Repeat buyers are one of the strongest measures of confidence in any apartment development.

At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.

Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.

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"I had some boxes I wanted to tick," he says.

Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.

“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.

He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.

[smartcode_project:default project_id=135096 project_image_fid=356818]

After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.

"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."

Today, Keith says the move has completely changed how he experiences Newcastle.

"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."

[smartcode_project:default project_id=135096 project_image_fid=356828]

Beyond the location, he says it's the sense of community that has surprised him most.

"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."

For Aimee and Lyle Goodman, the journey started almost by chance.

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The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.

"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."

As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.

"We actually catch up more as a family now," Aimee says.

"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."

[smartcode_project:default project_id=135096 project_image_fid=356829]

Lyle says their confidence came from GWH's reputation within Newcastle's building industry.

"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."

That confidence only grew throughout the buying process.

"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."

[smartcode_project:default project_id=135096 project_image_fid=351104]

Aimee says one moment stood out.

"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."

The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.

Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.

[smartcode_project:default project_id=135096 project_image_fid=356822]

ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;

The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.

[smartcode_project:default project_id=135096 project_image_fid=356826]

For Keith, the appeal remains straightforward.

"You feel at home even before you've moved into your home."

For Aimee, the change is measured in time.

“I just felt like I had more time,” she says.

[smartcode_project:default project_id=135096 project_image_fid=351102]

Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.

ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.

[smartcode_project_cta:default project_id=135096]

Joel Robinson

From ONE to ERA: Why buyers are choosing GWH again in Newcastle West

Virgate Property Group is preparing to commence construction of Verdé, its new apartment development in Melbourne's Arts Precinct at Southbank, following a strong run of sales that has seen more than half of the project's 173 apartments secured.

Verdé has attracted a broad mix of first home buyers, owner-occupiers upgrading from nearby inner-city suburbs and investors, with younger owner-occupier couples aged between 28 and 45 accounting for the strongest enquiry. Many are already living in Southbank, South Melbourne, Albert Park, Port Melbourne, South Yarra and the CBD.

"Verdé is located in one of the most desirable pockets of southern Melbourne," Blair Property Group Director Darren Blair, who is managing sales at Verdé, said.

"It's within walking distance of the Arts Centre, Royal Botanic Gardens, Albert Park Lake, and Southbank's restaurants and retail. It's a great lifestyle location with strong amenity and liveability, which made it a very attractive choice for the project."

[smartcode_project:default project_id=4661 project_image_fid=372549]

Virgate was already familiar with the precinct, having previously delivered the successful Domain House development in neighbouring South Melbourne. That experience gave the developer confidence to acquire the Coventry Street site and continue expanding its presence in Melbourne's inner south.

"We had been keeping an eye on the site and the broader precinct for a few months before deciding to move forward with the acquisition," Virgate said.

The project was ultimately secured in 2020 following feasibility studies, planning assessments and due diligence, with the brief centred on delivering "a high-quality, considered design that feels both refined and fit for purpose."

[smartcode_project:default project_id=4661 project_image_fid=314259]

Designed by <a href="https://www.apartments.com.au/architects/bruce-henderson-architects">Bruce Henderson Architects</a>, Verdé comprises 173 one, two and three-bedroom apartments priced from $599,000. The architecture is distinguished by a faceted glass façade that responds to both the site's outlook and Melbourne's changing light conditions.

According to Bruce Henderson Architects, the coloured glazing gives the building a distinctive identity while also providing privacy and solar shading, with residences oriented to capture views across the bay, city skyline and surrounding parklands.

Inside, <a href="https://www.apartments.com.au/interior-designers/designoffice">DesignOffice</a> has created interiors focused on natural light, efficient planning and enduring materials. Apartments feature engineered oak flooring, natural stone benchtops, floor-to-ceiling glazing and SMEG appliances, while a restrained material palette aims to complement the expansive outlooks rather than compete with them.

[smartcode_project:default project_id=4661 project_image_fid=372550]

Resident amenity has also been designed around everyday functionality rather than occasional use. Facilities include a concierge-serviced lobby, residents' lounge with fireplace, library and co-working space, gym, terrace garden with barbecue facilities, ground-floor café, and package delivery management.

The project's location continues to be one of its strongest drawcards. Positioned on Coventry Street, Verdé sits within walking distance of the National Gallery of Victoria, Arts Centre Melbourne, Royal Botanic Gardens and Albert Park Lake, while Southbank's dining precinct, Sturt Street trams and the new ANZAC Station are all nearby. The surrounding education catchment also includes Melbourne Grammar, Melbourne Girls Grammar, Mac.Robertson Girls' High School and several major university campuses.

The sales team says buyers have responded particularly well to the combination of location, design quality and long-term liveability.

"They're responding really positively to the quality of the design, premium resident amenities and the uninterrupted views. Many also appreciate the location and how connected it is to everything they need."

The ability to secure stamp duty savings before completion has also been a key factor for purchasers, alongside the opportunity to personalise finishes ahead of settlement.

With construction set to commence soon and more than half the apartments already sold, Verdé enters its next phase as one of the Arts Precinct's more established apartment developments, offering remaining buyers an opportunity to secure a residence before construction advances further. Expected completion is scheduled for late 2027.

[smartcode_project_cta:default project_id=4661]

Virgate's Verdé Southbank moves toward construction as sales fly past halfway stage

Downsizer-focused apartment development Kooyongkoot in Hawthorn has been recognised at the 2026 Better Future Melbourne Design Awards, taking home Gold and Silver awards in two categories.

<a href="https://www.apartments.com.au/new-apartments/kooyongkoot-hawthorn-1-kooyongkoot-road-hawthorn-vic-3122">Kooyongkoot</a>, currently being delivered by developer PQD and designed by Cera Stribley, received Gold in the Interior Design – Proposed category and Silver in the Architecture – Proposed category.

The dual recognition reflects the design approach behind the boutique development on prestigious Kooyongkoot Road, where the focus has been on creating homes for downsizers seeking the space, quality and functionality of a detached house within a low-rise apartment building.

Rather than maximising apartment numbers, <a href="https://www.apartments.com.au/developers/pqd">PQD</a> and <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a> limited the development to just 18 residences, allowing for larger floorplans, greater privacy, generous landscaping and expansive communal spaces.&nbsp;The majority of the apartments also benefit from corner aspects, allowing for dual sources of natural light.

Now around 70 per cent complete and on track for completion in November 2026, Kooyongkoot will comprise a mix of garden residences, ter​race apartments, sub-penthouses, and is crowned by two half-floor penthouses with direct lift access and private rooftop terraces.

[smartcode_project:default project_id=102717 project_image_fid=355297]

The Silver Award for Architecture recognised the way the building responds to its prominent corner position at the ent​rance to Hawthorn's Scotch Hill precinct, one of Melbourne's most established residential neighbourhoods.

Rather than competing with the grand homes that line Kooyongkoot Road, the architectural approach focused on restraint and longevity, using curved brickwork, generous landscaping and carefully considered proportions to integrate with the existing streetscape.

"The form feels fluid and timeless, as though shaped by the landscape itself – architecture that belongs, rather than competes," said Chris Stribley, Co-Founder and Managing Principal of Cera Stribley.

The judging submission also highlighted practical innovations throughout the building, including lift cores servicing only nine homes each, a central landscaped lightcourt designed to bring daylight and ventilation into the building, and fully enclosed private storage rooms with lighting, power and shelving to better accommodate residents transitioning from larger family homes.

[smartcode_project:default project_id=102717 project_image_fid=355293]

The Gold Award for Interior Design recognised the project's focus on long-term liveability rather than display-home aesthetics.

According to the awards submission, the interiors were designed from the inside out, prioritising how homes would function over decades of daily use through generous proportions, practical storage, durable natural materials and flexible layouts.

The specification includes natural stone throughout, upgraded acoustic glazing, V-ZUG appliances and fully enclosed storage rooms, alongside an amenity offering focused on wellness, entertainment and everyday convenience.&nbsp;

Residents will have access to a gym and yoga studio, a wellness centre featuring traditional and infrared saunas, a cold therapy shower and treatment room, as well as a residents' lounge and golf simulator/cinema room for entertainment.&nbsp;Kooyongkoot has also considered the everyday convenience of its residents by offering a private carwash and pet wash facilities on site as well as dedicated parcel lockers and oversized fully enclosed storage rooms.&nbsp;

[smartcode_project:default project_id=102717 project_image_fid=355303]

The project's attention to detail has already resonated with buyers. Earlier this year, Kooyongkoot recorded one of Boroondara's highest apartment sales when an $8 million penthouse was purchased by a Melbourne CEO downsizing from a nearby family home.

"Every detail feels deliberate, from the overall design down to the smallest touches," the purchaser said.

"The level of quality and refinement is exceptional, but what really sold it was how liveable it felt... It felt like a place where everything had been considered, not just a luxury building."

[smartcode_project:default project_id=102717 project_image_fid=355304]

Sustainability also formed a key part of both award submissions. Kooyongkoot is targeting a minimum 7.5-star NatHERS rating across all residences, supported by passive design principles, high-performance glazing, EV charging infrastructure, water reuse systems and a wellness model focused on lower-energy dry facilities rather than pools and large wet areas.

Located within walking distance of Scotch College, Methodist Ladies' College, Koo​yong Lawn Tennis Club, Aubur​n Village and Camberwell Junction, Kooyongkoot continues to target owner-occupiers looking to remain in Melbourne's inner east without compromising on space or quality. A limited selection of two, three and four-bedroom residences remains available, with prices starting from $1.9 million.

[smartcode_project_cta:default project_id=102717]

Kooyongkoot wins Gold and Silver at Better Future Melbourne Design Awards

New apartment supply has become increasingly constrained across <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a> in recent years, with fewer projects progressing through to completion as development conditions have become more challenging.

It makes <a href="https://www.apartments.com.au/developers/novm">NOVM</a>'s 2021-completed <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> one of the most recently completed residential towers on the Parramatta River, and among the newest apartment developments in Sydney's second CBD.

With the project largely completed before the sharp escalation in construction costs and inflation following the pandemic, The Lennox is now offering pricing that would be difficult to replicate in a comparable new development in Parramatta today, or across much of Western Sydney.

The majority of the 413 apartments at The Lennox sold before and shortly after completion. A limited release of the remaining apartments has recently been brought to market by capital partner <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a>, with entry-level pricing from $700,000 and two-bedroom apartments available from under $1 million.

Rising above the Parramatta River at 12 Phillip Street, The Lennox comprises one, two, three and four-bedroom apartments, appealing to first home buyers, young professionals, families, downsizers and interstate investors seeking a completed apartment in one of Australia's fastest-growing economic centres.

[smartcode_project:default project_id=5743 project_image_fid=372394]

Rather than positioning Parramatta as an alternative to Sydney's CBD, Equitifund believes the city has reached a point where it stands on its own merits.

"Parramatta is no longer simply an alternative to Sydney CBD, it's becoming a destination in its own right," Equitifund Executive Chairman Greg Huxley said.

"The Lennox captures that evolution with a level of quality and amenity that's difficult to match at its price point."

[smartcode_project:default project_id=5743 project_image_fid=953]

Designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, the tower responds directly to its riverfront setting through expansive glazing and open-plan layouts that maximise views across the Parramatta River and city skyline. Interiors feature engineered timber flooring, stone benchtops, stainless steel appliances and floor-to-ceiling glazing, while generous balconies extend the living spaces outdoors.

Marchese Partners says the project was conceived to balance high-quality apartment living with practical, long-term functionality, pairing larger, efficient floorplans with amenities more commonly associated with five-star hotels.

That emphasis continues through the resident facilities, which include a 20-metre rooftop swimming pool, fully equipped gym and wellness spaces, full-time concierge, a residents' lounge, function room, private lifts, secure basement parking and rooftop communal areas overlooking the Parramatta River. Ground-floor boardwalk retail and dining further activate the riverfront and integrate the building into the surrounding public realm.

[smartcode_project:default project_id=5743 project_image_fid=925]

Australian housing and finance group Equitifund has secured the remaining apartments, believing there are few completed apartment opportunities in Parramatta that offer the same combination of location, amenity and pricing.

Equitifund National Sales Director Ben Hamblett says buyers are increasingly recognising that premium apartment living no longer needs to come with Sydney CBD pricing.

"The Lennox is where aspirational living becomes attainable," Hamblett said.

"Wake to river and mountain views, step into Sydney's Second CBD, and arrive home to resort-calibre amenities, all without the harbour price tag."

Hamblett says owner-occupiers are also attracted by the convenience of having Westfield Parramatta, Church Street's dining precinct, Parramatta Park, Riverside Theatres, Western Sydney University and major transport connections all within walking distance.

"At The Lennox, lifestyle is not an afterthought, it is the foundation."

[smartcode_project:default project_id=5743 project_image_fid=5374]

The Lennox places residents within walking distance of Parramatta Square, Westfield Parramatta, Church Street Eat Street, Parramatta Station, the ferry wharf, Light Rail, the future Sydney Metro West, Parramatta Park and CommBank Stadium, reinforcing Parramatta's position as one of Australia's most connected metropolitan centres outside Sydney's CBD.

Equitifund says buyers visiting the display suite consistently comment on the quality of the finishes, generous floorplans, river and skyline views, and the walkability of the location. The project has attracted a broad mix of local professionals, upsizers, downsizers, buyers relocating from Sydney's inner suburbs and interstate investors seeking long-term growth opportunities.

That demand aligns with Parramatta's continued evolution as an economic powerhouse. Equitifund Research and Market Insights specialist John Bekiaris says sustained population growth, infrastructure investment and expanding employment opportunities continue to support long-term housing demand across the city.

"Parramatta has evolved from a satellite city into one of Australia's most important economic centres. Population growth, infrastructure investment and employment are all supporting sustained long-term housing demand."

[smartcode_project_cta:default project_id=5743]

The apartment price gap drawing Sydney buyers west

A luxury beachfront apartment at Rainbow Bay has more than doubled in value since it sold off the plan six years ago, setting a new local apartment record in the process.

The three-bedroom apartment in the Flow development on Petrie Street, the first of four new projects locally by Paul Gedoun's S&amp;S Projects, has sold for $7.4 million, after originally selling for $3.27 million when the project launched in 2020.

The seventh-floor apartment, comprising 187 sqm of internal living space and a 54 sqm balcony overlooking Froggies Beach and Snapper Rocks, was purchased by a local family.

The transaction was negotiated by Pezet Matheson director Kerry Pezet and equates to more than $30,000 per sqm.

Pezet said the sale reflected the limited opportunities to buy into the boutique beachfront development.

"The sale highlights the rarity of opportunities within the boutique beachfront development, where residences seldom become available," Pezet said.

"Flow is one of the Gold Coast's most tightly held buildings. Buyers from our database move quickly when residences become available, and achieving an off-market sale at $7.4 million demonstrates the depth of demand for property of this calibre."

<img alt="Flow" data-entity-type="file" data-entity-uuid="c585b206-2130-4eee-a50c-3f27c51a7c70" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-06%20at%208.33.25%E2%80%AFPM.png?VersionId=m3pHRDV62Y3fvN.XQuQHq.52ilTWpRLf" />

Flow was the first of four luxury apartment developments delivered by Paul Gedoun's S&amp;S Projects at Rainbow Bay and was completed in 2023.

Positioned on the beachfront overlooking Snapper Rocks, the residence includes three bedrooms, three bathrooms, a powder room and views stretching north along the coastline towards Surfers Paradise.

Pezet Matheson Residential principal Mitchell Lambert said buyers continued to prioritise quality beachfront apartments in tightly held locations.

"Flow Residences offers a rare combination of elevated beachfront positioning, architectural excellence, comprehensive resident amenity and premium finishes, which is exactly what discerning purchasers are seeking," Lambert said.

"The transaction further reinforces Rainbow Bay's reputation as one of Australia's premier coastal lifestyle destinations, where limited supply and growing demand continue to support strong market performance."

Pezet Matheson originally marketed and sold out Flow off the plan, making the latest transaction a return to one of the project's original buyers.

Paul Gedoun is selling his third project, <a href="https://www.apartments.com.au/new-apartments/radia-rainbow-bay-271-boundary-street-coolangatta-qld-4225">Radia Rainbow Bay</a>, after recently completing, and selling out, <a href="https://www.apartments.com.au/buildings/esprit-217-227-boundary-street-coolangatta-qld-4225">Esprit</a>. He has plans for a <a href="https://www.apartments.com.au/news/qld/first-look-s-s-projects-proposes-88-apartment-wellness-tower-at-coolangattas-boundary-street">fourth building</a>, 88 apartments on <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">Boundary Street</a>.

Rainbow Bay apartment doubles in price since off the plan sale during pandemic

Commercial

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A 50% stake in North Sydney’s 101 Miller Street/Greenwood Plaza has sold for $300 million plus.
The deal, one of the biggest commercial property transactions for the fourth quarter, was negotiated by Rob Sewell and Simon Rooney of JLL &amp; CBRE.
TIAA Henderson Real Estate, on behalf of TIAA-CREF purchased the half stake from Eureka Funds Management.
The remaining 50% share of the landmark office tower and dominant shopping centre will continue to be owned by the Mirvac Group.
Mirvac will continue to operate 100% of the asset.
Rob Sewell said 101 Miller and Greenwood Plaza was one of Australia’s limited stock of 35 premium grade buildings.
"But more importantly it is the only premium asset across Australia that is outside of a CBD area," he said.
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jchancellor-FAypfDUnLy

Half share in North Sydney's 101 Miller Street-Greenwood Plaza sold for $300 million plus

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Building materials company Hanson is selling off its South Brisbane riverfront site.
The ­market expectations are for as much as $40 million, according to the Australian Financial Review.
The site is located within the draft Kurilpa Riverfront Renewal Master Plan area, which ranks as Brisbane’s largest inner city urban renewal precincts.
The site with a 110-metre frontage to the Brisbane River has been listed through Brendan Hogan and Pat George of Colliers International.
Offers for 14 Nott Street covering 9,878 square metres and 3043 square metre at 19 Nott Street close 3 December.
Under the draft plan, the site may be developed with maximum building heights of up to 20 storeys.
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Hanson Building site offering on Brisbane River

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GUEST OBSERVATION
There has been much talk about the “search for yield” in investment markets. 
Investor interest in decent yield bearing investments has seen the price of such assets rise and their yields (or the cash flow they provide relative to their price) fall. This is clearly evident during the last three years. 
The chart below shows the yield available on various Australian assets today versus what they offered three years ago. All have seen a fall in their yields to varying degrees. 
<img src="/images/2014/10/23/oliver-oct-23-one.png" alt="">
But what's driving this? Is it a bubble? What warning signs should we watch? What does it mean for investors?
Why all the interest in yield? 
The first thing to note is that interest in the yield or cash flow an investment provides is a normal part of investing. But it seems to become a greater focus at various points in time. This is particularly so when interest rates are relatively low and investors are a bit wary about going for growth.
In Japan it’s become the norm as interest rates have stayed at/near zero for 15 years. In the US and Australia, yield focussed investing was in favour in the 1950s when interest rates were low and investors still cautious after the Great Depression and WW2. It became particularly apparent last decade as investors started putting more into yield plays like property, infrastructure and credit as bond yields remained relatively low only to be interrupted by the GFC. It has since returned with a vengeance.
There are three main drivers:
<ol>
<li>Low interest rates have pushed bank deposit rates and bond yields down, all of which is encouraging investors into higher-yielding alternatives. </li>
<li>Reduced fear of economic meltdown has helped investors feel comfortable taking on more risk but with memories of the GFC and its aftermath still fresh, this is only in a cautious fashion. So there is a desire for the comfort provided by investments that get a high proportion of their return from income. </li>
<li>Finally, aging populations are driving a longer term interest in yield. This started last decade as the first baby boomers moved into their pre-retirement phase and is intensifying now as they are starting to retire. This is driving demand for investments paying decent income in the form of dividends, rent, interest payments, etc. That said, trying to get a handle on the precise impact of this is nigh on impossible given increasing retirement ages and longevity driving a need for a decent growth exposure. </li>
</ol>
Is it structural of cyclical? 
The safest option in investment markets is to assume something is cyclical (ie short-term) rather than structural (ie long-term) until proven otherwise. Demographic influences are clearly structural and long-term. However, there is a structural aspect to low interest rates that cannot be ignored. 
First, to state the obvious, interest rates have been trending down with lower peaks and troughs since the 1980s. 
Second, the period of near zero/low global interest rates that has followed the GFC doesn’t look like it is about to end anytime soon. While the low global rates and easy money of the last few years have been constantly met with scepticism and concern about inflation and higher rates around the corner, the reality is that it hasn’t happened.
We are now into the fourth year in a row where the hoped for lift off to above trend global growth has not happened. Global growth remains OK at around 3 to 3.5%, but it’s below trend and uneven with periodic flare ups of concern about recession and deflation as we have seen during the last month or so in relation to Europe.
While it’s dangerous to say “this time it’s different”, quite clearly the world is different to the pre-GFC environment with excess levels of saving, spare capacity and more cautious attitudes to debt resulting in sub-par, uneven growth and low inflation/deflationary risks.
Article continues on the next page. Please click below.
<hr class="system-pagebreak">
The impact of low bond yields 
The logic of the chase for yield can be seen in relation to Australian commercial property (ie office, retail and industrial property). The next chart shows average commercial property yields relative to 10-year bond yields. While commercial property yields have fallen over the last 34 years from an average of 8.3% to an average of 6.6%, the yield on bonds has literally collapsed.
While the step down in bond yields was initially treated with scepticism on the grounds that “it’s just a bubble” or “inflation will soon take off forcing yields back up”, the longer it has persisted, thanks to sub-par growth and low inflation, the more investors have come to expect bond yields to stay down. So they increasingly invest in yield bearing alternatives such as property.
<img src="/images/2014/10/23/oliver-oct-23-two.png" alt="">
Faced with the choice of investing in a 10 year government bond yielding 3.2% as they are in Australia now, or allocating to commercial property with a 6.6% average yield and capital growth of, say, 2.5% pa (ie inflation) giving a total return of 9.1%, an investor might well conclude the latter makes more sense. 
In fact, looked at this way the property risk premium – ie the return potential property provides over current bond yields – at about 5.9% is about as high as it ever gets.
<img src="/images/2014/10/23/oliver-oct-23-three.png" alt="">
And of course, the same logic can be applied to investment in assets such as infrastructure, shares and corporate debt.
But is the chase for yield on borrowed time?
Is it wise for investors to behave this way? Probably yes… until it goes too far, bond yields surge or growth disappoints.
Has it gone too far? 
Inevitably the search for yield will be pushed too far as it was last decade. Perhaps the greatest risks are seen to be around corporate debt where the gap between US investment grade and junk bond yields and US government bond yields has fallen to the range that prevailed prior to the GFC.
However, credit spreads remained around these narrow levels for many years in the mid-1990s and mid-2000s before trouble arose. Nor have credit lending standards deteriorated like they did prior to the GFC.
<img src="/images/2014/10/23/oliver-oct-23-four.png" alt="">
In terms of equities, there has certainly been a narrowing in the gap between the forward earnings yield on shares and bond yields. But, as can be seen in the next chart, this gap – or a guide to the risk premium shares offer relative to bonds – still remains relatively wide compared to pre-GFC levels.
<img src="/images/2014/10/23/oliver-oct-23-five.png" alt="">
And finally for real assets (if commercial property is a guide), as indicated earlier, the risk premium offered by commercial property relative to bonds remains about as wide as it’s ever been.
So overall, it’s hard to argue the search for yield has gone too far. That said, corrections like the one we have seen in shares and corporate debt markets during the last month are healthy in ensuring this remains the case.
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What about the risk of an upswing in bond yields? 
The events of the last month, with renewed worries global growth and deflation, tell us that the immediate threat from higher interest rates is low. The US is closest to raising rates but global risks and a strong US dollar importing low inflation to the US could see that pushed out to the second half of next year.
Australia is under no pressure to raise rates, with sub-trend growth and low inflation, and probably won’t start raising rates till after the US and for both it will be gradual. Rate hikes aren’t even on the horizon in Europe, Japan and China.
What about the risk of slower growth? 
Slower growth is perhaps a bigger risk globally, with the global economic recovery remaining fragile. In the absence of a major external shock or a major monetary tightening, however, it’s hard to see a sharp slowing in global/Australian growth.
What to watch?
Our basic assessment is that the search for yield hasn’t yet gone too far. Key indicators to watch for signs that it has include the following:
<ul>
<li>Valuation indicators - such as price to earnings multiples and the gap between earnings yields and bond yields for shares, corporate bond yield spreads and the return premium property offers over bonds;</li>
<li>Signs global growth is becoming more synchronised and picking up and that global inflation is rising as a guide to global monetary tightening.</li>
<li>Global business conditions PMIs as a guide to whether growth is slowing again.</li>
</ul>
So far so good, but they are all worth keeping an eye on.
What does it all mean for investors?
While the yields and return potential across most assets has continued to fall, shares, non-residential property and infrastructure continue to offer better prospects than low yielding cash, government bonds and term deposits. Some value has also been returned to corporate debt following the recent back up in corporate bond yields.
Shane Oliver is head of investment strategy and chief economist at <a href="https://www.ampcapital.com.au" target="_blank">AMP Capital</a>.
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The chase for yield: What it really means for investors

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The Horsham Plaza in regional Victoria’s Wimmera region has been sold for $24.85 million.
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The 12,701 square metre neighbourhood shopping centre is on a 2.1 hectare land Darlot Street holding.
It is anchored by a Kmart and includes 26 specialty stores. 
It last sold for $12 million in 1996.
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Horsham Plaza sold for $24.85 million

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The new Northpoint Shopping Centre sold for $36.5 million in a newly developed suburb just north of Toowoomba.
The 1.95 hectare property has four street frontages including Ruthven Street, which is also the New England Highway. Developer Hallmark Property offloaded it through Jones Lang LaSalle’s Jacob Swan and Sam Hatcher.
The centre is the first investment of the Australian Property Opportunities Fund II.
The fully leased income is $2.751 million, which shows a yield of 7.63%.
The centre, which opened earlier this year, has a land area of 6,868 square metres and is anchored by a Coles supermarket and a medical centre.
There are 24 specialty shops and one kiosk, with a strong national tenant representation including Subway, Coffee Club, The Reject Shop and BWS.
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Northpoint Centre, Toowoomba sold

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Bourke Street Bakery has confirmed they will take up space at Lend Lease’s Barangaroo South project on Sydney harbour.
Bourke Street Bakery will be located in the development’s Lime Street Shops precinct.
“For us, Barangaroo seemed like the perfect location as it capitalises on the CBD position with strong population numbers and it also enjoys a connection to Sydney Harbour,” Bourke Street Bakey co-founder Paul Allam said.
“We’re not trying to replicate <a href="https://www.barangaroosouth.com.au/retail/discover-retail-at-barangaroo/bourke-street-bakery" target="_blank">our Surry Hills store</a>, but we will bring a sense of familiarity to our Barangaroo store when we open mid next year.”
Paul Allam and David McGuinness, both baker/chefs, began Bourke Street Bakery in Surry Hills in 2004. 
The original store, for which the company is named, has become a cult favourite with Surry Hills locals and those from afar who appreciate quality coffee and the finest in baked goods. 
Bourke Street Bakery has grown to over six stores with expansion plans for two more and employing circa 120 staff across the company.
McGuinness and Allam met when they worked at Brasserie Bread in Banksmeadow in 2002.
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Bourke Street Bakery expands to Barangaroo South

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After eight years ownership, the unlisted property fund manager, ISPT, has sold its 37-hectare Werribee development parcel in Melbourne’s outer south-west for $25 million.
It was bought by the local developer, Dacland Group, led by John Dwyer.
The three adjoining sites come with a permit in place for 500 dwellings.
Robbie Demian of Oliver Hume Real Estate told the Australian Financial Review it was a record price per hectare for the City of Wyndham market.
Wyndham ranked as the second most expensive growth corridor land market this year.
It has a net median lot price of $218,000.
House and land packages start from $347,000, according to Oliver Hume.
The Wyndham Growth Corridor is one of the fastest growing regions of ­Melbourne with its population forecast to reach 200,000 by 2031.
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Dacland adds to Werribee land subdivsion sites

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The third quarter 2014 statistics for Australia’s national office markets have been released by JLL, and it appears that it’s a largely positive story, with net absorption at a positive of 19,800 square metres over the quarter and the national CBD office market vacancy rate holding steady at 12.4%.
Over 2014, business conditions did improve as job advertisements trended higher, explains JLL national director of research Andrew Ballantyne.
“However, the start of the 2014/15 financial year appears to have been the catalyst for increased tenant enquiry and activity,” said Ballantyne.
A third successive quarter of positive net absorption was recorded for Sydney, at 15,100 square metres, with Melbourne also leading the recovery.
Other markets have been less positive, with resource-dependent Brisbane and Perth recorded negative absorption over the quarter and increasing vacancy rates.
However, Sydney’s recovery isn’t being led by the traditional large office space occupants, the legal firms and finance companies.
Instead, it’s technology and related firms expanding, explains JLL head of office leasing New South Wales and Australia Tim O’Connor. In particular, North Sydney is exposed to these businesses.
“Sydney is following the same trend as east coast US office markets – technology firms are expanding, upgrading and locating themselves in core locations alongside traditional users including investment banks. LinkedIn has committed to relocate to 1 Martin Place and will occupy space in the same building as Macquarie,” said O’Connor.
Despite this, incentives remain high at 30% in Sydney CBD.
“Tenants have had the luxury of time in the Sydney CBD over the past three years. We only have to see a few instances of tenants being unable to secure their first choice of accommodation before two things happen – the first is that decision making timeframes begin to reduce and the second is there will be downward pressure on incentives,” he said.
Meanwhile, Melbourne is undergoing a round of centralisation.
“Viva Energy and Pragmatic Training both committed to CBD space over the quarter. The acquisition of office stock with residential conversion potential in St Kilda Road will support further centralisation over the next two to three years,” he said.
<img src="/images/2014/10/15/ev.owa.jpg" alt="">
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Start of new financial year the “catalyst” for increase office enquiry: JLL

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The ­Australian Centre for Photography on Sydney’s Oxford Street has been sold for $5,035,000.
The centre will lease back the premises for the time being with the site has potential for development.
The 5.9% yield was secured by Miron Solomons, of Colliers International.
 “Yields of this level have not been seen on Oxford Street in several years, indicating a resurgence of the area,” he told Fairfax Media.
The 663-square metre building has been the home of the Australian Centre of Photography for 33 years.
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Paddington retail secures 5.9% yield with Australian Centre for Photography sale

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A Kings Cross terrace with 10 bedrooms and 10 bathrooms has been relisted by McGrath Estate Agents, with its front façade repainted since initially sold last month.
The property sold recently for $2 million when more than $1.8 million was being sought by the <a href="https://www.mcgrath.com.au/buy/house-potts-point-nsw-2011/241590/?searchID=43511206" target="_blank">agent Peter Starr</a>.
The buyer has spotted another investment opportunity, so have put the property up for sale after a splash of beige paint on its façade. Its former black exterior is pictured below. 
<img class="img-responsive" src="/images/phocagallery/2014/07/potts-point-july-22/potts%20point_0000_1.jpg.jpg" alt="Pre-auction $2 million deal for Kings Cross 'special' offering">
Last month Property Observer reported Martindale sold for <a href="/expert-insights/investing/pre-auction-2-million-deal-for-kings-cross-special-offering">$2 million pre-auction</a> through McGrath Estate Agents with a distinctive black facade at 52 Kellett Street features an insightful floor plan indicating (pictured below) the purposeful layout.
The property at 52 Kellett Street features an insightful floor plan indicating (pictured below) the purposeful layout. 
Click to open in new window:
<a href="https://propertyobserver.com.au/images/2014/07/22/potts-point-july-22-floor-plan.gif" target="_blank"><img src="/images/2014/07/22/potts-point-july-22-floor-plan.gif" alt=""></a>
It featured in the 1999 SMH report by the investigative duo Kate McClymont and Andrew Clennell entitled, "Our Brothel Barons".
At the time it reportedly traded as Classique, a brothel whose advertising once boasted of a speciality in lesbian double acts. It has more recently traded as Studio 52, Star 52, Antonio’s Angels and Secret Desire. The rates have been at around $120 for 30 minutes.
The building, which has been marketed as in Potts Point, was listed previously in 2011, 2012 and 2013 without success.
It last traded at $2.1 million in 2006 when bought by ETC Australias Group Pty Ltd. Its earlier sales were $1.5 million in 2004 and at $1.38 million in 1999.
The premises were for sale, not the business.
There is no registered lease, with no rental income advisory given in <a href="https://www.mcgrath.com.au/buy/house-potts-point-nsw-2011/228008/?searchID=41071082" target="_blank" style="line-height: 1.3em;">the first McGrath marketing</a>.
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