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!

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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

Apartments in greenfields – a match made in heaven?

I was interested to hear recently that Peet Ltd has decided to diversify its property holdings and move into the area of apartment living.

What’s more, their apartments in WA are in traditional greenfields locations such as Wellard.

The Invita apartments have now released three stages comprising of 36 apartments, 46 apartments and then 106 apartments.

The first two stages went from two storey to three storey but were still very small complexes and sold out within 4-6 weeks of launching.

No doubt their price mix was also highly competitive with one bedroom apartments (66sqm) starting from $280,000 and two bedroom (86sqm) starting from $320,000.

In conjunction, Peet acknowledged that the placement of Wellard on the train line plus the company’s decision to build the shopping centre in advance, were also key advantages to their recent sales success.

But for me, I just wonder if people have the appetite to live in a 106 apartment development when they are surrounded by 4 bedroom/2 bathroom McMansions!

With Peet forecasting releasing 8500 apartments in their near future and with 500 currently under design and construction, the company has certainly taken a bold step and are the first off the rank to offer this alternative housing option – which is certainly affordable (at last).

But certainly pricing plus also connectivity and clustering are key to this mix and hence this model could not be applied willy nilly anywhere else in Perth.

Paul Lakey GM of Development for Peet WA also acknowledged that there has been a relatively high ratio of investors for this new product and with the Fiona Stanley Hospital nearby, this is certainly an attractive rental option, with apparently quite good returns.

Either way I commend Peet for taking the risk and hope that this bold move assists with their ongoing success!

WA Budget sustains the state

Yes this is another commentary about the State Budget, but unlike the media, I believe that the dynamic Mike Nahan and the Barnett Government are in fact taking the right steps to move WA’s economy ahead.

The Government is in debt by $2.7 billion and while some people may appear aghast, I believe that sometimes you have to go into debt in order to take your business, or in this instance the WA economy, to the next level.

Quite frankly when the rest of the country was having a “GFC” WA was having an iron ore boom and I believe that the Government did the right thing by taking the revenue from this “boom” and spending it in WA, which ultimately bolstered the economy.

But unfortunately with mining, it is cyclical, and as you would expect, with the recent drop off in iron ore prices, the Government is feeling the pinch. So one strategy is to dispense with aging assets – especially, before they need further capital works, such as the Fremantle Port and that is the tactic that the WA Government has taken.

Basically they have decided to wear the deficit, rather than pass it entirely onto households.

What I thought was most interesting however, was the disparity over the GST allocation. If in fact WA had received South Australia’s portion of the GST revenue, not only would the Government have covered their deficit but had a $900 million surplus.

But it is, what it is – so steps have to be taken.

Regardless of the changes in iron ore prices, the fact is we have experienced an unprecedented period of business investment and when projecting to 2018/19 we can still expect continued good times.

And there is no doubt that WA is outperforming the other states when it comes to unemployment rates and GSP output. In fact WA created an additional 40,000 nett jobs in the last 12 months.

Plus the Barnett Government has led the way, with major infrastructure projects such as the Midland Health Campus and Perth stadium etc which will create 93,000 jobs over the period of construction.

So the Government intends to sell the TAB, Forest Products Commission, GROH Stock Housing, some Government buildings and LandCorp land holdings to name the majority.

Plus they are going to cap public sector wages and of course increase some taxes such as land tax.

The spending for the next 12 months therefore is more focused on social elements such as disability services, education, public transport and roads. But the Government has still committed $24.1 billion over the next four years to an infrastructure programme and this is a good sign for our economy.

And the Government believes that after the next 12 months, we will start to see growth again of approximately 5.5%.

The fact is, when you look around Perth, all you can see is nodes of growth and huge private sector investment.

I believe that Perth is in fact about to revolutionise into a new era, and I am excited. While the Government has got some work to do in gaining a more equalised budget, I do believe that the fact that they have decided to invest in WA is a major benefit. It has whet the appetite for the private sector to follow suit and we are in a good place for it.

If you want to know more click onto http://www.ourstatebudget.wa.gov.au/.

Commercial market needs to diversify

I attended the Property Council lunch last week which outlined the status of the Perth office market.

While vacancy rates are currently at 16% with projections that it could reach as high as 23%, the news still has a positive spin.

Interestingly, the Perth office market has grown steadily over the past 24 years, but we have held all our hopes on a one horse race – that is the mining sector.

Graphs shown be Deloiite clearly showed that mining began to play a major role for the WA economy in the 1980’s and we subsequently have ridden that high without then thinking about growing other sectors of our economy.

However with all the building works occurring at The Springs, Elizabeth Quays and Waterbank, what is clear, is that Perth is now moving into a new era – and quite frankly I am excited!

While we have been somewhat remiss in building our economy so that it is robust, now is the time and Deloitte predicted that there were five key markets that they believed would fuel WA’s future including gas, tourism, agribusiness, health, international education and wealth management.

The beauty about building these sectors is that there is obviously spin off industries including gas processing and transport etc.

However what this means is that we have to stop relying on the mining sector to be our saviour and actually take some control of where we take our economy – and that takes decisive action from the private and public sector alike.

This next ten year phase is definitely therefore about taking Perth to a new standard and with 150,000sqm of office space coming onto the market, there is no doubt that companies will look favourably at relocating into newer spaces at more competitive rates.

And if you happen to be holding onto older stock, now is the time to invest and be creative with how you may attract major sectors such as education into the CBD.

But if you stay still then you will undoubtedly suffer.

The writing is on the wall – so make some sound decisions and stay ahead of the pack – or otherwise you will find the next phase of Perth’s evolution will undoubtedly eclipse you!

Foreign investment continues to grow

So following on from the Multi Unit Conference, another speaker at the event was Joanne Chin, formerly of Colliers.

Joanne spoke of the increase in FIRB purchasers, with some development projects showing sales as high as 40% attributed to foreign investment (average was 5%).

These purchasers were local students, overseas residents anticipating relocation and then also foreign investors.

Typically these purchasers were seeking projects in Northbridge, East Perth and CBD.

Joanne made the valid point that some projects in the CBD were ideally suited for overseas markets.

It is worth therefore assessing if your project meets this criteria, before entering into this marketing realm, as it can be a very expensive exercise.

Certainly food for thought!

PropertyESP is a research and analysis company that makes sense of property.  To learn more visit http://www.propertyesp.com.au

Government must plan for greenfields too!

With the Sub-regional planning framework released last week – PropertyESP has something to say about planning for greenfields sites!

Independent property analysts, PropertyESP have released results this week after the company undertook research of greenfields sales as well as infill, over a two year period (October 2012-October 2014).

The company examined key areas such as Byford, Baldivis and Ellenbrook in comparison to Victoria Park, Belmont, East Perth and Midland as part of the overarching study.

The company found that demand for land lots in the greenfields areas ranged from 982 blocks to 2256 for the two year period (average 1557) in comparison to 712 apartment sales in East Perth (the highest volume).

Samantha Reece, Director of PropertyESP stated that while demand for infill was certainly increasing, demand for greenfieds lots was still a significant factor when planning land supply.

“The research found that the buyers of infill properties versus greenfields were two very different groups of people,” Ms Reece said.

“In addition the purchasing patterns of these buyers indicated that Greenfields buyers were highly unlikely to become owners of infill properties.”

The research discovered that house size was also a major player in the purchasing decision.

“Whether they purchased in greenfields or infill, the purchasers were still looking for an average of one bedroom per resident and as such families were seeking 3-4 bedrooms while baby boomers and Gen Y were seeking 1-2 bedrooms.”

But as Ms Reece observed, the terminology of infill as being a solution to affordability was also a misnomer.

“When we examined price per square metre for townhouses, apartments or even blocks of land, the price indicator demonstrated that infill was consistently more expensive across the board,” Ms Reece said.

“While there are many gains for purchasing an infill property, it is certainly favoured by a select group of residents and as such planners must recognise the need to continue to offer choice options for the market.”

The full research results will be presented to a UDIA function on Friday 15 May. To find out more or to book contact UDIA on 9215 3400.