Welcome to The Debuilt Debrief. This week we are pleased to provide property analytics and an article from industry expert Kel Twite.

EXPERT COMMENTARY

Buddy Ross provided his view in his cartoon inspired by Kel’s assessment of the proposals.

NEWS SUMMARY

Residential Property

The improvement in the residential market was a common topic this week with numerous developers reporting on increased buyer interest.

The Age reported that Mirvac, Australia’s largest apartment developer, believes that Melbourne and Sydney’s markets have officially risen from the ‘bottom’. Despite a rising concern by buyers of potential quality issues with off-the-plan purchases, Mirvac has seen a significant rise in enquiries. CEO, Susan Lloyd-Hurwitz, believes this is an outcome of people flocking to ‘trustful’ companies. (Carolyn Cummins, 22/10/19 – Mirvac calls the bottom of residential housing market)

The Australian reported that Stockland is seeing similar outcomes, however believes that smaller developers will struggle with accessing finance. According to Stockland CEO, Mark Steinert, this may result in a housing shortage. (Ben Wilmont, 21/10/19 – Stockland chief executive Mark Steinert says housing shortage may emerge in every state)

The AFR elaborated on the projected housing shortage. It reported that Victoria and Queensland have dropped below the decade’s average construction rate for the first time in five years. (Michael Bleby, 23/10/19 - Concerns of housing shortage escalate)

The Urban Developer believes that easier access to finance and government incentives are driving Stockland’s success in its article Owner-Occupiers Solidify Stockland Results, Pipeline.

The Real Estate Conversation analysed CoreLogic’s auction data to provide a report on the current trends of residential prices; Auction volumes and clearance rates steady in capital cities.

Build-To-Rent

Build-to-rent projects continue to emerge in Australia as reported by the AFR on Friday. Developer PDG has released plans for its second build-to-rent multi-use development located in Kavanagh St, Southbank. (Nick Lenaghan, 24/10/19 - PDG eyes next build-to-rent project in Melbourne)

Construction Defects

Building defects continued to be of interest in the media, however the AFR has reported on a different faulty material, magnesite, a floor topping used in construction between 1960 and 1980.

It is reported that magnesite absorbs water, which dissolves chloride in the topping. This subsequently leeches into the concrete slab and corrodes the reinforcement over time. The article identified this as another crisis which could cost up to $100,000 per apartment to remediate. (Nila Sweeney, 23/10/19 – Magnesite floors may be a bigger problem than cladding)

Architecture & Design outline possible solutions to this issue in Magnesite floor repair – What are your options?

Commercial Property

Retail

The AFR reported that Victorian retail properties are attractive to investors due to their high yields. Auctions are producing excellent results, with an off-the-plan Woolworths in Abbotsford (Melbourne) selling for $4.68 million, with a yield of 4.93%. CBRE believes this to be the result of the low cost of debt and the low number of investment opportunities available earlier in 2019. (Nick Lenaghan, 21/10/19 – Yield-hungry investors dive into Victorian retail properties) 

Commo supported this position and identified other retail purchases indicative of a strong market in its article ‘Leongatha Woolies tops other prime assets in $33 million auction’.

On the flip side, The Australian reported that retail landlord Vicinity, owner of Melbourne’s Chadstone shopping centre, is not seeing such positive results, as investors are rattled by the negative impact of e-commerce. In response, it is attempting to boost its luxury goods exposure which it sees as more resilient to an uncertain economy and changing consumer shopping attitudes. (Ben Wilmont, 24/10/19 – Vicinty Centres in ‘luxury fightback’)

Offices

BIS Oxford Economics forecasted that Sydney’s peaking office-sector market will start to decline, according to The Australian. This could be the result of slow employment growth and increasing supply of offices in the CBD. This may cause some risks to surface for investors, according to BIS’ principal property economist Lee Walker. (Mackenzie Scott, 24/10/19 – BIS Oxford Economics: Golden years for offices at an end)

On the other hand, Commo explored investment research in Queensland, and its positive results, with its article Private investors dominate Gold Coast office market, says latest Colliers International research.

Finance & Economics

According to Credit Suisse’s 2019 report on global wealth, Australia’s average wealth per adult has fallen as a result of the slumping property prices and a depreciating dollar. The AFR calculated that this has resulted in 124,000 Australians’ ‘global millionaire’ statuses being revoked. It was the biggest decline of any country in the report. (Aleks Vickovich, 21/10/19 – Australia loses 124,000 millionaires due to dollar, property prices)

Australia was also the only country covered in the report where house prices fell by more than 2% over the past year, according to The Age. (David Scutt, 21/10/19 – Australia slides in global wealth rankings as 124,000 millionaires disappear)

The Urban Developer examines Credit Suisse’s report in ‘Housing Downtown Hits Australian Wealth: Credit Suisse’.

PROPERTY ANALYTICS

Our property analytics includes a simple collection of graphs that we update monthly. We find that it provides us with a high level dashboard to assist us in keeping track of a selection of key statistics.

Feel free to check out our selection of key market analytics:

ARCHITECTURE & DESIGN

Anthony Gibbon’s Twine house sparked our interest this week. The conceptual home mimics the landscape of rolling hills it is situated in. Read about it in dezeen’s article ‘Twine house is topped by a twisting continuous concrete slab’.

To learn more about Debuilt Property please visit www.debuilt.com.au or email either Paul: pabrahams@debuilt.com.au or Daniel: dburger@debuilt.com.au.

Contact us via phone at +61 3 9988 1929.

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