REIWA – PropertyESP

Apartment research shows interesting trends

National online real estate company REA just recently released some results based on research that they conducted on a national level with 12,618 apartment buyers (of which there were 415 respondents – on par with a poll).

PropertyESP has reviewed this information, from a marketing perspective, which is one of our key areas of strength.

Firstly, what was very interesting to note, was the increase in WA owner occupier buyers in the apartment market since 2015, which grew from 41% to 60% in 2017.

When considering the mix of apartments in any development, it is imperative to consider your local demographic profile and even undertake research in the marketplace to understand what this market is seeking. We have known many developers to be stuck with one bedroom apartments, while the three bedrooms sold first. While one bedrooms may give a higher yield – this is only the case, if they in fact sell!

30% of these buyers were also considering townhouses in conjunction with apartments with the intent of reducing the amount of maintenance time, as would be expected, from a traditional home. As such apartment developers don’t just face competition from other apartment developments – but other small housing options as well, such as townhouses.

The research indicated that the time of conversion to sale was approximately 4.5 months. 43% of the buyers were also reading something related to property on a daily basis and hence this tends to demonstrate that regular social media posts/e-news are able to assist with promoting your project in this realm. This is especially so if you need to nurture buyers over a 4.5 month period.

Buyers were interested in market insights, advice about buying off the plan and apartment designs and amenities in the property related literature.

When asked what were the benefits of buying off the plan, respondents indicated:

Locking in current market price (49%)
Modern features (47%)
Brand new – no one has lived there (45%)
Cost savings (45%)
Customised finishes (45%)
Flexibility to choose floor plan (40%)

However what restricted their decision to buy off the plan included:

Unexpected costs/going over budget
Funding the purchase
The stress of construction
Not knowing what to expect

When asked what influenced the purchase of their apartment, respondents indicated:

Price (62%)
Location (49%)
Developer’s reputation (48%)
Access to public transport (46%)

When asked what amenities buyers were looking for, respondents indicated:

Storage in the car park (64%)
Fully equipped gym (42%)
Outdoor entertaining spaces (42%)

74% indicated that some kind of incentive influenced their purchasing decision, with 62% indicating a preference for the developer to pay stamp duty, 58% stating free upgrades and 45% a rental guarantee period. However this is not always the case and we have witnessed projects in Perth, which have in fact put up their prices in the last six months. In contrast some areas are oversupplied and hence incentives are a sales tool to generate traction with some buyers. Again it is on a suburb by suburb analysis.

What was also interesting to note was how buyers evaluate a developer’s reputation. 54% quoted the developers track record with previous projects, 40% indicated a long history in the market and 30% positive word of mouth. On that basis companies need to be mindful of not just marketing their projects but also their company brand. It all ties in together.

If you are, like us, excited about the future of the Perth apartment market and you are keen to gain a competitive advantage, please contact Sam to discuss further at info@propertyesp.com.au.

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!

Where does suburbia fit into the Perth equation?

PropertyESP recently attended the PIA State Conference which was aptly termed “Rocking the suburbs.”

Minister Rita Saffioti opened the conference and posed the question – does every suburb wish to be rocked and went on to explain that in the East, the focus in the 1990’s was all about the inner ring and that suburbs were seen nearly as a second class choice.

In contrast – Perth is the exact opposite – even some 27 years on.

Our population growth certainly has been part of the reason for this evolution with some residents happy to travel over an hour into the City for work while living in our burgeoning outer suburbs. This is true regardless of age.

But what is evident in the Eastern States, is that now, some three decades later, the inner city is reserved solely for the wealthy.

Interestingly 83% of lawyers work in our CBD, 62% engineers, 39% white collar professionals and 26% health workers – however this is not reflected in their choice of housing suburb.

This is partially because house sizes have not declined drastically and yet the range of housing choices in the CBD continues to cater for 1-2 person households.

The Minister therefore believes that we will see a shift whereby suburbia will become more like business districts and the City will evolve into an amenity district. This certainly aligns with their Metronet model.

At PropertyESP we believe that Perth will follow the same pattern as the East, with the CBD becoming a desired location over the next decade. But first we need to see greater choice of housing and added amenities such as schools in order to cater to a broader cross section of the community.

But on the tail of that, there are many suburbs that were established in the 1970’s to 90’s that really do lack any sense of pulse and hence in order to retain their residents, their Councils will also need to be progressive in the provision of services and development of community spirit.

There is no doubt that Perth is in a flux of change and as a result of significant investment in the inner CBD and key suburban shopping centres, we will see the rise of preferred suburbs over the next 5-10 years. But that also means that there will be many suburbs that languish.

The question is, are the LGA’s prepared to rock the boat and their suburbs and evolve with WA’s changing needs?

Apartments transform suburbs – and for the better!

Curious to see what has happened with the recent 2016 census, PropertyESP took a look at 3 suburbs that have been transformed by apartment developments to see what other changes to the suburb this had brought.

East Perth – originally an industrial suburb, EPRA (now MRA) was established in 1991 to redevelop and urbanise the suburb. It did so with the development of Claisebrook Village, with introduced 1450 new dwellings as well as retail and commercial properties on the site of the former East Perth Gasworks, scrap yards, contaminated industrial sites, empty warehouses and railway yards (Source: MRA Claisebrook Village Fact Sheet).

In the 2001 Census of Population and Housing, East Perth (which is broader than just Claisebrook Village) had 1631 occupied private dwellings that were apartments and flats (making 81.2% of all occupied private dwellings in the suburb). By 2016, this had risen to 4018 apartments and flats (88.8% of occupied private dwellings). The big transformation of East Perth occurred between 2006 & 2011, with the addition of 1160 occupied private dwellings that were apartments and flats (a 67% increase), and between 2011 & 2016, with the addition of 1125 occupied private dwellings that were apartments of flats (a 39% increase).

What else changed in East Perth over this time?

There was a change from these apartments and flats being predominantly rentals to owner occupied. In 2006 and 2011, the level of owner occupancy was hovered around 34%. By 2016, 64% of occupied private dwellings that were apartments or flats were owner occupied. Over the same period, the level of owner occupancy for apartments and flats in Greater Perth was unchanged (around 32%). With the redevelopment, people are choosing to own and live in apartments and flats in East Perth.
Median household incomes for the suburb have surged ahead of Greater Perth. In 2006, the median household income for East Perth was $1106 per week … on par with the $1086 for Greater Perth. By 2016, median household income for East Perth had risen to $2301, well ahead of the $1643 for Greater Perth.
The types of households attracted to the suburb has changed. In 2001, 46% of East Perth households were lone person households and 29% were couple households. By 2016, the two were on par – 37% lone person households and 36% couple households. Both groups have remained relatively stable across Greater Perth over the same period. Whilst families have not been attracted to East Perth in droves – they currently make up 16% of households – they have risen in number, up 251% from 210 households in 2001 to 737 households in 2016.

Burswood – another older suburb that gained new life and widespread awareness with the building of the (then) Burswood Casino in the 1980s. The suburb was officially gazetted in 1993. Subsequent apartment developments in a similar vein to East Perth have continued to change the suburb but it’s location on the eastern bank of the Swan River provides for a different lifestyle experience to East Perth.

The 2001 Census of Population and Housing counted 187 occupied private dwellings that were apartments and flats (making 37.4% of all occupied private dwellings in the suburb). By 2016 this had risen 183% to 530 occupied private dwellings that were apartments or flats. More importantly, this changed the housing profile of the suburb, with 57.2% of occupied private dwellings being apartments or flats. The really big transformation in Burswood occurred between 2006 & 2011.

What else changed in Burswood over this time?

As was observed in East Perth, there was an increase in owner occupancy of apartments and flats in the suburb. In 2001 and 2006, the level of owner occupancy was hovered around 21%. This rose to 36% in 2011 and 41% in 2016. Apartments and flats in Burswood are still the domain of renters, but it has seen a doubling of owner occupancy levels over 15 years.
Median household incomes for the suburb have surged ahead of Greater Perth. In 2006, the median household income for Burswood was $1091 per week … on par with the $1086 for Greater Perth. By 2016, median household income for Burswood had risen to $2273, well ahead of the $1643 for Greater Perth.
The types of households attracted to the suburb has changed as well. In 2001, 38% of Burswood households were lone person households and 31% were couple households. By 2016, the situation has reversed – 30% lone person households and 38% couple households. The proportion of family households has also increased, up from 18% in 2001 to 23% in 2016. In numbers, they have risen 14% from 87 households in 2001 to 213 households in 2016.

Cockburn Central – the first purpose built TOD in the Perth metro area. It was named in 2007 and was counted as a separate suburb for the first time in the 2011 Census. The 2016 counted 403 apartments or flats as occupied private dwellings, making up 70.8% of the 569 occupied private dwellings in the suburb. At 10 years of age, there’s not much history or transformation to explore. But as a purpose built regional centre for the surrounding area and designed with density and connectivity in mind, it serves as an interesting comparison to the other suburbs.

Firstly geography, Cockburn Central is 24km from the Perth CBD, connected by the Kwinana Freeway and Transperth rail. That makes it further from Perth than East Perth and Burswood. It has a number of employment opportunities close by, and is also well placed to connect to employment opportunities in the Perth CBD and the SW metropolitan industrial areas.

Who is living in Cockburn Central?

Cockburn Central is very much a renters suburb. At the 2016 Census of Population and Housing, 71% of occupied private dwellings that are apartments or flats are rented, higher than for Cockburn Central properties in general (58%). The level of renting is higher than for Greater Perth.
Median household income for the suburb is similar to Greater Perth – $1625 per week.
37% of households are lone person households (similar to East Perth), 34% are couple households (lower than East Perth but, like East Perth, the proportion of couple households is growing).

With the newness of this suburb, it does tend to however indicate that it may follow the same pattern as Burswood and East Perth in time.

As PropertyESP has always attested – apartments in the housing mix does tend to attract a more professional resident with higher disposable incomes and that is good for the LGA overall. If you would like to know what is happening in your suburb of development contact Sam Reece at info@propertyesp.com.au. We love to get into the nitty gritty!

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?

Burswood premium continues

PropertyESP will be releasing a media statement this week after examining the Burswood apartment market from 2013-2017.

While overall the median price for apartments in this locale has grown by 11% from $700,000 to $780,000, it is the fact that this growth has occurred across all bedroom configurations that makes it even more interesting.

One bedroom increased its median price point by 6% in these four years, two bedroom 17%, three bedroom 14.5% and four bedroom 8%. This contrasts to other apartment nodes nearby.

Plus in this time frame only 16 properties resold and when you see property being held onto this tightly then there tends to be an indication of high satisfaction and a sense that more growth is anticipated.

The sales data also demonstrated Burswoods’ preference for larger apartments with 21% three bedroom apartments sold in the four years, in comparison to its counterpart in Rivervale which sold just 13%.

There are calls from some Councils that apartments in fact can dilute the premium brand of a suburb – but in this case it is quite clear that Burswood not only has established this solid reputation but also maintained it.

Plus with the Stadium finishing and the Burswood Peninsula Precinct Plan on the horizon, this suburb will only continue to grow in value.

If you like the way we look at data – then let us have a look at your suburb. Unlike Eastern States companies, PropertyESP gets into the nitty gritty and we look at the long term – not just the last quarter. Because the devil is in the detail!

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!

Desire for East Perth to gain 24/7 heartbeat

Samantha Reece recently attended the East Perth session of the Cities Summit that has been co-ordinated by Member for Perth John Carey.

Over 60 people attended this session which comprised of businesses, developers, residents and interested parties.

Quite predictably the session dealt with the areas strengths, its problems and what the community would like to see occur.

East Perth was liked because of its walkability, the gardens and open spaces, Claisebrook Cove and the fact that the area felt calm and relaxed. In particular the residents enjoyed the fact that while they were living in the City it felt like they were in fact residing in a suburb.

However, there were certainly rumblings about the impact of foot traffic once the Stadium was completed and inexplicably this turned into concerns about safety.

But what was very clear was that East Perth has a Monday-Friday, 9.00am-5.00pm heartbeat and hence outside these times East Perth appears somewhat of a ghost town.

Some of the residents however enjoyed this low profile stating that they could travel to Northbridge and Perth for their entertainment. But this tends to fly in the face of what a TOD (and that is the basis for East Perth) is all about.

There was a sense that East Perth was missing small bars and night activation and that the vacant business premises detracted from the overall vitality.

The community certainly wanted to activate the area around Perth Mint and also turn Wellington Square into a pleasant space to recreate in – rather than avoiding it all costs.

The audience talked about movies in the park, markets at the WACCA car park, setting up pop up shops in the vacant premises and overall a more cultural atmosphere.

This obviously has a cost factor associated with these activation strategies and while John Carey may be seeking the City to hire a place maker for East Perth – it also needs people. There is no doubt that East Perth has been undercooked for density – like Subiaco – but this is an aspect that can be rectified as we move forward.

With the Stadium due for completion in 2018 this will certainly increase flow through traffic – but will they in fact stay and recreate in East Perth? And this is very much the issue of the chicken and egg scenario. Do you create the amenity so that people stay – or do you wait for the crowd and then create the activation?

Either way – there are some real opportunities for East Perth on its horizon and this community can either embrace it – or turn their back on it. But from the conversation we observed, there is a real desire to turn East Perth into a 24/7 destination and that will take input from all parties and not just a place maker hired by the City of Perth!

Freedom Fit is the new Downsizer

You may have seen PropertyESP’s Director Samantha Reece on Channel 7 News Wednesday evening talking about the concept that she has hatched – known as Freedom Fit – under the WA Apartment Advocacy banner.

After conducting recent focus groups with seniors, Samantha found that when baby boomers moved to an apartment – while they were downsizing the living space they used – they were not downsizing on their mortgage or their lifestyle. Hence the common term downsizer was now somewhat passe.

In fact these baby boomers knew that they would have an abundance of free time once they moved into an apartment and and hence sought locations that offered the corresponding lifestyle that would fill this time.

On that basis they sought locations that offered coffee strips, with natural elements such as the beach or river and also proximity to major hubs such as Perth or Fremantle.

In particular the apartment lifetyle also tended to be a motivating factor to encourage the residents to get out and try new activities and hence provided a new lease on life.

As a result of these findings, Samantha coined a new term – Freedom Fit – to better describe the motivation driving this older demographic.

These retirees were also keen on knowing their neighbours and recommended joint services within districts, such as a concierge service.

It was also evident that the senors in these groups were delighted with the apartment lifestyle and it is these added benefits that apartments offer over traditional retirement villages, which will now be a defining element of Perth’s evolving senior’s housing.

And what is clearly evident though is that this age group will dominate the market for a while yet – and as such we need to be conscious of what they are looking for including more living space, extra bedrooms and storage.

As the market begins to become more sophisticated with its appetite for apartments – so must our choice of designs.

Interesting times ahead!

Apartment supply update

Samantha Reece of PropertyESP recently attended and participated in the Property Council Apartment conference where Urbis revealed their First Quarter 2017 results.

At present 20% of Perth’s building approvals are for apartments compared to 60% in Sydney and 46% in Melbourne. This equates to 3797 apartments currently under construction.

There are at present 134 active apartment developments in WA and 11,194 apartments, which only represents about 10% of the apartments nationally, which tends to put WA’s supply somewhat into perspective.

There were 258 sales in the first Quarter 2017 with an average price of $650,000. These sales were primarily in the CBD and Western Suburbs. 25 of these sales were attributed to Essence apartments alone, located in Claremont.

58% of the buyers were owner occupiers while 25% were identified as investors.

2017 will be a peak year of construction with an anticipated 3200 apartments delivered. While the number of sales matched the apartments launched in Q1 2017, there will be another 800 apartments delivered in Q2 and 1200 in Q4.

Certainly the data still upheld Urbis’ prediction that there will be a shortfall of apartments by 2020. This is primarily because not all projects will proceed to construction phase.

This data also aligned with REA’s research which showed that the top suburbs searched for apartments were as follows:

East Perth
Perth
Rivervale (The Springs)
South Perth
Scarborough
Fremantle
North Perth
Burswood

There is no doubt that Perth is still far behind the other states in terms of apartment supply – but it also shows that demand is relatively strong and more so now from the owner/occupier market than ever before.

Certainly the next 12 months and commencement (or non) of a number of projects will impact on these forecasts and hence it will be an interesting market to observe.