East Perth – part d’eux

So following on from last week’s post – let’s look at East Perth in a different light.

Over the 20 year study timeframe, we looked at the census data and saw some very positive correlations with the growth of apartment residences.

Starting with the population; we saw 9% growth between 2001 – 2006, which is good news, but then from 2006 – 2011 the population grew a whopping 42%.

We also saw a 9% increase in couple households and a significant decline in single households. There were also 15% more professionals in East Perth in 2011, then the Perth average and we have seen weekly household income levels treble.

This evolution of East Perth has now created a more sought after location with greater property returns, and this was a rejuvenation that definitely needed to happen.

60% of the population were also renting in the East Perth area in 2011 and overall the residents tended to have a relatively higher disposable income.

These kind of details are important considerations, as you can imagine, as they alter what retail experiences you may provide residents and what other key amenities you might need to add.

But it is certainly a good draw card for any business who is considering opening within an area of high density, as the numbers certainly add up!

It leads us to think, what other areas can we expect to see this kind of adjustment as a result of redevelopment? Northbridge? The Springs? I guess time will only tell……

At PropertyESP, we appreciate property and exploring what is being sold and how that is changing over time.  We like to get behind the trends to see what people are buying and selling at the local level.

We share our knowledge with our clients so they can make informed decisions when developing, buying and selling property. 

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Time to compete

So we are hearing in the marketplace that it is taking longer to get property sales over the line. In particular buyers are taking up to three months and in some instances visiting the sales office five times before they sign on the dotted line.

With the increased competition, especially in locations such as the Springs and East Perth, buyers are virtually able to shop around as if they were looking to purchase a car – not an apartment.

These kinds of signs tend to trigger the need for developers and sales agents alike to become more focused on what they are selling and how it outperforms any of their competitors.

However, after conducting phantom shops for a number of clients recently, we are clearly seeing that agents have in fact not changed their modus operandus.

Typically sales agents address what I call the first step i.e. they meet and greet the buyer – but what they fail to do – is the remaining three steps in the sales process!

During these competitive times – sales agents need to delve deeper with their buyers and determine their real motivations, brag about the project and then finally close the sale!

And quite frankly we also do not accept the excuse that the majority of visitors are tyre kickers!

We believe that no one visits an apartment sales office unless they are considering buying an apartment. Generally buyers just need to hear the right information (pitch) and they will commit.

We become really irate when we hear an agent say they had 60 people through the sales office – but that they were all tyre kickers and hence no sales contracts were written!

There is something amiss with this statement – and there is no guessing what it is (PS the sales agent’s motivation!).

If you – like us – are also standing around and scratching your head about why your sales staff are not gaining traction then call PropertyESP.

We are happy to phantom shop as well as work with your team to give them the rev up and go, they may need at this stage!

There are still sales being made and if you want the lion’s share, then now is the time to get off your backside and go get them!

A tale of suburb rejuvenation

So we have been watching with some interest, changes to certain precincts such as The Springs, which are transforming from typically industrial areas into stylish and enviable pockets of real estate.

We thought to ourselves – where else have we witnessed this kind of rejuvenation and what can we expect over time? So we decided to examine Claisebrook, since its rebirth in the 1990’s.

We delved into 20 years of sales results for the East Perth precinct overall and discovered some very interesting facts!

Now some people would think that we are simply barmy at looking at such a long period of time – but we love to crunch numbers at PropertyESP and make sense of property trends.

So we broke the data into several precincts including Claisebrook, East Perth, Riverside, Langley Park and the Wellington Square precinct.

Not only did we look at sales prices and capital growth over this 20 year period, but also the changing demographics of the residents plus property design trends ie number of bedrooms etc.

We saw some interesting data for this time frame and will report on them over the course of the next few weeks.

What was most interesting however, we thought, was the timeframe for capital growth.

Typically in the East Perth area, the best time to maximise capital gains was in the first year of purchase and then not again until year 8. No denying these properties posted capital growth of 13% per annum at the peak, but between years 2-7 the capital growth dipped from 12%/annum to 6%.

Typically the cycle worked in 5 year intervals.

Between sales, properties in Claisebrook experienced the better growth rate (8% for apartment houses/annum, flats 16%) with East Perth demonstrating 16% for flats and Riverside 11% for units.

There is no doubt that this area therefore did benefit from converting from an old industrial site into a modern residential village.

We wonder therefore if we will see similar results for other locations and that can only be beneficial for those early birds who recognise a good investment!

If you would like PropertyESP to present the results from the East Perth sales analysis to your team, give Sam a call today – we are happy to do so at no charge!

A new world, in our vision

I attended an interesting forum recently, hosted by the UDIA, which talked about the fact that there is often disruption, before there is evolution.

Perth itself is undergoing a period of disruption and Elizabeth Quay is a prime example of this! But we can take comfort that the pain is worth the gain!

The panel of speakers talked about a new world – that is not too far away, where automated vehicles (AV) would be the norm.

These vehicles would need a nominal driver for times of emergency, but their distinct appeal was their ability to pick up and set down at nominated destinations, hence diminishing the need for carparks etc.

This would certainly have the added advantage of freeing up large tracts of land and would also increase the appeal of public transport and TOD’s.

In addition these automated vehicles would remove any need for traffic lights, stop signs etc as they operate via fibre optics, which are already programmed into WA’s traffic system.

There are already examples of these AV’s in the United States and Google in fact, is working very hard to develop one of the first prototypes.

But as with all massive leaps of faith – there is need for change and Main Roads is already planning for their transition to this new age of transport. And while there may be some impact on employment for taxi drivers and the like, the benefits far outweigh any of the downsides.

The good news is, that as I reach retirement, I will be able to witness this remarkable transition and this concept for me is totally awe-inspiring!

If this is in our near future – I can’t wait to see what also transpires over the next 2-3 decades.

Perth suburbs continue to perform

So PropertyESP has been developing some suburb profiles for clients, which outline capital growth, rental vacancies and rental yields plus other interesting data.

We have only just started but already Maylands and West Leederville are looking like promising inner suburbs for investors.

West Leederville has experienced 9.3% capital growth per annum for the last ten years and provides a 5.5% rental yield. This is above Perth’s average of 7.3%.

On the other hand Maylands has also experienced above average growth at 11.7% per annum over the last decade and furthermore 51% of residents in the area rent an apartment (Source ABS). The Maylands culture therefore appears to be very much in love with apartment living!

Both these locations are also undergoing a redevelopment process with the City of Cambridge in particular looking to bolster the commercial as well as residential components to create a very active West Leederville. They are also both centrally located to train and bus services.

These are locations that offer great promise – they will essentially evolve from low key areas into locations that offer a range of amenities and services, due to significant investment and the Cities propensity to trigger change.

It is these locations that offer good, above average growth and which retain their character that PropertyESP believe are the gems within Perth and hence are worth a look.

Let us know what you think! Share your favourite suburb with us!

We will continue to unearth key locations, including East Perth over the coming weeks – so stay tuned.

PropertyESP loves to research sales and property trends and then share the news with their clients. We drill down into the data to understand the why and how. We basically make sense of property!

South Perth set to soar

While we have seen a number of Perth locations take off lately including The Springs, Elizabeth Quays and Waterbank – it appears that South Perth is gunning to also boost its ratepayer numbers.

City of South Perth, CEO Cliff Frewing spoke at a recent UDIA function about the fact that the Council had approved the construction of 900 apartments over the past 18 months.

Of course top of mind is Finbar’s Civic Heart, which will feature 294 apartments on the corner of Mill Point Rd and Mends St reaching a staggering 38 storeys, on par with the QV1 building. In addition there is two more land parcels on top of that, which Finbar is developing including Aurelia (cnr Mill Pt Rd and Harper Tce) and 5-7 Harper Tce.

Plus there is a 70 apartment complex on the corner of Melville Pde and Richardson Street, a 102 apartment complex on the corner of Labouchere Rd and Charles St (Pinnacle) and 148 apartment development on the corner of Labouchere Rd and Lyall St.

Furthermore the City is undertaking a structure plan for the Canning Bridge precinct as well as looking to redevelop the Old Mill site.

Certainly South Perth has been home to high rise since the early 1990’s when Finbar started the ball rolling and while there has been a period of stagnancy it is quite clear that this is now about to change.

The good news is that there is a knock-on-effect and already other properties are changing hands including the IGA for $13.5 million. There is no doubt that all these apartment developments will therefore trigger a revitalisation for this beautiful riverside suburb.

Certainly the City has a lot to consider though as a result of this expansive growth, including its public transport needs – but regardless, this spurt of development will transform South Perth once again into a metropolis of activity and I can’t wait to see the end result!

Be happy we live in WA!

I spoke to a group of real estate agents last week about why we should be happy about living in WA.

Very interesting topic indeed!

As I prepared the speech I thought to myself, was it because the State Government had committed $24 billion to infrastructure projects over the next four years that I had reason to feel so positive?

Or that everywhere I looked at the moment, I only saw cranes in the skies of Rivervale, Northbridge, Waterbank or Elizabeth Quay?

Maybe it was because, despite unemployment rising, we still have the best employment rates across the nation?

Or was it simply because demand for housing far outstripped supply?

Take your pick!

With all that is happening, it has to be duly recognised that WA and Perth are now undergoing a significant period of transformation.

This is a time for firsts, such as the $389 million Ritz Carlton and there is nowhere else, quite frankly, I would rather be!

This means that now is the ideal time to also take stock, assess the situation and if needs be move into new areas, become more competitive and be truly innovative!

We recently saw that BHP and Rio Tinto dropped their prices so as to remain competitive with their iron ore exports. FMG failed to see the signs and were caught out. They wanted an enquiry – but at the end of the day – you are strategic – or you are not!

Unequivocally Perth is entering a new era and in ten years’ time we won’t even recognise the Perth of today.

That is good news and we should be shouting that from the rooftops!

So take that as a sign that maybe it is time for you to also change up your game and see what you can do to make the most of these happy times!

Good luck!

PropertyESP loves to research sales and property trends and then share the news through motivational speaker Samantha Reece. If you are looking for an interesting insight contact PropertyESP at http://www.propertyesp.com.au