WA has every reason to be feeling confident

Samantha Reece, PropertyESP Director recently spoke at the Perth Property Expo about why the West was the best investment option nationwide.

In preparation for her dialogue, Samantha undertook her usual research and found some very interesting facts:

  • In the 2016/17 year iron ore revenue from WA increased by 31% to $67.3 billion
  • In the same period gold broke the 200 mark, which hasn’t occurred since 2000/2001 – selling 205 tonnes
  • Tourism grew by 1.3%
  • Building approvals increased by 27% from just August to September 2017
  • Unemployment rate fell to 5.7% on par with the nations average
  • Consumer confidence has reached an all-time three year high
  • And 30% of the population believed that the economy would strengthen in the next year while 41% believed it would stay the same

This coupled with the avalanche of new infrastructure, about to descend upon Perth including:

  • $65 million Yagan Square
  • $400 million redevelopment of QV1, Forrest Chase and Raine Square
  • $1.6 billion Perth stadium
  • $500 million Canning City Centre and Carousel expansion
  • $2.65 billion Metronet
  • $200 million Murdoch medical precinct
  • $235 million Canning Hwy/Bridge redevelopment

And there is no doubt that that Perth is about to transform from a City, into a cosmopolitan capital.

Certainly in ten years Perth will be entirely different City and its evolution will create more opportunity and diversity.

We however, need to be aware of just how much WA has got going in its favour – and while it can not compare to the 2011 boom time – it is certainly showing signs that are extremely positive – and it is this good news, that we should be celebrating publicly! Spread the word!

 

 

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Appetite for change is on the horizon

PropertyESP recently attended the Perth Cities Summit co-ordinated by John Carey Member for Perth.  With over 350 people in attendance, everyone was seated randomly and provided with 35 ideas that had been derived from the previous workshops hosted in Northbridge, East Perth and West Perth.

These ideas included a variety of themes which aligned with PropertyESP’s agenda including:

  • Revitalise Heirisson Island as an indigenous cultural hub
  • Create Renew Perth to activate vacant properties
  • Ensure a full year long events and activation plan for the City
  • Establish the role of Night Czar or Mayor to drive night time economy
  • Facilitate the construction of a cable car from Elizabeth Quay to Kings Park
  • Cut red tape around use of the Swan River to create more life and vibrancy
  • Establish Perth as a canopy city
  • Abolish al fresco and street activation fees for small business

However at the end of the session the top five areas which the attendees chose included:

  • Partner with Noongar people to recognise indigenous culture and history in the City (33%)
  • Establish Perth as a canopy city (21%)
  • Create Renew Perth to activate vacant properties (19%)
  • Set an ambitious population target backed by innovative planning (17.8%)
  • Establish Perth with clear community precincts backed with precinct planning (9.2%)

While the final results have not been released – it was clear from a number of people on our table, and the panel, that there was a need for action rather than ongoing planning which only ultimately creates inaction.

And as Marion Faulkner from Committee of Perth stated, we as a city need to embrace a state of mind that is can-do.

The fact is, 350 people attended a session on a Saturday morning because we are passionate about change – and change for the better.  But in fact all of us need to now invest in our City – if not with financial contributions then at least our energy.

And now is the premium time with the suite of infrastructure projects that will be delivered in 2018.

PropertyESP urges the people of Perth to no longer be passive – but rather passionate about how Perth can grow – and how we can catalyst change.  The question is – are you up for the challenge?

 

 

Night time economy part of WA’s future

With all the inner city development occurring, a colleague of PropertyESP recently attended the Australian Night Time Economy (NTE) conference in Melbourne.

This conference dealt with the fact that the night time economy, which for so long has been associated with bars, restaurants and adult entertainment in fact was evolving and in the UK this economy represented $66 billion in trade alone (or 6% of GDP).

Closer to home, Brisbane’s NTE grew by 25.2% from 2009-2014 from $4.97 billion to $6.231 billion.

With changing work habits, multicultural diversity and in fact a 24 hour global clock, we are less and less inclined to think that night time is just for hedonistic activities.

But this means that if we want to transform some of our City into true night time economies we need to think across planning, place making and regulation.

This means that we need to consider pop up markets in car parks.  And temporary installations. And be more liberal with parklets.

This also means that we need to entwine our fashion, food and entertainment outlets and more so be open for custom.

That means that sometimes we have to take a risk and in fact subsidise these concepts to allow for creativity and sense of destination.

With so many areas undergoing rejuvenation in Perth at present – this is the perfect breeding ground for innovative night time solutions.

The question is – are we going to seize this opportunity?

The team at PropertyESP dare you too!  The time is certainly ripe for disruption!

Perth land prices most affordable nationwide – but lack of variety is our downfall

Samantha Reece, Director of PropertyESP recently attended the UDIA lunch with Colin Keane of Research 4 and then participated with the panel discussion alongside David Cresp (Urbis) and Gavin Hegney.

Certainly Colin’s presentation was somewhat telling of Perth’s current status for land sales.

While Perth peaked in 2013 with 1078 lot sales per calendar month.  In 2016 our underlying demand for land is now 637 lots per calendar month and actual sales are 478.

However there are a number of reasons why we are having this reduced success rate – and it is primarily to do with population.

First of all, Perth’s demand for land is driven predominantly by employment.  For every 100 people employed there is the direct correlation of 38 lot sales.  This ratio in Sydney is 17 lots to every 100 people and in Melbourne 26 lots.

To broaden our market we therefore need to consider a number of options – including net migration with emphasis on education, temporary work visas and holiday visas.

Nationally 56% of land sales are non-local demand.  In Perth it is 16%.  This means that 84% of our land purchasers are based locally.

Perth therefore needs to emphasise our market and attractive lifestyle in order to trigger interstate and foreign investors and certainly consideration needs to be given to delaying the State Government’s foreign buyer’s tax, as this could further reduce demand.

Tourism is also a key player with our land sales growth.

Nationally 50% of short term visas are for holidays – in WA our rate is 11%.  As Colin stated we need to grow our portfolio of tourism experiences and hence concepts such as gondolas connecting Elizabeth Quay and Kings Park no longer seem so farfetched.

Perth has well recognised tourism sites such as Rottnest Island, Kings Park, Elizabeth Quay and Swan Valley.  But now what we need to do is make these experiences deeper and more impressive so as to drive tourism spend to our state in preference to others.

Immigration also catalysts further population growth and so attracting students to WA for education purposes will undoubtedly attract their families.  The same can be said for immigration as a whole.

But there were two final gems of knowledge.

Firstly that WA has the cheapest land in the nation at an average price of $225,000 compared to Melbourne $272,000 and Sydney $423,000.

But while this is positive news, it is our stagnation in the small block sizes ie 450sqm that is killing the market and hence we also need variety of lot sizes to cater to all demographics.

And secondly, WA needs variety across a number of realms – our economic basis, our population and our supply of housing options.

Undoubtedly WA needs to grow its global handshake.

While Government has reduced the FHOG and other such stimulants, what its core focus should now be, is to attract and then retain people.

As such, while the Government may be initially focused on servicing WA in regards to Metronet etc, its top priority should be to work with private enterprise, on ways to boost WA and its profile.

Major events, stimulating tourism sites and golden education opportunities are the ingredients that will return WA to a stronger population market – and one that will help the economy overall.

Perth is experiencing a period of disruption – and that is going to definitely also going to affect the land sector.  The question is – are you prepared?

 

Perth still has $400 million of redevelopment in the pipeline

Samantha Reece recently attended the Property Education Foundation’s (PEF) Retail briefing with representatives from Westfield (Kate Holsgrove), Perron Group (Andrew Byars) and Vicinity (Andrew Hall).

And while Carousel, Cockburn Central and Morley Galleria are all poised for redevelopment – Perth CBD is also looking to undergo a major spruce up.

Jim Tsagalis, Director Lease Equity outlined a number of upcoming projects that would transform the City of Perth including Forrest Chase’s $100 million face lift and QVI and Raine Square’s estimated $300 million in remodelling.

Additional projects such as the addition of around 1,000 sqm at 480 Hay Street incorporating the 356 room Westin Hotel, would also inject another layer of food and beverage.

Jim stated that these developments coupled with Yagan Square and Elizabeth Quay would revolutionise the way Perth interacted with its national and international counterparts.

As he said – these extra projects will now create a night economy – and that is a great balance to what otherwise is a relatively 9am-5pm City.

 

There is no doubt that Perth can still feel somewhat buoyant as the capital investment that is still being injected into commercial fit-outs and retail expansion can only have a positive effect.  And that is certainly worth celebrating!

Would you invest $100 into WA’s future?

So at PropertyESP we are big fans of infrastructure and especially have been advocating that Metronet becomes a key priority with the newly elected Labor Government.

However contrary to our views, a number of developers have been reticent to endorse Metronet as they believe the development sector will be the ones forced to contribute with the value capture model.

Always focused on solutions, Samantha Reece Director of PropertyESP invited John Del Dosso from Colliers to present at the Property Council Residential Committee about other options that were also available to fast track Metronet.

John advised the Committee that if the Government was to charge a $100 levy/household per year they would raise $72 million.  If that same levy was placed on commercial businesses then this would add another $72 million per annum.  If you were to consider this as a perpetuating levy than in 5 years the Government would have raised over $600 million.

This is the exact model that Jeff Kennett applied in Victoria and as a result leap frogged that state into a growth phase (http://www.theage.com.au/victoria/regrets-only-a-few-20120928-26qme.html).

John went on further to recommend that a toll be placed on the Northern Freeway – which at the moment is one of the fastest growing corridors.  His reasoning was that the businesses travelling to work in this locale would be the ones paying the toll and residents – wishing to avoid this fee – would be more likely to catch the train (which would mean that this transport system may in fact become sustainable).

Samantha thought that this was a brilliant concept – despite being somewhat radical.

But when she raised it with other colleagues, their first reaction was to state that they didn’t think they should be forced to donate $100 so that Ellenbrook could get the train.

This led Samantha to think – just when would we as ratepayers, start to believe and hence invest in our own state?

This “What’s in it for me” mentality is in fact preventing us as a State to bloom – but at the end of the day $2/ week is very little to give up, in order to gain so much.

Perth is definitely in a precarious position – destined to grow with the most recent infrastructure which has been created – but also facing potential failure if our mindset is not right.

What do you think – would you invest $100 a year to help Perth’s transport network grow?

PS the good news is that Mark McGowan announced the Federal financing commitment for Metronet in today’s press (http://www.perthnow.com.au/news/western-australia/23-billion-jobs-boost-for-wa/news-story/b53b044c6aa3848a4c809169a1ea7645)

Finally East Coast recognises Perth market upswing

Today two East Coast companies, CoreLogic and Moody’s, publicly declared that the worst of Perth’s property market was behind us and they predicted 3% capital growth for houses and 5.6% for apartments over the forthcoming 12 months.

Now for some time PropertyESP has been blogging about the upswing in Perth property prices and especially with apartments.  That’s because we look at the micro while others look at the macro.

For example in Scarborough if you purchased a 3 bedroom apartment in 2011 – by 2016 you had achieved 28% capital growth.

scarborough

Or in Applecross/Mt Pleasant 2016 apartment prices are now back to 2011 boom-time values.

price per annum

Or even houses in the Western Suburbs (valued below $1 million and which were renovated), PropertyESP demonstrated they achieved 21% capital growth/annum (despite what was reported in the media).

9 May blog 11x 2

Plus analysing apartments in Churchlands and West Leederville, we were also able to demonstrate property growth from 2013 – 10% and 2% respectively.

11 april revised

But regardless of what a WA analyst says, it appears that we need the nod of approval from the East before we actually believe the good news!

Despite our level of cynicism for our Eastern States counterparts, PropertyESP is still glad for this national endorsement as it may actually infuse a sense of optimism with WA buyers and that is good news for the industry overall.

If you would like to see a WA company provide detailed analysis about your suburb of choice then contact us for a chat.  We make sense of property – and we are proud of it!