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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Astute investors know that all properties have defects which if not identified during due diligence, can be money pits. There is a small window of opportunity during the brief due diligence period to identify these risks prior to purchase.
Identification of risks provides a bargaining opportunity to either negotiate a reduced price or request the risks be removed at the vendors cost. Risk avoidance can be achieved with meticulous due diligence, particularly in investigation of eight potential deal killers listed below.
1. Asbestos contamination risk?
Asbestos materials of various types were commonly used in Australian property construction between 1940 and 1990. Asbestos materials were embedded in wall cladding, roofs, gutters, drain pipes, vinyl flooring, electrical wiring thermal insulation, boilers, exhaust pipes, switchboards, thermal insulation and inside fire doors.
The new National Work Health and Safety Act of 2011 requires owners of buildings constructed before 2003 to conduct an asbestos survey. Where asbestos materials are identified, this triggers the mandatory requirement for an asbestos register and asbestos management plan (AMP). Some property owners appear to be unaware of this new obligation.
An asbestos register is necessary to track of asbestos materials remaining (or removed) in investment properties. Asbestos may also be located in inaccessible areas and unfortunately discovered during re-development with sometimes disastrous and costly results. Asbestos materials if disturbed can cross contaminate internal areas of the buildings, requiring evacuation, loss of rent and potential occupant litigation.
Asbestos removal is a legally notifiable project, which can result in extremely costly asbestos removal projects. Careful investigation during due diligence can forewarn investors, revealing the true cost of asbestos removal. Armed with detailed information and cost options, investors can then more accurately evaluate if they wish to proceed with the purchase or avoid the risk.
2. Electrical switchboard over-loading and fusion risk?
Building electrical cables and switchboards can become over-loaded with tenancy changes and added electrical equipment. The overloading of wiring inside electrical switchboards can remain undetected for many years. Electrical fusion is one of the primary causes of fires within buildings where overheating of electrical switchboards and wiring starts fires.
Further electrical risks can include lack of earth leakage protection (ELP) to reduce the risk of electrocution to occupants. Poor quality electrical installation and modifications over time, can overload electrical switchboards leading to potential fires or equipment failures.
A review of electrical maintenance should be included in due diligence investigations to identify weaknesses and potential costly failures.  Where electrical maintenance is inadequate this may void insurance cover, with owners exposed to remediation costs.
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3. Fire and life safety non-compliance risk?
Fire and life safety systems for buildings require continuous testing and mandatory certification to confirm the fire detection and protection equipment will function to design when there is a fire.
Where buildings are refurbished this may trigger a mandatory requirement to upgrade the entire fire protection systems to the current Building Code of Australia (BCA) fire standards (This mandatory trigger activates when 50% of the building is refurbished within a three year period).  Upgrading can require new fire sprinklers, fire stair pressurisation, new fire hydrants in fire stairs, smoke hazard management, and in extreme cases additional fire exit stairs.
Upgrading of fire protection systems can incur considerable cost and potential risk and cost of compliance should be calculated before settlement.  Due diligence investigation should include a review of lease expiry dates and tenancy refurbishment timelines, to avoid trigging the 50% over three year rule.
4. Environmental site soil contamination?
Site contamination can occur from past site use, for example, contaminated industries such as petrol stations, industrial storage, chemical processing industries, dry cleaners, processing industries. Underground storage tanks (UST) even if removed, can leave toxic contaminants in sub-soils to contaminate the land and surrounding sub-terrain water courses. This may contaminate neighbouring properties, with the potential for future litigation.
Testing and soil removal can be a considerable expense particularly where the site is close to public waterways and the risk of cross contamination is high. The potential for sub-soil contamination is a risk often overlooked by property investors and an issue that should be investigated during the due diligence phase.
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5. Structure and façade water proofing risks?
Structural problems can include subsidence of foundations, cracking of walls, concrete cancer, leaking roofs, leaking windows or facades, flooding risk, or low earthquake resistance structures.
Where structural defects are identified, costs for repairs need to be estimated and negotiated with vendors prior to settlement. Unforseen property defects can result in major capital cost to correct structural weakness. Building changes and additions to original structure may overload design foundations with movement and consequential structural cracking. Façade deterioration can result in water entry and major internal damage.
In locations close to flood prone areas, underground basements and car parks may be flooded by back-flow of water through stormwater drains or sewers mains (i.e. Brisbane floods). Property constructed close to rivers beaches and harbours may also be impacted by salt migration and increased risk of rust and concrete cancer of steel reinforcing. Structural issues should form part of the due diligence investigation.
6. Disabled access non-compliance risk?
The 1992 Disability Discrimination Act (Commonwealth) has provided a standard that requires all buildings to provide dignified access with special facilities for people with disabilities (PWD). This has been codified in Australian Standards AS1428.1 as a requirement in new construction under the Building Code of Australia.
Where older buildings are refurbished, a mandatory requirement mat be triggered to upgrade the disabled access features to current Australian Standard AS1428.1. This can result where 50% of the building is refurbished within a three year period. Major capital expenditure could be necessary to provide new entry ramps, wide disabled parking bays, upgrading of lift controls, tactile ground surface indicators (TGSI) and large unisex disabled toilets, on each occupied floor in excess of 500 square metres.
Potential risk and cost to upgrade the investment property to fully comply with disabled access standards AS14281 may be overlooked during property acquisition. The requirement to provide disabled access and facilities can also be triggered with local government building approvals for tenancy fit-out where floors areas exceed 500 square metres.
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7. Air conditioning life cycle failure risk?
Air conditioning is not a luxury but an essential business component for tenants in modern buildings. Air conditioning systems are not like red wine and improve with vintage, but conversely deteriorate over time. Air conditioning plant and equipment have finite service lives with cooling and heating capacities slowly deteriorating over time. Original design cooling and heating capacities may be under-sized or mismatched to current occupancy loads. Additional air conditioning equipment may be required to meet comfort conditions specified in tenancy leases.
Due diligence should include condition and remaining service life of the air conditioning equipment. Replacement of air conditioning systems can require considerable capital expenditure that should always be estimated during due diligence. Replacement costs for air conditioning over a 10 year investment timeframe can result in large negative cash flow that needs to be included in calculation of internal rate of return (IRR) and return on investment (ROI).
8. Lack of mandatory certification to building codes?
In some cases where mandatory requirements for development approval, building approval or Occupancy Certification are incomplete this can lead to serious future consequences, including potential litigation from statutory bodies, potential restricted use by fire authorities and major difficulty in future when selling the property and non-compliance issues revealed.
Where non-compliance issues are unrevealed at settlement the obligation to remedy these issues becomes the responsibility of the purchaser. Non-compliance can include incomplete development approval conditions, incomplete Building Code of Australia BCA certification, Incomplete Occupancy Certification or lack of Annual Fire Safety Certification.
Where comprehensive technical due diligence is completed, these non-compliance risks can be revealed, and investors have the ability to either avoid the contract, or request a reduction in contract sum to compensate for rectification.
A further option is to request the vendor rectify the non-compliance risk and hold in escrow an agreed sum equivalent to the cost for the purchaser to rectify the risk. Where the vendor is unable to rectify the risk, the sum in escrow is able to be utilised by the investor to remedy the risks.
Comprehensive due diligence allows prospective investors to gather factual information about the condition, remaining service life, statutory non-compliance or other major property risks. The investor can then make a fully informed decision to either accept or avoid a contract on an investment property.
Clive Burrows is the founder of <a target="_blank" href="https://www.risk8.com">Risk Management Group</a>, an Australian due diligence consultancy that has undertaken in excess of 200 due diligence investigations on $11.9 billion of commercial real estate transactions over the past 20 years. 
You can contact Clive via <a target="_blank" href="mailto:Clive@Risk8.Com">email</a>.
 
 
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cburrows-SqzvJJk27D

Eight risks that can turn investment properties into financial nightmares

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The bushfires that travelled through New South Wales’s Blue Mountains in October last year went nowhere near the region’s tourism hubs. Nevertheless, in December the Blue Mountains Economic Enterprise estimated that as a result of the negative media attention around the bushfires, which contributed to a downturn in the region’s tourist visitations, the region’s economy is down by $71 million.
Donald Luscombe, the Blue Mountains Economic Enterprise chairman, said that although none of the region’s attractions were affected, tourists stayed away.
“As a result of lost tourism visitation over the first 42 days after the bushfire emergency, the total impact to economic output (revenue) for the Blue Mountains was $71.3 million,” he said.
“The data indicates a decrease in wages and salaries of up to $17 million over that 42 day period. Obviously, the flow-on impact of that in terms of consumption and expenditure is significant.  The total impact to the economy of the fires is yet to be calculated but as you can see, the impact from the tourism sector alone has had a truly significant effect.”
Tourist properties have also weathered the impact of poor media coverage. <a target="_blank" href="https://www.fntourism.com.au/buy-commercial-real-estate/business-accommodation-tourism-blackheath-nsw-41120130153">Federation Gardens Lodge</a> (pictured below) was prepared to list in October last year through First National Tourism. But according to broker Nick Brook, although the property was unaffected by the bushfires themselves, the vendors and First National Tourism decided to hold off on listing the property.
{yoogallery src=[images/stories/2014/02/11/blue]}
“We did all the preliminary work, including the research, and were ready to put it on the market. But because of the fires, we held off. We’ve only just listed the property this month,” he said.
The Clarendon Guesthouse in Katoomba (pictured below) sold late last year, with market sources suggesting that the hotel went for close to $2 million.
{yoogallery src=[images/stories/2014/02/11/kat]}
The sale was handled by Paul Kapiris and Andrew Jackson of CBRE Hotels. Although he says it is too early to draw conclusions from market values, Kapiris has noticed interest in the area recently, including from foreign investors.
“Interestingly, there’ve been a few sales in the area,” says Kapiris. “Whether it’s reflected in the values is probably unclear. But there has been a little bit of movement, particularly in <a target="_blank" href="/news">Katoomba</a>.”
Kapiris points to foreign investors and tourists as a possible source of revival for the region.
“We’ve seen a mix of local buyers seeking assets and foreign buyers, particularly those that have connections to tourism.
“The Australian dollar should have an impact – a lowering Australian dollar should help regional tourism. But how long that will take would be anyone’s guess.
“And the lowering Australian dollar and the growing Asian middle class are part of the reason that we’ve had such an increase in interest from Asian groups.”
Meanwhile, the Blue Mountains Economic Enterprise has launched a number of initiatives to strengthen the region’s economy, including a “Creative Industries cluster”. With research suggesting that creative industries provide 8% of the region’s available jobs – close to double the state average – the range of events and advocacy initiatives will seek to consolidate the area’s reputation as a creative hub.
While the holidays brought some relief to the Blue Mountains, Luscombe says that sustained interest is what the region needs.
“We saw a lift in visitation over the Christmas period, which is traditionally a peak time but the best way for Australia to assist this region continue its recovery is to visit and savour the cooler weather, glorious local food and world-class tourism attractions,” he said.
“We are absolutely open for business.”
jrichardson@propertyobserver.com.au
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jrichardson-uRX5hFdKfN

After bad bushfire press, the Blue Mountains works to regain its footing

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Toyota has announced it will close its Australian manufacturing division by the end of 2017, signalling the end of car manufacturing in the country.
The move follows similar announcements from GM Holden and Ford last year, with economists now tipping the total job loses to be in the tens of thousands.
Toyota also said it’s considering scaling down its development and technical operations in Australia and around 2,500 jobs will be lost from its Altona plant alone.
The car company’s Australia chief executive, Max Yasuda, said in a statement Toyota had done everything to try and keep its operations in Australia.
“We did everything that we could to transform our business, but the reality is that there are too many factors beyond our control that make it unviable to build cars in Australia,” he says.
“Although the company has made profits in the past, our manufacturing operations have continued to be loss-making despite our best efforts.”
The move will have a drastic impact on local suppliers, which will be forced to close, start exporting or diversify into other industries.
There has been talk of up to 50,000 jobs being lost and the potential for Victoria to be pushed into a recession, but JP Morgan chief economist Stephen Walters told SmartCompany this is too “alarmist”.
“The closure isn’t for three-and-a-half to four years, so like the other carmakers it’s not immediate, but if you’re not making cars there are direct losses of those jobs. There is a debate going about how many jobs will be lost, I’d say it’s likely to be tens of thousands,” he says.
“With retraining and some assistance, the jobs will end up elsewhere. Component manufacturers are also able to reposition and even export their components, so just because car manufacturing is ending, it doesn’t necessarily mean these smaller companies will shut down.”
A Federal Chamber of Automotive Industries study released in November last year tipped by 2018, if automotive manufacturing ended the <a href="https://www.smartcompany.com.au/finance/cashflow/34848-if-holden-leaves-toyota-follows-the-disastrous-impact-on-small-business" target="_blank">Australian economy would be $7.3 billion smaller</a>.
To what degree the economy is affected will be influenced by what policies are created to support manufacturing in the next three years, Roy Green, the dean of the Business School at the University of Technology, Sydney, told SmartCompany.
“It would be reasonable to say with the combined impact of the three assembly makers exiting the market between 30,000-50,000 people will be affected in the immediate companies, the car component suppliers and related services in engineering and design.
“It’s contingent on what the government does next in terms of policy in respect to manufacturing. It may not be as many jobs if there is a strategy developed around the diversification of the components manufacturing sector to let it participate more in global chains or to diversify into other industries.”
Green says the government needs to provide SMEs in the car components sector with an understanding of their opportunities and with new skills and management expertise to allow them to transition.
“It isn’t a question of throwing money at the remaining SMEs... Some will make it, many will not.”
In an article in <a href="https://www.smh.com.au/federal-politics/political-news/road-to-recession-end-of-car-industry-may-cost-50000-jobs-20140210-32d3g" target="_blank">The Sydney Morning Herald</a>, Adelaide University economics and workplace expert John Spoehr said Victoria and South Australia could be pushed into a recession.
He also speculated the closure of Holden alone could cause 50,000 jobs to go.
Green says a recession is possible, but unlikely.
“Whether it’s a recession or not depends on what else is happening in the economy – whether the component suppliers are transitioning and if other industries absorb the job losses, but if nothing happens and we sleepwalk into the next three years a recession is likely,” he says.
“But it’s hard to imagine policymakers being so short-sighted or businesses not taking advantage of other opportunities.”
Dr Philip Toner from Sydney University’s department of political economy toldSmartCompany research suggests a third of the jobs in the car industry will be lost, with the people either retiring or going on the dole.
“Another third will get jobs with lower wages and conditions in things like hospitality or aged care, and another third will get jobs with equivalent wages and conditions,” he says.
“Ironically, the effect of that is a reduction in Australia’s productivity. A rather startling statistic that emerged from some analysis I did was that something like 90% of jobs created over the past four decades were in industries with below-average productivity and low-wage jobs in things like aged care, retail, cleaning and security services.”
The FCAI study predicted the closure of Holden and Toyota in Australia would see the loss of 33,000 jobs in Melbourne by 2018 and 6000 in Adelaide.
Australian Chamber of Commerce and Industry acting chief economist Burchall Wilson told SmartCompany the alarmist commentary will harm the state economies.
“The job losses will be relatively small compared to the broader labour market and it’s still very unclear the extent to which there will be losses further up the supply chain,” he says.
“There is some quite dangerous and alarmist commentary which will only undermine business confidence in these states. It’s doing the states a disservice.”
Wilson says the closure of the car manufacturers shows the billions of dollars spent on propping up the sector has been “wasted”.
“In terms of support to the industry, it’s been costly to the community. There is no justification for propping up private sector businesses in relation to the automotive industry, as the Productivity Commission told us just two weeks ago,” he says.
“The first solution for any business which is struggling is to do what it can to contain costs and put itself on sustainable footing. It’s not the government’s responsibility.”
AMP chief economist Shane Oliver told SmartCompany the real danger in these situations is overstating the economic impact of an industry’s closure.
“I grew up in Newcastle and saw the closure of the steel industry. I remember going back in the 1990s when it looked fairly dismal. Today, however, the place is buzzing. They moved on. The regions here will also move on,” he says.
“I think there’s a real danger in overstating the economic impact. We’ll get by – there won’t be a recession. The longer-term impact is probably a positive one.
“All the money that taxpayers have been pumping into the car industry will probably come to an end. It can be reallocated to more useful areas, like infrastructure spending.”
This article first appeared on <a href="https://www.SmartCompany.com.au" target="_blank">SmartCompany.</a>
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jake-cSmGT7VXVf

Will Toyota’s move to end car manufacturing by 2017 in Australia cause a recession?

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Recently, we identified <a href="https://www.propertyobserver.com.au/landlords/holiday-and-short-term-rentals-does-your-property-fit-the-bill/2014012867387" target="_blank">new ways to rent out your investment property</a>, via the likes of Airbnb. Though this strategy will not work for every property, there is clearly opportunity to be had in renting your apartment with this approach.
Property Correspondent has since contacted a friend who has shared some top line stats of his experience.
Is it worth it? 
We asked our friend, who owns a modest two bedroom unit in the inner west of Sydney (within 5 kilometre access to the CBD; Balmain area) about his experience with his unit because he’d rented it out in the tradition way for a number of years, before converting it to an Airbnb property recently.
Here’s some rough apples-for-apples comparison numbers for his first year of operation:
Pre-Airbnb:
<ul>
<li>
Rented on a standard lease at $620 per week: $29,760 annually
</li>
<li>
Real estate agents’ management fees of 6% of rental revenue: $1,785.60 annually
</li>
<li>
Maintainance &amp; repairs allowance: $1,500 annually
</li>
<li>
Total actual revenue: $26,384.40
</li>
</ul>
Post-Airbnb:
<ul>
<li>
This example assumes an average of 5 out of 7 nights per week of rental occupancy.
</li>
<li>
There were several initial up front costs:
</li>
<li>
Initial cosmetic ‘light’ renovation (simply paint and new carpets) – $1,400
</li>
<li>
New furniture (master suite, 2nd bedroom suite, washer/dryer combo, ironing equipment, kitchen cookware, utensils, fridge, lounge, coffee and dining tables, side tables, art/decoration, TV/AV/Internet facilities, linen) – $7,600
</li>
<li>
Security key installation – $110
</li>
</ul>
Then there are administrative running costs that needed to paid on a regular basis, so I’ve calculated these as an annual figure:
<ul>
<li>
Airbnb listing costs (nomimal): $100 annually
</li>
<li>
Housekeeper costs: $200 per week, so $10,400 annually
</li>
<li>
Maintainance products (Cleaning products, soaps, shampoos, handwash, toilet paper, kitchen towel, perhaps a welcome gift each time. My friend joined Costco for about $50 and buys all of this in bulk once per quarter): $3,800 annually
</li>
<li>
Property maintainance and repairs (Year #2 onwards only): $2,500 annually
</li>
<li>
Nightly commandable rent rate: $230
</li>
<li>
Total rental revenue ($215 x 260 days): $59,800 annually
</li>
<li>
Total annual expenses (Year #1): $23,410 annually
</li>
<li>
Total net revenue (Year #1): $36,390
</li>
<li>
Total net revenue (Year #2 onwards): $43,000
</li>
</ul>
Of course, both ‘revenue’ figures will then require strata, water, council rate, tax and other additional property operating expenses furhter to those listed above. I asked my friend if there were any horror stories thus far in his experience. His feedback was that problems were minimal, providing that he was always contactable and available, and he screened his tenants carefully.
He did mention a couple of incidents where the tenant had clearly had parties, requiring additional housekeeping costs. Additionally, there were instances where tenants had lost keys. Although the tenants paid the key/lock replacement costs out of their bond; it did cause the property to be out of action for more days than expected, resulting in future-booked tenants having been cancelled. As you could imagine, this did not help his review ratings at the time. These were just a handful of little bumps along the road that he is still discovering.
This case study highlights the profit potential for renting an entire property out. What is missing is the ‘human’ cost – of your time commitment – in running the property for twelve months. There is also the opportunity to live in a two bedroom property yourself, and ‘Airbnb’ the second room out at a reduced nightly rate. However, investors need to be mindful of tax implications in producing rental revenue from their owner-occupied home.
Still, it may well be worth it. If instead of renting your second room for say $250 per week, you could get someone in at least four nights per week, for say $90 per night ($360 per week minimum), you’d be well ahead. An added benefit would also be that you’d only have a flatmate for four to five nights per week.
Australian investors are best served to keep this in mind when considering this approach to renting out their properties.
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a href="https://www.propertycorrespondent.com.au/" rel="nofollow" target="_blank">Property Correspondent.</a>
 
 
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cmcevoy-Go82SmsJA9

Holiday and short-term rentals: Do the finances stack up in a real life case study?

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Fears that demand for office space in Australia's capital cities could be crunched by the next generation workplace model - activity based working - are overstated, a new report has found.
Even the Sydney CBD office market, which is tipped to be the most exposed to activity based working (ABW), is showing only a gradual up take of this next generation trend, according to the report from Jones Lang LaSalle and the Property Council of Australia's NSW division.
<img src="/images/stories/2014/02/12/comm_feb_12_one.jpg" width="470" height="541" alt="comm_feb_12_one">
The findings were revealed in their 20 page report - Activity Based Working: Impact on the Sydney CBD Office Market - which looked at the impact of the workplace concept on office markets. Essentially, ABW allows employees to work on projects in a shared environment rather than individual cubicles.
Their analysis found that AWB is gaining momentum with large corporate tenants and some highly compatible industries like finance and insurance.  As such, a market like the Sydney CBD, which has a high concentration of finance and insurance tenants, was likely to be the most exposed market nationally to the trend, it said, while adding that the stock profile was another factor. Nearly 38% of the stock in the Sydney CBD is more than 5,000 square metres.
Significantly, the report also pointed out that the nature of lease expiry and natural tenant growth meant that the impact of ABW on market dynamics were "relatively gradual, even under higher take-up scenarios".
<img src="/images/stories/2014/02/12/comm_feb_12_two.jpg" width="470" height="377" alt="comm_feb_12_two">
JLL director of research and author of the report, Leigh Warner, said ABW was typically taken up only at lease expiry. "Only around 15% of leases expire in any particular year, and the evidence to date suggests that firms have initially been relatively conservative in judging the space that they have taken upon moving to ABW", he said. "This means that the initial impact on market demand is minimal, and it will only be gradual over the term of new leases as firms accommodate natural growth within their fit out – rather than taking new space."
Under a mid-range take-up scenario, said PCA NSW executive director Glenn Byres the "Sydney CBD is estimated to see a reduction in net absorption over the next decade of just over 100,000 square metres, or 16% relative to a base case."
Those numbers, he said, also suggest AWB would have a limited influence on the future growth and supply requirements of Sydney's CBD office market.
"There is no question that ABW is a concept that is here to stay in one form or another, and that it will have an impact on the market," added  Mr Warner. "However, the analysis undertaken clearly shows that impact is far from devastating on the market, even under high take-up assumptions."
The report concluded by saying that ABW was likely to be a trend that "will increasingly have an impact on office markets across Australia over the next decade", even though the portion of tenants that ultimately adopt ABW was still "very ambiguous".
"Regardless of the size of the eventual impact of ABW, the impact will be relatively slow over a period of 10 to 15 years," it said.
<a href="mailto:news@propertyobserver.com.au" target="_blank">news@propertyobserver.com.au</a>
<a href="mailto:news@propertyobserver.com.au" target="_blank"></a> 
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kjiminez-eaYKfU7qd2

Fear of activity based working impact overstated: Jones Lang LaSalle report

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Demand for Australian commercial property, particularly prime assets, is expected to be rampant again this year. Both local institutions and offshore investors have a strong appetite to satisfy, with the only hurdle being a marked shortage of available stock in which to target. This means investors will need to get creative - and they may need to play in a space they’re not traditionally comfortable with.  
Interestingly, the strength of investment demand actually contradicts the current market fundamentals in Australian commercial property, with vacancy rates trending upwards and tenant demand actually weakening, albeit slightly, in recent times.  
Still, those investors and institutions taking a long-term view understand the value of securing prime Australian assets now. The problem is, it’s not as simple as saying “we have $100 million we want to invest”.  
So how do these institutions satisfy their investment appetite for commercial property? How can they secure an interest in prime real estate when existing prime assets are so tightly held and new supply additions are few and far between? How do they recycle their capital?  
It’s going to be tough for institutional investors to get set this year. The need to get creative, to consider new alternatives and to leave their comfort zone is becoming increasingly apparent.  
Last year we saw capital partnering arrangements emerge as a vehicle for investors to satisfy their investment appetites.  
Our research from late last year showed the proportion of capital partnerships to total sales has grown rapidly since the end of the GFC, with 46.4% of transaction volumes recorded in the Australian retail market and the eastern seaboard office markets in 2012 involving a capital partnership.  
When you consider the shortage of available prime stock against the appetite of local institutions and the weight of money aimed at Australian commercial assets from offshore investors, which we quantified as US$16.5 billion as at September 2013, it is clear that offshore investors need to get creative to penetrate the domestic market.  
Hence we expect capital partnership arrangements to become more prevalent in 2014.  
Capital partnerships are one way in which investors may need to compromise their ideal investment scenarios. Another is through investment in REITs as opposed to direct property.  
Owners are awake to the demand for their assets. This means some are in the position to say “if you want to gain access to real estate assets, you need to invest in our funds”. It’s a compromise most investors would prefer not to have to make, but the reality is that it’s one of few avenues available to gain exposure to property.  
Others may even consider diversifying their capabilities to make a foray into development, as a way of creating assets in which they can invest to satisfy their appetite.  
Either way, it’s going to be tough for institutional investors to get set this year. The market can expect a shake up in 2014, and it could well be the major institutions who will be dominating the headlines.
Tony Dixon is director of investment sales for <a target="_blank" href="https://www.cushmanwakefield.com/">Cushman &amp; Wakefield</a>
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tdixon-SLWH4X4fad

Demand for Australian commercial property set to be rampant this year

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Australia could fall behind in the Asian Century if it does not <a href="https://www.smartcompany.com.au/growth/economy/33793-infrastructure-woes-as-sydney-cross-city-tunnel-placed-in-receivership" target="_blank">improve its infrastructure</a>, innovation and creativity, experts have warned.
Ken Henry, a former Treasury secretary and current director of the National Australia Bank and the Australian Securities Exchange told <a href="https://www.theaustralian.com.au/business/economics/former-treasury-secretary-ken-henry-warns-of-infrastructure-shortfall/story-e6frg926-1226821994365#mm-premium">The Australian</a> he thought Australia could be lacking in sufficient port, road and rail links to be an effective exporter during the Asian development boom.
"We do not have the infrastructure requirements for an economy and a society that is well connected with Asia," Henry said.
Henry was at the forefront of the Gillard government’s white paper into the Asian century and said there is “enormous potential” for Australia during Asia’s boom phase.
However he said “we simply don't have the infrastructure assets, the infrastructure services, to ensure that in the commercial space – but also the social space – we make the most of those connections”.
Henry is involved in a green paper by the SMART research group which is calling for “clearer decision-making to inform a national market for Australia’s infrastructure”.
He thinks lots of questions regarding our infrastructure should have been asked 10 or 20 years ago, not now, The Australian reports.
CPA Australian chief executive Alex Malley echoed Henry’s concerns in the accountancy body’s pre-budget submission to the federal government.
“With tentative signs of economic recovery in key global markets and a continued focus on Asia, Australia is uniquely positioned to take advantage of what has now become the Asian Century,” Malley said.
“However, despite our ‘open for business’ mantra, we are not the sole trader in our region. Across Asia, new and existing competitors are increasingly moving into areas Australia once regarded as areas of traditional advantage.
“This is not a time for complacency. It is the time to boldly step up.”
Malley said that as a nation, Australia must now make “brave choices” to secure our success in the Asian century.
“We must make sure that we do everything possible to support Australian businesses to be globally competitive.”
He said Australia is poised to take centre stage on a global level as we host the G20 Summit.
“Just as the strength of our economy made us an international example in weathering the worst excesses of the global financial crisis, this is a time when we should again demonstrate global leadership by making the tough decisions that will strengthen the global competitiveness of Australian business.”
The CPA Australia submission reiterates that Australia’s ability to compete will be “put at risk” unless action is taken to address the infrastructure deficit when it comes to road, rail, air and sea transport.
“Without the ability to safely, efficiently and effectively transport goods, data and people within Australia, our businesses face a significant disadvantage,” it said.
The group said funding of infrastructure should include user-pays principals, along with selling suitable public assets and investing the proceeds into new projects.
“CPA Australia calls on the government to consider providing a 40% or 50% discount on income earned from investment in infrastructure projects to attract more private capital to these major projects which will drive the future of Australian business.”
This article first appeared on <a href="https://www.SmartCompany.com.au" target="_blank">SmartCompany.</a>
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moliver-7qYWqnHmyR

Australia could luck out in Asian Century due to poor infrastructure

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There are so many good agents out there. There are also some bad ones. So, how do you choose the agent that is right for you?
Choosing the right agent is especially important for investors whose real estate portfolios are a major portion of their wealth. You may have held onto an investment property for years, and done everything right in that time. 
Even so, your choice of real estate agent to help you exit the investment could still make a huge difference to your degree of financial success.
Vital for investors
That's a big statement, so let’s look at an example to understand it better. Let’s say you paid $500,000 for a unit in <a href="/news">Artarmon</a>, on Sydney’s north shore, some time ago. Perhaps you reasonably expect to sell it now for about $600,000. 
A good agent might be able to ensure you reach that target price. With a bad one, you might fall short by as much as $25,000. 
Could a bad agent really cut your potential profit by 20%? Of course they could. By failing to develop leads from potential buyers, a bad agent can reduce both the size and the number of offers you receive.
If your property hasn’t gained as much value as the example, the impact of a bad agent could conceivably consume your entire profit. In the worst case, it could put you into the red.
I have always been a big believer in real estate agents, and this calculation just reinforces that belief for me. A good agent can make the world of difference.
That’s why answering the question, “Which agent do I hire?” could be the most important single choice you make in the entire lifetime of your investment property. The only question that is more important is, “Which property do I buy?"
Is the rapping agent right for you?
So which agent do you choose? Maybe you want the hip hop agent, who filmed a rap video in one of his listings. The lyrics include these rhyming lines:
"To be the host with the most you don’t have to be rich,
"Come check my opens and meet with me, b____.”
Or, if rap isn’t your thing, maybe you would prefer an agent who takes excellent property photos.   The blog terriblerealestateagentphotos.com found this listing photo, which it says gives off a "vague sense of animosity". 
Look closely and see if you can guess why. 
<a href="https://24.media.tumblr.com/3c1e5033b3e850ec095302f57a6e677b/tumblr_mvdg8n96HV1rrqskho1_500.jpg"></a>
<img src="/images/stories/2014/02/11/agent_feb_11_one.jpg" width="470" height="352" alt="agent_feb_11_one">Seriously, it is vitally important to hire the right agent for your sale. I have worked with real estate agents professionally for most of my career and, year after year, there’s one piece of advice that I keep coming back to.
It’s simple and not even very clever. It’s certainly not difficult.
None the less, it is perhaps the last bit of advice regarding hiring real estate agents that you’ll ever need.
My advice is this:
Never choose an agent who talks over you. 
In any profession, if your efforts to say something only causes the other person to talk louder or faster, you should have serious concerns. Their behavior shows a lack of respect, sensitivity and professionalism.
When someone talks over you, you can assume one or both the of the following: 
• This person doesn't care what I have to say.
• Or, this person lacks the self-awareness and control to know when to be quiet and listen, and when to speak.
Either way, you don't want an agent like that representing you in a transaction that could mean the loss or gain of tens of thousands of dollars.
Hurting you and themselves
Perhaps you are willing to give talkative agents the benefit of the doubt. After all, you might tell yourself, "They do know more about real estate than I do. Maybe what they have to say about my home is more important than what I intended to say."
Certainly, a good agent will have important things to say. But in listings presentations, the best agents do more listening than talking. It is vitally important to them that they understand their client's state of mind, and that they learn all the important details about the property that only the vendor can know.
In this sense, a real estate agent who refuses to let you speak is doing a disservice not only to you, but also to themselves.
So, whether you prefer a rap artist or a photographic genius as your real estate agent, never choose one who talks over you.
Andrew Taylor is the Queensland-born co-CEO of <a style="font-size: 14px;" rel="nofollow" href="https://juwai.com/">Juwai.com</a>, the number-one Chinese real estate portal for property in Australia and around the world. 
He has almost a decade and a half of experience in Australian and Chinese real estate and managing print, TV, radio and online media. He also has bachelor and graduate degrees in classical music, and plays the diyin gehu (Chinese bass).
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ataylor-LB7AWVFTs9

Choosing the right agent: The one thing they should never, ever do

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Many people express the opinion that residential property is first and foremost a shelter and therefore should only be considered from a social perspective. Many believe that it is a given right of every citizen of this country to have a roof over the head – rather than as a financial asset that can potentially make money for its owners.
Although it seems like a righteous position to hold, it cannot be denied that, in addition to offering a physical protection from the elements, residential property is, and always has been, an attractive investment option.
The old saying “property is the biggest investments one will ever make” has not been coined without reason. Besides, even when people say they are buying a “home and not an investment” they do not necessarily equate this statement with not making any money on their purchase in the future.
It would therefore be more pragmatic to consider residential real estate as “long-term accommodation” rather than just a “shelter”. It is both a  roof over the head, as well as a money making asset.
Property ownership is quite popular in <country-region>Australia</country-region>. According to the Australian Bureau of Statistics, as at August 2011, 67% of all residential dwellings were owner occupied. Although this proportion is slightly down since the previous Census in 2006, it has remained relatively unchanged for the past 50 years.
Those Australians who had a stake in residential property did quite well over the last six decades, as the following chart demonstrates.
 <img alt="seven_decades_of_prices" src="/images/stories/2014/02/10/seven_decades_of_prices.png" height="261" width="470">
Source: Based on ABS data and Stapledon 2007
Returns varied from decade to decade as property prices rose at different paces, but they have always remained positive. So will property owners be seventh time lucky? Chances are they will, given the <a href="https://www.propertyobserver.com.au/residential/australian-property-prices-in-2014-and-beyond-a-peek-into-the-future/2014013167457" target="_blank">past history of property prices in this country</a> .
What the above chart does not show is that property owners also had an opportunity to make substantial savings in the ongoing costs of accommodation (i.e. rent) once they had paid off their initial loan. This increased the actual returns to owners quite substantially.
The following chart compares estimated total returns on residential property from capital appreciation and reinvestment of imputed rents, which is conceptually equivalent to S&amp;P/ASX 200 Accumulation Index.
 <img alt="property_vs_shares" src="/images/stories/2014/02/10/property_vs_shares.png" height="275" width="470">
 
Sources: based on ASX and ABS data
The chart indicates that, over the long run, returns from residential real estate match returns from share market investments. This conclusion is also supported by a study undertaken by Russel Investments and published by the Australian Stock Exchange, the <a href="https://www.asx.com.au/documents/resources/ASX_Report_2013.pdf" target="_blank">Long-term Investing Report, July 2013.</a>
It is important to stress that residential property is a long term investment option – it delivers, but requires patience. Consequently, this means it can be outperformed over a short-term by other types of investments.
Take gold for example:
 <img alt="property_prices_vs_gold" src="/images/stories/2014/02/10/property_prices_vs_gold.png" height="299" width="470">
Sources: based on ABS and Perth Mint data
Over the long run, residential property outperformed gold. However, over a short-term, those investors who piled into gold in 2005 would have experienced a much greater rate of return than property owners - even after the 2012 and 2013 falls in gold price are factored in.
 <img alt="property_prices_vs_gold_short_term" src="/images/stories/2014/02/10/property_prices_vs_gold_short_term.png" height="299" width="470">
Sources: based on ABS and Perth Mint data
Just a note of caution: Do not take the above comment literaraly – property owners could still come on top, despite the proportionately smaller increases in prices compared to gold because of the leverage that is usually applied when buying a property.
For example, a $100,000 cash investment in gold in 2005 would now be worth $250,000 (i.e. $150,000 increase). That amount invested in the right property worth $400,000 in 2005 (i.e. as 25% deposit) would deliver by now $200,000 extra in owner’s equity.
There is one more reason why property should be treated as an investment. In particular, if you believe in the merits of diversification, individuals should always aim to spread their wealth across a wide range of assets to minimise financial risk.
Residential property is an asset class with proven long-term security, hence should be considered as a part of well diversified financial portfolio.
All working Australians already participate in local and overseas stock markets, various cash instruments and/or commercial property market via the superannuation funds they belong to. However, these funds do not invest in residential property.
Dixon Advisory was the first Australian company to offer individuals the opportunity to invest in residential property in the <country-region>USA</country-region> via its <country-region>US</country-region> Masters Residential Property Fund, but not in Australian property. So, diversification into Australian residential real estate is only possible via direct investment in your own home or in the investment property (as an individual or via self-managed super fund).
All in all, residential property is an investment regardless of whether it can be morally justified, or whether those buying the property do it with full consciousness of this fact or not. It is simply because the returns are too good and too consistent to treat it otherwise.
The social aspect of housing, that is, as an “affordable shelter”, is very important and should be widely debated. However, in my opinion, the issue stands a much better chance of being addressed properly with tailored solutions aimed at assisting specific sections of the community; rather than with Robin Hood like polices advocated by some commentators, that can potentially destroy the investment value of property in Australia.
Residential property constitutes a significant part of the wealth of this nation. There is merit in the aspiration to own a property as a way of building and accumulating wealth, and therefore, there is a good reason to keep the 'Australian dream' alive.
Undermining this aspiration and shaking confidence of Australians in property will not end well – either fif it leads to destruction of national wealth, or for those who are persuaded to opt out of participation if history continues unchanged. 
Arek Drozda is an independent analyst who has worked in the public and private sectors for over 20 years in business development, data analysis and in building geographic information systems.
 
<hr>
 RELATED ARTICLES BY AREK DROZDA:
<a target="_blank" href="/news">Putting property investment losses into perspective</a>
<a target="_blank" href="/news"></a><a target="_blank" href="https://www.propertyobserver.com.au/finance/australian-property-prices-explained-independent-analyst/2014011367181">Australian property prices explained</a>
 
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An investment or just a roof over your head: How should we treat residential property?

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Some interesting data suggests that low interest rates are working their magic and consumers are enjoying the spoils of low mortgage repayments.
Retail trade punchy
<img alt="Graph: Monthly Turnover, Current Prices, Trend Estimate" src="https://www.abs.gov.au/ausstats/abs@.nsf/a866861f12e106e0ca256a38002791fa/3dda13ecdc094b1cca257734002042f2/Body/0.1928!OpenElement&amp;FieldElemFormat=gif" style="padding: 5px; border: 1px solid #ebebeb; box-shadow: rgba(0, 0, 0, 0.0980392) 1px 1px 5px; display: block; margin-left: auto; margin-right: auto;">
Source: ABS
Very nice results, as trend retail sales rose by 0.6% month on month in December or 0.5% month on month seasonally adjusted.
Reported the ABS: "The seasonally adjusted estimate rose 0.5% in December 2013. This follows a rise of 0.7% in November 2013 and a rise of 0.5% in October 2013."
This is another punchy retail print which suggests that consumers are getting into the swing of things.
As you can see, things were pretty slow in early 2013, but over the past six months retails sales are humming along at an annualised pace of 6.5%, which is a very solid rate of growth.
Note that we have had five straight months of growth at 0.5% or above, which hasn't happened since 2003, when we were in property boom-time.
Michael Pascoe made some <a target="_blank" href="https://www.smh.com.au/business/comment-and-analysis/forget-bananas-were-a-coffee-republic-20140206-3238w">interesting observations</a> over at the Sydney Morning Herald where he advises that rather than listen to the complaints about Aussies 'doing it tough', we should look at the story that the actual numbers are telling:
"Instead of nervously counting our pennies in the face of 'cost of living' headlines, what we’re doing is eating out much more and keeping baristas employed. The star sector within retail continues to be restaurants, cafes and fast food outlets, as the accompanying graph shows.
"On the raw original number, we spent $3,523 million eating out in December, 10% more than in December, 2012. On the trend series, the growth was 8.2 per cent and the seasonally adjusted series scored 8.3 per cent growth."
He's not wrong.
Here is the chart showing the growth in the cafe, restaurant and takeaway food services sector (I like to think that I have contributed here in own my small way!).
<img alt="Cafes, restaurants and takeaway food services sector. Source: ABS" height="188" src="https://images.smh.com.au/2014/02/06/5136373/nar-abs-cafe-300x0.png" width="320" style="padding: 5px; border: 1px solid #ebebeb; box-shadow: rgba(0, 0, 0, 0.0980392) 1px 1px 5px; display: block; margin-left: auto; margin-right: auto;">
Source: ABS
Exports flying
Then came a pleasant surprise with the trade data – a second month of surplus for the Aussie economy.
No prizes for guessing where the surplus was sourced from: a large surge in iron ore exports to China, with export values roaring up to a new record high, both for iron ore and for China exports in aggregate.
Let's hope those commodity prices stay healthy as we continue to move into the production phase of the mining boom and the economy can really start to pick up.
Only a mug tries to pick the GDP result, but throw in a a pick up in housing construction and you might start to be looking at a decent result when Q4 print is released in March.
Markets
And what of the impact on markets?
Well, share markets were cheered at last, the XJO (ASX 200) jumping into the green by more than 1.1% at the time of writing.
Currency markets seem increasingly certain that the economy is picking up, the unemployment rate will start to fall, and that we have seen the last of the interest rate cuts for the cycle.
The Aussie dollar is all the way back up at 89.7 cents.
As for property markets, well, they have not really shown any signs of cooling at all.
In fact, if you drill into the data, you will be able to identify some of the trademark signs of an imbalanced market.
SQM Research's Louis Christopher <a href="https://propertyupdate.com.au/sydney-records-lowest-number-of-listings-since-2008-louis-christopher/" target="_blank">has highlighted</a> how Sydney's stock on market has collapsed by 17% year on year to its lowest level since the stock on market index was created.
Boom-time looks set to continue in the harbour city.
On the flip side, Darwin has 25% more stock on market than a year ago, which is likely to stall the market, says Christopher.
<img alt="sq1" height="125" src="https://dev.propertyupdate.com.au/wp-content/uploads/2014/02/sq1.jpg" width="400" style="padding: 5px; border: 1px solid #ebebeb; box-shadow: rgba(0, 0, 0, 0.0980392) 1px 1px 5px; display: block; margin-left: auto; margin-right: auto;">
Source: SQM
Meanwhile, RP Data's Cameron Kusher updated his time on market index, and found that time on market has fallen to the lowest levels on record.
Dwellings not sold at auction are selling faster than we have seen recorded before (28 days for houses and 35 days for units).
Sydney has led the way in this index in recent history too.
<img alt="TOM" height="145" src="https://ci5.googleusercontent.com/proxy/nw2AS3w5o_Szf920cBksV80z9zx6IICeSnL10WJnbOhojkzR4CaeuXAAwNhtl2Y5JkrlNf6eNT5hK4NpBjAnkYx_mrCYYbK_5nrD7F-l_w=s0-d-e1-ft#https://blog.rpdata.com/wp-content/uploads/2014/02/TOM.jpg" width="400" style="padding: 5px; border: 1px solid #ebebeb; box-shadow: rgba(0, 0, 0, 0.0980392) 1px 1px 5px; display: block; margin-left: auto; margin-right: auto;">
Source: RP Data
All in all, the evidence suggests that no more interest rate cuts appear necessary. Now, we just need to employment figures to pick up an the economy could be off and running.
Pete Wargent is the co-founder of <a rel="nofollow" target="_blank" href="https://allenwargent.com/">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a rel="nofollow" target="_blank" href="https://petewargent.blogspot.com/">blogger</a>.
His new book '<a rel="nofollow" target="_blank" href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx">Four Green Houses and a Red Hotel</a>' is out now.
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