Sherpa Group is ramping up its investment in the southern Gold Coast by lodging a development application for Flourish Vivere, a new $350 million project in Coolangatta.

The move comes after the group’s $27 million acquisition of the 2,029 sqm site on the corner of Griffith and Warner Street, last year.

They will develop 194 apartments across a 26-storey tower, which will become Sherpa’s largest project to date.

Viveré will be the next chapter in the Flourish story, following closely behind Amargo, Oasis, and the Avenues in Palm Beach, as well as Symphony in Brisbane, all designed to deliver affordable housing in lifestyle-rich locations, giving locals a real chance to secure a residence close to the beachfront.

The HAL Architect-designed project will offer a diverse range of residences, from one-, two, and three- bedroom apartments to the premium Canopy range to luxury penthouses.

<img alt="Vivere" data-entity-type="file" data-entity-uuid="c85f5a7e-a22f-4745-8def-400adb3c0b35" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-15%20at%209.53.43%E2%80%AFAM.png?VersionId=OY.chur3BPExn1exQ2q8clHqWnW_CaBi" />

“The Gold Coast is undergoing a period of immense growth, with more people drawn to the incredible 
lifestyle that’s available, leading to strong growth in property prices,” said Christie Leet, founder of Sherpa 
Group.

“Our goal at Sherpa is to ensure locals are not priced out of the market in prime locations, which is why we 
created the Flourish collection.

“Flourish Vivere will form the next chapter in our portfolio, and we are so excited to be lodging the DA, marking our first project in Coolangatta.”

A signature of the Flourish developments is the communal rooftop. Flourish Vivere will showcase a private resident’s lounge, outdoor dining with barbecues and pizza ovens, heated pool, fully-equipped gym, and a wellness centre with sauna and steam room.

<img alt="Vivere" data-entity-type="file" data-entity-uuid="c09372cc-aae6-4458-af2e-f291bd19a5e5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-15%20at%209.53.49%E2%80%AFAM.png?VersionId=Sc_RLXl5jiff.tnadogXjQJ_WIpDjf3p" />

The project is strategically located to offer a walkable lifestyle, with the Strand shopping centre, cafes, restaurants, shops and the beach, all just a short stroll away.

“We have meticulously planned Vivere to build on the Flourish legacy, creating a truly special project,”&nbsp;Leet added.

“Wellness, lifestyle and community are at the forefront of every decision we make, and that has not 
changed for Vivere.”

With the DA now lodged with the Gold Coast City Council, Sherpa has moved quickly to secure LPS Group as the builder, offering buyers a level of certainty that is rarely seen in today’s market.

Sherpa has delivered 16 residential projects over the past seven years with a pipeline of $1 billion, with more under construction.

Joel Robinson

Sherpa takes Flourish brand to Coolangatta, lays plans for Flourish Vivere 

S&amp;S Projects is boosting its investment at Rainbow Bay to more than $1 billion after the prolific Gold Coast developer acquired a new site for $20.25 million and immediately laid plans for a new luxury apartment project in the sought-after precinct.

The site, which is the company’s fifth acquisition at Rainbow Bay in the past four years, will be home to the company’s largest project to date after delivering 3 sold-out projects and construction progresses on Radia worth a combined $215m. 
S&amp;S Projects is currently finalising plans for its latest strategic acquisition, a 1,518 sqm site located 209-213 Boundary Street in Coolangatta, with a development application expected to be lodged within weeks.

The luxury residential development will build on the company’s highly successful projects at Rainbow Bay, comprising Flow, Awaken, Esprit and Radia, with Radia currently under construction by Hutchinson Builders.

“We have been unflinching in our commitment to Rainbow Bay and the transformation we have helped drive in this incredible part of the Gold Coast, which is among the city’s most desirable residential locations,” said S&amp;S Projects founder and director Paul Gedoun.

“Our fifth project will reflect the best of what we have done so far to create a lifestyle precinct that is second to none.”

The latest development, which has yet to be named, is proposed to accommodate 88 luxury apartments in a design that will immerse residents in a unique wellness lifestyle that expands on the legacy of S&amp;S Project’s earlier developments at Rainbow Bay.

The development will feature an expansive rooftop garden and wellness centre with a resort- style pool, among a host of lifestyle amenities planned for residents.

“Rainbow Bay, with its beautiful, protected beach and alongside one of the world’s best surf breaks at Snapper Rocks, is the natural wellness heartland of the Gold Coast,” said Gedoun.

“We are taking every advantage to create a truly unique rooftop wellness experience with a natural feel for residents, offering stone features throughout and an underlying theme that emulates a botanical garden.”

The latest acquisition comes as S&amp;S Projects is at the completion of Esprit and construction continues on Radia, which are part of their significant portfolio undertaken by the company at Rainbow Bay since 2022.

The $215 million Radia, which comprises 38 apartments, is currently the flagship development by S&amp;S Projects at Rainbow Bay which is expected to be completed in 2027.

Jayde Pezet, of Pezet Matheson, which has managed sales and marketing for S&amp;S Projects across their Gold Coast portfolio, emphasised the developer’s commitment to continuous improvement and excellence.

“S&amp;S Projects continue to elevate the benchmark of luxury with each development," Pezet said.

“We have worked with S&amp;amp;S on their 4 other projects in Rainbow Bay and their approach reflects a team that is constantly learning, refining, and pushing the standard higher.

“Their hyper-local knowledge and deep expertise within the luxury property sector are what truly set them apart, allowing them to deliver projects that feel both globally sophisticated and authentically connected to their coastal environment”

S&amp;S Projects plans to officially launch its latest project at Rainbow Bay in the second half of this year.

“As we embark on our largest project yet, we have pulled out all stops to create another landmark development that truly reflects the relaxed southern Gold Coast lifestyle,” Gedoun added.

S&S buys $20m Rainbow Bay site for fifth beachside apartment project

Japandi, an emerging design trend that combines Scandinavian functionality with Japanese rustic minimalism, remains relatively untested in Australia’s residential development market.

As developers look to differentiate their projects and offer something distinct to buyers, Brisbane-based developer Lantona has embraced the hybrid style for its recently launched Toowong apartment project, <a href="https://www.apartments.com.au/new-apartments/koya-residences-6-josling-street-toowong-qld-4066">Koya Residences</a>, with early response to the design proving positive.

Lantona entrusted Red Door Architecture and interiors practice Luma Design Co with delivering the Japandi brief. The approach blends Japanese minimalism with Scandinavian functionality, emphasising warm, restrained interiors, natural materials and clean lines. Drawing on the Japanese concept of wabi-sabi (beauty in imperfection) and the Scandinavian principle of hygge (comfort and cosiness), it creates serene, uncluttered and sustainable living environments.

These design principles are expressed throughout the Josling Street development, both in its exterior form and across the 40 one-, two- and three-bedroom residences within.

[smartcode_project:default project_id=150787 project_image_fid=366229]

Koya reflects a deliberately scaled approach, with the five-storey form designed to align with the surrounding residential streetscape rather than dominate it.

“Koya is conceived as a building that sits comfortably within its surroundings. Every decision, from material selection to spatial planning, has been guided by long-term liveability and enduring relevance,” the developer said.

[smartcode_project:default project_id=150787 project_image_fid=366243]

Positioned within an established inner-west neighbourhood, the development sits near riverfront parklands and the Bicentennial Bikeway, while remaining within walking distance of Toowong Village and multiple public transport options connecting to the CBD, St Lucia and West End.

Lantona said the location was central to the project’s conception, pointing to Toowong’s balance of green space, transport access and proximity to major education institutions.

“<a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> combines river access, walkability, immediate CBD connection and a strong educational presence. That balance made it the obvious setting for Koya.”

[smartcode_project:default project_id=150787 project_image_fid=366230]

Communal amenity is concentrated on the rooftop, where a shared retreat will include a pool, dining areas and outdoor spaces oriented towards neighbourhood and city views. The design allows for both private use and small gatherings, extending the living environment beyond individual apartments.

Koya enters the market at a time when smaller-scale developments are becoming less common in established suburbs, with many recent projects in the suburb shooting for the sky.

In a nod of confidence,&nbsp;<a href="https://www.apartments.com.au/builders/brisbane-builders">Brisbane Builders</a>&nbsp;has already commenced construction on the building, which is slated for completion in early 2027. Keenan &amp; Byrne is marketing Koya.

[smartcode_project_cta:default project_id=150787]

Japandi-inspired Koya Residences launch in Toowong

<section data-scroll-anchor="false" data-testid="conversation-turn-6" data-turn="assistant" data-turn-id="request-WEB:ca872054-bfe3-4cc5-a2c8-b373d4dfeafb-2" dir="auto">
A completed Castle Hill apartment development is returning to market with an uncommon level of financial backing, positioning it as one of the more secure options for buyers in Sydney’s north-west.

Skyview in Castle Hill, originally developed by Top Place and now overseen by capital partner <a href="https://www.apartments.com.au/developers/equitifund-group">Equitifund</a>, is being relaunched following a full remediation process. Central to its repositioning is a substantial financial reserve designed to provide ongoing protection and reduce uncertainty for incoming purchasers.

At the core of this offering is an $11 million bond secured during the project’s remediation phase, negotiated by former NSW Building Commissioner David Chandler. With less than $4 million required to complete the works, approximately $7.2 million remains in reserve, with around 15 years left on the term.

[smartcode_project:default project_id=147685 project_image_fid=359134]

Rather than a typical insurance-backed structure, the remaining funds are held as cash, creating a readily accessible financial buffer should any future building issues arise. The structure is intended to provide buyers with an added layer of certainty, differentiating the development from more conventional apartment offerings.

Equitifund Executive Chairman Greg Huxley said the structure provides a level of security not typically seen in apartment developments.

“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.”

[smartcode_project:default project_id=147685 project_image_fid=359135]

The remediation process has now been completed in full, with no active rectification orders or outstanding directives linked to the project on NSW Government registers. This outcome reflects the broader tightening of building oversight across the state, while also highlighting the project’s transition into a completed, compliant asset.

In a market where many buyers remain cautious about apartment quality, initiatives like this are designed to restore confidence, giving purchasers greater certainty and a stronger sense of security in their investment.

Equitifund has since acquired the remaining apartments and is managing their reintroduction to the market. With the works finalised and a significant financial reserve in place, the project now presents with a markedly different risk profile compared to its initial release.

[smartcode_project:default project_id=147685 project_image_fid=359137]

Beyond the added security, the development is positioned in one of Castle Hill’s more established pockets. The Gay Street address places it within close proximity to Castle Towers, one of the country’s largest retail centres, as well as Castle Hill Metro Station, which now connects directly to the broader Sydney Metro network.

Equitifund National Sales Director Ben Hamblett said buyer demand in the area continues to be driven by access to transport and amenity.

“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.”

[smartcode_project:default project_id=147685 project_image_fid=359145]

The apartments also enter the market at a relatively accessible price point for the area, with two-bedroom configurations starting from $995,000 and rental demand for similar stock reaching around $900 per week. This combination of pricing, connectivity, and completed status is expected to appeal to both owner-occupiers and investors seeking lower-risk entry into the Hills District apartment market.

For eligible buyers, a limited 3.50 per cent p.a. two-year fixed interest rate is currently available through Equitifund’s lending partners, providing an additional layer of affordability.

EquitiCredit Pty Ltd ACN 676 363 769 holds ACL 559289 and provides credit assistance. Finance is arranged through EquitiCredit and funded by its lending partners. Interest rates are subject to change and eligibility criteria apply. Terms, conditions, fees and charges may apply. This is not financial advice and should not be relied upon as such. Prospective buyers should seek independent financial advice.

[smartcode_project_cta:default project_id=147685]
</section>

Castle Hill apartments offering unmatched buyer protection through dedicated fund

A State-Assessed Rezoning Proposal for the Kurnell Peninsula is now on public exhibition, setting out a plan to deliver up to 4,300 homes alongside new retail, tourism and public open space on a 210-hectare coastal site.

The proposal, backed by the Minns Labor Government, would transform a former sand mining area along Captain Cook Drive into a mixed-use precinct delivered over approximately 20 years.

In addition to housing, the plan includes more than 7,000 sqm of retail and commercial space, new community facilities and approximately 116 hectares of open space, equating to more than half the site.

<img alt="Kurnell" data-entity-type="file" data-entity-uuid="ce1c6567-1df0-4de0-9fe5-a76be0367834" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-13%20at%209.11.51%E2%80%AFAM_0.png?VersionId=dbbTmYaJvROA5fkQbgaxis8cmFwtpB5_" />

<hr data-end="849" data-start="846" />
<h2 data-end="902" data-section-id="ony3l3" data-start="851">Rezoning framework enables mixed-use development</h2>

The rezoning application seeks to amend planning controls under the State Environmental Planning Policy (Precincts—Central River City) and the Sutherland Shire Local Environmental Plan 2015.

Its primary objective is to enable a broader range of land uses across the site, including residential, employment, tourism and community uses, while also formalising environmental protections and land management outcomes .

The proposal has progressed through the state-led rezoning pathway after being identified as a project of regional significance, supported by several years of technical studies and agency consultation .

Development would occur in stages, aligned with the progressive closure and remediation of the existing sand mine.

<hr data-end="1718" data-start="1715" />
<h2 data-end="1768" data-section-id="krwii9" data-start="1720">Master plan structured around three precincts</h2>

The accompanying urban design report outlines an indicative master plan that divides the site into three primary precincts, anchored by a town centre in the western portion of the site.

The town centre is planned as the first stage of development, located on land that has already been remediated. It is intended to accommodate higher-density housing, retail, and community uses.

<img alt="Kurnell" data-entity-type="file" data-entity-uuid="4bfd5873-4847-4105-b220-0a30c96f5573" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-13%20at%209.20.09%E2%80%AFAM.png?VersionId=7aVaSsZLAc6mElSH4g6Ct5bGsNxZcnPL" />

Additional precincts extend toward Bate Bay and Boat Harbour, with built form responding to environmental conditions and proximity to the coastline.

The design framework identifies distinct local character areas, with the master plan structured to reflect “unique natural qualities” across the site.

<hr data-end="2495" data-start="2492" />
<h2 data-end="2544" data-section-id="1vitwqn" data-start="2497">Open space forms core of the design approach</h2>

A key component of the proposal is the allocation of approximately 116 hectares to open space and ecological land.

This includes:

<ul data-end="2846" data-start="2678">
	<li data-end="2702" data-section-id="d96caj" data-start="2678">Three district parks</li>
	<li data-end="2723" data-section-id="17y6uz6" data-start="2703">Nine local parks</li>
	<li data-end="2741" data-section-id="14hui00" data-start="2724">Sports fields</li>
	<li data-end="2778" data-section-id="ts7psx" data-start="2742">Coastal and ecological corridors</li>
	<li data-end="2846" data-section-id="agduax" data-start="2779">Two kilometres of publicly accessible beachfront along Bate Bay</li>
</ul>

The urban design report positions this open space network as central to the structure of the development, rather than ancillary to it.

It is intended to support ecological regeneration, provide recreational amenity and create a connected network across the peninsula.

The plan includes north–south ecological corridors, expanded wetland systems and pedestrian and cycling links designed to connect residential areas to the coastline and open space areas .

<hr data-end="3347" data-start="3344" />
<h2 data-end="3381" data-section-id="ql66rt" data-start="3349">Housing mix and affordability</h2>

The proposal includes approximately 4,300 dwellings across a range of housing types.

This includes high-density apartments, medium-density housing, townhouses and seniors housing.

Affordable housing provision is identified at approximately 240 dwellings, alongside a smaller component of social housing.

The master plan emphasises housing diversity, with the intent of accommodating a range of household types and age groups within the development.

<img alt="Kurnell" data-entity-type="file" data-entity-uuid="d4baba4d-b5b0-4a86-bcad-5d319b036184" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-13%20at%209.11.59%E2%80%AFAM.png?VersionId=udYFz0q8tjEPR3pmKLHRSFRJN4dKakPO" />

<hr data-end="3877" data-start="3874" />
<h2 data-end="3919" data-section-id="rgckdv" data-start="3879">Built form controls and height limits</h2>

Proposed building heights across the site range from three to 12 storeys.

These controls are set out within the rezoning application and are intended to manage visual impact, maintain view corridors and ensure compatibility with the coastal landscape.

Floor space ratios and height limits are applied across different parts of the site to reflect varying environmental conditions and proximity to open space and the coastline .

Higher density is generally concentrated within the town centre, with lower-scale development toward the coastal edge and environmentally sensitive areas.

<hr data-end="4548" data-start="4545" />
<h2 data-end="4588" data-section-id="1minlda" data-start="4550">Retail, tourism and employment uses</h2>

In addition to residential development, the proposal includes retail, commercial and tourism uses.

This includes:

<ul data-end="4896" data-start="4706">
	<li data-end="4775" data-section-id="1jrun76" data-start="4706">Approximately 7,000–9,800sqm of retail and commercial floor space</li>
	<li data-end="4803" data-section-id="10kyifw" data-start="4776">A full-line supermarket</li>
	<li data-end="4830" data-section-id="fz1hdg" data-start="4804">Food and beverage uses</li>
	<li data-end="4896" data-section-id="1aqg2fj" data-start="4831">Tourism accommodation, including hotel and short-stay options</li>
</ul>

The proposal also identifies employment outcomes, with the development expected to support jobs both during construction and in ongoing operations.

These uses are concentrated within the town centre and key activity areas across the site.

<hr data-end="5142" data-start="5139" />
<h2 data-end="5172" data-section-id="162x2kt" data-start="5144">Infrastructure and access</h2>

The proposal includes upgrades to Captain Cook Drive, which provides the primary access to the peninsula.

These upgrades are intended to improve traffic flow and support emergency access.

The transport strategy also incorporates:

<ul data-end="5529" data-start="5407">
	<li data-end="5433" data-section-id="fanquy" data-start="5407">Internal road networks</li>
	<li data-end="5469" data-section-id="o6y80y" data-start="5434">Walking and cycling connections</li>
	<li data-end="5529" data-section-id="jgraft" data-start="5470">Proposed public transport routes and bus stop locations</li>
</ul>

The rezoning report includes detailed analysis of transport, flooding, and infrastructure requirements to support the staged development of the site .

<hr data-end="5723" data-start="5720" />
<h2 data-end="5769" data-section-id="14urh3" data-start="5725">Environmental and cultural considerations</h2>

The site is identified as having environmental and cultural significance, including areas of ecological value and Aboriginal archaeological sensitivity.

The proposal includes measures to protect and enhance these areas, including:

<ul data-end="6230" data-start="6004">
	<li data-end="6056" data-section-id="1pzyouo" data-start="6004">Retention and regeneration of coastal vegetation</li>
	<li data-end="6100" data-section-id="bjn2vz" data-start="6057">Strengthening of biodiversity corridors</li>
	<li data-end="6148" data-section-id="1bpeyoj" data-start="6101">Protection of riparian systems and wetlands</li>
	<li data-end="6230" data-section-id="lg0cka" data-start="6149">Integration of cultural interpretation and recognition of Indigenous heritage</li>
</ul>

The urban design report also outlines opportunities for incorporating Indigenous cultural elements into public spaces and landscape design.

<hr data-end="6893" data-start="6890" />
<h2 data-end="6908" data-section-id="w7rk5f" data-start="6895">Next steps</h2>

The proposal is currently on public exhibition, with submissions open to the community. Feedback received during this period will inform the Department of Planning’s assessment of the rezoning.

If approved, the rezoning would establish the planning framework for future development applications across the site.

<hr data-end="6893" data-start="6890" />
<h2 data-end="6908" data-section-id="w7rk5f" data-start="6895">What the NSW Government says</h2>

Minister for Planning and Public Spaces Paul Scully said the planned closure of the sand mine and remediation of the Kurnell Peninsula presents an exciting opportunity to transform the area.

“This proposal envisions a vibrant new beachfront community with thousands of new homes, jobs and great open space in the Sutherland Shire. I encourage the community to have their say during the public exhibition period. Feedback from the community will play an important role in the assessment of the proposal.”

Sydney's newest beachfront city: NSW Gov to unlock 4,300 new homes on Kurnell peninsula

Yields

<html><body>
GUEST OBSERVER 
It’s hard to argue that the search for yield has gone too far given how low bond yields are. A range of assets still provide much better yields than cash and bonds.
However, bond yields are likely to gradually trend higher helped by stronger global growth, a gradual rise in global inflation and the Fed moving to reduce its bond holdings. This suggests the search for yield will slowly start to wane and the risk of a reversal down the track will gradually rise.
That the Fed can move to start reversing its post Global Financial Crisis (GFC) quantitative easing is another sign the US and global economy is getting back to normal after the GFC. This is good for investors.
Introduction
For some time now, the investment world has been characterised by a search for decent yield paying investments. This “search for yield” actually started last decade but was interrupted by the Global Financial Crisis (GFC) and the Eurozone debt crisis before resuming again in earnest.
When investment assets are in strong demand from investors, their price goes up relative to the cash flow (eg dividends, interest or rent) they provide pushing their yield down. This is evident in recent times in response to the “search for yield” with yields falling across the board as the next chart shows. 
<a href="https://www.propertyobserver.com.au/images/2017/09/28/Screen%20Shot%202017-09-28%20at%2011.45.14%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/28/Screen%20Shot%202017-09-28%20at%2011.45.14%20AM.png" alt="">
But everything goes in cycles. So has the "search for yield" gone too far? Will the US Federal Reserve’s shift to start reducing its bond holdings cause a reversal?
Drivers of the search for yield
Interest in yield based investing is not new and is in fact a normal part of investing. Particularly when investors are a bit wary about going for growth. In fact, in Japan it’s become pretty much the norm as interest rates have been stuck at zero for years. In the 1950s, yield focussed investing was the norm in the US and Australia.
The search for yield also became apparent last decade and played a role in the GFC itself (as investors piled into yield based investments underpinned by "sub-prime" mortgages, oblivious of the risks). There are three main drivers of the “search for yield” in recent years:
First, low interest rates and bond yields and the flow on to bank deposit rates due to low inflation and sub-par growth have encouraged investors to search for higher yielding investments. Central banks buying up bonds and displacing investors into other assets have accentuated this.
Second, reduced fear of economic meltdown (as the GFC and subsequently the Eurozone public debt crisis subsided) has helped investors feel comfortable in taking on the greater risk that this entails.
Finally, aging populations in developed countries is seeing baby boomers move into pre-retirement and retirement, driving a demand for less volatile investments paying income.
Normally, this demand would go to bonds and bank deposits but as their yields are so low some of this demand has gone into other yield paying investments.  
Demand for yield from aging populations has further to go as populations age.
For example, in Australia the share of the population aged 65 and over is projected to rise from 15% now to 22% by 2061. However, the second driver is cyclical and will reverse next time there is a sustained bout of risk aversion – just as it did in the GFC.  
The first driver is a mix of structural and cyclical influences, though, and it’s probably been the main driver of the search for yield. Bond yields and interest rates have been trending down for 30 years or so and this is structural reflecting a downtrend in inflation, which resulted in a long-term super cycle bull market in bonds. But falls this decade also contain a big cyclical element reflecting the sub-par global growth and deflation seen after the GFC.
This accentuated the super cycle bull market in bonds and put the search for yield on steroids. This is where the greatest risk of a reversal in the search for yield trade lies.  The logic of falling yields  The search for yield is understandable and can be seen in relation to Australian commercial property ie office, retail and industrial property.
The next chart shows average commercial property yields and 10-year bond yields. While average commercial property yields have fallen since the early 1980s from an average of 8.3% to around 5.5%, the yield on bonds has crashed. The longer the decline in bond yields has persisted, the more investors have expected it to continue, driving rising demand for higher yielding assets like property. 
<a href="https://www.propertyobserver.com.au/images/2017/09/28/Screen%20Shot%202017-09-28%20at%2011.46.51%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/28/Screen%20Shot%202017-09-28%20at%2011.46.51%20AM.png" alt="">
With Australian 10-year bonds yielding 2.8%, it’s little wonder investors might find commercial property on an average yield of around 5.5% more attractive particularly once capital growth of, say, 2.5% pa (ie inflation) for a total return of 8%, is allowed for. The property risk premium – the return potential property provides over bonds – at 5.2% remains high &amp; well above early 1990s and pre-GFC levels that caused problems for property. 
<a href="https://www.propertyobserver.com.au/images/2017/09/28/Screen%20Shot%202017-09-28%20at%2011.48.05%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/28/Screen%20Shot%202017-09-28%20at%2011.48.05%20AM.png" alt="">
The same logic applies to investment in assets such as unlisted infrastructure, listed variants of both commercial property and infrastructure, shares and corporate debt.
But are we getting close to a reversal?
Has it gone too far? The greatest risks are around corporate debt where the gap between US investment grade and junk bond yields and US government bond yields has narrowed sharply to around levels that prevailed prior to the tech wreck and again prior to the GFC. But as we saw in the mid-1990s and mid-2000s, spreads can remain low for a while before trouble arises, which is usually when the economy turns down and there is no sign of that just yet.
For equities the gap between the forward earnings yield on shares and bond yields has narrowed in recent years. But this gap – which is a guide to the risk premium shares offer over bonds – still remains relatively wide by pre GFC standards. 
<a href="https://www.propertyobserver.com.au/images/2017/09/28/Screen%20Shot%202017-09-28%20at%2011.49.36%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/28/Screen%20Shot%202017-09-28%20at%2011.49.36%20AM.png" alt="">
And finally for real assets, using commercial property as a guide, as indicated earlier the risk premium offered by commercial property relative to bonds remains wide, albeit it 
has narrowed as property yields have fallen and bond yields have risen (a bit). Overall, it’s hard to argue the search for yield has gone too far given how low bond yields still are. That said, corrections like what we saw in shares and corporate debt during 2015-16 are healthy in ensuring this remains the case.
But what about the risk of an upswing in bond yields, particularly with the Fed moving to quantitative tightening? This is the biggest risk and our view is that the super cycle bull market in bonds is over. There are several reason for this:
  First, global growth is looking stronger as evident in strong business conditions indicators across most countries. Global growth is improving and becoming more synchronised globally. Nearly 75% of the 45 countries tracked by the OECD are seeing accelerating growth, the highest it’s been since the initial bounce out of the GFC in 2010.
  Part of the reason for this is that the “muscle memory” from the GFC, which commenced a decade ago, is fading and this is contributing to stronger confidence.
  The risk of deflation is receding and giving way to the risk of a rise in inflation as capital and labour utilisation is on the rise globally &amp; productivity growth is poor, reflecting: low levels of investment; increasing levels of populist regulation in some countries; and as older workers retire. While the impact of technological innovation (the Amazon effect, artificial intelligence) will keep this gradual there will still be a cycle in inflation and the risks are gradually pointing up.
  Reflecting this, central banks are gradually retreating from ultra easy policy
. The Fed is the most advanced here as the US economic recovery is further advanced. As a result, the Fed is moving towards allowing its holding of government bonds and mortgage-backed securities to start declining.
This will be achieved by the Fed not rolling over (ie not reinvesting) the bonds on its books as they mature so it won’t be as dramatic as actually selling bonds. But its holding of bonds will nevertheless decline and it will be sucking cash out of the US economy. In other words, it will be undertaking “quantitative tightening” to reverse the “quantitative easing” of a few years ago.
This is good news and reflects the strength of the US economy much as its commencement of rate hikes did in 2015. Nevertheless, combined with continuing gradual Fed rate hikes, it will likely see a resumption of the upwards pressure on bond yields acting as a gradual dampener on the search for yield .
The upswing in bond yields is likely to be gradual – with periodic spurts higher then fall backs like over the last year – as the Fed will likely be gradual, other central banks including the Reserve Bank of Australia are well behind the Fed in being able to tighten and yield focussed demand from aging populations will act as a constraint. But the trend in bond yields is likely to be up unless there is an unexpected relapse in global growth.
 What does it all mean for investors?
 There are several implications for investors: expect lower returns from government bonds as yields gradually rise; the search for yield likely has further to go in relation to commercial property and infrastructure but it is likely to wane as bond yields rise; share markets are now more dependent on earnings growth for future gains (and the signs are positive) but cyclical sectors geared to higher earnings will likely be the outperformers and yield plays may be underperformers.
That the Fed is moving to start reversing its post-GFC quantitative easing (money printing) is another sign the global economy is getting back to normal. This is good for investors.
 <a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author" target="_blank">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home" target="_blank">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
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soliver-smf6LQXgW9

Where are we in the search for yield? Shane Oliver

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The thriving student accommodation market doesn’t seem to be popular with lenders despite top yields.
Student apartments around major universities and colleges regularly generate 8 per cent yields, or twice the return of most short-term savings products, according to agents specialising in student property. But with most major banks blacklisting inner-city high-rises and tightening criteria for investors, purpose-built student apartment values are continuing to fall.
Stephen Fitzsimon, head of business development for Melbourne Real Estate, which rents more than 1,000 apartments in Melbourne's CBD, told The Australian Financial Review that the price of a small apartment purchased about a decade back had dropped by about 10 per cent to $210,000.
Fitzsimon said demand for accommodation from overseas students (particularly from China and India) is "off the charts" and "continues on an upwards trajectory".
More than 170 groups of students recently registered to view a one-bedroom apartment in Melbourne's CBD that was renting for about $430 a week, he said. 
"These apartments are yielding through their teeth.”
Rental activity will pick up further as the start of the second academic semester nears.
But lenders are reluctant to lend to investors, the AFR reported.
Lending to investors must be capped at 10 per cent annual growth, says APRA.
"If the banks changed their lending policy to allow normal mums and dads to buy, prices would go up because the yields are so strong."
Student apartments are popular with cashed-up self managed superannuation fund (SMSF) investors and retirees looking for yield. 
Overseas buyers are holding on to the apartments because capital losses have been offset by the rising Australian dollar. They are also used to offshore assets, particularly Chinese investors.
The gap between student numbers and student accommodation is rising.
In Melbourne, it is more than 84,000, according to JLL, while in Sydney it is about 43,000 and in Brisbane – excluding the Gold Coast – more than 18,000.
The gap reflects the underlying demand.
Savills' director of student accommodation Conal Newland said the ratio of purpose-built student accommodation in Sydney, Melbourne and Brisbane is about one bedroom for every 10 students, compared with more than two and a half bedrooms for each student in more established markets like London.
Overseas students in Australia are expected to increase to between seven and eight million in the next eight years from about 4.5 million now. 
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Student units earn top yields, but lenders' reluctance pushes prices lower  

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<img src="https://counter.theconversation.edu.au/content/68979/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
For the past three decades the yields on long-term bonds have been on a downward trend. This has dramatically reversed since the election of Donald Trump, with more than a trillion dollars wiped off the global bond market in the past week and a half.
But it’s not just investors that are impacted by this spectacular reversal. The bond market is a backbone of the global financial system, meaning the sell off has implications far and wide, from economic growth through to real estate prices. 
<h2>What’s happening in bond markets</h2>
Bonds are a type of long-term debt - companies and governments sell bonds to investors and these will in turn be bought and sold on the bond markets. 
The thing to look at with bonds is the market price, which is reflected in the yield quoted or price paid when a bond is bought and sold. Investors in bonds receive their returns in regular interest payments and the return of principal when the bond matures. 
As the price of the bond rises, the yield will drop. With the price of bonds steadily rising during the 30 year bull market, yields have fallen away significantly, bringing down the interest rates around the world.
<a href="/images/2016/11/21/image-20161117-19371-72i9pu.png" target="_blank">Click to enlarge</a>
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US 10 Yr Treasury Yield. 
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<h2>Why we pay attention to the bond market</h2>
The price of bonds filters through into the rest of the economy. This is because government bonds are considered relatively risk free, and so act as a benchmark for pricing (relatively more risky) securities in all other markets. 
A company’s shares, for example, are expected to yield the risk-free rate (what a government bond would yield) plus an additional amount to compensate investors for their riskiness - called the “equity risk premium”. Investment in corporate bonds can be expected to yield the risk-free rate plus a premium for taking on the added default risk. 
The US bond market is especially important, as it is the largest and its prices act as a benchmark for interest rates globally. Rising bond yields in the US signal a number of things - higher expected inflation from the touted tax cuts and higher spending, and the need to borrow to fund this expansion. All of this puts further downward pressure on bond prices and upward pressure on interest rates, increasing yields. 
Overall, bond prices serve as a “barometer” of what the market is “thinking”. Especially what it thinks will happen in the future, as the relation between long term interest rates and short term interest rates has a mechanical effect on future interest rates. 
<h2>What this could mean</h2>
The sudden increase in bond yields, most notably the 10 Year US Government bond yields, has broad implications for the economy.
Mortgage rates are tied to the 10 year bond yield, for example, meaning borrowers will need to pay more for housing loans. This won’t happen overnight and we will have to wait to see the long-term effect on real estate prices.
But taking in past history, here are a range of possibilities from the end of the bull market.
First, when long-term interest rates are higher than short-term interest rates, the market expects interest rates in the future to be higher. This suggests that this market sell off isn’t an aberration, we can expect higher yields and lower bond prices in the future, and this trend will continue.
Second, long-term bond yields generally reflect an economy’s long-term real growth rate plus a premium for inflation. Inflation measures around the globe have been quite low and central banks have struggled to reach their inflation targets. Rising bond yields could mean the growth starts to tick up.
Third, there will be more uncertainty in global markets until the implications of a Trump presidency are known. Investors will expect a greater return to investment in US government bonds because of this heightened uncertainty. So yields on long-term US Treasuries are likely to stay up and even increase further in the foreseeable future. But even so interest rates are still low by historical standards.
Fourth, new borrowing for housing will be more costly. The risk of rising interest rates on existing mortgages has been mostly shifted elsewhere in the US economy. Let’s hope that the institutions or individuals holding that risk fare better than the institutions which collapsed during the savings and loans crisis in the US in the late 1980s.
Fifth, this is a permanent change in the nature of global interest rates. Rising bond yields could push up interest rates. Australia’s Reserve Bank Governor Phillip Lowe has signalled no further interest rate cuts unless inflation drops well below its current 1.5 percent level.
Christine Brown is professor and head of the Department of Banking and Finance, Monash University and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/christine-brown-316660" target="_blank">here</a>.
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jchancellor-FAypfDUnLy

If the ‘bond market rout’ continues it could impact home prices

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GUEST OBSERVER
“Record low interest rates”. This seems to be the headline of the year, having been used so many times it is hard to remember any other kind of interest rate. Each time we see this, expectations for another rate cut decrease momentarily, only to return to the same, pre-cut probability-levels after a few weeks. 
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Figure 1 paints a clear picture of a similar short-term outlook, yet weakening long-term expectations.
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While this graph does not include data since the rate cut (yields on 10 year treasuries have lifted a whopping 0.03 percent since the July levels shown in Figure 2), we can see almost identical movements at each maturity date from May to June and from June to July.
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Yields on 3 year bonds are down 0.05 percent, 5 year bonds are down 0.1 percent and 10 year bonds are down 0.2 percent. 
This is almost a textbook example of yield curve inversion. In fact, yields on 90 day treasury bills in June were identical to those on 10 year bonds at 1.93 percent. 
Other than perhaps transaction costs, there is no reason for an investor to take on the extra risk of longer term securities without any increase in expected return. 
The RBA had little choice but to cut rates again. 
Figure 2 shows a similar picture, with greater inversion in the short and medium-term (up until about 2022) and lower yields on long- term maturities. 
This is a dangerous combination. 
An interest rate cut effectively lowers the short-term cash rate (i.e. 90 day yield), which normalises (steepens) the yield curve.
In theory, this stimulates the economy by making borrowing cheaper and incentivising banks to borrow at the short-term rate and lend out at the higher long-term rate. If the curve continues to flatten out (as it did since the last rate cut in May) then this impact is almost entirely negated. Like a see-saw, rates will continue to decrease until long-term expectations increase or at least stabilise. 
For more information, <a href="https://secretagent.com.au/" target="_blank">click here</a>.
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Rates will continue to decrease: Secret Agent 

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Adelaide's weekend clearance rate sat in equal second place at 70 percent, according to CoreLogic RP Data.
The nation's cheapest sale was in Adelaide's Rostrevor.
The one bedroom <a href="https://www.realestate.com.au/property-unit-sa-rostrevor-122565842" target="_blank">Radnor Avenue villa</a> offering fetched $209,000. It had sold at $166,500 in 2008. It was a $235 a week rental, so reflected a 5.8% gross yield.
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5.8 percent yield in weekend's cheapest auction result 

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The Victorian town of Cobram tops CoreLogic RP Data's latest list for median gross yields for units at 7 percent.
Its yield sits considerably higher than the national average of 4.63 percent.
<a href="/images/2016/05/13/Screen%20Shot%202016-05-15%20at%208.36.12%20AM.png" target="_blank">Click to enlarge</a>
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Property Observer profiles Cobram from a rental perspective.
The median sale price of a unit in Cobram was $170,000, compared with a national average of $438,000, over the last 12 months, according to the data. 
The median price change over one year was 5.26 percent.
Median rent for units was $230pw in Cobram against a national average of $390.
Property Observer looked up a few units around the median range available for renting around the median for Cobram on www.realestate.com.au.
 <img src="/images/2016/05/17/main.jpg" alt="" width="644" height="483">
1. A two-bedroom unit at <a href="https://www.realestate.com.au/property-apartment-vic-cobram-418414534">2/91 High Street Cobram Vic 3644</a> is available for $210 per week. Last traded price $110,000 in 1992, according to CoreLogic RP Data.
<img src="/images/2016/05/17/main-1.jpg" alt="">
2. A two-bedroom unit at <a href="https://www.realestate.com.au/property-apartment-vic-cobram-418414454">5/69 Campbell Road Cobram</a> is available for a rent of $240 per week.
 
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prateek24-ezbwHMbNAk

Victoria's Cobram tops rental yields for units: CoreLogic RP Data

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A new report suggests retail property prices will be built up by investors due to tightening yields, improved consumer sentiment and other asset classes not providing the same stability.
The LJ Hooker Commercial Retail Market Monitor said the value of retail transactions dropped in 2014-15, with the downturn attributed to the lack of available stock, with regional centres hit the hardest.
“Investment transaction activity was a little subdued in the first half of 2015, constrained in dollar terms by the low level of stock available,’’ he said.
“Regional centres have been consolidated on the back of improved retail spending.
"Queensland’s capital and secondary markets experienced a halving of retail turnover from 5.3% in 2013 to 2.5% in July this year.
“But we’re expecting a considerable turn-around for Queensland eclipsed, not surprisingly, only by Sydney and New South Wales over the next two years."
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Tight yields to drive retail property investors

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Capital city rental yields nationwide are lowest in Melbourne and highest in Darwin, according to CoreLogic RP Data, who found Melbourne rental yields at 3% and Darwin at 5.7%.
Unit yields are lowest in Melbourne (4.1%) and highest in Darwin and Brisbane at 5.5%.
Hobart and Canberra are the only two cities where house gross rental yields are steady. 
 
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