Samantha Reece – PropertyESP

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.

Perth’s housing supply falls short

The question on everyone’s lips of late has been “Are we being oversupplied with apartments?” but recent research from the Australian Housing and Urban Research Institute (AHURI) and the Bankwest Curtin Economics Centre (BCEC), has shown that in fact increases in housing stock in Perth have failed to match population growth.

The study – Housing supply responsiveness in Australia: distribution, drivers and institutional settings, led by Professor Rachel Ong, Deputy Director of BCEC, examines how well supply is keeping up with demand across Australia’s regions and capital cities.

And while the rest of Australia has been able to match demand – Perth has lagged behind.

The report also found that most of Perth’s housing was concentrated in the mid to high price segments.

While typically construction of housing at the top end of the price scale tends to then allow for an increase in availability of affordable housing – this has not been evident in Perth.

It therefore appears that Perth is in fact in dire need of more apartments – but in the right locations.

The recent WA Apartment Advocacy research showed that renters were seeking locations that were close to their work as well as conveniences such as public transport, shops, gyms and restaurants. And while the Metronet will free up many opportunities for affordable housing along the train line – this also needs to be matched with services and facilities.

The fact is, we need more housing and we need affordable options and that is going to require creative thinking outside of the box. But either way – urgent action is needed!

Read more about this article and PropertyESP’s Samantha Reece’s comments in this weekend’s edition of the West Australian.

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)

Coastal living the new black

Despite the resistance by coastal suburbs to welcome apartment living into their community – the research from the WA Apartment Advocacy has clearly shown that this status is going to have to change – and soon.

Of the 155 apartment owner occupiers surveyed, 15% had been living in a coastal location before then moving into their apartment (19% living on the coast). However when asked where they would choose to live next time – 70% stated an apartment and 49% stated a coastal location. 44% also indicated they would choose riverside. This was evenly dispersed across all age groups.

Of the 113 renters interviewed, 11% had been living on the coast and 14% moved into a coastal apartment. But when asked where they would choose to live next 73% stated an apartment and 47% demonstrated a preference to coastal locations.

Of those living in the inner city – the owner occupiers showed a movement away from this address with a drop of 61% to 50% as this being their preferred location.

With Perth’s apartment market still very young, and limited supply in restricted locations, Perth apartment livers have chosen the best from what is on offer.

But ultimately what they want is access to the coast – which up until now has only been available to the privileged.

Councils that have therefore chosen to listen to the 5% of their population who reject apartment living have quite obviously chosen to ignore the majority who want this choice (and rightly so) for their home.

It is a message that Councils and Government will now need to start listening to.

At PropertyESP we are glad for this intelligence which raises the argument for permitting apartment living in key locations such as Trigg, Scarborough, Cottesloe and so forth. Because without it – all we hear are the nay sayers. But now there is a larger voice speaking up – and they are saying yay for choice!

Flight to bigger apartments evident

The first poll research of its kind in WA, with 268 apartment residents (owner occupiers and renters) has shown a real appetite for larger apartments.

The WA Apartment Advocacy (WAAA) data has demonstrated that 35% of renters moved from a two bedroom and 26% from three bedroom properties into one (35%) and two (34%) bedroom apartments. But asked what would they move into next, 48% said two bedroom and 38% indicated three bedroom properties.

This was mirrored by the owner occupiers as well, with 35% moving from a three bedroom property and 39% from a four bedroom into predominantly two bedroom apartments (64%). However, when thinking about their next move, 33% would move into a two bedroom and 53% into a three bedroom property.

The research demonstrates that the need for a third bedroom was driven by resident’s usage of the space in their apartments, with 61% of owner occupiers and 48% of renters, using a bedroom as a study or a study nook in their apartment.

For some time now, the WA apartment market has been focused on one and two bedroom apartments but this data gives food for thought to both developers and investors alike.

At PropertyESP we tend to concur with WAAA in that baby boomers should no longer be called downsizers but more aptly right sizers and up-stylers.

Why? Because these people have been typically living in their family home for 25 years and so what they are seeking is a spacious apartment with all the mod cons.

While apartment analysis to date has been focusing on what has been selling – this data tells us what the next market trend is. Those that are wise will take note!

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.

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

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).

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

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!