Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

Joel Robinson

First look: SP Setia targets St Leonards skyline with 40-storey TOD tower

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

First look: Urban Property Group unveils Newcastle’s latest tower at Wickham interchange

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

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The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
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[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

Local Little Bay residents, along with buyers from premium postcodes across Sydney’s affluent Eastern Suburbs, have dominated purchases in developer-builder Urban Property Group’s first Eastern Suburbs apartment development, <a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a>.

The $250 million coastal project, one of the first new developments in the area in several years, has proven particularly popular with downsizers, especially those from Coogee and Bondi. One Double Bay downsizer paid $4.7 million for a four-bedroom penthouse, setting a new local apartment price record in the process.

Buyers have been attracted to the combination of coastal tranquillity, premium design and amenity-rich neighbourhood living. The walkable village setting, along with proximity to three of Sydney’s leading golf courses, New South Wales Golf Club, St Michael’s Golf Club and The Coast Golf Club, has also been a key drawcard.

[smartcode_project:default project_id=112343 project_image_fid=352689]

Built across two low-rise buildings designed by <a href="https://www.apartments.com.au/architects/hill-thalis-architecture-urban-projects-pty-ltd">Hill Thalis</a> and set along a lush, landscaped green spine, designed by leading landscape architect <a href="https://www.apartments.com.au/landscape-architect/arcadia-landscape-architecture">Arcadia</a>, ESTE Little Bay offers a collection of one, two, three and four-bedroom residences with interiors by Richards Stanisich.

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> Sales Director, Tom McIvor said the response to ESTE has been "nothing short of extraordinary."

“Buyers have been quick to recognise ESTE as a rare opportunity to invest in a coastal sanctuary that offers both seclusion and connectivity to the heart of Sydney,” McIvor said.

[smartcode_project:default project_id=112343 project_image_fid=352687]

<a href="https://www.apartments.com.au/project-marketer/srm-residential">SRM Residential</a> Senior Director, <a href="https://www.apartments.com.au/project-marketer/srm-residential">Clayton Ross</a> said the local market has responded incredibly well, driven by ESTE’s exceptional location and the rarity it offers.

“We’ve seen strong interest from a variety of buyer groups, all of whom are drawn to the exclusivity and quality of the build and construction by the 4.5-star iCIRT-rated builder / developer, Urban Property Group. There’s truly nothing else like it along Sydney’s coastline.”

[smartcode_project:default project_id=112343 project_image_fid=352690]

The project also includes robust buyer protections, including Resilience Insurance’s Latent Defects Insurance, providing 10 years of structural cover, and an independent iCIRT-rating of the developer.

“The iCIRT-rating adds another layer of confidence,” Ross added. “Buyers see it as a safeguard for their investment and their lifestyle.” A highlight of ESTE’s offering is its exclusive wellness amenities, including a heated rooftop infinity pool and outdoor heated spa, a state-of-the-art Technogym fitness centre, and a sauna.

<a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a> is topped out and is on track to complete towards the end of 2026, with residents moving in before Christmas.

[smartcode_project_cta:default project_id=112343]

Eastern Suburbs buyers snap up ESTE Little Bay apartments

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

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

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The NSW Fair Trading Minister Anthony Roberts says strata schemes work best when owners and residents take an active interest in how the scheme is run. Getting people to volunteer their time to serve on committees or attend meetings is an ongoing challenge for many schemes, particularly where the majority of residents are tenants.
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Just over half of all residential strata lots in New South Wales are investor owned with many of these investor-owners living inter-state or overseas, making it difficult for them to attend meetings or to take an active interest in the concerns of the residents.
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The act currently sets an upper limit of nine for the number of people who can be appointed to the committee. While owners may find that having a small committee helps to ensure the efficient management of the scheme, the government maintains there is no clear reason why an upper limit needs to be provided for in the law. There are many different types of strata scheme and owners corporations should be able to appoint as many committee members as is necessary to effectively administer the scheme and to provide suitable representation.
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Noting in some schemes tenants make up the majority of residents, the government will be seeking to recognise tenants for their role in strata communities as many are willing and able to contribute in a positive way to the running of the scheme.
Despite this, tenants currently have no rights to attend meetings or contribute to decisions that affect them.
It is proposed that the law give tenants the right to attend and participate in meetings of the owners corporation. It is also proposed that tenants be allowed to appoint a non-voting representative to the committee in circumstances where tenants occupy more than half the lots in a strata scheme. Consistent with community feedback on the discussion paper, tenants will not be given new voting rights.
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HE SAYS – NO, NOT YET <img style="float: right;" alt="jc-silhouette-5" height="225" width="150" src="/images/stories/2013/09/06/jc-silhouette-5.jpg">
The voicing of tenants’ opinions by formal representation at body corporate meetings isn't really vital.
Let's face it many body corporates are already dysfunctional – hence, the reason for the NSW governments’ long overdue overhaul of strata title.
Renting an apartment for only six or 12 months is not unusual for tenants who could cause more grief than harmony for their neighbours if they are encouraged to have a say/play in the running of a building.
Imagine these tenants demanding the right for barbecues (even the ultimate portable barbecue, Ziegler &amp; Brown Twin Grill) on miniscule balconies in buildings with hundreds of apartments. Don’t tell me they won't demand to formalise the practice of hanging laundry items on portable racks on balconies in between their smokey barbeques.
Given the transient nature of many tenants, these could be distracting issues raised on a regular basis at strata meetings.
Certainly if we had the ideal European model of lengthy tenancies, often almost life-long, then it would be a different matter.
 
<img style="float: left;" alt="mb-silhouette-4" height="225" width="150" src="/images/stories/2013/09/06/mb-silhouette-4.jpg">SHE SAYS – YES
I’m all for democracy - everyone has the right to be heard. Indeed our reformist Fair Trading minister Anthony Roberts often refers to strata schemes as the fourth tier of government.
A proposed change to strata laws suggests tenants have a voice, but they won’t be allowed to vote on issues of building management. Tenants will be permitted to speak, but owners of strata title property will still hold all the cards due to their voting rights.
Let’s not forget that when Australia’s first parliamentary elections for the Legislative Council were held in 1843, the right to vote included men with freehold property valued at £200 – but also was granted to any householder who paid rent of £20 per year. So since colonial days most tenants have had a right to participate.
If tenants are allowed to air their grievances, or suggest positive ways to solve a problem, it could resolve neighbourly conflicts and encourage more harmonious day-to-day interaction with residents of a strata building.
Call me Pollyanna, always optimistic and trying to look on the bright side, but I am in agreement with Anthony Roberts on this one. 
In his speech on November 2, Roberts said “these reforms aim to build a culture of community and co-operation by encouraging participation and inclusion…and improve the everyday things that people in strata schemes care about."
<a href="mailto:jchancellor@propertyobserver.com.au" target="_blank">jchancellor(AT)propertyobserver(DOT)com.au</a>
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jchancellor-FAypfDUnLy

Should renters have a say in the management of residential strata buildings?

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Watch the video below, and tell us: could you have lived in this?
According to <a href="https://www.just-think.com.au/" target="_blank">Just Think Real Estate</a>’s Edwin Almeida, who told us that on his inspection of the property he couldn’t be in there for more than six minutes, the tenants did so – for two years! They even paid $410 per week for the pleasure. The rental is in Sydney's Homebush area.
What you see on the ceiling there, is copious amounts of mould. Around the fuse box? Asbestos. Also note that there is no smoke detector.
{qtube vid:=v1dYcpRNkec}
The tenants were asthmatic and their fuses kept blowing out.
The investor had been self-managing and had allowed the property to get into this state, later asking a property manager to take over when he found himself dealing with tenants in arrears and some property damage.
Luckily, the landlord has now renovated, spending up to $15,000, and bringing the rent up to $480 per week. The renovation included fixing the broken fence, fixing the mould and electrical problems, fixing the concrete balcony, a kitchen upgrade and other more cosmetic fixes. The property could now achieve somewhere around $750,000 if it was put on the market, says Almeida, compared to around $600,000 beforehand.
See the gallery below for the fixed up property. These photos were provided as part of the most recent routine inspection report.
{yoogallery src=[images/stories/2013/11/14/sq]}
However, it could have created far more problems; including possible liability for the landlord should a tenant have gotten sick. Unfortunately, not all stories are happy stories.
With <a href="https://www.propertyobserver.com.au/victoria/landlord-sued-%24300000-over-balcony-collapse/2013111466359?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=news" target="_blank">Property Observer reporting about a landlord being sued $300,000</a> for a balcony collapse due to poor maintenance in a Melbourne rental, it’s now more critical than ever that investors, particularly self-managing ones, and property managers are aware of what is required from them.
Almeida has been providing Property Observer information for the <a href="/news">‘Is your tenant living in squalor?’ series</a>. He says the property above is not the worst he has seen, and that these problems are rife across Sydney.
He details the following:
The misnomer when we discuss the topic of “tenants and landlords” in relation to self-managed properties, that the landlord is somehow exempt from legislative obligations around duty of care, is far from the truth. This is not the case, and burying your head in the sand and thinking you have some sort of exception will only create more issues.
Some, no doubt, have come face to face with the “tenants from hell” as noted in this article but is it always the tenants that are at fault? This is a question that has to be asked and dealt with on a case by case basis.
What of the landlord’s responsibilities in relation to providing a safe living environment under the residential tenancies Act 2010? Regardless of whether the property is self-managed or managed by an agent, there is an obligation. We can blame the tenants all we like, and even jump up and down as much as we want, but the question remains: Why are the issues allowed to become so big in the first place? The law works both ways, it doesn’t just protect tenants as many would like you to believe.
Now back to the issue of safe living standards. Outside of damage caused by tenants, there is a clear obligation for the landlord to provide a safe living environment. Don’t be fooled in thinking that not many cases are recorded or heard around landlords being sued for damages in the area of health. Most of the cases around this are settled outside of the courts before they become too costly. These are costs that overshadow arrears and any other form of malicious damage done to property by the tenant.
The video attached to this article is a short glimpse of a self-managed property. Yes, there was an arrears, some damage to some of the rooms. But frankly, these problems are overshadowed by the fact that the property was riddled with hazards that may cost the landlord tens of thousands of dollars due to possible health and safety issues, if they are sued. Some of these issues included mould, being the most obvious, as well as electrical hazards, sharp objects and falling fences.
Again this is a third call for the governing bodies to be more proactive when it comes to dealing with living standards. We are not living in a third world country and surely we have more than a legislative obligation to providing a safe living environment. We have a strong moral obligation just the same if not more prudent.
I note the financial temperature of the property market is 'hot' and equity levels of properties are increasing on an almost daily basis. So why not put back and re-invest into these properties? Look at the upside: higher rental returns, greater values in terms of equity, and the obvious one: you won’t get sued!
If you don’t want to lose it all because you didn’t fix the issue early enough before someone was injured or suffered a health loss, then ask yourself the question one more time: Is your tenant living in squalor?
 
<a href="mailto:jduke@propertyobserver.com.au" target="_blank">jduke@propertyobserver.com.au</a> 
 
 
 
<div id="_mcePaste" class="mcePaste" style="position: absolute; left: -10000px; top: 0px; width: 1px; height: 1px; overflow: hidden;">managing partner and licensee-in-charge of <a href="https://www.just-think.com.au/" target="_blank" rel="nofollow">Just Think Real Estate</a></div>
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jduke-EHk3XBmHkn

Is your tenant living in squalor? This video is hard to watch

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A fairly soft <a target="_blank" href="https://www.propertyobserver.com.au/economy/wage-growth-slows-to-lowest-rate-in-decade-why-interest-rates-could-stay-low/2013111266295">wage price index release this week</a>, while the share markets got a bit of nudge cropping by 1.4%. Not much to get excited about with the wage prices, in truth. Wages in Australia increased by 0.5% quarter on quarter leading to year on year wages growth of 2.7%, with the usual volatility across industries.
<a href="https://3.bp.blogspot.com/-DAG9pEYHP84/UoMPmEXokpI/AAAAAAAAKwk/2RCzLsbDDmE/s1600/Wages.jpg" imageanchor="1" target="_blank"><img border="0" height="175" src="https://3.bp.blogspot.com/-DAG9pEYHP84/UoMPmEXokpI/AAAAAAAAKwk/2RCzLsbDDmE/s400/Wages.jpg" width="400"></a>
Source: ABS
Wages growth at that kind of level appears unlikely to fuel much in the way of consumer price inflation, yet go some of the way towards explaining how hard it is to time property markets. In Sydney, for example, we have had three property downturns in the last ten years (2004, 2008, 2011), yet as each cycle passes wages and household incomes have trended higher over time.
<img alt="Dwelling Prices graph" src="https://www.rba.gov.au/chart-pack/images/5-6-household-sector/6bl-dwelpri-small.gif?accessed=2013-11-13-16-51-47">
This soft wages print adds something to the argument that interest rates could be staying right where they are with an official cash rate (OCR) of 2.50%, potentially for the next six months, until such time as there is clear evidence that the unemployment rate has peaked.
The inflation picture is a little mixed at present. The key inflation readings - the trimmed mean and weighted mean - are comfortably within the target range, yet note the gulf between tradables inflation and non-tradables (apologies, I have to go with the RBA's spelling, though I don't like it).
<img alt="Underlying Inflation graph" src="https://www.rba.gov.au/chart-pack/images/4-au-gdp-growth/4bl-underinf-small.gif?accessed=2013-11-13-16-58-37">
<img alt="Non-tradables and Tradables Inflation graph" src="https://www.rba.gov.au/chart-pack/images/4-au-gdp-growth/4br-tradeinf-small.gif?accessed=2013-11-13-16-58-37">
Note that: "Tradable items are things whose prices are largely determined on the world market like oil, motor vehicles and clothing. As such, the prices of tradable items are heavily influenced by exchange rate movements. By comparison, non-tradables refers to things that are not readily exported or imported, like medical services, housing and haircuts. As such, their prices are largely determined domestically."
Following on from its worse-than-expected business survey, National Australia Bank (NAB) still believes that the next move in interest rates will be down, although it has pushed out its cut estimate until the middle of 2014. Others remain more positive on the economic outlook and see the next move as being up.
The respective trends for public and private sector wages are detailed below. The downtrend over the last three years is fairly clear, although perhaps there are signs of hope in private sector wages. The trend for public sector wages doesn't look inspiring. On a related point, the outlook for Canberra's property markets also does not appear great with jobs likely to be cut in the ACT.
<img alt="wargent-wages-source-abs-nov-15" height="373" width="470" src="/images/stories/2013/11/15/wargent-wages-source-abs-nov-15.jpg">
Source: ABS
Elsewhere, however, Westpac reported that consumer confidence picked up (no doubt in part due to stronger dwelling prices) and perhaps unemployment expectations may have topped out...for now.
Overall, the data on Wednesday seems to fit with the Reserve Bank of Australia's base case, which is for below-trend GDP growth through 2014 before the economy starting to pick up momentum again in 2015. The impact of slowing mining capital investment will be key, and certainly one of the most significant issues to watch with interest.
<a href="https://3.bp.blogspot.com/-f44cEH3xLM4/UoMRG8YSMtI/AAAAAAAAKxA/TYLG380kdTE/s1600/RBA+GDP+forecast.jpg" imageanchor="1"><img border="0" height="365" src="https://3.bp.blogspot.com/-f44cEH3xLM4/UoMRG8YSMtI/AAAAAAAAKxA/TYLG380kdTE/s400/RBA+GDP+forecast.jpg" width="400"></a>
 
<hr>
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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pwargent-M4siyDbqQY

How wages are affecting the property market

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While iron ore, coal, gold and natural gas have been Australia’s biggest commodities for the past decade, industry experts say the exporting landscape is evolving, with new industries coming to the fore.
Food manufacturing, oil and gas extraction, beer manufacturing, education services and legal services have been ranked by IBISWorld analysts as Australia’s best chances to support the nation’s economy in the next few years.
In 2013-14, Australia is expected to generate $317.6 billion in export revenue and IBISWorld industry analyst Sebastian Chia told SmartCompany in a statement macroeconomic factors will favour exporters in the next five years.
“It’s mainly been driven by the growth of the Asia Pacific region and the demand for our food products and our education services which are viewed as higher quality goods in the region,” he says.
As the value of the dollar softens, Australian exports are expected to become increasingly price competitive against the currencies of Australia’s major trading partners.
Businesses in the food manufacturing sector are positioned well for the next five years, as Australia’s high food standards are attractive to foreign markets.
IBISWorld figures show revenue for Australia’s baby food manufacturing industry is forecast to grow by 2.9% per year over the next five years to reach $206.7 million. The dairy industry is also expected to grow, with revenue anticipated to grow by 2.1% to reach $12.8 billion.
The demand from south-east Asian markets is likely to be behind the dairy sector’s growth, with this a likely motivating factor in the current <a href="https://www.smartcompany.com.au/growth/economy/34058-bidding-war-emerges-between-saputo-and-bega-over-warrnambool-cheese-and-butter">bidding war for the Warrnambool Cheese and Butter Factory</a>.
Chia says overseas companies have twigged that Australia is in a favourable geographic position to Asia.
“They’ve realised we have an advantage in this sector because we’re so close to these countries where the middle class is booming and there is a great demand for our food services.”
Dairy Australia industry analyst John Droppert previously told SmartCompany dairy processors with exporting links are leading the market.
“At the moment there is tremendous growth in south-east Asia and this year the export story is very strong. There have been a few tough years for many of the key exporters, but there have been supply shortages in China this year and there have been exits among the smaller producers there, which is driving up commodity prices to levels we haven’t seen very often.”
The Australian education services sector, like the food sector, is considered to be of high quality in the Asian markets, and the sector is predicted by IBISWorld to grow at 3.7% over the coming years.
“International students are a major market for this sector, accounting for 24.9% of total enrolments this year,” IBISWorld general manager Karen Dobie said in a statement.
“Following annual growth of 7% prior to 2009, industry growth has cooled off somewhat because of the high Australian dollar, but the anticipated decline of the dollar in the next five years will boost enrolments from foreign students once again.”
While the education and food industries are already attracting demand from overseas, whether or not Australian beer companies are successful overseas is yet to be told.
Chia says beer manufacturers are expected to place an increased focus on exports, as sales in the local market have declined over the past five years.
“Faced with that stagnant or falling demand, particularly for the traditional brands, they’re looking to export markets for growth,” he says.
“They see there being more growth by going overseas. It’s too early to tell whether or not they’ll be successful, but brands like VB are seen as quintessentially Australian and people will pay a premium.”
Chia says one way businesses can succeed in <a href="https://www.smartcompany.com.au/leadership/strategy/31265-exporting-made-easy-a-guide-for-small-business-exporting-to-asia">expanding overseas</a> is to consider merging with a brand in that market.
“Looking at the legal services sector, this is a good case and point, there have been a lot of mergers recently which have seen business start to align themselves to different regions like the UK, US and Asia,” he says.
“A lot of that has been to take advantage of the push into the Asia Pacific region.”
This article first appeared on <a target="_blank" href="https://SmartCompany.com.au">SmartCompany</a>.
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mrobin-TVRYiru7si

Australia’s top five exporting opportunities revealed

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Investing in property can be costly and time consuming - such as having to buy how-to books, attend seminars and pay consultants - so competent operators will welcome advice on which fees and charges they can claim through their tax.
Property taxation specialist Shukri Barbara said he was often asked which of these self-education programs are tax deductible.
They include:
<ul>
<li>wealth creation using property as a class of asset</li>
<li>learning about new trends in property values</li>
<li>mentoring on property – both short and long-term programs</li>
<li>consulting fees relating to management ‘assistance’ with property investments 
</li>
</ul>
To assist, Barbara has accessed ATO correspondence regarding an audit of a claim by a client. It helps explain which expenses are deductible and includes some of the ATO’s responses.
Basic principles of claiming deductions
An expense is generally allowed as a tax deduction if it is incurred in generating income - in this case rental income.
So, first, there has to be:
-          Ownership
<ol style="list-style-type: lower-roman;">
<li>A property has be owned before it can generate rental income, then there has to be</li>
</ol>
-          Income
<ol style="list-style-type: lower-roman;">
<li>Revenue from rent before a claim for a deduction is considered to have been incurred in generating that income.  Finally, </li>
</ol>
-          Nexus
<ol style="list-style-type: lower-roman;">
<li>The expense has to have a nexus to earning the income i.e. incurred directly in generating the income e.g. agent fees, rates etc.</li>
</ol>
Timing is important if the expense is to be deductible. The expense has to be incurred after you own the property – usually after settlement.
Claiming deductions for education/mentoring/consulting fees
As regards coaching, some of the questions include:
-          If the program relates to increasing wealth  – no deduction
-          If the program relates to acquiring/sourcing property  – no deduction
-          If the program relates to improving the value of a property  – no deduction
-          If the program relates to improving rental revenue – yes deductible
-          If the program relates to reducing rental expenses  – yes deductible
-          If the program relates to getting better tenants  – yes deductible
-          If the program relates to better managing the agent  – yes deductible
What if the coaching is for all of the above?  – a proportion of the fees may be deductible
-          What’s the ATO’s attitude? – If it sees expenses as capital related to increasing wealth the expenses are usually not deductible.
Unfortunately, as suppliers continue to change the descriptions on their invoices, and descriptions of their services, to enable the client’s fees to be deductible, some things still remain unclear as they have not yet been tested in the court.
The above approach is equally applicable to seminars and mentoring. A proportion of the fees will be allowed as a deduction where they relate to the revenue and expenditure side of rental properties. Otherwise they are not deductible. This is assuming the property is owned and earns rental income.
Sourcing fees
Sourcing fees – such as hiring a buyer’s agent - are considered a capital expense and part of the cost base of a property, along with property inspections and pest inspections. When calculating capital gains on resale, the CGT will be less as a result of this cost.
If the deal falls through and the property is not purchased, while the ATO will acknowledge that an expense has been incurred, it is not accounted for anywhere for tax purposes and cannot be claimed.
In which year is the claim deductible?
Where deductible, the expense should be claimed in the financial year in which it is incurred - usually the date on the invoice of the agreement with the provider. The contract/invoice date is the relevant one where payment is made by instalments.
What is the ATO’s view?
In an audit situation the ATO will review each person’s circumstances based on the facts. They will:
-          look at the description of the services on the invoices from the providers
-          test each claim and see if, in reality, that’s what is being charged
-          look at whether the amounts are reasonable
-          look up the provider’s website and see what they are promising and then compare it to the invoices
So, if the website only talks about wealth creation, while the descriptions on the invoices are very brief, the fees are likely to be not deductible. Otherwise, they may form part of the cost base for sourcing the property.
Barbara said investors could legitimately claim for the cost of ‘’lifetime membership programs’’ offered by spruikers even if they charge by instalment. The claim should be for the full amount at the time of the first instalment.
He said those generating income through real estate – such as real estate reporters – can claim for tickets for events such as home buyer ‘expos’.
<a href="mailto:staylor@propertyobserver.com.au">staylor@propertyobserver.com.au</a>
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staylor-63KgDrKwoY

How much of your “property education” is actually tax deductible? 

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Owners corporation managers are becoming involved in residential developments earlier and earlier on, according to Andy Dawson, managing director of Engine Property Group.
Dawson spoke to Property Observer as part of our Day in the Life series.
{qtube vid:=SFsbTEceQbI}
As soon as planning permits are approved for large residential development, owners corporation managers can become involved providing feedback on how the building will work.
The role has extended far beyond that of being just a strata manager and now involves consultation on laws, lay-out, and structure of residential buildings from day one.
"If you break down from our perspective what we actually do, right from the moment that the actual town planning permit is issued and there are architectural drawings we’re asked to have a look at the drawings, to look at the machinations of the building, look at how many buildings there are, what type of amenities there are, how we actually structure the owners corporation," Dawson told Property Observer.
Photos: ILK South Yarra
New developments, prestigious and otherwise, have more and more common spaces. <a href="https://www.propertyobserver.com.au/victoria/vue-de-monde-communal-kitchen-for-melbourne-development/2013092365193">Banquet kitchens</a> are the norm these days, buildings aren’t complete without their <a href="/news">own cinema</a>, and <a href="/news">shared rooftops</a> are now almost as important as what is in the newly completed apartment.
But with that rise of shared spaces comes the added burden on the owners corporation for managing and funding them.
<blockquote class="twitter-tweet">
Pool at South Yarra, Ilk <a href="https://twitter.com/search?q=%23propertyobserving&amp;src=hash" target="_blank">#propertyobserving</a> <a href="https://twitter.com/search?q=%23ilksouthyarra&amp;src=hash" target="_blank">#ilksouthyarra</a> <a href="https://t.co/UEovBOF8Jd" target="_blank">pic.twitter.com/UEovBOF8Jd</a>
— Jennifer Duke (@JennieDuke) <a href="https://www.propertyobserver.com.au/https://twitter.com/JennieDuke/statuses/380251428985380864" target="_blank">September 18, 2013</a>
</blockquote>
The organisational and technical infrastructure required far surpasses what was required in previous styles and require a far larger owners corporation.
Working out the operational costs of these spaces is integral to maintaining body corporate fees at their advertised rate, and working this out takes months.
Dawson says larger firms are generally able to keep body corporate fees within 10% of the advertised rate even after several years.
"We have to set quite reasonably budget allocations so incoming purchasers know what the level of the owners corporation fees are."
The increasing complexity of developments also means there is an increasing number of owners corporations for each development. It’s common for them to have eight different bodies for one development.
"They’re a function of cost centres they don’t want to be paying for the costs of a person living in another tower."
Day in the life
8.30am: Get to work and check emails
9:30am: Meeting with managers to organise staff for upcoming hand-over of development
11:30am: Site visitation to Tip Top development in Brunswick. Discussions with developers on how to approach owners corporation structures.
12:30 Lunch meeting with an architect on the design of a communal kitchen
14:30 Meeting the building manager of 27 Little Collins Street on how to move 170 people into the development, using just one goods lift, without disrupting the operations of the Sheraton Hotel.
16:00 Meeting with Engine’s Lawyers to develop presentation on the legal obligations of a developer in an upcoming site
Video Transcript
Alistair: Prestigious new developments these days seem to offer more and more shared spaces, from rooftop cinemas, massive gyms, beautiful gardens and banquet kitchens but this drive towards shared facilities requires a sleeker much more engaged owners corporation structure to manage these spaces. We spent the day with Andy Dawson, head of Engine Property Group to talk about how they manage this emerging breed of new developments.
Andy: Engine Property Group is a property asset management company. We look after every aspect of property save and except sales and rentals. So when common property is created an owners corporation is deemed to exist and the owners corporation is the owners and they can own a multi-level residential tower or they can own an estate or a planned-community and we assist them with their functions under the act to fulfil the repair maintenance of common property and enforcing the rules and regulations in that environment.
Alistair: So which sort of developments do you cover?
Andy: We’ve got some beautiful sites, we have some beautiful established sites. We have representation at New Quay, the Nolan Tower, Royal Domain Tower, we have properties in Port Melbourne, Bay Apartments and out to the east we have Mitcham Village. We have wonderful estates Solomon and Allamanda. Out in the east we have Marriot Waters and we’ll be taking a trip today to a beautiful development, probably the most prestigious development in South Yarra which was delivered by Little Property which is Ilk.
Alistair: What’s changed in the industry?
Andy: You could purchase an apartment back in the early 80s and upon settlement you receive your owner’s manual and your keys and you would arrive at the apartment complex and possibly be met by a retired bank manager. Your movement would be organised. Now the delivery of service is at such an acute level that we have worked so hard and can see the high level development companies that attract purchasers. Their service proposition with regards to delivery has increased because apartments are now seen as homes, buildings are now seen as communities. The level of owner occupier is significantly higher. If you break down from our perspective what we actually do, right from the moment that the actual town planning permit is issued and there are architectural drawings we’re asked to have a look at the drawings, to look at the machinations of the building, look at how many buildings there are, what type of amenities there are, how we actually structure the owners corporation. It’s not unusual in these larger developments to have anywhere from six to eight owners corporations and they’re a function of cost centres they don’t want to be paying for the costs of a person living in another tower. So we have to have a look at the structure of the owners corporations, the cost allocations. We have to set quite reasonably budget allocations so incoming purchasers know what the level of the owners corporation fees are.
Andy: So if you can imagine, you’ve purchased your apartment, you move in, and then you arrive at the apartment complex and you’re met by one of our team who’s the building manager. There’s been a lot of lead-up work for two to three months to that particular point in time. So someone comes in and straight away they feel the building is clean, safe, it’s secure, it’s compliant, and they can go to their website. They can have a look at how to book into the movie theatre, the barbeque area, how do I go about this, what are the rules, what can I can’t do, who do I contact? It all augurs well for maintaining that higher standard. And we’re lucky enough to be working with groups that are continually evolving up and we’re continuingly evolving up. So that’s our significant point of difference and that’s where I see our industry as going.
Alistair: So where are we heading?
Andy: Toorak Road, the new very prestigious Ilk development that’s been recently handed over by Little Property.
Alistair: So you’ve been working with Little Property for a while?
Andy: Yeah we’ve got a great relationship with Little. We’re very fortunate to have tremendous relationships with a lot of high end developments. We try and work really hard. We have our scabby knees but we try and work really hard to maintain the respect and deliver in accord with their expectations and purchasers’ expectations.
Andy: It was delivered in stages. The first stage was end of June early July; the second stage was end of August. And that’s getting nearly 400 people into a building over that period of time.
Andy: We’re standing on the ninth level of Ilk Tower. Which is Little, in South Yarra’s development. So there are six owners corporations at Ilk. We’re standing on one owners corporation here which the residential towers share. Which is the common amenities here, it’s a beautiful entertaining area where people can have their own private parties, catering, bring in a chef, over there we have cinemas, barbeques, it really is well done. But the point I’m making is it’s a common property and an owners corporation. Above us is the North Tower, that’s an owners corporation. Below this slab is the South Tower, that’s an owner’s corporation. The point I’m making is the people in the South Tower don’t contribute to the costs of the people in the North Tower but they share the costs of these cost. We have a retail component and we have a car park component. But again the whole process of bringing a $100 million plus building on stream, in anticipation of 400 residents where you know that people have just experienced that journey I’ve spoken about with regards to customer relations. It’s so critical for us to hit it right.
Andy: Behind the scenes, behind that area there is plant and equipment. And that plant and equipment is being loaded up on building management system so we know who the core supplier is, who the manufacturer is, what types of warranties are involved, both from a manufacturing perspective and from a service perspective. And that is so important. People don’t think of this, they think it might just be heating and cooling equipment. But the reality is, if something goes wrong and you just have a strata manager who gets the call they might just ring a contractor to come and fix it. But from our office we know who to go directly to. We know who the service providers are and all that is a function of not breaching warranties. And again that’s a function of cost saving. So it’s a situation of managing a building parcel in its entirety rather than just having one particular discipline which is strata management.
<a href="mailto:awalsh@propertyobserver.com.au">awalsh@propertyobserver.com.au</a>
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awalsh-7Ub9EypybQ

What does your owners corporation actually do? A day in the life of an owners corporation manager

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Vacancy rates across Sydney’s popular inner and middle suburbs have tightened as first home buyers, struggling to afford properties, look to rental accommodation.
The October 2013 Real Estate Institute of New South Wales Vacancy Rate Survey shows availability across the Sydney metropolitan area is steady at 1.7%.
REINSW president Christian Payne said the rate was the lowest the middle suburbs had experienced in 18 months. "It is yet another indicator of how the abolition of incentives on existing properties for first home buyers is causing issues across the marketplace."
Other figures are:
• Inner suburbs (0-10 kilometres from the CBD) are down 0.1% to 1.7%
• Middle suburbs (10-25 kilometres from the CBD) fell 0.2% to 1.6%
• Outer suburbs (more than 25 kilometres from the CBD) are up 0.2% to 1.7%
"First home buyers who can’t afford to buy their dream homes are putting substantial pressure on the
rental market," Payne said.
"Middle suburbs, including Auburn, Burwood, Hunters Hill, Parramatta and Ryde are some of the hardest places to find accommodation in Sydney."
Outside Sydney, the Hunter fell 0.1% to 2.9% despite Newcastle’s increase of 0.7% to 2.4%. The Illawarra remained steady at 2.0% even though Wollongong’s vacancy rate rose 0.4% to 2.3%.
In regional areas, Albury is the hardest place to find rental accommodation after a decline 0.2% to 1.8%. Orana, which had previously held the title, jumped 0.6% to 1.9%.
Northern Rivers’ availability rose 0.2% to 3.1% and New England was up 0.5% to 2.9%.
Meanwhile, the easiest place to find rental accommodation in the state is the Central West after a rise of 0.3% to 4.1%. South Eastern NSW added 0.5% to 4.0%. Coffs Harbour’s availability leapt 0.8% to 3.8%.
<a target="_blank" href="mailto:staylor@propertyobserver.com.au">staylor@propertyobserver.com.au</a>
 
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Struggling first home buyers pushing down Sydney's inner and middle suburb vacancy rates

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A recent article in the Australian Financial Review reassured investors that the anticipated short-term surge in sublease space (within Australia's CBD Office markets) has simply not eventuated:
"Sublease space spikes at times when the economy is weak and business confidence is low because companies are restructuring and downsizing."
<img alt="CBRE_sublease_space_by_industry" height="315" width="470" src="/images/stories/2013/11/12/CBRE_sublease_space_by_industry.png">
Source: CBRE
Furthermore, the article suggested that the overall amount of sublease space is expected to fall sharply over the next few months — following the post-election improvement in business confidence.
And of all the capital cities, the CBRE research shows Melbourne has provided the greatest improvement over the past year.
What else does the chart reveal? For a number of years now, this blog is pointed to Melbourne having far greater stability — when you compare it to other capital cities. And my reasoning has been that Melbourne enjoys a far more diverse tenancy mix.
However, there has never really been any definitive analysis, to clearly confirm this particular assertion.
That is until now!
As you can see from the chart above, every CBD (other than Melbourne) has a major exposure to one specific market sector:
<ul>
<li>
Sydney: Finance &amp; insurance;
</li>
<li>
Brisbane: Mining, manufacturing &amp; construction;
</li>
<li>
Perth: Mining, manufacturing &amp; construction; and
</li>
<li>
Canberra: Information technology.
</li>
</ul>
As you would appreciate, when any of these business sectors begin to surge those capital city office markets respond rapidly — with escalating rentals and prices.
However, during an economic downturn (like the GFC ) those same markets tend to suffer the most.
Bottom line is with a more-balanced spread within its tenancy mix, Melbourne's office market is better placed to withstand such economic gyrations.
While it may not reach the same heady peaks, nor does Melbourne plumb the depths experienced by the other capital cities.
Perhaps it lacks some of the excitement. Yet instead, Melbourne has historically been able to offer investors solid and predictable returns.

<hr>
Chris Lang is an advisor to commercial property investors, sell-out author and regular speaker on how to invest in commercial property. You can visit his website <a target="_blank" rel="nofollow" href="https://property-edge.com.au/">Property Edge Australia</a> to help you get the most out of your commercial property investing.
 
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Balance is best: Why Melbourne's office market is well placed to withstand economic gyrations

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For most investors who focus on units and apartments, buying on the ground floor long time been a property industry taboo. Experts and successful investors historically have insisted on avoided the ground floor for a plethora of reasons. This sentiment was then reflected and evidenced in the market via property values. Take your stock-standard, older style, three-floor walk-up unit block without a lift.

For the past fifty years or more, you could almost guarantee that that the top floor units would achieve the higher values, followed by middle floor and then the ground floor with the weaker property values in those complexes.

There are a number of reasons why professional investors have avoided ground-floor units and apartments in the past, each of these being perfectly valid within the context of historical demographic and cultural trends/preferences:  

1) Safety and security

[smartcode_project:default project_id=26730]

Historically, unit dwellers have been mostly a younger demographic cohort, with singles, couples, or perhaps couples expecting their first baby, occupying units due to the cheaper cost of living whilst saving for a home of their own. Ground floor was always seen as less secure and therefore at greater risk of theft and damage.

2) Top floor units having better views and more private balconies

[smartcode_project:default project_id=22584]

With most investors targeting more of a young single/couple/family investor persona, views and privacy is a crucial feature for investors to ensure tenants have peace of mind. A better outlook and maximum privacy helps to keep tenants happy and thus keep them renting your investment unit longer. This reduces vacancy periods and thus maintains solid return on your investment, so top floor eclipsed ground floor units in terms of demand by investors.

3) Noise

[smartcode_project:default project_id=29915]

Top floor units have also been favoured by investors because of noise issues. With many light sleepers who are also rental property seekers, being on a ground or middle floor of a building can be a real turn-off, with footstep noise from the units above being the deal breaker between renting an apartment and not renting one. Top floor units do not have this problem and thus grow in capital value faster, as well as attract higher rental cost.  

However this preference could be changing, and for NSW investors with a keen entrepreneurial streak, there could be genuine opportunities emerging with ground floor units. With some due diligence and forecasting, investors could be well placed to purchase ground floor units at lower rates, and reap the rewards later on in the holding period.

The reason for this is a combination of two dynamic factors:

1)      The very recent – and well covered – news of the NSW state government’s upcoming changes to strata by-laws; and

2)      Changing demographic factors in the NSW population coupled with the an increasingly urbanised and unit-preferential population  

There are a number of strata by-law changes that the Department of Fair Trading is looking to push through, and these are expected to take effect by mid-2014. Of all the changes established, the most significant changes for ground floor investors are:

-          That smoking will be prohibited on balconies and courtyards within individual units

-          It will now be much easier to have a pet in a strata property than ever before  

So how do these changes positively affect ground floor units? The answer in my mind is all to do with Australia’s aging population. NSW is Australia’s most populous state and also has one of the highest baby-boomer proportional populations in the country. As this generation moves into retirement age, demand for easy-access, level ground floor dwellings will no doubt increase in this state.

For me, the smoking and pets by-law changes is about reading between the lines. Most complaints to strata committees (which, when unresolved at a strata committee level, escalate to the NSW Fair Trading department, the team responsible for the strata by-laws restructure) stem from refusal of pets, and also complaints from elderly and family dwellers about neighbour’s balcony smoke blowing into their unit.

In my mind, the new by-laws have been developed in part to benefit and assist our increasing aging population who are downsizing to apartment living, as well as benefit young families. Smoke is a genuine turn-off for these dwellers, and as for pets it is well documented that having a pet helps boost the mental health of retirement age and elderly people, especially those who may have lost their life partner and are living on their own. Pet ownership can curb depression and also assist therapy for illnesses such as dementia too.

Where it used to be a trend for retirees and elderly to move out of capital cities, seeking ‘sea-change and tree-change’ lifestyles, to live in a bigger dwelling (i.e. a house on a larger lot), in a quieter, more remote, and peaceful town, new trend data now that suggests the opposite is occurring.

Retiree-aged Australians are increasingly wanting to remain urbanised, with the main reason being to be close to their families and grandchildren; not having to travel so far to see them regularly. Affordable houses with yards in metropolitan areas then becomes a challenge for retirees to source.

The other cultural shift occurring is one geared towards low-maintenance, well-located properties. So, units and apartments that do not have yards are much easier to maintain.  

The pros of holding a retiree-age occupied, ground-floor investment property, far outweigh the cons these days, and here’s why:

-          A growing retiree demand for ground floor housing – providing stairs are minimised and access is easy – this creates a growing tenant pool, which in turn increases demand.

-          Sure, some mature tenants may simply prefer to live on the top floor of a building with a lift, however as an investor the increased strata costs to maintain a lift (along with any other amenities such as pools, tennis courts, water features etc.) may make this property type not as profitable as a modest non-lift building

-          Elderly folks make great tenants! It will be very unlikely that your tenant will trash the place, create noise issues etc. In fact, in my experience my elderly tenants have maintained the properties very well, and even created a sense of community within their buildings, as well as reporting suspicious activity to local police

-          Rental repayment security is also a positive. With most mature tenants being downsizers; cash-flow is quite positive and the commitment of an apartment is usually far less than the house they may have occupied previously

-          Occupancy tenure is usually also excellent, with many retiree-aged tenants establishing themselves in a property with more of a long-term view than say a young family or couple, who are looking to move out as soon as their home deposit is saved  

So perhaps it is time for investors to reconsider their stance on ground floor units and apartments. I do not doubt that middle and top floor properties will continue to grow also, however the opportunity for ground floor success is substantial.

 

<hr>
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a href="https://propertyspectator.blogspot.com.au/" rel="nofollow" target="_blank">Property Correspondent.</a>

 

 

 
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Down low can be the way to go: Ground floor apartments and units could be a good investment

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Australia's real estate market remained a tale of two stories in the third quarter of this year.
In its latest Global Market Perspective fourth quarter report, Jones Lang LaSalle found that during the September quarter, the theme of robust investment activity and subdued leasing activity not only continued globally but was more pronounce in the Australian market.
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Unlike the US and London which are experiencing both strong leasing and investment markets, it highlighted that in Paris and the Australian cities, the very strong demand from domestic and cross-border investors were in stark contrast to weak market fundamentals.
But JLL also noted that with the outlook improving in the majority of major leasing markets, it expects "in general, that disconnects will narrow during 2014".
The domestic findings were part of broader global real estate market report which overall pointed to more encouraging signs in 2014.
"Virtually all major markets are recording sales volume growth - and the weight of money, combined with an improving lending environment and heightened risk appetite, point to further uplift over the coming year," the report said.
"Liquidity is improving across a broad spectrum of markets and sectors and, barring external shocks, we are looking at a scenario where 2014 global sales volumes are potentially only 20-25% lower than the boom years of 2006 / 2007.”
However, it cautioned that the global leasing markets are less exuberant, with corporates remaining vigilant.
It also pointed out that following such a period of weak corporate activity, demand would typically be expected to bounce back by 20-30% - but that this cycle was likely to be different. "Commercial real estate is now being utilised more efficiently, leading us to the view that the upswing in occupier demand is likely to be less pronounced than in previous cycles, JLL said. “Even so, the majority of major leasing markets should be on a more solid footing in 2014".
Commenting on the local results, JLL head of international investments for Australia, Simon Storry said that strong institutional demand, both domestic and offshore, continued to support core valuations and noted that yield spreads, both within and between markets, widened again in the third quarter.
"These very wide spreads are now attracting yield-hungry investors - frequently active asset managers, smaller funds and syndicates - with more flexible mandates," he said.
In office markets, the average CBD vacancy rose from 10.9% (Q2) to 11.3% (Q3). He attributed that spike in vacancy rates to an increase in stock, however, he also pointed out that net absorption across CBD markets posted the first positive reading since 2012.
"Sub-lease availability (a sensitive indicator of underlying demand for office space) also fell slightly in Sydney and Melbourne although Brisbane and Perth both reported increases," said Mr Storry.
On the basis of information on future transactions, as well as long term indicators such as residential construction, Mr Storry said "we see the September quarter as marking the stabilisation of office space demand". But he expected vacancy rates to remain elevated through 2014.
"The medium term outlook for office markets, as for retail and industrial sectors, is for a measured recovery, with rental growth strengthening,” he concluded.
<a href="mailto:%20news@propertyobserver.com.au" target="_blank">news@propertyobserver.com.au</a>
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