For most new apartment buildings, the Owners Corporation starts life with little more than a bank account and the first quarterly strata levies.

At <a href="https://www.apartments.com.au/buildings/9-gay-street-castle-hill-9-gay-street-castle-hill-nsw-2154">9 Gay Street</a> in <a href="https://www.apartments.com.au/developments/castle-hill-nsw-2154">Castle Hill</a>, it starts with around $7 million in reserve.

It's an unusual legacy of what was once one of Sydney's highest-profile apartment remediation projects. When the development, originally known as Skyview and built by disgraced developer Top Place, came under scrutiny by then NSW Building Commissioner David Chandler, an $11 million remediation bond was negotiated to ensure any building defects could be fully rectified.

The building underwent an 18-month remediation program, during which around $4 million of that bond was spent bringing the building up to the standard it should have been in from the outset.

After extensive inspections, all active rectification orders have been lifted. What's more, around $7.2 million remains secured for the Owners Corporation for the next 15 years.

In a twist few would have predicted, what began as a significant concern for purchasers has left the building with something almost unheard of in the apartment market: a multi-million-dollar financial reserve from day one.

[smartcode_project:default project_id=147685 project_image_fid=359136]

<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a> Executive Chairman Greg Huxley said the structure offers buyers a level of certainty that is difficult to replicate.

"The $11 million bond established for the Skyview Castle Hill development represents exceptional value, providing genuine financial security for purchasers," Huxley said.

"Unlike a standard insurance policy, this bond consists of real funds held in trust for the Owners Corporation, offering a tangible layer of protection and added peace of mind."

The apartments themselves have been designed with a focus on practical, contemporary living. Interiors feature Smeg appliances, stone benchtops, tiled living areas, carpeted bedrooms, 2.7-metre ceilings, floor-to-ceiling glazing, and ducted heating and cooling throughout.

Residents also have access to a range of shared amenities, including two rooftop barbecue areas, a swimming pool, children's playgrounds, secure building access, storage cages, and visitor parking.

The location continues to be one of the project's strongest drawcards. Castle Hill Metro Station sits virtually on the doorstep, providing direct connections across Sydney's expanding Metro network, while Castle Towers offers extensive retail, dining, entertainment, and service amenities within walking distance.

[smartcode_project:default project_id=147685 project_image_fid=359127]

The building, now named after its location at 9 Gay Street, comprises a diverse mix of one-, two-, and three-bedroom apartments starting from just under $600,000.

Equitifund National Sales Director Ben Hamblett said demand in the Hills District continues to be driven by buyers seeking convenience and connectivity.

"Interest from both owner-occupiers and investors in Castle Hill remains exceptionally strong, with buyers consistently prioritising developments in close proximity to the Metro station and Castle Towers Shopping Centre," Hamblett said.

"There is a clear trend in the market, with purchasers seeking convenient access to transport and lifestyle amenities that support a seamless, low-maintenance way of living."

On top of the long-term protection afforded by the remaining $7.2 million bond, Equitifund is offering a limited-time stamp duty rebate on selected apartments.

Eligible purchasers can also secure finance options, including a 3.99 per cent two-year variable rate, loan-to-value ratios of up to 90 per cent, and interest-only lending options through EquitiCredit.

[smartcode_project_cta:default project_id=147685]

Joel Robinson

Why this Castle Hill apartment building starts with a $7 million advantage

For much of the past few years, conversations about Australia's property market have centred on the rapid growth seen in Sydney, Brisbane, Gold Coast, and Perth. <a href="https://www.apartments.com.au/developments/melbourne-vic-3004">Melbourne</a> has followed a different trajectory.

That relative underperformance is now encouraging some buyers to reassess the city, particularly those willing to look beyond short-term market movements and focus on quality property in established locations, along with the long-term growth prospects of a city expected to overtake Sydney as Australia’s most populous.

John Bekiaris, Research &amp; Market Insights at <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a>, said Melbourne's current position is attracting increasingly sophisticated purchasers.

"Melbourne continues to present one of Australia's strongest long-term investment stories," Bekiaris says.

"While other capital cities have experienced stronger recent growth, that relative underperformance is exactly what's attracting sophisticated counter-cyclical investors."

[smartcode_project:default project_id=1979 project_image_fid=363268]

Equitifund isn't just commenting on Melbourne's property market, it's investing in it.

The Sydney-headquartered capital partner has taken over the remaining apartments at <a href="https://www.apartments.com.au/buildings/victoriana-melbourne-20-queens-road-melbourne-vic-3004">Victoriana</a>, the recently completed glass-encased development opposite Albert Park Lake in Melbourne's tightly held St Kilda Road precinct.

Designed by <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> and built by <a href="https://www.apartments.com.au/builders/hickory">Hickory</a>, Victoriana places residents between one of Melbourne's most recognised parklands and the CBD, offering oversized two and three-bedroom apartments aimed at owner-occupiers seeking a genuine alternative to a traditional family home.

The development comprises 232 completed residences alongside a suite of resident amenities, including a 25-metre indoor swimming pool, gymnasium, landscaped entertaining areas, resident lounges, EV charging, secure basement parking and a concierge-style arrival experience.

[smartcode_project:default project_id=1979 project_image_fid=363229]

The apartments have been designed with owner-occupiers firmly in mind.&nbsp;Open-plan living and dining areas flow onto generous balconies framing views across Albert Park Lake, Fawkner Park, the Royal Botanic Gardens and the Melbourne skyline.

Kitchens feature Gaggenau appliances, stone benchtops and generous preparation space. Bedrooms include built-in robes, while bathrooms feature full-height textured tiling. Hardwood flooring and ducted air conditioning complete residences designed for long-term living.

Rothelowman's architecture takes its cues from the landscape opposite the site. Sweeping horizontal glazing references the movement of Albert Park Lake, while generous balconies and expansive glazing strengthen the connection between the apartments and the surrounding parklands. The result is a building designed to deliver the scale and amenity expected of luxury apartment living, while offering the larger floorplans increasingly sought by owner-occupiers.

[smartcode_project:default project_id=1979 project_image_fid=363284]

The location is one of Victoriana's defining characteristics. Positioned on Queens Road, residents are directly opposite Albert Park Lake and within easy reach of Fawkner Park, the Royal Botanic Gardens, South Melbourne, St Kilda Road and the CBD. With few comparable development opportunities remaining in the precinct, buyers are increasingly placing value on outlooks that are unlikely to be interrupted by future construction.

Greg Huxley, Founder of Equitifund, believes those qualities become even more valuable over time.

"Premium real estate has always rewarded buyers who take a long-term view," Huxley said.

"Victoriana represents the kind of asset that's increasingly difficult to recreate today, particularly in an established location like Queens Road."

He said rising construction costs are also changing the way buyers assess completed developments.

"When you combine an irreplaceable location with thoughtful architecture and premium finishes, you create something that becomes increasingly difficult to reproduce as construction costs continue to rise."

[smartcode_project:default project_id=1979 project_image_fid=363228]

According to National Sales Director Ben Hamblett, enquiry has been driven largely by Melbourne downsizers and buyers upgrading from smaller apartments.

"Interest in Victoriana continues to build, with strong buyer focus on the larger owner-occupier residences within the development," Hamblett says.

"Enquiry is increasingly driven by local buyers who recognise the rarity of what's on offer: park-facing apartments in an established neighbourhood where new development opportunities are becoming increasingly scarce. At Victoriana, the view is not just a feature; it's an appreciating asset in its own right."

He said interstate enquiry has also strengthened as buyers reassess Melbourne's position within the national property cycle.

"Melbourne currently stands as the most compelling entry point of any major Australian capital, and discerning buyers are beginning to recognise what those who move early always understand: the best opportunities are taken before the price rise confirms them."

[smartcode_project_cta:default project_id=1979]

Why now is the time to buy in Melbourne's premium apartment market

Developers and apartment buyers have a narrowing window of opportunity before Brisbane's Olympic infrastructure pipeline begins competing directly with residential construction, pushing up costs, tightening labour supply and making new projects increasingly difficult to deliver.

While Brisbane's apartment market continues to benefit from strong population growth and limited housing supply, industry research suggests the years leading up to 2027 could prove to be the most important period for developers looking to secure builders and buyers hoping to purchase before the next wave of price increases.

A new Colliers report, Brisbane 2032 Olympic and Paralympic Games: Creating Solutions, highlights the scale of the challenge. While thousands of new homes are planned across South East Queensland, the Brisbane Olympic Athletes Village alone will deliver more than 10,500 beds during the Games before being converted into around 1,750 to 2,000 apartments. Equivalent to almost two years of typical inner-city apartment supply, the project will also absorb a significant share of the construction workforce and building materials.

The broader construction pipeline paints an even clearer picture.

Construction Skills Queensland's Horizon 2032 report forecasts Queensland's annual construction pipeline will average $69 billion over the coming years before peaking at $75 billion in 2027-28. Demand for construction workers is expected to increase by 17 per cent to almost 150,000 people, with the industry facing an annual shortfall of around 19,000 workers that could blow out to as many as 35,000 during the peak construction period.

The Olympic venues, athletes village and supporting infrastructure will account for billions of dollars worth of work across South East Queensland through to 2032, creating intense competition for labour at a time when Australia's residential construction sector is already under pressure.

[smartcode_project:default project_id=150489 project_image_fid=373834]

Colliers Queensland Residential Director Andrew Scriven said the convergence of these projects is creating a clear window of opportunity for both developers and buyers.

"From 2027 onwards, the market will shift dramatically," Scriven said.

"Labour will increasingly be locked into government-led infrastructure and Olympic projects, which means private residential developments will face higher costs and tighter margins. The developers who move now are the ones most likely to get projects off the ground."

Scriven said the same dynamic would also affect buyers, with fewer apartment projects expected to launch once construction capacity tightens.

"If you're looking to change your lifestyle over the next five years, now is your window of opportunity to buy."

[smartcode_project:default project_id=150713 project_image_fid=373827]

Developers are already positioning themselves ahead of that window.

Following the success of Monarch at Toowong, Consolidated Properties is preparing to launch two new Brisbane apartment projects in the second half of 2026. They include <a href="https://www.apartments.com.au/new-apartments/gloriette-30-bedivere-street-yeerongpilly-qld-4105">Gloriette</a> at Yeerongpilly Green, a 25-storey tower within one of Brisbane's key Olympic precincts, and <a href="https://www.apartments.com.au/new-apartments/castile-47-skyring-terrace-newstead-qld-4006">Castile</a>, a recently approved 25-storey riverfront development at 47 Skyring Terrace in Newstead.

Hutchinson Builders will deliver both projects, with early works already underway at Yeerongpilly and Newstead expected to commence later this year.

The timing comes as Brisbane's fundamentals continue to strengthen, with strong interstate migration, population growth and vacancy rates remaining below 1.5 per cent.

Colliers Queensland researcher Pragya Sharma said Greater Brisbane is forecast to require around 40,000 new apartments between 2021 and 2031.

"There's a real mismatch emerging between when housing is needed and when it will be feasible to build," Sharma said.

"As a result, the period leading up to 2027 presents a key window of opportunity for developers to secure approvals, funding and construction capacity, while buyers will have greater choice before supply constraints intensify."

Colliers research outlines a critical pre-2027 window to start residential projects before labour squeeze: now is the time to buy

Developers, buyers on watch in South East Queensland ahead of construction crunch: Colliers

It's taken less than nine months for developer Sherpa Property Group to sell out all 51 apartments in its <a href="https://www.apartments.com.au/new-apartments/flourish-oasis-palm-beach-7-9-sixth-avenue-palm-beach-qld-4221">Flourish Oasis</a> development in <a href="https://www.apartments.com.au/developments/palm-beach-qld-4221">Palm Beach</a>, over a year before its anticipated completion.

&nbsp;

Located at 7-9 Sixth Avenue, the $67 million development has resonated strongly with both local owner-occupiers and downsizers seeking high-quality apartments within walking distance of the beach, dining precincts and everyday amenities.

[smartcode_project:default project_id=151449 project_image_fid=357458]

Christie Leet, Founder of <a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Group</a>, said the sell-out reflected both the strength of the Palm Beach market and the success of Sherpa's community-first approach to development.

"The sell-out of Oasis is a fantastic outcome and reinforces the strong demand we're seeing for thoughtfully designed apartments in lifestyle locations," Leet said.

"From the outset, our vision was to create a development that genuinely enhanced the Palm Beach community while providing residents with exceptional homes and wellness-focused amenities.

"We've been incredibly encouraged by the level of local support throughout the campaign, 72.5 per cent of buyers are locals, with a significant proportion of purchasers choosing Oasis as their future home rather than an investment."

[smartcode_project:default project_id=151449 project_image_fid=357463]

Construction is now progressing following development approval, with trusted builder LPS Group delivering the project and completion anticipated in Q3 2027.

Oasis forms part of Sherpa Group's successful Flourish collection, which has become recognised for its focus on wellness, community and elevated coastal living.

[smartcode_project:default project_id=151449 project_image_fid=357469]

Residents will have private access to a rooftop amenity space featuring a pool, gym, sauna, steam room, hot and cold plunge pools, spa and barbecue facilities.

"The success of Oasis demonstrates that buyers continue to prioritise quality, location and lifestyle," Leet said.

"We are proud to have delivered a project that has resonated so strongly with the market and look forward to bringing Oasis to life for our future residents."

Sherpa recently launched <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a>, its third instalment of the Flourish brand in Palm Beach following Flourish Oasis and <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>.

[smartcode_project_cta:default project_id=151449]

Sherpa sells out Flourish Oasis in booming Palm Beach

Urban Property Group's <a href="https://www.apartments.com.au/new-apartments/la-vera-macquarie-park-94-talavera-road-macquarie-park-nsw-2113">La Vera</a> is leading the next phase of Macquarie Park's residential evolution, with the new apartment development set to become the first of several new apartment projects in the precinct to complete.

The 169-apartment building has now topped out ahead of its scheduled completion in the third quarter of 2026, as new residential investment continues to reshape one of Sydney's largest employment hubs into a true mixed-use precinct.

[smartcode_project:default project_id=134951 project_image_fid=368645]

Cox Architecture has designed La Vera to capture the best of its unique positioning on Talavera Road, orienting the building towards Lane Cove National Park.&nbsp;The building features a sculpted northern façade with flowing curves inspired by the surrounding landscape, while its city-facing elevation adopts a more structured architectural expression to maximise skyline views.

"The vision for the project was to conceive a building that adopted an organic and curvilinear form to the northern portion that faces the Lane Cove National Park," <a href="https://www.apartments.com.au/architects/cox-architecture">Cox Architecture</a> Director Felipe Miranda said.

"The residents that reside in the northern portion of the building benefit by having beautifully crafted curved balconies that speak to the natural context and heighten the relationship of their internal living spaces to the external balconies."

[smartcode_project:default project_id=134951 project_image_fid=358802]

La Vera offers a diverse mix of one, two, three, and four-bedroom configurations, with prices currently starting from $740,000. Buyers so far have been a mix of Sydney-based investors,&nbsp;metro commuters, owner-occupiers and downsizers from surrounding North Shore suburbs.

Both investors and owner-occupiers have been drawn to La Vera's proximity to Macquarie University, Macquarie University Hospital, Macquarie Centre and the Sydney Metro, infrastructure that supports both strong rental demand and a convenient lifestyle for residents.

The apartments feature full-height glazing, timber flooring throughout living areas, stone kitchen benchtops, SMEG appliances, floor-to-ceiling bathroom tiling and ducted air conditioning.

Residents will have access to a rooftop recreation level featuring a swimming pool, sauna, barbecue facilities and landscaped relaxation areas, complemented by additional communal space at ground level. Many apartments enjoy uninterrupted views across Lane Cove National Park, reinforcing the project's connection to its natural setting.

[smartcode_project:default project_id=134951 project_image_fid=364551]

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a>, a family-owned developer and builder with nearly four decades of experience, holds a 4.5-star iCIRT rating and was Australia's first developer to introduce 10-Year Latent Defects Insurance (LDI). La Vera is the first apartment development in <a href="https://www.apartments.com.au/developments/macquarie-park-nsw-2113">Macquarie Park</a> approved to offer the additional insurance protection, alongside a five-year warranty on SMEG appliances.

Urban Property Group CEO Patrick Elias said the additional protection reflects changing buyer expectations in the off the plan market.

"Consumers are a lot more weary and a lot more concerned in buying off the plan than they ever have been. Having LDI is a tool to portray the confidence that we have in our product, and a confidence we want buyers to share," Elias said.

Following completion of the building later this year, buyers will move into their apartments well before Christmas.

[smartcode_project_cta:default project_id=134951]

La Vera closes in on completion as Macquarie Park continues residential transformation

Office Market

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Melbourne is fast catching up with long-standing rival Sydney in the office leasing market, according to Cushman &amp; Wakefield.
An influx in planned supply in Melbourne will bring overall stock levels within 100,000 sqm of Sydney by 2021, the first time ever the gap has been this narrow (last was 400,00 sqm in 1992), it says.
Sydney, often considered the corporate capital and global property hub of Australia, previously benefited from disparity between both the size and quality of available office space. 
However, today despite Sydney’s 5.1 million sqm of net lettable CBD office space compared to Melbourne’s 4.6 million sqm, and a tighter office market in Sydney with vacancy rates of 5.9% compared to 6.5% in Melbourne, the most noticeable difference is in average prime rent, according to Cushman &amp; Wakefield.
While rental growth continues in both markets, CBD office space in Melbourne still remains markedly less expensive than Sydney. 
Average Prime net effective rents in Sydney is currently $720 per sqm across the CBD, whereas the equivalent Melbourne rent is practically half, at $370 per sqm. 
<a href="https://www.propertyobserver.com.au/images/2017/09/03/SydVsMel.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/03/SydVsMel.png" alt="">
<a href="https://www.propertyobserver.com.au/images/2017/09/03/SydVsMel2.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/03/SydVsMel2.png" alt="">
Alongside rent, an assortment of factors have helped close the gap in attractiveness. 
The Victorian government’s proactive approach to development and construction has seen net office supply grow at nearly three times the pace of Sydney over the past 5 years, according to the real estate firm. 
This will continue with significant disparity between the net negative forecast supply in Sydney (- 15,250 sqm) and the additional 435,000 sqm forecast supply entering Melbourne between 2017 and 2021.
This projected supply will significantly alter overall office volume, and in 2021 Melbourne office stock will come within approximately 100,000 sqm of Sydney. 
For perspective, the previously narrowest gap was approximately 400,000 sqm in 1992, and since 1990 the average gap has been circa 800,000 sqm. Beyond 2021, the proposed increased supply for Sydney will see this gap shift to a more traditionally balanced level. 
Whilst the Melbourne office market doesn’t incorporate major submarkets like Sydney, the abundance of newly built and renovated quality stock is bringing business to the CBD. 
“We are seeing large occupiers take a renewed interest in the CBD. They are gravitating from fringe areas like Richmond, Hawthorn and St Kilda Road back to the CBD for unsurpassed access to a wider talent pool and better amenities,” said Chas Keogh, joint head of Office Leasing Victoria.
Tim Courtnall, head of Office Leasing NSW added that “for the first time following the GFC we are seeing a shift from the importance of cost efficiency towards people and culture”. 
Many companies feel a renewed sense of confidence and are comfortable committing to a longer lease with many also upgrading their space to provide a competitive edge in today’s war for talent, he said. 
Despite the strong rental growth in Sydney’s CBD, firms are going after prime grade office space in superior locations with the best amenities to be competitive in targeting talent. 
While Melbourne’s significant population growth and attractiveness of cheaper prime grade rent has its appeal, Courtnall said he is yet to see companies relocating head offices to Melbourne as a result, and believes Sydney remains the preferred location for global financial and tier 1 technology firms. 
Highlighting the point, Cushman &amp; Wakefield recently secured space for two leading corporates that have chosen to expand their footprint or relocate within the financial core of Sydney’s CBD, despite steadily growing rents. 
RCR Building Services relocated from 50 Bridge Street in the Sydney CBD due to demolition, opting to lease two floors (2,410 sqm) in one of Sydney’s most iconic premium buildings, 1 Macquarie Place, Gateway. Growing fintech player, SocietyOne, also recently secured an entire floor in 45 Clarence Street, taking 44% more space and a higher effective rental. 
With both cities offering appealing lifestyles, and the range of office products becoming increasingly aligned, whether expanding an existing Australian footprint, relocating, or entering the Australian market, Melbourne’s eclectic appeal and Sydney’s celebrated locale is enticing to both investors and occupiers. 
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Melbourne closes in on Sydney in office stock: Cushman & Wakefield

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The simplest of all economic theories, the one most first year economic students are taught on day one, is the theory of supply and demand. 
Today, we can witness the Sydney and Melbourne CBD office markets as a perfect real-life example of this phenomenon. Both NSW and Victoria are experiencing extraordinary population growth fuelled by migration. 
According to the ABS, 72,013 local and overseas migrants moved to NSW, and an unprecedented 92,038 migrants moved to Victoria in 2016. These figures are 38 per cent and 45 per cent respectively above the 10-year average migration levels for these two states. 
This flow of migrants is contributing to strong white collar job creation in both capital cities – the demand side of our equation. The supply side, however, is not keeping up. 
The Sydney CBD office market only grew by 4,314 sqm over the last 12 months. This is a mere 0.1 per cent of total CBD supply. 
<a href="https://www.propertyobserver.com.au/images/2017/08/21/SydneyCBD.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/21/SydneyCBD.png" alt="">
Melbourne had far stronger supply, growing by 109,640 sqm over the past year, although all of this and more was absorbed. 
Total vacant space reduced from 313,311 sqm in July 2016, to 294,562 in July 2017. Supply for the next twelve months is even more ominous. 
<a href="https://www.propertyobserver.com.au/images/2017/08/21/MelbourneCBD.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/21/MelbourneCBD.png" alt="">
Colliers International is forecasting the Sydney CBD office market to contract by 50,000 sqm over the year to July 2018, and the Melbourne CBD to reduce by 7,000 sqm. This, at a time when Deloittes Access Economics expects an additional 5,600 office based workers to require space in the Sydney CBD, and 6,121 workers in the Melbourne CBD. 
Based on a conservative estimate of 11 sqm per office employee, this is about 60,000 sqm of demand in Sydney and about 65,000 sqm of demand in Melbourne. In a climate of reducing availability of stock, the simple law of supply and demand tells us that the result must be an increase in prices. 
Over the year to June 2017, prime grade face rents grew by 7.8 per cent in Sydney, and 14 per cent in Melbourne. 
“While these growth rates are well above ten year averages (4.7 per cent in Sydney and 4.3 per cent in Melbourne), our outlook for growth is over the next 12 months is also very strong,” says Anneke Thompson, national director at Colliers Research.
“Over the year to June 2018, we expect face rent growth of 10.3 per cent in Sydney and 13 per cent in Melbourne.
“This growth will have implications for landlords and occupiers. It is next year when we expect to see the bulk of face rent growth, before new supply begins to hit the market in 2019. Beyond that time, we see growth returning to more normalised levels, as supply and demand of office space rebalances.”
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Supply-demand imbalance in Sydney, Melbourne continues to push up rents: Colliers

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GUEST OBSERVER
Imagine a world where nothing is wasted and resources are endlessly re-purposed.
From bamboo coffee cups to recycled paint, more companies are championing the idea of a circular economy in which discarded raw materials and products are repeatedly reused, producing no waste or pollution.
According to the United Nations, by 2050 we could need three times more resources than we currently use, due to population growth and unabated consumerism. Specifically, the US National Intelligence Council has stated that globally we will need 35 percent more food, 40 percent more water and 50 percent more energy by 2030 alone.
“In short, the ‘take, make, dispose’ model of production, also known as a linear economy, is forcing the planet into a state of disrepair,” says Sophie Walker, Head of UK Sustainability, JLL. “We inherently live beyond our means and as a result, have seen pressures on resources mount and the potential for irreversible environmental changes grow.”
Taking a fresh approach
In recent times the concept of a circular approach has gathered momentum as an attractive and viable way of generating economic growth and prosperity for people and planet. “The shift to the regenerative circular concept we are seeing is taking place because world governments and businesses have realized that increasing global competition has made access to resources, at affordable prices, an increasingly challenging proposition,” says Walker. “They have also realized that the environmental risks are too severe to continue down the ‘linear’ path.”
And the potential benefits of applying circular principles to domestic economies and businesses are mammoth. The European Commission states that it could bring an estimated net saving of £523 billion to European businesses. In London, net benefits of a least £7 billion per annum along with 12,000 new jobs could be obtained by 2036 by applying circular activities across a variety of sectors according to The London Waste and Recycling Board.
Big companies such as Apple, Unilever, Renault and Google are already taken action to embrace circular solutions. In the fashion world, H&amp;M aims to become 100 percent circular, helped by its in-store garment-collection program and polyester fashion line made from reprocessed PET bottles.Since adopting a circular mindset, professional services firm PwC has saved almost £25 million by cutting paper and energy consumption through measures such as using cooking fat from its canteens and other kitchens to fuel its offices and remanufacturing office furniture where possible. Its cut-throat examination of numerous waste streams helped it achieve zero-waste-to-landfill status in 2012.
The real estate impact
Can the same circular principles work for buildings? Walker thinks so: “In my opinion the answer is yes. The UK building sector utilises over 400 million tonnes of material a year and generates a third of all our waste which comes at great cost, not only to the planet but also to our pockets. But it doesn’t have to be this way. Durable, re-usable components that can be easily put together, taken apart and accessed for repair or replacement can make all the difference. This allows us to adapt to society’s ever-changing needs by extending the life and value of our buildings.”
She points to modular construction, where homes are built in a factory environment using state of the art methods and materials, as an antidote for reducing waste and improving speed and affordability of new builds in the UK housing sector. For example, Legal &amp; General has just built its first modular housing prototype outside its Selby factory in Yorkshire.
Elsewhere, companies are turning waste into building materials. Lendlease is a supporter of Cross Laminated Timber (CLT), a material made from wood chips, normally considered scrap. CLT has a low ecological footprint and is faster and less labour-intensive to construct than conventional materials so much so, that the first 10-storey apartment building made with CLT took five skilled workers just 10 weeks to build. In what it calls “the latest example of high-performance workplaces, setting new benchmarks in environmentally sustainable building practices,” Lendlease is using CLT to erect the tallest and largest engineered timber office building by gross floor area in the world in Brisbane, Australia.
Why the future is circular
“Circular thinking really is gaining traction in the property sector,” Walker explains. “There are firms out there building entirely with circular economy principles.” The aptly named Circular Building was one of the first buildings in the UK built to satisfy these values, in which all parts were intended to be used to their full potential and to the duration of their life cycle.
“Another example is the Park 20|20 office development in Amsterdam which embraces a circular-economy approach by creating closed cycles for materials, energy, waste, and water, with everything having the potential to be composted or recycled back into industry,” she adds.
As circular thinking catches on, the need to move towards a new model is no longer in doubt nor are the potential economic opportunities. “Whether it’s property, retail or consumer goods, businesses are realising that big cost savings can be made from being socially and environmentally responsible and efficient,” says Walker.
To recycle the phrase Mark Farmer used in his assessment of the British construction sector: “the choice is simple, modernize or die.”
This article by Emma Hollingshead appeared in <a href="https://www.jllrealviews.com" target="_blank">JLL Real Views</a>
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jchancellor-FAypfDUnLy

How companies are reaping the benefits of circular thinking

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Commercial property continued to be a popular with foreign investors in the 2016/2017 financial year, in particular office assets in the Sydney and Melbourne CBDs, according to Colliers International.
Investment across the office, retail, industrial and hotel sectors was $28.99 billion in the preceding financial year, according to the 2016/17 Capital Markets Investment Review series.  
Foreign buyers accounted for $8.19 billion, or with 28 percent, of those sales, according Colliers.
“Yield compression in each asset class will continue throughout the financial year ending (FYE) 2017, with limited stock creating competitive tension between investors and driving record prices,” says the report.
<a href="https://www.propertyobserver.com.au/images/2017/08/15/InvestSnapshot.png" target="_blank">Click to enlarge</a>
 <img src="https://www.urban.com.au/images/2017/08/15/InvestSnapshot.png" alt="">
The states most in demand with investors are New South Wales and Victoria due to their thrust on infrastructure development, population growth, rising rental rates and tightening yields.
This has created opportunities for some of Australia’s premier developers to build the next generation of commercial assets, according to Colliers International’s managing director of Capital Markets and Investment Services, John Marasco.
“These development hot spots in Sydney and Melbourne will cement these cities’ reputations as globally competitive cities for both capital and tenants, and meet not only the current but also the future needs of occupants,” he said.
New South Wales grabbed the lion’s share of investment across office, retail, industrial and hotel sectors, totalling $12.51 billion.
It was followed by Victoria, which recorded $8.33 billion in investment across all four sectors.
“Not surprisingly, the eastern powerhouse states of New South Wales and Victoria have again dominated sales volumes, with generally more assets to offload and greater appetite from buyers for CBD locations,” Marasco said. 
Queensland had $4.75 billion in total investments, followed by Western Australia with more than $1.02 billion, the Australian Capital Territory with more than $628.5million, and South Australia with $601.5 million.
Anneke Thompson, Colliers International’s national director of Research, said one of the most notable trends this year was the increase in investment from offshore private investors, particularly in the office sector. 
“Throughout the past financial year, offshore privates purchased $2.09 billion worth of office stock, up 59 per cent from $855 million the previous year,” she said. 
Not surprisingly, half of the offshore private capital invested in Australian office markets came from China at $1.05 billion. Private capital from Hong Kong and Singapore also surged, growing to $906 million in 2017 from $73 million in the financial year ending in 2016.
<a href="https://www.propertyobserver.com.au/images/2017/08/15/OfficeOffshoreVol.png" target="_blank">Click to enlarge</a>
 <img src="https://www.urban.com.au/images/2017/08/15/OfficeOffshoreVol.png" alt="">
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<img src="https://www.urban.com.au/images/2017/08/15/OfficeInvestmentByState.png" alt="">
Thompson said the influx in private capital could be explained by both the continued search for yield and the growing perception in the global investment community that Australian office property offered a “safe haven” investment environment.
“The improving leasing markets, particularly in Sydney and Melbourne, are also helping drive investor confidence in the outlook for capital appreciation of core office assets,” she said.
Throughout the past year, Australian office markets have continued to build on their growing global reputation as a relatively high-yielding asset with solid long-term fundamentals, attracting more offshore capital.
According to Colliers International’s 2016/17 Capital Markets Office Investment Review, the total transactional value for the FYE2017 was $13.2billion, with about 75 per cent of sales taking place in New South Wales and Victoria and offshore investors making 44.9 per cent of purchases.
Although transaction value is slightly down on last year (by $2.7billion), the FYE2016 included the $2.45billion sale of the Investa portfolio to China Investment Corporation, Colliers said. 
Marasco said it was important to note the impact population growth in Australia’s capital cities was having on transaction volumes, with the country growing by 1.89million people between the 2011 and 2016 Census.
“Both federal and state governments are now more focused on building infrastructure to help our cities cope with their growing size,” he said. 
“These are key positive attributes for office markets, with both trends being felt most keenly in Sydney and Melbourne.”
 
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Offshore money continues to flow into commercial property: Colliers

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Demand for office space in Adelaide is growing according to Colliers International, who believe the local office market is heading into the second half of 2017 with a positive outlook.
Jeevan Deut, Colliers International’s associate director for Office Leasing in South Australia said about 70 per cent of all enquiries continue to come from small business looking for office space less than 1,000sqm.
“It is interesting to note that the number of larger business looking for space greater than 3,000sqm in Adelaide is on par with the likes of Brisbane and Sydney," he said.
“The average size of a business looking for office space in the Adelaide market has also increased from prior year, up from 587sqm to 1,030sqm.
“It seems that the insurance sector is driving the majority of the larger requirements, followed by the education and training sector and the property services and government sectors.
“Our market has seen transactions increase almost threefold in terms of area.
“The average size of businesses transacting has increased from 290sqm in the five months to May 2016 to 777sqm in the five months to May this year.
"The perceived low demand environment was consuming people’s attitudes and fuelling a negative sentiment towards the office market.
“We are finding the leasing market is now starting to turn.
“With a sound level of enquiry and anticipated tenant movement, we have passed a trough in tenant demand and are now trending back up.
“Moving into the second half of 2017, we expect the demand for office space in Adelaide to rise and larger businesses to transact.”
Colliers International’s research database has recorded the total amount of office space enquired for year to date to have increased by 44 per cent when compared to the same time last year. 
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Insurance sector drives demand for Adelaide office space

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Entry-level office accommodation within the Adelaide CBD is essentially limited to strata suites, according to valuation firm Herron Todd White’s latest office market review. 
This market has been relatively stagnant, rental growth has been limited and the vacancy within the CBD is high. 
Below are a range of sales within the Adelaide CBD that HTW considers are entry level and show analysed yields ranging from 4% to 8%. 
<a href="https://www.propertyobserver.com.au/images/2017/07/14/AdelaideCBD1.jpg" target="_blank">Click to enlarge</a>
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<a href="https://www.propertyobserver.com.au/images/2017/07/14/AdelaideCBD2.jpg" target="_blank">Click to enlarge</a>
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There are affordable freehold options within the CBD fringe. The price of properties will vary significantly, with the alternate use possibilities and development potential meaning that the investment is aligned to factors other than its office use. 
As an example of a sale, a 67 sqm office suite (above and below) at <a href="https://www.realcommercial.com.au/property-offices-sa-adelaide-501956566">401/147 Pirie Street</a> in the CBD sold recently for  $376,000 through Leedwell Property, according to Corelogic RP Data.
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/07/14/HTWAdelaide1.jpg" alt="">
The entry-level office accommodation in suburban localities is most notably former homes converted to office use along main arterial routes, add HTW.
Along these arterial routes the demand and therefore value levels will vary significantly between locations and building types; however, similar to CBD strata suites they are predominately sold to owner- occupiers. 
Escalating outgoing costs and limited rental growth is eroding investment returns. The market is more risk adverse and low interest rates can make owner- occupation more attractive than renting, indicating that owner-occupiers are more active in this space. 
Mum and dad investors looking to acquire entry- level office space should think more broadly about alternate uses and the potential of future rezoning; and if buying a leased investment ensure that the rent is sustainable. 
Cash flow positive office investment could have a higher risk of vacancy, with the possibility of needing to offer incentives such as lower rent to attract a new tenant, however, these costs may be beyond the entry-level investor. Lessoning those risks by looking to more prominent localities such as in the inner east CBD fringe or in the CBD will possibly push the price point beyond entry-level. 
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Adelaide CBD office market stagnant, entry level assets mostly strata suites: HTW

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Over the past 12 to 24 months, the entry-level Sydney CBD, CBD fringe and secondary office markets have experienced significant capital and rental growth amid a strong rental environment and low vacancy due to a number of factors, say valuation firm Herron Todd White in their latest office market review.
The withdrawal of office space for alternative uses or redevelopment, including Goldfields House at 1 Alfred Street, Fairfax House at 19 Pitt Street and the Department of Lands building at 23-33 Bridge Street has not been counterbalanced by entry-level gross supply within the Sydney CBD. 
Further, the construction of the Sydney Metro and residential redevelopments will place further pressure on supply and office rents in the Sydney CBD, adds HTW.
Secondary office precincts in areas such as the northern beaches suburbs of Belrose, Warriewood and Brookvale, together with CBD fringe precincts including Surry Hills, Ultimo and Pyrmont, have only recently shown signs of coming out of a long GFC-impacted period of subdued growth with values only recently matching those last seen in 2007. 
The entry level market in the CBD is generally characterised by smaller (10 to 75 square metres) strata title office stock within B and C grade office complexes such as 147 King Street and 368 Sussex Street with prices ranging from $200,000 (less than 100 square metres) to $500,000, reflecting market yields in the range of 5% to 7%, says HTW.
An example of such a sale was a commercial suite in Quay West, <a href="https://www.realcommercial.com.au/property-offices-nsw-sydney-502341138" target="_blank">111 Harrington Street</a>, that recently sold for $330,000 through Noonan Property, Corelogic RP Data shows.
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/07/13/HTWJulySyd1.jpg" alt="">
Similar office stock in secondary locations such as Belrose and Brookvale tends to sell in the $200,000 to $400,000 bracket reflecting yields in the range of 5.5% to 7.5%. 
“Belrose is an example of a suburb that had been significantly impacted by a pre-GFC glut of stock leading to oversupply with resultant subdued growth in capital values and market rents and high levels of vacancy,” said HTW.
Recently, an <a href="https://www.realcommercial.com.au/property-offices-nsw-belrose-502366902" target="_blank">office space</a> in Belrose changed hands for $220,000 through LJ Hooker.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/07/13/HTWSydBelrose.jpg" alt="">
The entry-level market is generally characterised by owner occupiers and sitting tenant purchasers driven by the low interest rate environment in which the cost of finance compares favourably with market rents, mum and dad investors looking for 5% plus yields in an environment where alternative property investments with sufficiently positive yield profiles are few and far between and superannuation fund investors. 
The strong residential market has added further fuel to the fire in providing significant equity to invest. 
To counterbalance this, the main threats to continued growth in entry-level office markets would include rising interest rates, a general downturn in the economy negatively impacting affordability and confidence and a reversal in Sydney’s residential property market. 
“Many commentators are reflecting that we are at the peak of the current property cycle, though time will tell,” conclude HTW.
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Sydney entry-level office market shows solid growth trend: HTW

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The office market in Canberra has experienced an oversupply in recent years, driven by high vacancy levels due to the Commonwealth government policy and the demand for quality high-end space, say valuation firm Herron Todd White in their July office market update. 
As a consequence, the lower end price of the market felt the impact as a flow on effect from the abundance of space which in turn led to downward pressure on rents and increases in incentives available to tenants. 
The continuation of low interest rates provided the opportunity for those looking to invest or acquire smaller unit properties for under $500,000. Primary locations include the City, Kingston, Manuka and Braddon and secondary locations are Deakin, Turner and Phillip or one of the town centres, Belconnen, Gungahlin and Tuggeranong, says HTW.
This class of property comprises small office units ranging from 50 square metres to 200 square metres in units plan complexes.
An example being <a href="https://www.realcommercial.com.au/property-offices-act-griffith-502070558" target="_blank">Unit 1/22 Franklin Street Manuka</a> which sold in June 2017 for $276,000 with an area of 55 square metres showing $5,018 per square metre.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/07/13/HTWManuka.jpg" alt=""> 
Manuka is an inner south primary boutique shopping centre located within five minutes of the Parliamentary Triangle with a sought after office precinct. Unit 60 and 61/18 Flinders Way Manuka sold for $150,000, each being 55 square metres and 54 square metres respectively showing $2,727 per square metre and $2,777 per square metre and a yield of 7.5%. The units were leased and included two car spaces. 
Secondary locations include Deakin, Turner and Philip, an example being Unit 2/42 Geils Street, Deakin sold in April 2017 for $310,000 being a 83 square metre ground floor unit with a fitout in place. This showed $3,735 per square metre. Deakin is a secondary area occupied by medical and association tenants and private organisations. 
Owner-occupiers are dominating the market at present with access to finance and low interest rates providing the opportunity to purchase property via a superfund and obtain an asset for the future. 
The market performance is currently steady with values holding in most areas except Tuggeranong, where supply is higher than demand and some new mixed use developments are under construction.
"As we approach the later half of 2017 and beginning of 2018 the market should start to show signs of growth due to a number of Commonwealth Government lease deals coming to fruition and the opportunity for rental deals to provide some growth for the next few years," say HTW in the review. 
No new developments are due in the short term which will put pressure on the current space available. Until the mooted building projects re-commence there is no new space available in the ACT.
However, space is available in most areas at the lower end of the price range within the $250,000 to $500,000 range primarily in mixed use developments at ground and first floor levels, conclude HTW.
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Canberra's lower end of office market faces oversupply: HTW

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The office market continues to stay without a peak of market occupant, with Melbourne staying put along with three other cities at the approaching the peak position, similar to the previous update in April from valuation firm Herron Todd White.
However, the latest July office clock indicates that the list at the bottom of the market has swelled, with April occupants Adelaide, Darwin, Hobart, Burnie, Cairns, Devonport, Launceston, Townsville and Wide Bay joined by two capital cities, Brisbane and Perth.
<a href="https://www.propertyobserver.com.au/images/2017/07/10/HTWJulyOffice.jpg" target="_blank">Click to enlarge</a>
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Sydney remains a rising market, with an undersupply for office rentals relative to demand, according to the Office Market Indicators. 
Melbourne is a balanced market, though there is an oversupply of available property for rent. 
Brisbane and Perth are grappling with a large oversupply, which probably explains their bottom of market position.
<a href="https://www.propertyobserver.com.au/images/2017/07/10/HTWCapitalCityMarketIndicators.jpg" target="_blank">Click to enlarge</a>
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The April clock had NSW Far North Coast approaching the peak of market, but has dropped two notches since then to the start of recovery position.
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Melbourne, Gold Coast approaching peak of cycle for office market: HTW property clock

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Tenants upgrading to higher quality suburban and CBD office properties have vacated 40,000 sqm of office space across Western Australia’s suburban office markets in the past 12 months, according to a new report.
West Australian commercial property information firm Y Research’s latest, West Australian Suburban Office Report, shows that the 
Vacancy rate across Perth’s 50 suburban office markets have risen to 17.7% from 16.5% in November 2016, according to the June report.
A weak economy and increasing competition for office tenants, large and small, from office owners in the Perth CBD, West Perth and other suburban markets, are pressuring Western Australia’s suburban employment hubs, according to chief problem solver of Y Research, Damian Stone.
In the past six months, 11 suburbs recorded more than 1,000 sqm of negative net absorption including major markets, Northbridge, East Perth, Leederville, Fremantle and Midland. 
While relocations to the Perth CBD and suburban markets have played a role, the major driver of higher vacancies in the first half of 2017 continues to be downsizing with companies, such as the Sunday Times, Boral, NAB and the Water Corporation, vacating space in the last six months. 
Despite the higher headline vacancy rate, what is becoming increasingly evident is tenants’ flight to quality, said the report. 
“Improved affordability, in terms of market rents and leasing incentives, combined with increased choice due to recent office developments and the level of vacancy, is allowing tenants unprecedented choice of tenancy. 
“The flight to quality trend is highlighted by tenants upgrading from secondary spaces in their current suburb or relocating to a neighbouring market, typically within 5km.”
Retailer Bunnings’ move from industrial space in Welshpool to a portion of the recently completed A Grade building in Rivervale was the largest leasing transaction in the reporting period and also evidence of the flight to quality. 
Reinforcing the trend, infrastructure operator Brookfield Rail moved from Welshpool to Bravo at Perth Airport while aged care provider Bethanie Group shifted from Claremont to WorkZone in Northbridge. Residential developer Satterley moved from South Perth to Troode Street in City West.
This “flight to quality” is having two main impacts on Western Australia’s suburban office markets – either in terms of suburb or building, you are top of the market or not in the market for tenants, says the report.
With multiple choices for A Grade space in desirable suburbs such as Subiaco, Northbridge and Herdsman, there are limited or no tenants in the market for older, secondary properties in non-core locations with limited - amenity, public transport links and building services such as end of trip facilities. 
As a result, market rents for high quality spaces have stabilised in the past six months, while discounting continues across secondary properties and non-core locations. Secondary property owners unable to compete on building quality are using price to drive absorption. Asking prices under $100 per sqm are increasingly commonplace, it says.
“Ten years on from the peak of Perth’s office space crunch and the wave of decentralisation of tenants to the suburbs, the short-term challenges are mounting for Perth’s suburban office markets - continued competition from Perth CBD and West Perth owners, amenity short falls in major markets, vacant space in recently completed developments and potential space consolidation from suburban office markets’ main occupier, the State Government,” notes the report.
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