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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Technology company AWA Limited is up for sale after collapsing into administration last week.
AWA Limited services the technology needs of businesses and its website claims “where there is technology infrastructure that needs to be installed and maintained AWA will be there making it all work.”
The tech company started operations in 1909 as a radio manufacturer and radio broadcaster, but in recent years has focused on providing technology services to major businesses and government organisations.
It began as Australasian Wireless Limited, a Telefunken wireless agent, and since then has grown to employ 240 staff with a network of regional agents in over 700 locations around Australia.
It fields 15,000 service calls a month and 40,000 inventory transactions with a blue chip customer base which includes Flight Centre, Dimension Data, HP and NEC.
The business has been placed for sale by Andrew Spring and Roderick Sutherland of Jirsch Sutherland who were <a target="_blank" href="https://www.smartcompany.com.au/growth/economy/34976-the-20-most-notable-collapses-of-2013">appointed as receivers</a> on February 28, 2014.
“We are continuing to seek expressions of interest in respect to the sale of the business/assets of the company,” Spring and Sutherland said in a sale advertisement placed today.
AWA Limited was placed in administration last week with Philip Carter, Daniel Walley and Alan Walker of PPB Advisory appointed as administrators.
Carter told <a target="_blank" href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-02-26/awa-appoints-administrators-after-105-years/5285602?section=business">ABC radio</a> that AWA's board had "run out of time" and "run out of options".
"The company was either about to become insolvent or already insolvent, so in this case they have acted at a time when it looked like they were shortly to become insolvent."
Expressions of interest in buying the business are open until March 10, 2014.
Jirsch Sutherland and PPB Advisory were contacted for comment but failed to respond prior to publication.
This article first appeared on <a target="_blank" href="https://www.SmartCompany.com.au">SmartCompany</a>.
                             
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cwaters-YrtBR88nBe

Tech company with 240 staff collapses after 105 years

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If there’s one thing which this country doesn’t have a shortage of it is property schemes and ‘gurus’ who promote these schemes to the vulnerable property investor. The defence housing scheme and National Rental Affordable Scheme (NRAS) now has competition from another scheme.
This scheme is sweeping places such as Sydney, Adelaide, Perth and Ipswich. It’s the granny flat (yes, the granny flat!); the next epidemic that will give plenty of property owners grey hair.
The logic of the granny flat goes like this: “Pick an area where the local government zoning permits granny flats, buy a house, spend $100,000 to build a granny flat on it, rent out both properties, and bring in a double-rent bonanza!”
Clever, right? Wrong!
I see it a lot where property investors get caught up in the higher than normal rental return of a property at the expense of the ultimate potential for capital growth. Don’t get me wrong, the rental income has importance however let’s not lose sight of why we are actually investing. For a majority of people, they invest so that one day they will have the financial freedom to exit the workforce with an income stream that will give them a significantly better lifestyle than they’d get on a taxpayer-funded pension.
At first glance, you’d think a granny flat with its capacity to bring in more rent from one property would be the perfect way to ratchet up those retirement funds. How close will you be to retiring by owning a property that is cash flow positive to the tune of (say) $2,000 per annum? How many granny flat properties will you need to acquire in order to sail the Bahamas? And, how will you fund future dual-living duds like this?
Sure, the granny flat property will grow in value over the years, but its growth will be directly influenced by the buyer demand for it. And this is where the rubber really hits the road.
Think about this scenario logically: who wants to buy a granny flat property? It has to be a buyer who doesn’t mind someone else living in their backyard and the various annoying behavioral traits of each new tenant. That buyer probably is not a young family, a baby boomer, or a young professional couple.
Most often, granny flat properties only appeal to investors. The number of owner-occupiers choosing a granny flat property over any other more conventional home is minuscule. According to the latest Census data, only 25% of all properties are investor-owned. So, to invest in a granny flat property is to sink a heap of money in to an asset with a very small basket of future buyers and to ignore the much bigger basket brimming with first home buyers, renovators, upgraders, downsizers and investors (75% of the market actually)!
Granny flats fall under Propertyology’s category of ‘specialised properties’: properties which only appeal to a very select population segment. These properties have lower demand than a more conventional property.
There’s been a rise in the number of property valuers not supporting purchase prices for properties with a granny flat. Spending $100,000 to build a granny flat on an existing detached house block rarely adds an extra $100,000 in value. Why? Because granny flats aren’t pretty and there are far less teetotalers than willing grannies (buyers).
There is a growing number of ‘property consulting’ companies out there spruiking new houses with granny flats on them to investors. With the gift of the gab and more glossy brochures than you can poke a stick at, these are often the same ‘consultants’ who ran out of NRAS stock and / or are suddenly struggling to make a buck from selling defence housing.
The extra rental income isn’t everything that’s it made out to be either. There is often a longer vacancy period between tenants because a lot of people are turned off at the thought of having a stranger live in their backyard. And those tenants who are interested will demand a lower rent. Property management and letting fees will be applicable to each dwelling and there is increased potential for tenant conflicts.
Banks have a more conservative credit policy for granny flats. When assessing a borrower’s affordability banks will often significantly discount the potential rental income. They often will also limit the amount that they will lend against granny flat properties. Think about why banks would do this.
If you are still um-ing and ar-ing about whether the cash flow positive granny flat is an ideal strategy for stopping work one day, think about this:
Property investor ‘A’ and property investor ‘B’ both have $500,000 to spend. Investor ‘A’ spends his money on a specialised property while investor ‘B’ spends hers on a conventional property. 10 years pass and the conventional property has grown in value in line with the broader Australian market at 6% a year and will then be worth $895,000. The smaller buyer pool for the specialised property has resulted in an increase in value by 4% a year for an end value of $740,000. It’s not rocket science figuring out which property will make a bigger contribution to that retirement nest egg.
On the surface, the dual rental income creates an allure that granny has become youthful again. But, take off the rose-coloured glasses and you’ll discover that, beneath all that botox and bottled-blonde hair is the genuine granny. My advice: keep your granny, but ditch the granny flat. It’ll save you years of grey hair!
Simon Pressley is managing director of <a href="https://www.propertyology.com.au/" target="_blank">Propertyology</a>, a full-time property market analyst, accredited property investment adviser, and the REIA's Buyer’s Agent of the Year (2012 and 2013).
                                     
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spressley-sBoeMhannA

Keep granny, ditch the flat

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There is a distinct housing cycle.  Much of it driven by things that repeat – liquidity; the economy; rising demand; relative investment returns; scarcity and confidence – but there is always an ' X factor' which builds influence and is often the key ingredient/s that causes imbalance.
But first things first – <a href="https://www.propertyobserver.com.au/australian-capital-territory/despite-auction-heat-dwelling-values-were-tepid-in-february-rp-data-rismark/2014030468153" target="_blank">Australian house price growth has paused</a> (well, at least during February) after rising for eight consecutive months.  House prices are up 9.5% over the year.
I am not surprised, as there are natural limits to any market, regardless as to how strong an influence the 'X factor' is and eventually dwelling prices and rents are determined by the local market’s capacity to pay.
This property cycle – and especially for those Queensland markets entering a recovery or just about to – should have several years to go before reaching a market peak.
But high house price inflation now will see a much quicker market peak and potentially, a larger correction in years to come.  For mine, this Queensland residential recovery should be more about increasing sales volumes and clearing excess resale supply and little to do with price or rent escalation.  Appreciation yes, rampant increases no.
In my presentations of late, I outline that past residential cycles have shown an 8.5% average annual return.  But I also go into some detail to explain why I think the next residential cycle – between now and 2021 – will be much milder - averaging 5% per annum on average.  And this assumes that nothing really unforeseen happens.
I am dourer about the future for several reasons, including the limited impulse of future interest rates; no likely new government assistance packages (i.e. FHOG or NRAS); aging and changing demographics; budget deficits; more frugal governments; geopolitical shifts (the Russian periphery is only part of a wider changing picture); low housing affordability and structural changes to local/overseas employment.
Housing is affordable if you have good equity, a well-paid, full-time job or a well-stocked superannuation fund.  But if you are starting out, or have limited equity, or work several part-time jobs, then Australia’s housing market is very expensive indeed.
Also, whilst jobs are being created, most of late are part-time.  Three out of 10 people are now employed part-time across the country.  Nearly 2 million workers are ‘underemployed’ – meaning they are working but would like more of it.  Things are expensive.  We just got our quarterly energy bill, I am still in stock!
At present, this cycle’s 'factor X' – well it should really be 'factors X' – are having a very inflationary impact.  These include SMSFs' push towards property, Chinese direct and indirect buying, loose FIRB rules and the lower Aussie dollar.
So far this has been largely confined to Sydney and Melbourne.  But many Queensland developers and local agents are doing their level best to attract these influences north.  I wish them luck, as God knows it has been tough making sales over the last five years, but I don't want them to be all that successful.  We cannot afford its inflationary impact.
The graphic below suggests that these influences have already caused Sydney and Melbourne, by and large, to become unhinged for local reality.
Dwelling prices are over or approaching 10 times the disposable family household incomes in both cities. When the music stops – and it always does – then values must fall in both cities.  At best, values would plateau for a very long time.  Think five years.  Maybe 10.  It happened in the late 1980s.  History seems to repeat.
<img alt="matusik_march_4_one" height="353" width="470" src="/images/stories/2014/03/04/matusik_march_4_one.png"> 
You see, interest rates will eventually rise, Chinese interest will wane, changes may happen to SMSFs or FIRB or the dollar will stabilise/increase.  Worse still would be a hiccup or two regarding employment.
Both Sydney and Melbourne have now painted themselves into a corner, so to speak.  Price-wise, there is very little wriggle room.
I do hope the current pause in house prices continues.  I wrote late last year that values in both Sydney and Melbourne could fall this year.  If they don’t pause, then both cities face a serious correction.
As for South East Queensland (SEQ), well I am writing this much earlier than I anticipated, too.  I pencilled in this type of post for later this year, even early 2015, as it was at that stage that I anticipated the term “irrational exuberance” might best describe the local market’s general mindset.  But alas, I am covering this now.
Many I talk to - which is quite wondrous really, as only three months ago these same people described the local housing market as "dead" - are in a mad rush to buy something.  Anything.  They just don't want to miss out on the price rush.
True, SEQ price points are much lower than Sydney’s, Melbourne’s and even Perth’s.  SEQ’s gross rental returns are also higher, especially at present, at least for attached product.  Yet current dwelling prices are already at 6.9 times earnings in Brisbane.  Vacancy rates – especially in inner Brisbane – are already starting to rise.
The state has been through a lot in recent years, much of it bad from an economic point of view.  SEQ cannot stomach a run on dwelling prices like we have recently seen in Sydney and Melbourne.
Asset appreciation of between 5% and 8% over the next 12 months, with a smaller price/rent top-up during 2015, would be welcome.  Anything beyond that – for mine – is potentially breaking the bank.
I would be joining the chorus if Queensland's dwelling price to household income ratio was lower.  But it isn't.  We come a distant third, some will argue, fourth behind Perth, when it comes to international buying interest.  Interstate migration is very low these days to Queensland.  This might change, as southerners are forced out of Sydney and Melbourne.  But we need jobs to attract this movement.  A warm climate alone these days isn't enough.  Our dwellings, whilst still cheaper than Sydney and Melbourne, aren't as cheap as they once were.  Well not cheap enough for some to sell-up and take a punt in sunny Queensland.
Slow price/rent growth, much more sales and thereby reducing resale supply - now that’s want we need over the next couple of years.  A mild cycle, not a rampant one.
I hope I am right.
Michael Matusik is the founder of <a rel="nofollow" target="_blank" href="https://www.matusik.com.au/" style="font-size: 14px;">Matusik Property Insights</a>, which has helped over 550 new residential projects come to fruition.
Read <a rel="nofollow" target="_blank" href="https://www.matusikmissive.com.au/">Michael’s Blog</a> or follow him on <a rel="nofollow" target="_blank" href="https://www.facebook.com/ThinkMatusik?fref=ts">Facebook</a> and <a rel="nofollow" target="_blank" href="https://www.twitter.com/michaelmatusik">Twitter</a> or connect via <a rel="nofollow" href="https://www.linkedin.com/in/michaelmatusik">LinkedIn</a>.
                                   
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michaelmatusik-49YzLvdmNv

What's going to be the 'X factor' in this property cycle?

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There have been few Google searches for the term “first home buyer” over the past few years with that segment of buyers increasingly dropping out of the market.
<img width="470" height="196" src="/images/stories/2014/02/28/fhb-analysis-chart-feb-28.gif" alt="fhb-analysis-chart-feb-28"> 
Plotting Google searches on the term “first home buyer” compared with Australian Bureau of Statistics data on the proportion of home mortgages taken out by first-time buyers shows a fall in interest in the search term corresponding to the drop in buyers. Related phrases such as first home owner grant yield similar results.
The peak in first home buyer activity in 2009 was preceded by a clear spike in internet searches on the subject.
There was a minor lift in the number of searches on first home buyers around mid-2012, in line with a slight lift in buyer numbers, but aside from that blip, the term has been as absent from Google searches as the buyers have been from the market.
<a target="_blank" href="mailto:news@propertyobserver.com.au">news@propertyobserver.com.au</a>
                                     
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zfielding-GvX3Uq9KTa

Amount of first home buyers searches dropping in more ways than one

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Macquarie Park in Sydney, as well as Southbank and the Docklands in Melbourne, are three of the most productive areas in Australia when it comes to driving the economy, a report published yesterday by accountancy firm PwC shows.
The Geospatial Economic Model has recorded an “on the ground” economic review of 2214 Australian locations in terms of economic contribution. It found that in the 2012-13 financial year, one square metre of Sydney’s central businesses district generated $15,004 of economic output, which was the highest in Australia.
The report reveals economic activity is highly concentrated, with an area about the size of Tasmania generating 85% of the value of Australia’s $1.5 trillion economy last year. It found that 221 locations generated 51% of the country’s economic output.
The top 10 locations for economic output in 2013 were responsible for 18.4% of GDP, however, they employed just 12.1% of the population. These areas were the Sydney CBD generating $64.2 million, Melbourne CBD at $55.3 million and Perth CBD at $28.5 million.
Next were resources-rich areas in Western Australia – Roebourne at $28.72 million, Ashburton at $24.4 million and East Pilbara at $24.2 million.
Then Adelaide CBD came in at $16.2 million, North Sydney at $10.9 million and Macquarie Park in Sydney’s north-west at $9.1 million.
PwC economist and partner Jeremy Thorpe toldSmartCompany that while the CBD areas may have many staff compared to mining areas, they were not necessarily as productive in terms of economic contribution.
“Mining is not a huge employer, but it is phenomenal for output,” he says.
Areas that were on the top 10 list in 2001-02 that dropped off this time were Churchill in the LaTrobe Valley, Victoria, and Dandenong in Victoria. Thorpe says Churchill relies largely on brown coal production, while Dandenong is a general manufacturing area that could have been hit by the manufacturing downturn.
While Australia’s economy grew by 2.6% in the 2012-13 financial year, the report found that 35% of locations actually shrank. Thorpe explains this was countered by higher growth in other areas.
PwC found that while state capitals account for a disproportionate amount of Australia’s total economic output, the CBDs are actually idling and becoming less productive. Since 2007-08, the productivity has either stagnated or declined across all of the major CBDs.
Thorpe says while the CBDs will always play a significant role, “it’s the CBD fringe areas such as Docklands in Melbourne, Pyrmont in Sydney and Fortitude Valley in Brisbane where we are seeing significant growth”.
“In Sydney, we also see interesting dynamics playing out beyond the CBD, with the economy of North Sydney having not grown over the past 13 years, while the economy of Macquarie Park has doubled over this period.”
He says Macquarie Park, which generated $9.1 million for the economy has benefited from the inclusion of train access, and many tech start-ups are embracing the space.
In Melbourne, CBD fringe area Southbank generated $7.433 million, while the Docklands generated $8.99 million.
This article first appeared on <a target="_blank" href="https://www.SmartCompany.com.au">SmartCompany</a>.
                     
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moliver-7qYWqnHmyR

Australia’s most productive areas for economic growth revealed

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As it turns out, the Australian economy wasn't the basket case Treasurer Joe Hockey, the rest of the government, business groups and their media mates have been claimed it to be after the gloomy mid year economic outlook was released last December. Economic growth picked up in the December quarter, <a href="https://www.propertyobserver.com.au/https://abs.gov.au/ausstats/abs@.nsf/mf/5206.0?OpenDocument" target="_blank">ABS national accounts</a> showed this morning, with growth of 0.8% seasonally adjusted, stronger than it was in the three months to September (0.6%).
In his first few months as treasurer, Hockey first warned us of the dire threat to growth from offshore -- back when he announced he was lavishing $9 billion on the Reserve Bank -- and then after he took the lowest possible forecasts from Treasury for the Mid Year Economic Forecast in order to portray himself as Hercules cleaning out the Augean stables left to him by Labor.
Today's numbers, though, suggest Hockey was more Chicken Little than Hercules. Growth through all of 2013 was a much stronger 2.8% compared to the annual rate of just 2.3% in the September quarter. The 2013 growth rate was much closer to the 3.1% growth seen in calendar 2012 and makes a mockery of the gloom and doom that emanated not just from Hockey but even from the unions and Labor, anxious to portray the government as killing the economy through being unwilling to keep handing out money.
But when Hockey held his MYEFO media conference in December 17 last year to detail to contents of what appeared to be a 'slit your wrists' assessment from the economy, the real thing was gathering pace - that's what successive figures for retail sales, exports, the National Australia Bank's business surveys and quite a few other measures show. Against that there was jobs data was negative and looking like it would worsen in line with forecasts, before it would improve. But the turmoil over the Holden announcement had little impact on consumers: they started using their savings (the household savings ratio fell below 10% for the first time since mid-2010), spent more in shops, on property and overseas travel.
The only gloomy spot, which we knew about from last week's capital expenditure data, was for private investment: gross capital formation - a measure of investment in the economy - which was a negative 0.5%. But thanks to the weakening dollar, the terms of trade rose 0.6% in the quarter as export volumes rose and import volumes fell -- net exports added 0.6%. But final consumption expenditure at 0.5%, much stronger than many business economists had forecast - that's down to the surge in retail spending in the closing months of 2013 and the real estate boom.
Industries contributing to growth were mining (1.2% because of the rising level of exports), while manufacturing (1.5%), rental, hiring and real estate added a combined 4.2% (not unexpected given the surge in property prices and activity).
GDP per hour worked also lifted yet again, providing yet more evidence of the sustained period of labour productivity growth delivered under the Fair Work Act -- up 0.6% in the quarter and 1.7% throughout the year, and slightly higher in the private sector. And unit labour costs fell 0.7% as well. More data that doesn't fit the narrative.
This article first appeared on <a target="_blank" href="https://www.crikey.com.au/">Crikey</a>.
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po-LsXgBTHBmX

The economy is not as bad as Joe Hockey claims: ABS national accounts

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Growing business confidence and easier access to capital could see Melbourne's strata office in for a big year in 2014.
Full-floor office sales in the last quarter of last year came in at more than 13 and that level of strong level of activity spilled into the start of this year.
DTZ manager of CBD Strata Sales, landlord and institutional investor services, Danny Clark said: “We are being inundated with strata office enquiries, and 2014 is set to be a strong year for sales in the sector with growing business confidence and easier access to capital.”
Such is the competition, DTZ CBD strata sales and leasing executive, Samuel Bell added that it recently concluded the sale of a vacant floor at level 1, 20 Queen Street (pictured below), which attracted fierce competition from both owner occupiers and investors.
{yoogallery src=[images/stories/2014/03/05/mel]}
The sale, he said, further highlighting the fact that investors were now prepared to carry the risk on vacant floors.
“We are starting to see increased competition from both local and offshore investors looking for quality investments; however, full floor investments are a rarity in the Melbourne market. This competition, coupled with a shortage of available stock, is leading to record sales per square metre," said Mr Bell.
The 20 Queen Street floor was 390 square metres and sold for $1.1 million.
Nearby, at 620 Bourke Street, a 567 square metre floor on level 4, fetched $2.075 million.
Levels 1 and 2, at 420 Collins Street - combines floor size of 780 square metres - sold for $2.9 million.
<a href="mailto:news@propertyobserver.com.au" target="_blank"></a><a href="mailto:news@propertyobserver.com.au">news@propertyobserver.com.au</a>
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kjiminez-eaYKfU7qd2

Melbourne strata office market tipped for a big year

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It’s a common misconception amongst property investors: “never sell your property”. Although residential property investment requires a long-term outlook to ride out market fluctuations and maximise the effects of compound capital growth, even the best quality investment asset has a use-by date.  
The whole point of investing is to improve your quality of life. At some stage, you’re likely to reach the point where selling a property is the only way to help achieve further investment or lifestyle goals. Here, we look at four situations in which it may be appropriate to sell.  
1. Making room to move. If you have a growing family, you may need to renovate or extend the family home. If you take out a loan to meet these expenses, you’ll pay the full amount of interest, because expenses associated with the family home are not tax deductible. By contrast, if you sell your investment property, you can use the proceeds to pay for the home improvements outright.
When you’ve completed the renovations, focus on paying down the remaining debt on your home so that you’ll be well positioned to buy another investment property later down the track.
2. Hanging up your hat. If you’re nearing retirement and you have an investment property that you’ve held for many years, it may be worth selling it and transferring the equity into a more tax effective structure. When you’re working, your aim is to generate income through a wage or salary and purchase assets that will create capital growth.
Once you retire, however, it’s the job of your investment assets to generate the income for you. To maximise the available income, you need to minimise the tax payable. If you sell your investment property and put the proceeds into a superannuation account, the income generated will be tax-free when you draw on it in years to come.  
3. Ditching an underperforming asset. Regardless of your stage of life, there’s little point in holding on to an investment property if it’s not performing to an acceptable standard. It’s important to review your property’s capital growth performance each year, relative to the wider market. If it fails to outstrip the median increase for a couple of years running, chances are this situation won’t change anytime soon. It may be better to sell the asset and move on to something more productive.
 4. Getting away from it all. Many people who are reaching the peak of their careers like to escape to the coast or country on weekends and recharge the batteries. If you’ve held an investment property for 10 years or more and it has achieved significant capital growth, it may be appropriate to sell the property and use the proceeds to buy a holiday home outright. Generally speaking, properties in holiday areas have a more volatile capital growth pattern, and should not be regarded as prime financial investment prospects. They’re really an investment in lifestyle.
Remember the decision to sell an investment property should never be undertaken lightly. Regardless of your personal and financial situation, seek independent personalised advice before you make a decision.  
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.
Note: This article was originally published on Property Observer in November 2013.
                                                    
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marmstrong-sd3emVLPPb

Four signs that it's time to sell up

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In November 2012, the Australian government introduced a Significant Investor Visa (“SIV”) for migrants as prospective permanent residents who invest $5 million into complying investments in Australia for a minimum period of four years. Complying investments include Australian government bonds, ASIC regulated managed funds and direct investment into Australian proprietary companies. This initiative has brought opportunities and challenges in Australian property.
Opportunity
SIV will draw capital flows into Australia. Under the new visa scheme, the Australian government expects to attract 700 new residents annually and $3.5 billion in complying investments. As the majority of SIV applicants to date are Chinese, known for their keen interest in Australian property investments, it is reasonable to expect that a sizable portion of SIV funds will flow into the property market, with estimates of $2 billion per annum of new capital.  On a cumulative basis this is material for a total commercial property market valued at $700 billion. Investors may participate in property investment syndicates, which purchase existing properties or participate in property development projects.
With the aid of advisors and Australian fund managers arranging financial affairs for migration purposes, SIV applicants will gain an initial exposure in Australian investments. As familiarity and trust between SIV applicants and Australian fund managers grow, participation in wider investment products is possible with additional savings from SIV applicants. Although the initial $5 million from successful SIV applicants is committed to complying investments, excess funds are not restricted. Australian fund managers will be in a strategic position to build long term relationships with SIV clients, providing holistic solutions for their financial needs.
Table 1 shows current SIV statistics from the creation of this visa on 24 November 2012 to 31 October 2013 which provides support for the target of 700 new residents annually.
Table 1: Significant Investor Visa key indicators - November 24, 2012 - October  31, 2013
<table style="width: 470px;" border="0" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="bottom" nowrap width="293">
Indicators
</td>
<td valign="bottom" nowrap width="64"> </td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
Expression of Interests (EOIs) submitted:
</td>
<td valign="bottom" nowrap width="64">
825
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
Invitations issued:
</td>
<td valign="bottom" nowrap width="64">
631
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
Applications lodged:
</td>
<td valign="bottom" nowrap width="64">
498
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
Primary visas granted:
</td>
<td valign="bottom" nowrap width="64">
65
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
Applicants from China:
</td>
<td valign="bottom" nowrap width="64">
91%
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
 
</td>
<td valign="bottom" nowrap width="64"> </td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
Applications on hand (31 Oct 2013)
</td>
<td valign="bottom" nowrap width="64">
422
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
- Less than 3 months:
</td>
<td valign="bottom" nowrap width="64">
41.2%
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="293">
- 3-6 months:
</td>
<td valign="bottom" nowrap width="64">
38.6%
</td>
</tr>
</tbody></table>
Source: Department of Immigration and Border Protection
Challenges
Converting SIV investors into a viable funding source for property investment or development lies with the development of syndicates which will include a number of SIV investors. Property syndicate managers will need to accommodate a number of investors from different cultural ethnicity and business practices.
Another challenge of SIV funding lies with the liquidity of funding. The SIV legislation requires the applicant to have $5 million invested into complying funds for four years. This exceeds most development project lifespans. SIV Investors may switch within four years, as long as the switch is done within 30 days into another complying fund.
SIV poses as an opportunity for raising capital into property syndicates. Property syndicate managers will need to acknowledge and manage the unique nature of SIV investors in order to tailor solutions around this initiative.
 
Ming Niu is an analyst at <a href="https://atchison.com.au/" target="_blank">Atchison Consultants</a>.
 
                      
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mniu-gkBe4pvnDQ

Significant Investor Visa – a new source of capital for property investment syndicates? 

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After a year in which the number of empty floors in Australia’s office buildings increased to around one in 10, there is an intense debate about where office demand will come from. In the context of a generally subdued economic outlook, there are at least six reasons why office demand should improve over the next year or two:
1. Business confidence is improving
Business confidence has trended up over the past six months in all states and across most industries and is now close to a three year high.Confidence is a key component of the DEXUS office barometer which predicts improvingconditions for office demand in the Sydney CBD.
2. Improving corporate earnings outlook
The share market has strengthened considerably over the past year. A stronger share market is expected to lift confidence further and lead to more corporate transaction activity, supporting demand for space in the investment banking, legal and accounting sectors.
3. The Australian economy is responding to low interest rates
While declining resource investment will be a drag on economic growth, other factors will partially offset it. Improving retail sales, tourism numbers and housing construction will all contribute to growth. Meanwhile the trading bank sector is benefiting from improving credit growth, and the health and education sectors are also on a growth path.
4. The business service sector will benefit from outsourcing 
The business services sector in Australia has added more jobs to the economy in the past decade than the government and mining sectors combined. While state and federal governments are intent on consolidating to the detriment of demand for office space, such consolidation usually leads to outsourcing,supporting growth in the business services and technology sectors.
5. Most firms will grow, despite productivity gains 
Over the past decade the number of firms expanding at the end of their office lease has outstripped the number of those contracting, by a factor of three to one. While the corporate sector in Australia remains focused on productivity improvement, this focus should slowly shift towards expansion as corporate earnings benefit from productivity improvements and low financing costs.
6. Tenants will migrate to quality buildings
Competitive rents in the major CBDs areencouraging the inward migration of tenants from fringe and suburban locations - estimated at more than 20% of recent CBD leasing. In addition, tenants are actively migrating from poorquality buildings to better quality stock, leading to withdrawals of older stock.
Peter Studley is general manager, research, at <a href="https://www.dexus.com/" target="_blank">DEXUS Property Group</a>. 
                            
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