Last week we posed the question – “Could the Brisbane CBD property market actually be in a state of undersupply?” Despite everything you may have read in the media. If what some of the industry experts are saying is correct, then Brisbane City is a far cry from being in a state of oversupply. In fact, the situation could seemingly be quite the opposite.

Could it be true? Remember last week we finished off with this statement from Consolidated Properties Executive Chairman, Don O’Rorke –

“The market will be crying out for new product in 2019. We certainly don’t see any oversupply issues in the CBD.”

Let us recap… in Part One last week we shed some light on O’Rorke’s argument in favour of undersupply. We did this by exploring the number of apartments that are currently under construction in the Brisbane CBD, according to the latest Urbis research. This quickly illustrated that only 1812 units are under construction (over four projects) in the CBD from now until 2019.

1. 666 units are due for completion this year (2017)
2.  810 units are due for completion next year (2018)
3.  336 units are due for completion in 2019

This week we turn it up a notch by investigating another five other major contributing factors, including:

1.  apartment pre-sales for these four projects
2.  where Brisbane sits in comparison to surrounding suburbs
3.  apartment vacancy rates in CBD
4.  population growth
5.  infrastructural developments

We begin with point one. According to the Urbis report, the majority of the previously mentioned 1812 units have already been presold with no further developments scheduled to complete until the Queen’s Wharf Casino project finishes its first stage in 2021/2022. “The only certain fact is that the four buildings under construction in the Brisbane CBD will be the only additions to the existing market stock in the coming years and 1812 apartments, by any measure is a small number,” he said. “With the majority of those apartments already pre sold, there is clearly an excess of market demand for new product.” 

 Next we shift our attention to point two – Where does Brisbane sit in comparison to its surrounding suburbs? Well, according to O’Rorke Brisbane is very much a fragmented market. “A buyer or tenant who wants to be in the CBD does not want to be in The Valley, Newstead or South Brisbane – all of which have substantially more stock completing in 2017 and 2018.”

The Urbis report indicates the following figures:

1.  3,879 apartments are due for completion in 2017 and 2018 across the Northern Market (Fortitude Valley and Newstead) 
2.  3,403 apartments are due for completion in 2017 and 2018 across the Southern Market (West End and South Brisbane)

Remember that over that same two-year period there are only 1,476 apartments due to be finished in the CBD, which is only a very small percentage in the total scheme of things. Now, if we look at the vacancy rate, Urbis’ current tenancy report shows a vacancy rate of only 2.3 per cent - clearly indicating that the supply is being fully absorbed by the rental market.

Furthermore, the latest Brisbane Inner City population growth figures show an increase of 1.8 per cent. And we can certainly expect this number will continue to rise, given the number of infrastructural developments like the Queen’s Wharf, Howard Smith Wharves and Brisbane Airport (just to name a few) on the cards for Brisbane over the next few years.

According to research by Property Council of Australia the number of white collar jobs also continued to grow in the last quarter of 2016. This may just the beginning of things to come, given that the Queen’s Wharf project alone is expected to tipped to inject 10,000 employment opportunities from construction through to completion.

Let us put it all together…

Brisbane can expect to see 1812 apartments due for completion over the next three years, which (as we now know) is a small fraction when compared to its northern and southern markets comparatively – including surrounding suburbs such as Fortitude Valley and Newstead. (Could it be that when referring to previous comments about oversupply, the industry experts are referring to Brisbane’s surrounding areas – not actually the CBD?). When combined with the scarcity of development locations, as well as population growth and an increase in employment opportunities – both driving strong demand for CBD apartments for sale and rent.

Does this sound like a city in a state of oversupply?

If you are interested in buying or selling property in the Brisbane CBD, speak to the team with their fingers on the pulse - call HSBP on 0419 782 133.

While we may have read a lot about the Brisbane property market being in oversupply of late, seems we are not the only ones that feel this may just be all commentary hype. Some industry experts of late have been coming forth stating that marketing pundits have got it wrong and that the situation is in fact very much the opposite – the Brisbane CBD is showing all the signs of having a significant apartment undersupply. Could this be true?

Someone who believes this is certainly the case is Consolidated Properties Executive Chairman, Don O’Rorke. Over this two-part series we will explore some of the arguments that help back up O’Rorke’s case for the undersupply argument and we sure you will agree that he has quite a compelling case.

Okay, so let us rewind for just a moment – an undersupply here in Brisbane. Could that be true? Could what we have been reading over the last twelve months (and beyond) simply be fabricated stories to create newsworthy articles that sell papers and build hype?

According to O’Rorke, the answer is yes, and he has plenty of facts to back up his argument.

Let’s start with the first point – the ‘actual’ number of apartments that are currently under construction in the Brisbane CBD. After all, that is the only number we have to base anything on.

O’Rorke says his thoughts on undersupply are supported by Urbis; with the latest Urbis research showing that only 1812 units are under construction in the CBD across the following four projects –

1. 150 apartments – Abian (Sunland Group, Alice Street, finishing in Q2 2017)
2. 340 apartments - Spire (Consolidated Properties, 550 Queen Street, finishing in Q3 2017)
3. 1,138 apartments - Sky Tower (Billbergia, 222 Margaret Street, progressively completing over two years to 2019, and 176 of those apartments will finish from Q2 2017)
4. 184 apartments - Mary Lane (Sam Chong,111 Mary Street, finishing in Q2 2018)

From this Urbis data we can see that –

•  666 units are due for completion this year (2017)
•  810 units are due for completion next year (2018)
•  336 units are due for completion in 2019

Knowing these numbers, does that sound like a city in a state of oversupply?

However, these four projects are just the tip of the iceberg. Next week in Part Two of this series we will explore other contributing factors - such as the pre-sales for these four projects, apartment vacancy rates in CBD, infrastructural developments, employment and where Brisbane sits in comparison to surrounding suburbs such as Fortitude Valley and Newstead. Some of the information is quite surprising.

In the meantime, we will leave you with this very strong statement from O’Rorke –

“The market will be crying out for new product in 2019. We certainly don’t see any oversupply issues in the CBD,” he said.

Undersupply or oversupply, one thing is for certain, when it comes to local Brisbane apartments you cannot go past speaking with the highly knowledgeable team at HSBP. For professional advice on your next move in the property market, schedule an appointment with the team at HSBP on 0419 782 133.

If it is one thing that we have come to know of late, is that there is no shortage of infrastructure and development projects on the horizon for the Brisbane CBD. With more than $10 billion worth of major projects due to be completed in 2022 - the myriad of infrastructure projects currently underway bestows a wealth of opportunities for property investors to tap into – and all thanks to Brisbane’s vastly growing economy!

As a tenant or property owner, one of the biggest advantages that comes with living in the CBD is convenience; saving both time and money which often stems from less time commuting to and from work as well as the close proximity to amenities such as schools, public transport, shopping precincts, etc.

Let us focus on this idea of being close to work for just a moment. With today’s fast-paced lifestyle, it is no wonder more and more people are seeking opportunities to save time and money. Nothing could do this better than living closer to work.

By living in the CBD, the money saved on fuel each day soon adds up. Plus, there are the countless hours each week which is saved in time going to and from the city, stuck in peak hour traffic. For many, that is why the option of city living is becoming an obvious choice.

It is also why these days we are starting to see a vast increase in the number of tenants taking solace of a CBD lifestyle. Also why so many investors are buying investment properties in the heart of the CBD! And why more offices were going up in the CBD.

The proof is in the numbers… according to the Property Council, Brisbane CBD’s office market record vacancy level has fallen to 15.3 per cent. Knowing that office vacancy levels are down can only mean one thing… the number or offices are up.

From recent reports we know that is certainly the case, especially given that the Brisbane Transit Centre is set to see 11,000sq m of its commercial space refurbished by Lend Lease as well as the Shayher Group’s plans to build an office tower.

Naturally, once the news broke that more commercial work spaces going up in the Brisbane CBD, we were more than pleased.  After all, with more work hubs and city offices being built in the CBD, that spells more workers… and equally more tenants for our property investors.

According to recent media reports^* and industry sources, here is what we do know about each of these projects:

Brisbane Transit Centre, Lend Lease

 -  The $8.5 billion ASX-listed construction and property company Lend Lease had signed off on an extensive redevelopment of the East Tower within the transport hub.

- Further redevelopment of the 29,000sq m complex is said to be on hold until the state government determines its plans for the much-vaunted but as yet unfunded $5.4bn Cross River Rail, which could use the centre above and around the Roma Street station.

 - The Lend Lease-managed Australian Prime Property Fund Commercial last year paid $62.6 million to buy out GPT Wholesale Office Fund’s share in the mixed use, developable asset.

CBD Office Tower, Shayher Group

- The Shayher Group, an affiliate of the Taiwanese Pau Jar Group, has invited construction tenders for its $600m office tower, with building contracts for this and its residential tower standing at $370m. 

- The proposed 40-storey tower in its $1bn Brisbane Quarter precinct is forging ahead despite the absence of a locked-in lease for the 48,000sq m space.

- Last year, it was announced JLL and CBRE would handle leasing for the office tower, and Colliers International the retail.

Add to this, the construction of the Shayher Group’s W Hotel and their residential tower which is set to go on the site of the city’s former Supreme and District courts.

With market confidence on the rise and a boost to major infrastructure projects (such as the likes of the Shayher Group’s new office tower and W Hotel as well as Lend Leases’ redeveloped Brisbane Transit Centre), it is clear that the Brisbane CBD is going through an exciting transitional period!

Thanks to this shift, Brisbane’s economy can expect to see a lot of positive changes take shape over the coming months and years.  By this we mean driving more employment in the CBD, which equates to more tenants. Further proof of the wonderful things in store for the Brisbane CBD and the investors that support it – once again!

For more information or to schedule an appointment with the experts in Brisbane property, contact the HSBP team on 0419 782 133.

Source: Courier Mail

For any of you with concerns over the Australian economy, well, read on. This article takes reference from Peter Switzer’s latest editorial titled Shhh! Don't mention the damn good Aussie economy! (www.switzer.com.au) and uncovers a whole new side to the economy that is not widely publicised – the good side! (The ‘capital city home prices are up by 11.7%’ side.) And, for those of you who love economic data… well, you are really in for a treat! This article has all that, and so much more.

As we know all too well, Switzer is not one to just say something without backing it up with hard facts. So, we thought we would share with you some of the key points from his article. Starting with the fact that we are only hearing what certain influencers wants us to hear.

 Economists are saying we are due for two more interest rate cuts because of a struggling economy, and the press want us to believe the penalty rates decision will hurt the government. Then there are the alarmists that have spent the last two years talking about an income recession.

 But let us sit in the Switzer camp for a moment. As he so puts it, “why won’t a better economy, with lower unemployment, rising business as well as consumer confidence, trade surpluses and rising wages actually make the Turnbull team gain a few more likes?”

 According to Switzer, Deloitte Access Economics’ economist, Chris Richardson, told Peter on his TV show that a surge of national income is on the way. (That statement alone really questions any concern of income recession.)

 So let us forget about all the media hype and opinions pertaining to the economy for one minute and instead let us take a look at what we do know to be true – the facts. As per Switzer’s article (and many of our recent articles too for that matter), this is what we have seen of the economy, of late:

1.  The economy grew by 1.1% in the December quarter, after contracting 0.5% in the September quarter. Annual economic growth lifted from 1.9% to 2.4%.
2.  Unemployment fell from 5.8% to 5.7% with the January reading.
3.  The weekly ANZ/Roy Morgan consumer confidence rating rose by 6.1 points (4.7%) to a 6-week high of 119.1 in the week to February 26.
4.  The NAB business conditions index surged from +9.9 points to +16.2 points in January – a 9-year high. The business confidence index rose from +5.7 points to a 3-year high of +9.8 points.
5.  Economy-wide sales rose by 0.6% in the December quarter, after falling 0.1% in the September quarter. Annual growth of sales lifted to 2.7%, the biggest rise in five years.
6.  The CoreLogic Home Value Index of capital city home prices rose by 1.4% in February and was up 11.7% over the year.
7.  Private sector credit rose by 0.2% in January, after a 0.7% gain in December. Investor housing finance lifted 0.6% in January to stand 6.6% higher over the year – the fastest growth in 11 months.
8.  The Performance of Manufacturing index rose by 8.1 points to 59.3 in February – the strongest result since 2002. A reading above 50 indicates that the sector is expanding. This was the fifth consecutive month of expansion!
9.  Car sales are close to record highs.
10.  Our super funds have had another great year after the stock market has surged since February 2016 by a massive 22.7%!

 All valid points made by Switzer. Interestingly, he also points out that the economy has not experienced a recession for more than 25 years! Assuming we do not see one by September, he says, “this year we should be hailed as having the greatest growing economy of all time”.

 After looking at everything he points out, we have to agree. So, let us stop believing everything the newspapers or politicians tell us and let us make more informed decisions based on the truth. The facts. After all, with lower unemployment and rising consumer confidence… and 25 years without a recession…  it seems we do have a pretty darn good Aussie economy. Do we not?

 For property investors this paves the way for what could potentially be a solid year ahead. Especially when you add into the mix the fact that CoreLogic’s Home Value Index of capital city home prices rose by 1.4% in February, and was up 11.7% over the year. Those figures are huge!

 There you have it. With more good happening in our economy than some experts would like us to believe, just like the news, it really comes down to making sure you are well informed about every investment decision you make. Another reason why is pays to seek advice from industry professionals – such as the industry-leading experts at HSBP.

 For more information or to schedule an appointment, contact the HSBP team on0419 782 133.

The results are in!

Every year, the Australian Business Economists’ Association (ABE) compiles an economic and financial survey of the executive committee.

This committee represents 22 institutions, and the survey asks the committee members a series of special questions. These questions vary from topics such as the Reserve Bank cash rate, China, the US economic outlook and commodities – among many others.

Many industries and experts look to the annual survey as a great source of financial and macroeconomic forecasts for the year ahead and beyond.

We thought we would share with you 20 highlights to come from the results of this year’s survey.

1.  The 2017 Australian economy is expected to grow at a similar pace to 2016.
2. Economic growth is expected to be moderate and driven by strength in net exports and growth in household consumption.
3. Dwelling investment will also add modestly to growth
4. Business investment is expected to contract again.
5. Low interest rates and strong population growth have supported dwelling investment.
6. Dwelling investment is forecast to grow by 1.4% in 2017.
7. The Committee expects export volumes to grow by 7.5% in 2017 and by 6.3% in 2018.
8. Low interest rates, firm growth in house prices and a relatively tight labour market have given support to household consumption.
9. Household consumption growth is forecast to moderate slightly in coming years, to 2.5% in 2017 and 2.6% in 2018.
10. The Committee expects growth in wages to remain weak over the next two years. The Committee expects the labour price index to rise by only 2.1% in 2017, following estimated growth of 2.0% in 2016. For 2018, an increase of 2.5% is the median forecast of the Committee.
11. The Committee’s expectations for headline inflation are towards the bottom of the RBA’s 2%-3% per annum target range.
12. The median forecast for headline inflation growth in 2017 is 2.0% and 2.1% in 2018.
13. The median forecast for underlying inflation growth is 1.8% in 2017 and 2.1% in 2018.
14. The Committee expects the RBA to leave the cash rate on hold at 1.50% for all of 2017 and 2018.
15. The range of forecasts for the cash rate at the end of 2017 ranges between 1.00% and 1.50%, indicating that the Committee sees a risk of an easing.
16. The Federal Government’s headline budget deficit is expected to improve over the forecast period, according to the median forecast of the Committee.
17. A deficit of A$36.1 billion is expected in 2016/17, after an estimated deficit of A$39.6 billion in 2015/16. A further improvement to a deficit of A$26.6 billion is forecast for 2017/18.
18. The Committee expects the Australian dollar to end 2017 weaker at US$0.7000, down from its current level of around US$0.7646 (as at 6 February 2017). The range of forecasts for the end of this year is wide at US$0.63-0.78 and for the end of 2018 US$0.65-0.80.
19. The ASX200 share market index is forecast to be 3.2% higher (at 5,775) by the middle of this year and 7.2% higher (at 6,000) by the end of this year from its closing level of 5,597 on 6 February 2017.
20. The ASX200 is then expected to increase a further 4.6% over 2018 to end the year at 6,275.

So if the ABE Executive Committee are right, it seems there are signs of moderate economic growth as we head into 2018 – proving a solid step in the right direction for the Australian economy. Especially if the committee does not foresee the RBA cash rate rising anytime in the near future… and dwelling investment is forecast to grow by 1.4% in 2017!

Here at HSBP we constantly have our finger on the pulse when it comes to real estate and the local economy. So if you are looking to buy or sell a property in Brisbane, contact a team that really knows their stuff – call HSBP on 0419 782 133.