and-cons-of-investing-in-a-modern-duplex">the positives and negatives of duplex housing from an investor perspective</a>.

Today I'll explore a more recently evolved ‘sister’ property type to the humble duplex – the ‘dual-key’ property.

Dual-key properties are a fairly recent emergence; however they have existed for decades in places such as Sweden, Japan and the United States.

A dual-key property is effectively one main property, with one front entrance door/hallway. The property then has a living room, bathroom, kitchen and one or two bedrooms.

Sounds like any normal property so far; except that a dual key property has an additional dwelling inside of it. Usually there’s an extra bedroom that has its own door lock. Inside the bedroom is a studio apartment with its own small kitchen and separate bathroom.

Unlike duplexes, dual-key properties enable one space to be shared by two separate parties or tenants. The property may have only one entrance/front hallway, through which all occupants enter. Some dual-key properties have only this as a common area, however most typically have a shared lounge and kitchen. Usually each tenant will actually have separate keys that unlocks only their own bedroom and bathroom spaces.

The pros and of a dual-key investment:

<ul>
<li>Two income producing properties on one title (unlike some duplexes, townhouses and attached dwellings that may require separate titles).</li>
	<li>As the property unit owner will typically only need to pay strata for one property, not two.</li>
	<li>Each portion can still be let separately, offering investors great scope for maximum rental return.</li>
	<li>Arguably, in an ageing population that is also downsizing and urbanising, dual-key could be a smart play to reach into the urban dwellers who require extra space for a parent or elderly relative to live close-by (but still with some privacy and separation).</li>
	<li>Another target rental audience for these property types would be students. Most urban students desire to live within walking distance to everything; their campus, CBD centres, and transport hubs. Dual-key properties may be attractive to students who seek a well located, low maintenance/low common area cleaning property.</li>
</ul>
The cons and of a dual-key investment:

<ul>
<li>Because dual-key is a (relatively) new property type in the Australian market, many are being priced as such. It may be financially smarter, in terms of rental return, to simply buy two separate properties from the beginning.</li>
	<li>The jury is still out on whether this property type is high demand or not. The abovementioned student and extended-family demographics may appreciate this property type, but many others will not. Urban young professionals, for instance, may simply prefer to pitch in for a three or four bedroom share house instead.</li>
	<li>Banks and lenders may have reservations in approving mortgages for this property type.</li>
	<li>Dual-key properties may actually offer limited capital growth. However, some dual-key properties may be easily convertible back to a two to three bedroom single property later down the track.</li>
</ul>
It is a great sign of the times that dual-key properties are on the uptake. With limited urban space and continually high-demand to occupy it, this property type could be a good compromise between human density and quality of life.

As a prospective investment property however, like all property types, would-be investors need to crunch rental and capital growth numbers and consider all the issues a dual-key property type presents, before taking the plunge.

<h2>Check out our latest listings:</h2>

[smartcode_project:default project_id=22057]

[smartcode_project:default project_id=94811]

[smartcode_project:default project_id=24532]
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The pros and cons of dual-key investment properties

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First home buyers are fighting with a 100 pound gorilla with one arm tied behind their backs as they compete with investors who have the luxury of negative gearing and superannuation funds.
But laws around negative gearing and super are unlikely to change so it’s time to revisit the issue.
I believe the answer lies in rethinking superannuation laws and first home buyer grants.
Historically the family home has been the corner stone of ones wealth but this is in danger of being lost. Superannuation was implemented to help people self fund their own retirement and compliment the wealth in their family homes. I believe that allowing first home buyers to access their super and assist them in laying that foundation keeps within the spirit of superannuation.
 A worker who earns the average Australian income of $50,000 a year will have around $36,000 in super by the time they are 30 not including any return on their investments. As a couple that is $72,000! They also have the benefit of diverting more of their income into a tax-sheltered environment. It would not be unreasonable for a first home buying couple to have in excess of $100,000 in super by the time they want to purchase their first home.
<blockquote>
Buying a property is only the first step to home ownership. Keeping up with the mortgage payments is where the real pain starts to bite.
</blockquote>
A large deposit like this would mean first home buyers have more equity in their home and as a result in a more stable financial position. It would also save a significant amount in interest. For example if a first homebuyer had a $100,000 deposit they would only need to borrow around 80% of the property value rather than 90% or more. On a $500,000 home that would save them $2,500 to $3,000 per annum in interest.
They would also avoid paying a hefty mortgage insurance bill of around $5,000 to $10,000 in most cases.
Buying a property is only the first step to home ownership. Keeping up with the mortgage payments is where the real pain starts to bite. If governments really want to help with home ownership they should look at providing ongoing assistance and review first home buyer grants.
First home buyer grants have evolved over the years but on average they provide first home buyers with around $10,000 cash or stamp duty saving benefits. Rather than paying first home buyers a lump sum payment that is usually paid to the banks for mortgage insurance, I believe annual payments will be more effective and a better use of taxpayer money. An annual payment of $2,000 a year for the first five years would help first home buyers establish themselves in the market.
While the devil is in the detail the points outlined above provide a win-win outcome. The government wins as it helps solve first home buyer affordability at no extra cost. The economy wins, as more money will flow into the important building industry. First home buyers win as they will enter the market without paying mortgage insurance and save around $5,000 per annum in holding costs for the first five years.
There is a potential downside in that it would place further pressure on property prices. However this is already happening even without first home buyers and these ideas will go a long way to levelling the playing field between first home buyers and investors.
They would help young Australians into the market and start the process of building wealth in one of our most powerful tax-free investments – our home.
Mark Armstrong is a director of <a href="https://www.ipropertyplan.com.au/">iProperty Plan</a>, which provides independent analysis and tailored advice to investors and home buyers.
This article was first published on Property Observer in October, 2013.
YOU MAY ALSO LIKE TO READ:
<a href="/expert-insights/buying/exclusive-first-home-buyer-picks-from-the-experts">Exclusive: First home buyer picks from the experts</a>
<a href="/expert-insights/investing/how-will-rising-student-debt-affect-first-home-buyers">How will rising student debt affect first home buyers?</a>
<a href="/expert-insights/buying/the-national-guide-to-first-home-buyer-grants">The national guide to first home buyer grants</a>
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It's time to re-think first home buyer grants

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Business meetings via hologram, suburban ‘coworking hubs’ and the possibility of working in Joondalup one day and Auckland the next are just some of the predictions outlined in the Intel Security <a href="https://intelsecurityapac.com/2025/wp-content/uploads/sites/15/2014/05/FR5289b_McAfee_14Q2_ISEC_SSO_32pp_A4_Reportv_LR.pdf">Safeguarding the Future of Digital Australia in 2025</a>report published yesterday.
While 50% of the 1230 Australians surveyed in the report feel comfortable with the current rate of technological change, with only 17% feeling concerned, it is worth looking at what trends could be on the way that your business may need to adapt to.
1. Fully globalised work
According to the report, it’s not just knowledge work that forms the globalised economy: “We are seeing everything from surgery to mining machinery operation being routinely completed by people far away.”
As such, in the future it will become even more crucial for businesses to focus on high-quality customer service in a challenging environment where every industry can foreseeably go global, exposing businesses to many challenges but also unprecedented opportunities.
“Almost all work can be done anywhere now,” futurist, entrepreneur and author of the report <a href="https://www.smartcompany.com.au/growth/economy/3217-">Ross Dawson</a> told SmartCompany. “This will drive down the prices of what people are prepared to pay for this work.”
Likewise, marketing will take on a whole new importance, enabling companies to compete on a global scale and differentiate themselves from competitors the world over. According to the report, this will require companies to acquire more and more personal information from prospective customers in order to discover better ways to target them directly – and with 51% of Australians not reading online privacy policies, as well as the confluence of online activity, this information will be produced in incredibly high volumes.
Dawson says Australian businesses which have “the global perspective”, including strong links to Asia, will be able to take advantage of the opportunities posed by a fully globalised economy, but points out that such an environment would “place pressure on the availability of work and the wages paid for workers who do not have distinctive capabilities”.
2. Rise of the machines
The report says by 2025, machines will have risen against the humans – in a sense. While the advent of advanced robotics will make many jobs obsolete, they may allow for the creation of more jobs in the knowledge industry. These jobs will fill in the blanks with regards to what the machines are not likely to be capable of, such as creativity and relationship skills.
However, the report warns this will create inequalities in the job market that will be challenging to navigate. While specialist knowledge will be in demand and lead to many job opportunities, the rise of the machines will lead to fewer jobs for people without such skills – and lower wages too.
“This is one of the big uncertainties, the big unknowns: the degree to which we have ‘technological unemployment’,” says Dawson. “Whatever happens, what we do know is that we need to focus on developing the distinctively human skills and capabilities of people.”
“We have actually dehumanised work, we’ve made [jobs] into processes. The more tightly we define the work that is done, the easier it is to create a machine to replace it. We now need to work on humanising work… rather than trying to create highly process-orientated work roles,” he says.
Article continues on next page. Please click below.
<hr class="system-pagebreak">
3. Flexibility
There will be more self-employed people by 2025, with many more opportunities for flexible and freelance work.
The report predicts businesses will reshape in order to adapt to this new labour flexibility, with a new focus on extended rather than permanent workforces.
While this might sound like an ideal situation for highly paid freelance workers of the future economy, too much inequity in pay for flexible workers may create job security issues – yet another challenge for businesses to address by 2025.
“The trend is already evident that we are moving towards more and more unstructured freelance work. And as we move to a more and more fluid economy, it means there will be more opportunities for individuals to create a portfolio of work,” says Dawson.
“There will be some people who struggle… but there is a lot that we can do to guard against that. Part of it is around the sorts of social support structures that we have, as well as the education opportunities we have available to adults as well as children.”
4. Office revolution
One of the most interesting possibilities outlined in the report is the notion of creating more ‘coworking hubs’ – suburban office spaces separate from a CBD-centred central office, where employees can work collaboratively in a creative capacity.
“[Collaborative work] is absolutely fundamental… to ensuring Australia’s competitiveness and success,” says Dawson.
These hubs are envisaged as being far more attractive than today’s offices, featuring access to sophisticated technology that may have only been available in the head office.
Short of simply cutting back an employee’s morning and evening commute, these hubs will serve the purpose of boosting productivity and financial turnover by fostering creative entrepreneurship among coworkers. One American survey by Deskmag says that 71% of workers reported an increase in creativity once joining coworking spaces, with 70% also reporting feeling healthier and 62% saying their work output was better.
Better networking technologies would help facilitate these geographically separated work situations, one idea being the use of a ‘holodeck’: a multi-camera set up that could project someone’s likeness in three dimensions, allowing bosses to meet with their employees even if they do all their work at the hub.
5. Security
Of course, an increased reliance on information technologies will require a corresponding increase in network security. If the globalised economy will require more information collection to facilitate marketing, new systems will need to be put in place to protect this personal information from malicious hacking.
“The first thing is understanding what sort of information we need,” says Dawson. “There is often a gathering of data for the sake of it, when it really needs to be focused on creating value. There needs to be a strategic directive,” he says.
Dawson says apart from a focus on plain IT security protocols, which are likely to include more shifts towards point-to-point security, the online behaviour of employees will also need to be addressed by business owners, in order to avoid information leaks.
“One of the other trends is that there are more and more people working remotely, so locking down data becomes very different to what it’s been in the past. It’s also about having the right behaviours by the people inside your organisation.” 
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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Five key workplace trends of the future: Report

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Investors should steer clear of Brisbane’s inner city, New South Wale’s Hunter region and Queensland's Emerald, according to Hotspotting.com.au’s Terry Ryder.
In his <a href="https://hotspotting.com.au/reportDetail.php?num=146" target="_blank">Over-supply Alert</a>, commentator and regular Property Observer contributor Ryder nominates 10 regions that investors should avoid due to oversupply issues. According to Ryder, “supply is the factor most over-looked by property investors,” with many focusing on demand.
He attributes the Gold Coast’s five year price tumble to oversupply, while the same factor is also to blame for Wyndham City’s stagnation. With oversupply, writes Ryder, comes a fall in rents which in turn pulls down property values.
The regions Ryder to avoid fall loosely into two “danger situations”: inner city apartment markets and regional centres where increasing supply has coincided with declines in demand due to the resource sector slowdown.
Here are Ryder’s top 10 markets to avoid:
<ol>
<li>
Brisbane inner-city (QLD) 
</li>
<li>
<a href="/news">Emerald </a>(QLD) 
</li>
<li><a href="/news">Gladstone </a>(QLD) </li>
<li>
<a href="/news">Gracemere</a> (QLD) 
</li>
<li>
Hunter region (NSW) 
</li>
<li><a href="/news">Mackay </a>(QLD)</li>
<li>
Melbourne inner-city (VIC)
</li>
<li>
<a href="/news">Moranbah</a> (QLD)
</li>
<li>
Perth inner-city (WA)
</li>
<li>
<a href="/news">Port Hedland </a>(WA)
 
</li>
</ol>
This article continues on the next page. For Terry Ryder's explanation of each city's market, click below.
<hr class="system-pagebreak">
 Terry Ryder explains why each region is affected by oversupply issues.
<ol>
<li>
Brisbane inner-city (QLD) Despite the “aura of safety and respectability” surrounding CBD apartment markets, Ryder warns that <a href="/news">Brisbane</a>’s CBD residential market hasn’t performed well historically. He notes the city has 69 apartment developments, of 100 or more units each, scheduled for the next five years, which “suggests the situation will get worse before it gets better.” 
</li>
<li>
<a href="/news">Emerald </a>(QLD) Ryder cites the shrinking Bowen Basin coal industry as a factor in Emerald’s growth prospects, with new stock from developers hitting at exactly the wrong time. “But currently this is a market to avoid – at least until the new resources projects get under way and the existing accommodation surplus is absorbed.” 
</li>
<li>
<a href="/news">Gladstone </a>(QLD) Gladstone’s vacancy rate currently sits at 8%, up from 1.5% in August 2012. According to Ryder, Gladstone is now experiencing the effects of a wave of developer activity in late 2012 and early 2013. 
</li>
<li>
<a href="/news">Gracemere</a> (QLD) About 10 kilometres out from Hotspotting favourite Rockhampton, Gracemere “has just been smashed by developers” according to one of Ryder’s clients. Ryder sees the almost doubling of residential building approvals in Gracemere from 2011-2012 to the next year as a “warning signal.” 
</li>
<li>
Hunter region (NSW) The coal industry’s downturn has also hit New South Wales, with Ryder claiming that despite several other strong economies in the area, the resources sector once “elevated its status to a boom region.” Though he believes that the coal industry’s contraction isn’t likely to be permanent, Ryder says the downturn in demand is occurring alongside a rise in developer activity, driving oversupply. 
</li>
<li>
<a href="/news">Mackay </a>(QLD) Mackay is another region feeling the effects of a contracting coal industry, according to Ryder. But he believes that it will eventually pick up. “Mackay has been a strong regional property market numerous times in the past and will be again in the future. It's a growth centre and it has one of Queensland's most important export ports for the resources sector,” he writes. “But currently this market is still in decline and is one to avoid until the bottom has been reached.” 
</li>
<li>
Melbourne inner-city (VIC) This isn’t the first time Ryder has raised concerns over Melbourne’s inner city market. Last month, he wrote that <a href="/expert-insights/buying/the-inner-melbourne-boom-is-toxic-growth">“the inner Melbourne “boom” is toxic growth if ever I’ve seen it</a>.” “Local investors should stay well away from this market,” advises Ryder. 
</li>
<li>
<a href="/news">Moranbah</a> (QLD) With a vacancy rate of 10%, “the Moranbah market is a basket case – and Australia’s most spectacular example of the rise and fall of a property market,” writes Ryder. Again, Ryder writes that although the area will recover in the future, “right now it’s the nation’s No.1 No Go Zone.” 
</li>
<li> Perth inner-city (WA) Oversupply is a smaller issue in Perth’s inner city than in Melbourne or Brisbane, writes Ryder. But nevertheless he cautions investors against the area. “There are high levels of urban renewal activity in and around the <a href="/news">Perth </a>CBD and this is likely to see considerable new construction in the near future,” he writes. 
</li>
<li>
<a href="/news">Port Hedland </a>(WA) Ryder urges investors to disregard marketing materials when it comes to Port Hedland, where properties are taking five months to sell as the mining boom winds down.
</li>
</ol>
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Safari Group offers low-touch investment proposition in Queenstown’s popular ski fields district

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