Holiday home buyers who have long gravitated to Queenstown’s alpine setting are increasingly looking for low-maintenance apartments that allow them to lock up and leave, while still generating income when they’re away.

For Wendy, who had spent years visiting the Queenstown and Arrowtown region, <a href="https://www.apartments.com.au/developers/safari-group">Safari Group</a>’s Mountain Oak Apartments provided the opportunity to formalise what had previously been a recurring holiday pattern.

“We always had Queenstown in the back of our minds to buy something there as a holiday home,” she says. “We love the Queenstown and Arrowtown area.”

<img alt="From slopes to markets: Mountain Oak connects residents to the best of 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/658d4f_48c3ec1ae5df4a2cab7d23c07c7f51b3~mv2.jpg?VersionId=27K8oQ4ExDN8Yu70VHDa9Olq59XU36m3" />

Time spent visiting her sister-in-law, who owns in Arrowtown, along with regular stays at Millbrook Resort, had already shaped a strong personal connection to the region.&nbsp;

Rather than approaching the purchase purely as an investment play, Wendy’s starting point was lifestyle.

“We were more thinking about ourselves and where we could stay, and then the rental aspect was second.”

Mountain Oak Apartments, located within the masterplanned Remarkables Park precinct in Frankton, aligned with that thinking. The ability to secure the apartment with a deposit and settle on completion made the timing work.

“The fact that we could put a deposit down with the balance on completion was a bonus for us,” she explains.

<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://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" />

Wendy selected a two-bedroom, two-bathroom penthouse, a configuration that supports both private use and guest flexibility.

“The two-bedroom, two-bathroom configuration appealed from both a rental viewpoint and for the ability to have friends stay while we are there,” she says.

Across the development, two-bedroom apartments range from 64sqm to 78sqm, with two-bedroom plus flexi options from 71sqm to 75sqm, each with an allocated car park. The flexi layouts introduce an additional space suited to work or hobbies, reflecting demand from buyers who split their time between leisure and remote work.

Apartments include underfloor heating in bathrooms, heat pumps to living areas, and joinery positioned to maximise natural light and mountain outlooks. The Remarkables Park precinct is known for its extended winter sunshine hours, water frontage and open views toward The Remarkables.&nbsp;

Units come in light and dark interior colour schemes.

<img alt="Mountain Oak Apartments draws holiday home buyers to Queenstown" data-entity-type="file" data-entity-uuid="fd685a22-3b95-43a1-87cb-48fdd42bb4ba" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/658d4f_f9f89107c2704ebbbe5a6b36da508cb3~mv2.jpg?VersionId=MigFIEm6b.mrANANwxSmwHvC4RdJUuyR" />

While lifestyle was the primary driver, the fundamentals of the Queenstown market added reassurance.&nbsp;

“Proximity to the airport and tourism being the main attraction all year round,” Wendy says, when asked what stood out from an investment perspective.

Mountain Oak sits just eight kilometres from Queenstown’s CBD and around a two-minute drive from Queenstown Airport.&nbsp;

For Wendy, that airport proximity carries practical value.

“The airport proximity is a bonus, we think that being so close will be an attraction for the convenience side.”

Residents are also a short drive from Coronet Peak, Jack’s Point Golf Course, New World Supermarket, Five Mile Shopping Centre, and the dining, medical, gym, cinema and library amenities within the town centre, as well as the seasonal Remarkables Market.

Importantly, the purchase does not lock owners into a single use. Mountain Oak offers the flexibility to opt for short-term visitor accommodation or longer-term residential rental management, with 365-day visitor accommodation consent in place. Owners can utilise Safari Group’s 24/7 on-site management service or appoint their own provider, and do not need to decide on a strategy immediately.

“It was a bonus that we can rent it out as well as use it for ourselves,” she says.

Additional buying options, including furniture packages and storage units available for purchase within the building, further support a lock-and-leave model suited to interstate and overseas owners.

<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" />

Mountain Oak Apartments comprises 141 residences, ranging from one-bedroom configurations through to larger apartments and penthouses. One-bedroom apartments are currently priced from NZ$639,000, with three-bedroom options from NZ$1,299,000.

With 365-day visitor accommodation consent, the development is structured to respond to Queenstown’s established four-season tourism economy, spanning winter ski traffic and summer hiking, cycling, golf and lake-based activity.

Although Wendy acknowledges the strength of rental demand, her approach remains long term.

“We’re not planning to sell it anytime soon, so we are keen to hang on to it, but the passive income will be a bonus.”

Confidence in the developer also influenced her decision. Before proceeding, Wendy sought feedback within the local building community.

“We asked around and Safari Group had a good reputation,” she says.

Safari Group has delivered more than 2,000 hotel units and residential apartments across over 18 developments nationwide, with more than 25 years’ experience in the sector.

With completion anticipated by mid-2027, Mountain Oak is attracting a cross-section of buyers, from yield-focused investors to lifestyle purchasers seeking a foothold in one of New Zealand’s most tightly held alpine markets.

For Wendy, it represents both a future holiday base and a long-term asset within Queenstown’s year-round tourism economy.

Joel Robinson

How Mountain Oak Apartments draws holiday home buyers to Queenstown

Eduard Litver's Capitel Group is seeking to redevelop Chatswood's Mandarin Centre in the heart of the burgeoning suburb.

Capitel Group, in a joint venture with Metis Group, has filed a State Significant Development Application (SSDA) to demolish the Mandarin Centre and construct a 32-storey tower designed by Skidmore, Owings &amp; Merrill (SOM) with 325 apartments.

The 3,524 sqm site at 61A-65 Albert Avenue will also home extensive retail amenity, both at street-level and across a four-level podium.

<img alt="First look: Metis and Capitel unveil $1.2bn+ plan to redevelop Chatswood’s Mandarin Centre" data-entity-type="file" data-entity-uuid="905976ea-08cd-409f-8a4c-33a3fb8bf351" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/1771923441002.png?VersionId=f_xI2ejpxQvEm4fPqGji01RY9_AWVY6O" />

In its early stage Design Report submitted to the NSW Government's Housing Delivery Authority, SOM describes the ambition for the project as one that “aims to revitalise and reactivate an important corner of the Chatswood CBD.”

The architects note that the existing shopping centre “has a lack of vertical connection between its five levels of retail and a cumbersome pedestrian access from the street to the second-level transit connection,” framing the redevelopment as an opportunity to reconfigure circulation and better integrate with surrounding transport infrastructure.

The design adopts a single tower configuration, shaped through early testing to respond to neighbouring buildings and key public spaces.

Retail activation is concentrated at ground and lower podium levels, with a focus on food and beverage, lifestyle and wellness tenancies. The intent is to create a more permeable ground plane and improve connections between Albert Avenue, Victor Street and the Chatswood transport interchange, located within walking distance of the site.

<img alt="First look: Metis and Capitel unveil $1.2bn+ plan to redevelop Chatswood’s Mandarin Centre" data-entity-type="file" data-entity-uuid="b1e0c8cb-ee9b-41c1-97ac-0455c043b9e7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/1771923442914.png?VersionId=y.Kbo.9bzLIbOabeygYts8Uf9imI.Dqh" />

The site occupies a prominent position on the southern edge of the Chatswood CBD core, bounded by Albert Avenue and Victor Street. It sits near the rail and metro interchange and within close proximity to Chatswood Chase, Westfield Chatswood, Chatswood Oval and a range of commercial office towers and residential buildings.

Chatswood has been one, and continues to be, of the most popular suburbs for developers in recent years. The most recent tower to launch is Hyecorp's Celine on Archer Street, which followed The Anderson by Changfa and Huirong.

Soon to launch is Coronation's Archer &amp; Albert nearby the new proposal.

Chatswood boom continues with Capitel and Metis’s $1.2 billion Mandarin Centre redevelopment

Apartment development applications continue to tally up in Rose Bay following the NSW Gov's 2025 update to the Low and Mid-Rise Housing Policy.

&nbsp;

Some $200 million worth of developments were filed in the space of four weeks at the back end of last year, with the likes of Fyve, HSN, Luxcon and Fortis all seeking to creating new apartment buildings.

The latest plans are for an amalgamated 3,105 sqm site across Conway Avenue, Fernleigh Avenue, and Carlisle Street. Developer Mathieson Property is planning <a href="https://www.apartments.com.au/new-apartments/dian-2-6-conway-avenue-rose-bay-nsw-2029">Dian</a>, 70 apartments across a new eight-storey building, perched on a ridgeline within walking distance of Rose Bay Town Centre.

The State Significant Development Application (SSDA), includes one-, two-, three- and four-bedroom configurations. Over 15 per cent will be dedicated as affordable, as per the NSW Government's push for affordable housing. The 17 apartments will be managed by a community housing provider for 15 years following completion of the building.

<img alt="First Look: Mathieson Property unveils eight-storey infill housing proposal ‘Dian’ in Rose Bay" data-entity-type="file" data-entity-uuid="f99c21d9-e69d-4a23-ae35-3244cfa0b4ae" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Rose%20Bay%20site_0.png?VersionId=67KSZfecJ3fvn1ewo9xxKrneRT.Nsjwd" />

MHNDU has designed the building around three central cores, with lower-level apartments arranged to maximise corner balconies and cross-ventilation. Upper levels are configured with dual north–south aspects to capture harbour views and solar access.

Private open space is a key feature of the scheme, with generous balconies and terraces throughout. Five ground-floor apartments would include private pools, while one upper-level residence will feature a rooftop terrace and pool. A communal room and adjoining landscaped outdoor terraces provide shared open space for residents.

<img alt="First Look: Mathieson Property unveils eight-storey infill housing proposal ‘Dian’ in Rose Bay" data-entity-type="file" data-entity-uuid="dd2e275f-c270-4eb1-9a02-2b573b8eb540" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Rose%20Bay%20front_0.png?VersionId=Us5jNEG6iLFLLMfQSzVBVdILYobBj.g9" />

The site sits around 365 metres walking distance of Rose Bay Town Centre and around 312 metres from regular bus services on New South Head Road, meeting the accessible area criteria under the Housing SEPP.

In early 2025, the NSW Government implemented significant changes to its Low and Mid-Rise Housing Policy, altering planning controls to allow greater density for new apartment projects within an 800-metre walking distance of stations and town centres in the&nbsp;<a href="https://www.apartments.com.au/developments/woollahra-nsw-2025">Woollahra</a>&nbsp;Local Government Area, overriding existing local controls. Buildings are now permitted to rise up to six storeys within 400 metres of a station or centre, or eight storeys where affordable housing is incorporated, and up to four storeys within the 401 to 800 metre radius, which can increase to six storeys with affordable housing.

Mathieson Property unveils Dian Rose Bay apartment development

Lower North Shore developer <a href="https://www.apartments.com.au/developers/hyecorp-property-group">Hyecorp</a> is preparing to launch <a href="https://www.apartments.com.au/new-apartments/celine-chatswood-37-archer-street-chatswood-nsw-2067">Celine</a>, its new apartment development in Chatswood.

Set within a blue ribbon location on Archer Street, Celine will rise on a quiet, tree-lined enclave on the edge of the South Chatswood Heritage Conservation Area, a short walk from the connectivity which Chatswood is famous for.

Celine will deliver 122 one, two, three, and four-bedroom residences, designed to accommodate a broad range of buyers, from owner-occupiers to investors.

[smartcode_project:default project_id=149594 project_image_fid=362610]

Designed by&nbsp;<a href="https://www.apartments.com.au/architects/fuse-architecture-0">Fuse Architects</a>, the 29-storey tower has been shaped to respond to its Archer Street setting, with a defined podium and slender upper levels.&nbsp;

The building incorporates a two-storey residential lobby at the corner, double-height retail fronting Bertram Street, food and beverage tenancies along a through-site link, and two levels of commercial office space.&nbsp;

A landscaped pedestrian connection between Archer and Bertram streets will provide a publicly accessible link through the site, extending activity at ground level beyond the building footprint.

[smartcode_project:default project_id=149594 project_image_fid=362606]

Inside, Hyecorp is emphasising scale and flexibility. Most residences will incorporate multipurpose rooms, allowing buyers to configure additional living, study or guest space within their floorplan.&nbsp;

Kitchens have been designed with proportions more commonly associated with standalone homes, complemented by Gaggenau and Miele appliances, integrated refrigeration, Miele laundry appliances, Taj Mahal stone and bronze tapware.&nbsp;

Buyers will also have the option to tailor aspects of their home through the developer’s “Live Your Way” personalisation service.

Resident amenity will include an outdoor pool, gym and sauna, as well as barbecue and lounge areas designed for shared use. Upper levels are oriented to capture eastern outlooks towards the Sydney CBD and surrounding greenery.

[smartcode_project:default project_id=149594 project_image_fid=362633]

The location places future residents within 800 metres of Chatswood Interchange, providing access to metro and rail services, and within walking distance of Westfield, Chatswood Chase and the Chatswood Concourse. Parks including Chatswood Park and Beauchamp Park are nearby, along with a cluster of schools and private hospitals.

Celine continues Hyecorp’s focus on the Lower North Shore. The Australian, family-owned developer has been operating locally for more than 30 years, with recent projects including Audrey in St Leonards, now nearing completion, and Juliet in Roseville. With registrations expected to open soon, Celine represents the group’s latest addition to the Chatswood apartment market.

[smartcode_project_cta:default project_id=149594]

Hyecorp unveils Celine, a striking new apartment tower in the heart of Chatswood

International development company <a href="https://www.apartments.com.au/developers/spg-land">SPG Land</a> has kicked off construction of the $1.5 billion <a href="https://www.apartments.com.au/new-apartments/paradiso-place-surfers-paradise-103-ferny-avenue-surfers-paradise-qld-4217">Paradiso Place</a>, one of the highest value developments to get underway on the Gold Coast in more than a decade.

Located on a 1.15ha site stretching from Surfers Paradise Boulevard to Ferny Avenue, Paradiso Place, when completed, will deliver 845 residences across three residential towers. &nbsp;

Paradiso Place has been several years in planning by SPG, which has now pushed the green light on construction to meet pent-up demand from investors and owner occupiers.

&nbsp;

[smartcode_project:default project_id=106566 project_image_fid=185858]

The move follows minor amendments to the original design to cater to buyer demand, including the provision of more premium residential amenity, including private dining, lounge and events spaces for residents to entertain guests.

The three towers, comprising 41, 40 and 44 levels, will bring to the market 845 apartments with each tower boasting its own podium level interconnected skybridge to create a unique elevated ‘beachside village’ for residents.

[smartcode_project:default project_id=106566 project_image_fid=362500]

The <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a>-designed development will bring a broad range of residences to the market, most offering ocean views and all enjoying five-star hotel amenities with world-class facilities and the convenience ground level retail precinct.

&nbsp;

Construction of Paradiso Place has been made possible by SPG’s newly established SPG Built division partnered with experienced project management group Eastview Australia, a company that has supported the development of a raft of major projects on the Gold Coast over the past two decades.

[smartcode_project:default project_id=106566 project_image_fid=362499]

“It’s a very exciting time for Paradiso Place as we start construction,” said SPG Land Chairman David Wang.

“We have spent our energy refreshing design and assembling the best team and waiting for what we believe is the right time to start construction on one of the most exciting mixed-use developments to proceed on the Gold Coast since Oracle in Broadbeach and Circle on Cavill in Surfers Paradise. &nbsp;

“The local and interstate downsizer market is getting stronger, and we see Paradiso Place as the right project for our times right now. Our company has the capacity to deliver large-scale projects, and we are thrilled to be bringing this vision to reality.”

&nbsp;

[smartcode_project:default project_id=106566 project_image_fid=185861]

SPG Invest, a company founded in Australia in 1998 with a focus on high-end real estate and premium hospitality assets, has delivered 56 projects in the Asia-Pacific region over the past twenty-five years, including The Peninsula Hotel Shanghai and the Global 188 twin-tower project in Suzhou and Cambridge Residences at Robina.

Paradiso Place will deliver a range of new apartments with two-, three- and four-bedroom layouts, as well as a collection of sub-penthouse and penthouse apartments across three levels. Prices start from $950,000.

[smartcode_project:default project_id=106566 project_image_fid=185852]

“We have a very strong vision for Paradiso Place – we are creating a unique beachside residential community where contemporary design &amp; architecture and luxury materials combine with five star residents’ amenities and the convenience of a premium retail precinct on the ground floor”, said SPG Land CEO Dr Ying Rao&nbsp;

“We are confident that the community will recognise that this is more than just another development. Paradiso Place will bring a much-needed retail precinct and lifestyle hub to northern Surfers Paradise with premium retail, lifestyle and food and beverage options,” Said Dr Rao&nbsp;

“The retail precinct is critical to enhancing the lifestyle amenity for residents and guests, so SPG will retain control of this precinct to curate a premium retail offering that will support this thriving new community.

“SPG will also retain short-term holiday letting to control premium and luxury outcomes in line with our vision.”

Construction of Stage 1 Paradiso Place is expected to be completed by end of 2029.

[smartcode_project_cta:default project_id=106566]

Construction commences on $1.5 billion Paradiso Place development in Surfers Paradise

Australian Industry

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A group of large Australian industry groups have banded together to denounce the lack of action on issues surrounding combustible cladding. 
Australia’s fragmented approach to regulatory enforcement and compliance with building regulations requires a renewed commitment to national action to maintain public confidence in our built environment, the group said. 
The concerns of the groups are characterised by the following:
<ol>
<li>Australian and international insurers are introducing strict cladding-related exclusions in mandatory professional indemnity insurance products for building practitioners in the building supply chain.</li>
<li>The discovery of major defects in buildings has significantly reduced the ability of those building owners to find an insurer willing to accept the risk.</li>
<li>State and territory governments have not taken a consistent and comprehensive approach to undertaking and completing audits of existing high-rise buildings with combustible cladding, nor developed a remediation strategy.</li>
<li>Governments are taking an inconsistent and fragmented approach to implementing reforms described in the Shergold-Weir report, which was released 18 months ago. </li>
</ol>
They acknowledged that though some action has been taken to amend the National Construction Code (NCC) and effectively eliminate the use of many types of combustible cladding on new building facades, they believe the response of state and territory governments to dealing with cladding on existing buildings has been patchy and inconsistent.
In a statement released this week the groups stated:
"We urge the Commonwealth, State and Territory governments to work together in providing certainty through a uniform national approach to dealing with these matters.
"As organisations representing the building, construction, property and insurance industries, we urge the Federal Government to play a leadership role and bring together all state and territory governments to:
<ol>
<li>"Develop and implement a consistent and best practice Australia-wide response for risk assessment and a rectification strategy for existing buildings with combustible cladding with an agreed timetable that reflects the urgency of the issue. This will reduce confusion, clarify the scale of the challenge and support a viable professional indemnity insurance market that provides the coverage needed by industry participants and building owners.</li>
<li>"Establish a joint government-industry taskforce to oversee urgent and consistent implementation of all Shergold-Weir report recommendations across all jurisdictions."</li>
</ol>
Signatories to the statement were Property Council of Australia, Insurance Council of Australia, Ai Group, Australian Construction Industry Forum, and Master Builders Australia. 
</body></html>

j.ballantyne1990-6AQqhLzZaK

Industry groups call for building regulation reform on combustible cladding

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GUEST OBSERVER
The Q3 NAB SME Survey suggests a loss of momentum in SME business conditions and confidence but this is against the exceptionally strong results in Q2.
Overall, conditions and confidence remain above their long-term averages which suggest relatively solid levels of underlying activity.
A further narrowing in the gap between conditions experienced by SMEs and larger businesses as indicated by the NAB Quarterly Business Survey suggests that the pace of growth is now more consistent across small and large businesses.
The NAB SME Survey is the leading business survey of small businesses in Australia, and complements the comprehensive Quarterly NAB Business Survey.
It offers a rich repertoire of insights into factors affecting smaller firms’ conditions by state, industry and size, as well as an assessment of their outlook for investment and output.
<a href="/images/2016/10/31/NAB%201.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/31/NAB%201.jpg" alt="">
However, the base of industries which reported positive conditions shrank in the quarter and this warrants close monitoring for signs of further weakening in the near future. The sustained weakness in retail conditions is of particular concern as it has the potential to affect other affiliated industries such as wholesale and transport.
Meanwhile, we continue to witness strong conditions in tertiary services such as health, business and financial services.
SME business confidence eased marginally in the quarter to +5, but continues to exceed its long-term average of +2.
The fall in SME confidence was in spite of the RBA’s 25bps cut to the cash rate in August, perhaps a reflection of the absence of a sustained depreciation in the AUD despite the rate cut.
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<img src="/images/2016/10/31/NAB%202.jpg" alt="">
In Q3, business conditions were mixed by state. NSW, Victoria and WA reported relatively stable conditions, SA improved but was still lacklustre, while Queensland deteriorated sharply. The readings for Queensland in particular have been volatile recently so we will need additional information to determine the underlying trend for the state,” said Mr Oster.
NSW and Victoria continue to outperform in terms of conditions, while WA remains the weakest.
The ongoing mining downturn continues to weigh on WA conditions, while the recent improvements in commodity prices have done little to assuage the pessimism of SMEs from the state, with WA continuing to be the least confident state as well. Apart from WA, SA was the only other state to report negative confidence. Meanwhile, NSW, Victoria and Queensland tied in the top spot for confidence at +7 index points.
<a href="/images/2016/10/31/NAB%203.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/31/NAB%203.jpg" alt="">
 
SME forward orders rose by 1 point to +4 index points in Q3, which is notably above the long-term average of -1 index points and consistent with the result for general businesses as reported in the QBS.
The generally positive readings for forward orders since late 2013 are broadly in line with a moderate recovery in real economic activity.
By industry, the quarterly movements were mixed. Apart from manufacturing, retail and transport, all other industries reported positive forward orders.
<a href="/images/2016/10/31/Survey%204.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/31/Survey%204.jpg" alt="">
Forward orders for finance (up 16 points to +17) and health services (up 9 points to +16) jumped by the most in the quarter to record the strongest results, pointing to the continuing outperformance of services sectors.
Forward orders for manufacturing fell the most (down 8 points to -1). Meanwhile, transport and retail, both at -3, were the weakest in the quarter.
This is consistent with the lacklustre conditions and confidence experienced by the retail sector at the moment.
<a href="/images/2016/10/31/Survey%205.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/31/Survey%205.jpg" alt="">
The SME stock index improved marginally to +5 index points, to be above the long-term average of +2 index points and that of larger businesses indicated by the QBS (at +2).
The improvement was largely driven by business services and health, both rising by 6 points to +13 and 0 respectively.
The stock index for business services was also the highest in the quarter, followed closely by wholesale (down 6 points to +11). The relatively high stock levels reported by the wholesale sector is consistent with a higher capacity utilisation rate and resilient forward orders in the quarter.
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<img src="/images/2016/10/31/Survey%206.jpg" alt="">
That said, the sharp deterioration in the conditions of larger wholesale businesses as indicated by the QBS could signal an imminent weakening of wholesale SMEs in coming quarters.
Meanwhile, stocks for manufacturing (down by 11 points to +3) and property services (down 9 points to -7) fell by the most in the quarter, with the latter the weakest across industries.
The two consecutive quarterly falls for property services are consistent with a lower transaction volume in the housing market recently.
<a href="/images/2016/10/31/Survey%207.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/31/Survey%207.jpg" alt="">
The non-seasonally adjusted cash flow index was the strongest in Q3 for financial services (at +24), followed by business services (at +22) and the weakest for transport (-9) and retail (-8).
Overall, SME price indicators point to relatively contained price pressures.
Growth in input costs (purchase costs, overheads and labour costs) have generally eased over the last two years and have contributed to improved margins readings.
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<img src="/images/2016/10/31/Survey%208.jpg" alt="">
That said, final price growth appears to have lost some momentum in recent quarters – probably indicative of strong downstream competition – and is consistent with a subdued inflation outlook.
Business conditions for SMEs eased by 2 points to +5 index points in Q3, but remain slightly above the long-run average of +4.
Encouragingly, low-tier SMEs continued to report positive business conditions after recording the first positive reading in two years in Q2 to be around its long-term average.
SME conditions are now only marginally below those of general businesses indicated by the NAB Quarterly Business Survey (QBS), but this mostly reflects a notable fall in the conditions of the latter. SME business confidence also eased in the quarter to +5 (from +6 in Q2), but remains above the long-term average of +2.
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<img src="/images/2016/10/31/Survey%201.jpg" alt="">
Two of the three components that make up SME business conditions fell, with trading conditions (down 5 points to +11) and profitability (down 2 points to +4) both retreating from their recent peaks but continuing to stay above their long-term averages.
Despite a sustained period where trading and profitability conditions exceed their historical average, the employment index was in negative territory for the eight consecutive quarter at -1, which was unchanged from the quarter before.
The lack of momentum in SME employment conditions are seemingly at odds with the relatively more robust reports by general businesses in the QBS, where the employment index has been tracking above long-term average levels since H2 of 2015.
<a href="/images/2016/10/31/Survey%202.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/31/Survey%202.jpg" alt="">
This possibly reflects the weaker financial capacity of SMEs to hire new employees or a greater difficulty for them to find suitable labour compared to their larger counterparts.
In Q3, business conditions were mixed by state. NSW, Victoria and WA reported relatively stable conditions, SA improved but was still lacklustre, while Queensland deteriorated sharply. The business conditions index for Queensland gave up all its the gains, dropping by 10 points from Q2 to be back at +1 again.
The eastern non-mining states of NSW and Victoria continue to outperform at +13 and +10 respectively, while WA remains the weakest of all states at -14. Despite the sharp fall in conditions, Qld was the only state which reported improved confidence in the quarter (up 2 points to +7) to tie with NSW and Victoria in having the strongest confidence.
Meanwhile, stronger commodity prices in the quarter had done very little to bolster confidence of SMEs in WA, which reported a decline in confidence (down 5 points to - 6) in the quarter to be the weakest of all states.
Most SME industry sectors reported weaker conditions in the quarter, with services sectors continuing to outperform more traditional sectors in general. Similar to Q2, health, finance and business services occupied the top three spots, while transport (at -7) replaced construction (at +2) as the weakest sector, followed by retail (at - 4).
The wholesale sector managed to hold onto its recent gains in conditions to be at +8 index points, a sign that perhaps some of the earlier upstream cost pressures had ameliorated. However, weak growth in wholesale final price suggests that competitive pressures downstream are elevated.
Business confidence by industry paints a more positive picture overall, with more sectors reporting an improvement rather than a decline in the quarter. Apart from property and retail, all other industries recorded positive confidence.
<a href="/images/2016/10/31/Survey%203.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/31/Survey%203.jpg" alt="">
Somewhat surprisingly, confidence of the property sector suffered the sharpest decline in the quarter to be the weakest across industries, even though dwelling prices continue to grow strongly in major markets of Sydney and Melbourne, and more recently, ACT.
Compared to the larger businesses in the QBS, SME business conditions outperform general businesses in finance, wholesale and property, but are significantly weaker in transport.
Analysis by firm size shows that low-tier SME firms continue to report weaker conditions and confidence compared to their larger counterparts, although the fact that their conditions and confidence indices are positive remains encouraging.
Alan Oster is group chief economist, National Australia Bank, and can be contacted <a href="https://business.nab.com.au/author/alan-oster/" target="_blank">here</a>.
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Property confidence dips as SME business conditions remain upbeat overall: Alan Oster

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GUEST OBSERVATION
As Australian companies enter the new year, IBISWorld reveals the five industries expected to soar and the five expected to sink.
We expect 2015 to be a boom year for a wide array of industries. Coal seam gas extraction will provide the benchmark for others to chase, with online grocery sales, fast fashion, private equity and hydroponic crop farming also expected to soar in the coming year.
While some industries are set for a bumper year, there are many that will be dreading the year ahead. Petroleum exploration is tipped to be the biggest loser in 2015 as oil prices plunge, while mining and construction machinery manufacturing, cigarette manufacturing, motion picture and video distribution, and electricity distribution are all expected to endure a difficult year.
Industries set to fly
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top">
Industries
</td>
<td valign="top">
Revenue 2014 ($m)
</td>
<td valign="top">
Revenue 2015 ($m)
</td>
<td valign="top">
Growth (%)
</td>
</tr>
<tr>
<td valign="top">
Coal seam gas extraction
</td>
<td valign="top">
737.9
</td>
<td valign="top">
1830.0
</td>
<td valign="top">
148.0
</td>
</tr>
<tr>
<td valign="top">
Online grocery sales
</td>
<td valign="top">
1914.2
</td>
<td valign="top">
2194.0
</td>
<td valign="top">
14.6
</td>
</tr>
<tr>
<td valign="top">
Fast fashion
</td>
<td valign="top">
1219.4
</td>
<td valign="top">
1346.5
</td>
<td valign="top">
10.4
</td>
</tr>
<tr>
<td valign="top">
Private equity
</td>
<td valign="top">
365.0
</td>
<td valign="top">
401.8
</td>
<td valign="top">
10.1
</td>
</tr>
<tr>
<td valign="top">
Hydroponic crop farming
</td>
<td valign="top">
791.7
</td>
<td valign="top">
836.4
</td>
<td valign="top">
5.6
</td>
</tr>
</tbody></table>
Coal seam gas extraction
The coal seam gas extraction industry is undergoing a significant transformation. Industry revenue is forecast to rise by 148.0% over the next year, to reach $1.83 billion. While coal seam gas projects have become more viable due to new and improving extraction techniques, it is the development of export capabilities that is expected to drive rapid industry growth.
The opening of the domestic east coast gas market to the international market is expected to push gas prices higher – particularly as Australia is well-positioned to meet strong demand from Japan, China and South Korea, which are the world’s three largest natural gas importers.
Supply to these markets from considerable coal seam reserves in Queensland will be boosted in 2015 as the Curtis Island LNG plant becomes operational. Once operational, the Curtis Island LNG plant will be the world’s first project to turn coal seam gas into liquefied natural gas, which will be a boon to operators of newly developed coal seam gas fields in the Cooper Basin.
Online grocery sales
Online grocery shopping has been slow to catch on within the Australian market, even as local online shopping as a whole has exploded in popularity over the past five years. The uptake of online shopping is typically driven by the improved ease of use of online stores and fast, affordable delivery options. As consumers become more adept at using online stores and gain more experience buying items online, online shopping expands.
Such a phenomenon is anticipated to occur for online grocery stores in 2015, leading to revenue growth of 14.6% for the year. While grocery shopping is not a difficult undertaking as there are supermarkets scattered across all pockets of the country, time-conscious consumers are increasingly realising the benefits of online grocery shopping.
The increased prevalence of click-and-collect options and greater comfort with purchasing perishable items like fresh fruit online are expected to boost industry revenue over the coming year.
Fast fashion
Fast fashion stores are expanding rapidly across Australia. While the industry was previously dominated by Australian mainstay Cotton On, international operators including Zara, Topshop, H&amp;M, Uniqlo and Forever 21 have taken the country by storm. Zara is expected to continue its phenomenal growth, while 2015 will be the first full calendar year of Australian operations for H&amp;M, Uniqlo and Forever 21, leading to projected industry revenue growth of 10.4% over the year.
Zara posted exponential revenue growth with extremely high retail profit margins over its first three years of operation in Australia, and IBISWorld expects this growth to continue in 2015. The rousing success of the grand openings of H&amp;M and Uniqlo in Melbourne in April 2014 is expected to result in similar growth for these stores, which will generate significant growth for the overall fast fashion industry.
Private equity
2014 was a highly successful year for the private equity industry, which is expected to achieve similar prosperity in 2015. Private equity firms generate revenue from management fees paid by outside investors and the gains made on investing their own funds.
Merger and acquisition (M&amp;A) activity is expected to rise in 2015. As private equity firms will play a key role in upcoming M&amp;A deals, this should result in growth in management fees earned and potential investment returns, ultimately leading to forecast industry revenue growth of 10.1% for the year.
Growth in M&amp;A activity in Australia coincides with greater global interest in M&amp;A, as Europe and particularly the United States are emerging from a prolonged period of crisis and subdued growth.
Hydroponic crop farming
Hydroponic crop farming holds a relatively small place in the overall scheme of Australian agricultural production, but is undergoing strong and steady growth. Water conservation is the driving force behind hydroponics, as hydroponically grown produce typically uses only one-fifth the amount of water that soil-grown produce requires.
In addition to water conservation, hydroponics allow for higher production yields of high-quality produce. Vertically tiered plants enable greater productivity, while greater quality control, faster plant growth and longer growing seasons offset the added cost of hydroponic systems over conventional agricultural practices.
Rising capacity in the hydroponic crop farming industry should meet sustained demand from retailers and consumers in 2015, and lead to revenue growth of a forecast 5.6% for the year.
Article continues on the next page. Please click below.
<hr class="system-pagebreak">
Industries to fall
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top">
Industries
</td>
<td valign="top">
Revenue 2014 ($m)
</td>
<td valign="top">
Revenue 2015 ($m)
</td>
<td valign="top">
Growth (%)
</td>
</tr>
<tr>
<td valign="top">
Petroleum exploration
</td>
<td valign="top">
4631.0
</td>
<td valign="top">
3755.3
</td>
<td valign="top">
-18.9
</td>
</tr>
<tr>
<td valign="top">
Cigarette &amp; tobacco manufacture
</td>
<td valign="top">
1895.3
</td>
<td valign="top">
1685.1
</td>
<td valign="top">
-11.1
</td>
</tr>
<tr>
<td valign="top">
Electricity distribution
</td>
<td valign="top">
18547.6
</td>
<td valign="top">
16694.7
</td>
<td valign="top">
-10.0
</td>
</tr>
<tr>
<td valign="top">
Mining &amp; construction machinery manufacture
</td>
<td valign="top">
5425.0
</td>
<td valign="top">
5092.1
</td>
<td valign="top">
-6.1
</td>
</tr>
<tr>
<td valign="top">
Film &amp; video distribution
</td>
<td valign="top">
1857.5
</td>
<td valign="top">
1788.4
</td>
<td valign="top">
-3.7
</td>
</tr>
</tbody></table>
Petroleum exploration
The world price of crude oil is plummeting due to an enormous supply glut spurred by overproduction from members of OPEC, the United States and Russia. The severe crash in oil prices means that the investment returns available from petroleum exploration activities are drastically reduced.
Exploration projects have therefore become far less viable for Australian firms, particularly as the stock prices of such firms have begun to dive. These conditions are projected to result in an 18.9% decline in industry revenue in 2015.
High oil prices have acted as an incentive for global companies to invest in petroleum exploration over the past five years. However, the subsequent oversupply is going to hamper exploration in 2015, as Australian firms are unable to compete with the low production costs and high production volumes from the world’s major oil producers.
The best-performing segment in the industry is expected to be natural gas exploration – but investment has already peaked for the segment, and additional gas extraction capacity will not be needed until export facilities become fully operational.
Cigarette and tobacco
In Australia, cigarette manufacturing has historically been dominated by British American Tobacco and Philip Morris, with Imperial Tobacco importing cigarettes rather than manufacturing them locally. The industry is headed for a severe decline in 2015, as Philip Morris offshored its cigarette manufacturing for the Australian market to its Korean facilities in 2014.
The loss of Philip Morris is forecast to result in an 11.1% revenue decline for the industry in 2015. Philip Morris held just over one-third of the industry’s market share. The loss of the company from the industry will be keenly felt as the number of companies manufacturing cigarettes and tobacco products in Australia falls from two down to one.
High regulatory barriers in Australia, requiring more stringent quality control, meant there were few export opportunities for the company’s local facility. Meanwhile, rapidly rising taxes on cigarettes and the advent of plain packaging have meant that smokers are increasingly buying cheaper cigarettes, such as those manufactured by British American Tobacco.
Electricity distribution
The cost of retail energy has surged over the past five years. Earlier projections of continued growth in electricity use per capita and rising peak demand led the industry to gold-plate electricity networks, and the Australian Energy Regulator (AER) allowed fees to rise to cover capital costs. A subsequent decline in the use of centrally generated electricity means there is a surplus of network capacity.
The AER has slashed revenue limits in New South Wales and Tasmania, as consumers have been paying for networks’ overinvestment. This is expected to result in an overall industry revenue decline of 10.0% in 2015.
The AER has cut revenue limits substantially for the three networks operating in New South Wales for 2015-16 – in some cases, by over 30.0% when compared with 2014-15. Similarly, Aurora Energy in Tasmania suffered a regulated revenue cut that will hit the industry in 2015.
The industry is further threatened by the increased use of small-scale electricity generation through solar photovoltaic panels, which could reduce demand for distribution networks as consumers go off the grid.
Mining and construction machinery manufacturing
Demand for mining machinery has been driven by investment in new mines, along with mine expansion projects. Mining companies are expected to revise down their expectations of revenue growth during 2015, as the prices of commodities like iron ore have plunged. Demand for mining machinery is expected to fall as a result, leading to a forecast revenue decline of 6.1% over 2015.
The development of new mines, and the expansion of existing mines, generally requires mining firms to purchase new machinery, leading to revenue growth for mining machinery manufacturers. As the mining boom moves from its investment phase to a production phase, and as falling iron ore prices deter further investment, demand for machinery is likely to suffer in 2015.
Film and video distribution
Australian motion picture and video distributors have been hit with a barrage of new media formats and consumer behaviours that have made the industry less profitable and resulted in declining revenue over the past five years. Video-on-demand services are expected to boom in 2015, cannibalising sales of DVDs and Blu-ray Discs, which generate greater revenue. The continuous decline of DVD and video hire outlets, along with the negative effects of piracy, are projected to lead to a 3.7% dip in revenue in 2015.
The introduction of US-based streaming service behemoth Netflix, along with local entrants Stan and Presto, is tipped to be a win for consumers but a loss for distributors. Consumers will be able to pay monthly subscription fees to view a wide range of content, in contrast to paying a set price for each single film or TV show – which added up to a much larger hit to the hip pocket.
David Whytcross is an industry analyst at <a href="https://www.ibisworld.com.au" target="_blank">IBISWorld</a>.
For more information on these, or any of Australia’s 500 industries, log onto <a href="https://www.smartcompany.com.au/www.ibisworld.com.au" target="_blank">www.ibisworld.com.au</a>, or follow IBISWorldAU on Twitter.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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po-LsXgBTHBmX

The Australian industries set to fly and fall in 2015

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The Australian Performance of Construction Index has seen the industry's contraction slow over March, with the index up 2.0 points to 46.2 over the month.
The '50 point level' is that which separates expansion from contraction in the industry and it is the third consecutive month since the industry returned to growth that the index has been below this balance level.
The Australian Industry group director - public policy, Peter Burn, said that there was a consolidation of recent gains in the houe building sector. He also noted a recovery of commercial construction.
Despite these positive shoots, a pull-back in the previously bullish apartment building sector and a decline in engineering construction kept the index sluggish.
"As is the case with the broader economy, the rebalancing of the construction sector as mining-related activity slows still has a considerable way to go," said Burn.
He pointed to hopes that momentum can be maintained in the residential construction sectors, with attention to turning to required investment in non-mining related engineering construction.
Meanwhile, Housing Industry Association chief economist Harley Dale noted that despite the positive signs at the close of 2013, it was disappointing to see a full first quarter of 2014 in negative territory.
"The detached house activity component remains expansionary, if only just, and 2014 should be a healthy year for new home building activity," said Dale.
"What the sector and broader economy needs, however, is a sustained recovery in new home building commensurate with average construction levels being considerably higher over coming decades than those achieved over the past 20 years," he said.
"The prospect of achieving this outcome would be significantly bolstered by a national taxation reform agenda which included the removal of the excessive and inefficient taxes levied on new home building."
House building did fall over the month, by 1.4 points, however it remained above the 50 mark - at 50.8, suggesting a stabilisation. Meanwhile, apartment building declined 1.0 points to 45.6 points.
Commercial construction declined by 3.4 points, to 56.5 points, with engineering construction up 5.8 points to 45.5 points.
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