The Premier has a vision for WA

Samantha Reece of PropertyESP attended the Premier’s lunch last week with the UDIA and it was clear from the outset that Colin Barnett is definitely on the campaign trail 12 months out from WA’s next State Election.

Appearing both frank and succinct, the Premier reminded the audience that the State had just come out of an unprecedented period, which had allowed Perth to bloom.   He talked about the gold rush in the 1890’s and post war construction of Japan in the 1960’s and now the 2000’s which had created the State that we live in today.

And as Barnett reiterated, Perth has now become a vibrant city with the Perth Link, Elizabeth Quay as well as Brookfield Plaza, the State Treasury Building and the St George’s Cathedral precinct.

But with WA coming out of that boom, it is now time to consider new areas of opportunity.

As would be expected, tourism, agriculture and science were the three areas that the Liberals will be focused on as they head into the next election and beyond.

But as Barnett stated, there is now a focus on making Perth even more liveable and that can primarily be achieved by increasing density.

In a bold move, he stated that Donna Faragher’s first role as the newly appointed Planning Minister would be to visit all 29 metropolitan LGA’s and ask them to identify locations for high density and if the LGA did not comply, then the State Government would mandate locations.

The Premier also indicated that there was quite a strong focus on relocating Government departments to the outer suburbs, including Joondalup, Fremantle, and Cockburn, to assist these areas with their economic growth.

And he spoke about capitalising on the location of QE2 to UWA by creating a centre of innovation on par with the Texas Medical Centre.

However, next on the Government’s hit list is public transport and the Premier gave an indication that the contracts for the underground rail to the airport and Forrestfield would be signed off in the next couple of weeks.

It is quite clear through these kinds of actions that infrastructure within greenfields development is certainly not on the Government’s priority list.

The Premier also spoke about expanding tourism opportunities in Kalgoorlie, Albany, Bunbury and the Coral Coastline.

And he indicated that the State Government would be happy to consider abolishing stamp duty and instead increase personal and company taxes by 1%.

There is no doubt that the current Government has hit some home runs in the past eight years, delivering a suite of new experiences to Perth which has transformed our everyday lives.

In the post boom economy, it is fitting to remind ourselves that WA has already received tangible benefits from those years of economic growth. But as we head into the future, the State still needs a plan to meet the needs of our growing state.  The Premier has shared his vision for that future.

The next 12 months will certainly be an interesting time for the State in the run up to the election, and we at PropertyESP will be watching avidly!

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Has WA hit rock bottom?

Samantha Reece of PropertyESP attended an interesting lunch this week with Mark Pownall of WA Business News.

The topic of the lunch was WA’s current business scene and how the state was positioned in the current economic climate.

Certainly some of the information on property sales and building pipeline that Mark shared with us showed that Perth was coming off a relatively strong high.

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But the signs are there that we are once again moving through a cycle.  We reached a peak in 2014 – and we believe the trend will improve again in the medium-term.

Although population growth has slowed from the highs of 2011/2012, in the past ten years Perth has grown from a city of 1.5 million to over 2 million. Mark was confident that some of those migrants would stay regardless of the changes to the mining sector and look for work in other sectors.

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There was further good news, with commodity prices for iron ore having risen in recent weeks. Gold is also once again championing the cause for WA, as is LNG.

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WA has come a long way in the past decade and we are now poised for the next cycle.

With the skyline filled with cranes and $24 billion of Government infrastructure being built, there are positive signs that we will come out of this downturn relatively unscathed.

In terms of future economic opportunities Mark, cited a number of key areas for us to ponder.

Firstly, he believes that agribusiness will come to the fore and Mark quoted Bannister Downs $40 million investment with their new dairy as one example.

Secondly, Mark felt that this was the time for innovation.  At PropertyESP we strongly agree with this point.  If you continue to do business in 2016 as you have for the past 10 years, then you will undoubtedly falter.

Mark felt WA’s saving grace would be gold and the apartment market as key drivers for our economic recovery.  In particular, Mark reinforced that there was a need to tie public transport to infill living, something we at PropertyESP have also been emphasising over the past 12 months.

At the end of the day, WA is cyclical because of its heavy reliance on the resources sector.  But as we all know what comes down, will always go up!

Interested in what we might have to say about the WA property sector? Then contact us at info@propertyesp.com.au. We make sense of property!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Project marketing needs to dig deeper than the surface

Last week Samantha Reece presented REIWA’s first Project Marketing Course.

Speaking to 30 sales professionals, who all had projects underway, Samantha spoke about a number of key activities that PropertyESP undertakes when conducting research , which we always do before creating a marketing strategy.

Firstly, we look at the demographics of an area, particularly looking at changes over time. This tells us how many of the residents own their homes outright; which age groups are earning the most income; whether the suburb is a young family area, or is undergoing transition with the influx of new residents; and how the occupational profile of the area is changing. All of this helps us determine the key customers for the project.

When we look at this kind of data over the past 11 years we can see trends. For example, the chart below shows the increase of professionals and managers in Success and Atwell, and at a greater rate than the increase in the Perth Greater Capital City Area, while the percentage of professionals and managers in Ellenbrook has stabilised. This data helps to identify which customers we will target in an area.

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Next, PropertyESP looks at sales trends over time. We believe that if you look at data over 10-20 years you can see a trend in sales and capital gains.

For example, the chart below shows the capital growth for the Murdoch area suburbs, which is useful in determining what sorts of price points might be acceptable to buyers who are now looking to purchase in the area.

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And then we look at the competition and often phantom shop other sales offices to determine what the sales agents are saying about their projects, so that we can then determine a point of difference for our client’s project.

It was evident from the presentation and resulting feedback, that many of the sales agents were not undertaking the full gamut of research before developing their project marketing strategy.

It is important that before you appoint a sales agency you determine:

  • Who are your potential customers? (ABS data)
  • What has happened in the market place to date and how will this affect your pricing? (REIWA sales data)
  • What is your competition offering? (Phantom shop/web search)

If you would like to discuss these points in more detail, before you launch your next project, then contact PropertyESP on 0452 067 117 or info@propertyesp.com.au.

 

 

 

 

 

 

 

 

 

 

 

 

 

WA will weather 2016 and succeed

Samantha Reece attended the Property Council’s Australian Property Index breakfast held at Lavan Legal’s offices on Thursday.

Speaker Anthony De Francesco of MSCI spoke about the overall Australian market before then breaking down to WA on the basis of residential, retail, industrial, commercial, healthcare and tourism growth.

What was interesting was that from December 2014 – December 2015 all these sectors posted growth across Australia.

In particular Anthony spoke about the increase in overseas investors that were fuelling large asset purchases. He explained that it was Australia’s yield plus the cost of capital, which all contributed towards ongoing overseas investment.

However, looking at a state by state analysis it is clear that WA and QLD are tailing the other states and in particular NSW and Victoria. But it was also noted that just two years ago, it was the reverse.

When the rest of the States were experiencing a GFC – WA was not – but our shortfall was that we didn’t highlight this fact and hence create a mini boom, as the likes of which we have just witnessed in Sydney.

In the commercial sectors Perth is certainly suffering an oversupply. With Prime CBD sites we are seeing vacancy rates sitting at 17% when the average is 7% and vacancies for Secondary CBD sites are sitting at 22% when the long term average is 12%.

However on the upside – the retail sector certainly is showing signs of growth in WA and that is because for so long there have been caps on floor sqm and these are now lifting. As a result the retail sector is playing catch up with the residential population growth we have witnessed over the last 4-5 years. And this population growth is anticipated to continue – albeit at a slower rate.

By far it is evident that residential property growth has significant flow on effects with other sectors – especially in retail with household and white goods – and in the East it is this activity which has propelled the rest of the economy.

In terms of what action can be taken here in WA – it simply is a matter of supply and demand.

As Anthony stated, if there is an oversupply of commercial offices, then consider turning some of these into residential. And that is the key for the next 12-18 months – being flexible so as to ride out this current cycle.

There are plenty of upsides to the WA market and this current status will allow for upgrading of old office stock, introduction of premium hotels (which should attract the overseas tourists) and an expansion of the overseas student market.

The fact is, private enterprise will need to invest, but this is in keeping with our current revitalisation and will certainly leverage Perth even further as a city which has finally found its vibrancy.

Perth and WA have benefited from unprecedented capital investment and now it is essential to keep this wave moving so as to counter balance the adjustments we are witnessing in the mining sector.

But if we all stay focused on action, then this should be an easy task to fulfil.

Armadale Crime Hotspot Doesn’t Tell the Full Story

News like Armadale is Perth’s crime hot spot doesn’t really help the good people of Armadale when it comes to selling their property. Few people would want to buy in “the burglary capital of the area”.

But annual crime statistics do not tell the full story. In fact, it’s a little like comparing the annual road toll for Australia and the USA. We know there are many more cars on the road in the USA (after all, their population is much larger than ours), so we expect that they would have more car accidents. But you can’t draw the conclusion as a result, that it’s safer to drive on the road in Australia.

Perth’s crime hotspots included the suburbs of Armadale, Rockingham and Mandurah (based on data recently released by WA Police Force). These places also have a number of other things in common. They are all “regional centres”. They all have shopping centres / retail precincts. They also all have entertainment precincts. Both of these draw in people from surrounding areas which can influence the volume and types of crimes. And they also have reasonably-sized populations.

A fairer way to look at the crime statistics is to look at them on a per 1000 basis – per 1000 people, per 1000 dwellings, per 1000 cars.

Now the most accurate figures we have for all of these are almost five years old. And it’s quite likely that they have increased since the 2011 Census. But as this is a largely academic exercise, we’ll use the information we have to hand.

Assaults are carried out on people. 300 assaults a year looks very different in a suburb with a population of 10,000 compared to one where the population is 1000. The difference is a ratio of 30 assaults per 1000 people compared to 300 assaults per 1000 people. Suddenly, the smaller town doesn’t look as safe.

Armadale’s population of 12,800 back in 2011 gives us an incident of assaults of 44 per 1000 people. Rockingham and Mandurah had fewer assaults than Armadale, but Rockingham had the largest population of the three suburbs, indicating the incidence of assaults as 22 per 1000 people whilst Mandurah, with its much smaller population had a much higher incidence of assaults than both suburbs. Being regional centres, unfortunately a number of the assault victims could well include visitors to the retail and entertainment precincts.

Home burglaries are committed on dwellings. So the total number of home burglaries needs to be factored against the number of dwellings. Again, our Census figures are a little out of date, but these suburbs are fairly well established so the number of dwellings shouldn’t be too different to what there is today.

Armadale does indeed figure high on this measure. The 394 home burglaries factored against the 5800 dwellings gives an incidence of 67 burglaries per thousand dwellings. That is higher than Rockingham and Mandurah, but lower than other suburbs that did not rate a mention. And whilst Peppermint Grove was touted as one of the safest suburbs – only 24 home burglaries – at a rate of 41 per thousand dwellings you’re more likely to get burgled in Peppermint Grove than in Rockingham.

Back to our opening argument – that crime statistics can have an impact on the property market. Thankfully, most people don’t place this foremost in their mind when selecting where to live. And people choosing a regional centre or an inner city location do so knowing that there will be some negatives alongside the positives.

However, when reviewing crime statistics, they really do need to be looked at through the lens of incidence per thousand … people, or dwellings, or cars (for car thefts) … and grouped by types of location (regional centre, inner city, suburb, etc.).

If you are now faced with this negative perception due to the recent reporting from the WA Police, then maybe rephrasing this data, as we have done above may assist your cause. If you are interested in discussing this matter further than feel free to contact PropertyESP on info@propertyesp.com.au.

2016 Outlook lunch focuses on true opportunities

At the 2016 Property Council Outlook lunch that Samantha Reece moderated last week, our expert panel had some true words of wisdom.

Paige Walker, Residential Development Director for Mirvac, stated that the company was seeing a steady sales pattern and while the volume wasn’t overly high, it was at least consistent. She believed that 2016 was a year of stabilisation and normalisation and that we could expect to see green shoots by mid-2017.

Lloyd Jenkins, Senior Managing Director for CBRE, was also optimistic about the apartment market stating that the tightening of availability of greenfields land would create a stronger demand for higher density living. This coupled, with the ability for the universities to now directly engage with Asian based communities to entice students to WA, would also have a positive flow on effect, with overseas families tending to buy in WA so that they could visit their children as needed.

The office specialists, which included John Williams, Managing Director JLL; Imran Mohiuddin, State Chief Executive Officer Colliers; and John Corbett, Managing Director Knight Frank, all believed that now was the time to buy office and commercial properties, many at below replacement cost.

John Corbett cited the case of selling an office premise to a Singaporean buyer for $20 million in the 1990’s which was now worth $200 million. But as they all surmised, you needed to do your homework and pounce when the chance presented itself.

Finally, Jim Tsagalis Managing Director for Lease Equity stated that while we may have seen long standing chains such as Laura Ashley and Dick Smith fall over in recent times, he was aware that there were a number of European chains, including Aldi, who were keen to enter the WA market. The changes to deregulation had certainly hurt the mum and dad operators, but the bigger chains were embracing this new era with the introduction of self-serve checkouts, etc.

Overall, the panellists believed that the industry had seen far worse – and while there had been some adjustments with the mining sector, which had undoubtedly had its impact, Perth and WA needed to undergo a period of normalisation so that the market could once again become more affordable.

The consensus was that 2016 would be a tough year – but that meant having to be innovative and hard working – and we at PropertyESP have no doubt that we have all faced this challenge in the past and met it head on.

As the moderator, Samantha really enjoyed the dialogue at the lunch and came away feeling that there definitely was light at the end of the tunnel.

What’s your thoughts for 2016? We would be interested to hear your predictions!