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<p>Activity in the childcare property and development market has almost ground to a halt this year as the steam goes out of the sector.</p><p>Just one childcare centre transacted in April this year, according to CBRE data, a $10-million centre in Narre Warren, Victoria, with a 4.25 per cent yield. This compares to March last year, when five new and 10 old centres changed hands.</p><p>Also this year, a centre at Cranbourne North, Victoria, sold with a 5.25 yield in May.</p><p>“If the same developers were to purchase a block now, there would be no way they would be able to transact at that yield,” says CBRE’s Jimmy Tat.</p><p>Tat says there has been a switch in the market and any demand from investors is for new rather than existing centres.</p><p>There are 1.4 million children attending 13,000 centres across Australia, which draw on $40 billion in government childcare subsidies.</p><p>“Investors have held back since the RBA lifted the cash rate. Instead of actively bidding for properties, they are sitting back and waiting to see what the market is doing to get a gauge on pricing and yields,” says Tat.</p><p>“The demand is still there, but investors are waiting to see if there are any changes to the market.”</p><p>It is understood rising construction costs mean some new developments have been paused. Moreover, deals developers locked in with an operator at 2021 or 2020 prices no longer look as attractive, given construction costs have escalated as input costs rise in line with inflation.</p><div id="4oPFXO2qFrnGYHitbaI80z"><picture><img src="//images.ctfassets.net/8pr762qjocl3/2SjRy4hyhDsmeryaG37Bxn/02dada2d30c8a5a34b298814684fa7e9/1.jpg" alt="This childcare centre in Cranbourne North, Victoria, sold with a 5.25 yield in May. " data-mce-src="//images.ctfassets.net/8pr762qjocl3/2SjRy4hyhDsmeryaG37Bxn/02dada2d30c8a5a34b298814684fa7e9/1.jpg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ This childcare centre in Cranbourne North, Victoria, sold with a 5.25 yield in May.<br><br></span></div></div><p>“A lot of projects are either on hold or developers are having to renegotiate with operators to see if there's a middle ground from which they can proceed with development,” Tat says.</p><p>The market, say pundits, is ripe for opportunistic investors to cherry pick assets. CBRE anticipates yields to head towards double figures.</p><p>&nbsp;“There are a lot of cashed-up investors, who are attracted to the government support the childcare sector enjoys,” Tat says.</p><p>“It’s a very stable investment. Sooner or later there is going to be a lack of supply because construction costs are rising.</p><p>“Developers are postponing their development or renegotiating with operators on rents to make the development feasible.</p><p>“But if you compare the childcare sector to shopping centres, where the yield is sub 5 per cent, it is very appealing.”</p><div id="4jDZIHe20PUIhixtIeesZa"><picture><img src="//images.ctfassets.net/8pr762qjocl3/5UNbLdJVOswmSjFYS50Orb/4181452d5bc3e6d61278135ac54b6d28/3.jpg" alt="Australian Unity’s Childcare Property Fund currently has about 20 centres with a value of about $110 million." data-mce-src="//images.ctfassets.net/8pr762qjocl3/5UNbLdJVOswmSjFYS50Orb/4181452d5bc3e6d61278135ac54b6d28/3.jpg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ Australian Unity’s Childcare Property Fund has about 20 centres with a value of about $110 million.<br><br></span></div></div><p>“We’re focusing on geographical diversification. We have stable assets providing income to investors and we've secured opportunities from developers looking for partnerships to fund their pipeline,” says Australian Unity fund manager Mark Delaney.</p><p>“We're also assisting developers who may not have equity to deliver and de-risk projects.”</p><p>An example from the portfolio is an established centre in Runcorn in Brisbane with 100 per cent occupancy.</p><p>“We secured the asset and working with our tenant to refurbish that centre and improve the offering to children as well as increase numbers the centre can offer,” Delaney says.</p><p>“As a result, we're improving our assets to give better returns to investors.”</p><p>Despite the softening operating environment, Delaney says there is tough competition for childcare centres among acquirers.</p><p>“We're selective about assets and geographical spread is just one factor we consider.</p><p>“We look at the demand ratio in the catchment and whether the centre is successful in its own right, aside from the property fundamentals.</p><p>“The day rates and financials must be strong. One thing we don't want is an over-rented centre that will not be a success when re-letting the centre in five or 10 years.”</p><p>Of course, Australian Unity also takes more immediate economic factors such as rising interest rates and inflation into consideration when selecting centres for its portfolio.</p><p>“We have to take that into consideration in acquiring assets that will see Australian Unity have a strong return to investors over the short, medium and long-term,” Delaney says.</p><div id="29jnM6aXOL4TogOVDACGfC"><picture><img src="//images.ctfassets.net/8pr762qjocl3/2E3F4rTiVtkfb3Ez8M11uo/59b33a05fba719186e8874e276fb3c0c/2.jpg" alt="The appeal of childcare assets to investors is coming back but where new centres are built is crucial." data-mce-src="//images.ctfassets.net/8pr762qjocl3/2E3F4rTiVtkfb3Ez8M11uo/59b33a05fba719186e8874e276fb3c0c/2.jpg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ The appeal of childcare assets to investors is coming back but where new centres are built is crucial.<br><br> </span></div></div><p>It’s a sector where for-profit, not-for-profit and government operators make up the market. According to the Australian Children’s Education and Care Quality Authority, 51 per cent of centres are run by the private sector, 33 per cent by not-for-profits and the remainder managed by governments and schools.</p><p>“Location is really important. Planning permits are often easy to secure, but not enough thought goes into them,” Community Child Care Association services manager Daniela Kavoukas says.</p><p>The association represents community-based education and care services in Victoria.</p><p>“I’ve seen childcare services built on busy roundabouts or next to petrol stations on a main road. That's not good for children given the pollution or noise.</p><p>“So, there is an oversupply in many places, but there are childcare deserts in places where land is too expensive and it doesn't make sense for big developers to build, because there's not enough kids to make it worth their while.”</p><p>A study by the Mitchell Institute and Victoria University, released in March this year, ‘Deserts and oases: How accessible is childcare in Australia?’, found of the 57,000 regions across Australia, 3600 have no childcare facilities.</p><p>To this end, the Victorian government has just announced it is building 50 centres across the state.</p><p>At a federal level, this year’s budget included a $19.4 million provision to fund up to 20 new childcare centres in rural and regional areas.</p><p>Like many sectors, childcare property development is experiencing something of a hiatus. But its return as a desired asset class isn’t far away with attractive fundamentals including government support and demand certain to underscore a healthy long-term development pipeline in the future.<br><br></p><hr><p><strong><br>You are currently experiencing <em>The Urban Developer</em> Plus (TUD+), our premium membership for property professionals. </strong><a href="https://www.theurbandeveloper.com/membership-plans" data-mce-href="https://www.theurbandeveloper.com/membership-plans"><strong>Click here to learn more.</strong></a></p><div id="2GhuueZl01Zwo2aFfjNVi2"><picture><img src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg" alt="TUD + Banner" data-mce-src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg"></picture></div>

Childcare investment has all but ground to halt. The Urban Developer finds out why, and what the future looks like for the sector…

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<p>A $391-million masterplan aimed at transforming one of the key towns in the Snowy Mountains has been finalised.</p><p>The NSW Department of Regional Planning today released the 40-year masterplan for the Snowy Mountains’ Special Activation Precinct (SAP), aimed at transforming Jindabyne, best known as the gateway to the NSW ski fields, into a year-round economy.&nbsp;</p><p>Funding for the Snowy SAP has been sourced from the $4.2-billion Snowy Hydro Legacy Fund—proceeds from it have been allocated to infrastructure projects across regional NSW.</p><p>The masterplan opens up the land to the east, west and south of Jindabyne with new residential zoning, as well as recreation, commercial and open space areas.</p><p><span class="mce-preview-object mce-object-iframe" contenteditable="false" data-mce-object="iframe" data-mce-p-allowfullscreen="allowfullscreen" data-mce-p-src="https://www.youtube.com/embed/459CCwsBpQg"><iframe src="https://www.youtube.com/embed/459CCwsBpQg" width="560" height="314" frameborder="0" allowfullscreen="allowfullscreen" data-mce-src="https://www.youtube.com/embed/459CCwsBpQg"></iframe><span class="mce-shim"></span></span></p><p><br>It includes a new town square, school, TAFE and country university. The plan adds bed capacity to the existing alpine resorts’ footprint to increase accommodation options for residents, seasonal workers and visitors.</p><p>Key to the plan is a new Mountain Bike and Adventure Park that includes a gondola tourist attraction, a walking trail and cycleway around the Lake Jindabyne foreshore, designed to cement Jindabyne’s place as one of Australia’s pre-eminent mountain bike destinations and year-round tourist destinations.</p><p>“The precinct now moves into the delivery planning stage that will provide the blueprint for how proposed enabling infrastructure will roll out, such as the Southern Connector Road that will open more land for residential and commercial development, sewerage and utilities upgrades,” local MP Nichole Overall says.</p><p>Planning will also now begin on foreshore improvements including shared paths and park space close to Jindabyne, the adventure park, car parks and improvements to the town centre.</p><div id="4iSB1sUVAiSRj73mldRu3v"><picture><img src="//images.ctfassets.net/8pr762qjocl3/2lDHAV2b6gmJk2rW0OcxdS/e838ca95e6591567640263a623b5b224/fd4ddc653e99adf8b0fbdd3150a82672.jpeg" alt="The masterplan aims to transforms the town’s economy beyond the ski season." data-mce-src="//images.ctfassets.net/8pr762qjocl3/2lDHAV2b6gmJk2rW0OcxdS/e838ca95e6591567640263a623b5b224/fd4ddc653e99adf8b0fbdd3150a82672.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ The masterplan aims to transforms the town’s economy beyond the ski season.<br><br></span></div></div><p>“The masterplan was introduced in 2018 when consultation began with the Jindabyne community regarding native title,” PRD Real Estate chief economist Diaswati Mardiasmo says.&nbsp;</p><p>“This was to ensure future property development falls in line with the unique values, character and story of the surrounding area.”&nbsp;</p><p>The major change is the mountain biking path, says Michael Henley from Snowy Mountains real estate firm Henley Property: “That will bring people to the area and elevate Jindabyne to a major summer destination.”</p><p>There is a chronic shortage of permanent residential accommodation in and around Jindabyne currently, as well as affordable short-term accommodation for the many workers that flood the area during the three months of the ski season.&nbsp;</p><p>So, in addition to the SAP masterplan, the NSW government has created the Regional Housing Delivery Plan for the Snowy Monaro to address this shortfall.</p><p>“There is a lack of residential stock built in the Snowy Monaro regional council area,” says Mardiasmo.</p><p>“Only 23 apartments, seven cabins, three townhouses, 11 other homes and 296 land lots have been released since 2017, which is a major concern given the current market demand.</p><p>“Although there has been a focus on infrastructure and commercial projects in the past five years, there is a need for ready-to-sell stock, as well as the creation of subdivision lots,”&nbsp;&nbsp;</p><p>Long-time local and one of the town’s major property developers Bruce Marshall says he’s optimistic the masterplan will prompt much change across the mountains.&nbsp;</p><div id="3FzhHsMrRYe595upbLMJCy"><picture><img src="//images.ctfassets.net/8pr762qjocl3/7tyhm5E6sH4htDVXTk5qq3/290329a1d1b25cb9c6dcf2bbc7dde73f/Jindabyne_Town_Centre_-_Photo_by.jpeg" alt="Jindabyne is ‘bursting at the seams’, according to one of the town’s staunchest supporters." data-mce-src="//images.ctfassets.net/8pr762qjocl3/7tyhm5E6sH4htDVXTk5qq3/290329a1d1b25cb9c6dcf2bbc7dde73f/Jindabyne_Town_Centre_-_Photo_by.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ Jindabyne is ‘bursting at the seams’, according to one of the town’s staunchest supporters.<br><br></span></div></div><p>He owns Nugget’s Crossing, the main shopping centre, which he also developed, as well as the local Mitre 10 and the Lake Crackenback resort.</p><p>Marshall has been very involved with the SAP process, and says he welcomes its release because: “we're bursting at the seams”.&nbsp;</p><p>“I've been here a long time and I started developing here many years ago.&nbsp;</p><p>“Nobody was doing anything to develop property in Jindabyne when I started and I've been lucky enough to have almost a lifetime developing property here without competition of any consequence.</p><div id="3FzhHsMrRYe595upbLMJCy"></div><p>“What’s going to be interesting is how the state government attracts private enterprise to take over the projects identified as necessary to create attraction for the area in the summer months. The government's not going to run the amusement park or bike park.”</p><p>Olivier Kapetanakos is the chair of the Jindabyne Chamber of Commerce as well as proprietor of the housekeeping and property maintenance business Snowy Mountains Property Crew and farm stay Avonside Alpine Estate.&nbsp;</p><p>He says he is also excited about a future for Jindabyne now the masterplan has been finalised.</p><p>“Jindabyne has developed into this mini Queenstown, with all the same faults,” he says.</p><p>“Before this, we were developing housing and attraction solutions using an urban planning tool that was outdated.&nbsp;</p><div id="5aIe7nTtsp1evEPQeofMRn"><picture><img src="//images.ctfassets.net/8pr762qjocl3/4QQxK08VXPeczwesEx3lYX/e7679f226af0509db62755d46fcc5d45/1200px-Snow_in_Jindabyne_07.jpeg" alt="Funding will make or break the masterplan." data-mce-src="//images.ctfassets.net/8pr762qjocl3/4QQxK08VXPeczwesEx3lYX/e7679f226af0509db62755d46fcc5d45/1200px-Snow_in_Jindabyne_07.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ Funding will make or break the masterplan, says the chair of the Jindabyne Chamber of Commerce.<br><br></span></div></div><p>“We were also amalgamated as an LGA with two other LGAs that really didn't have tourism at their heart. So the SAP is vital to our future.”</p><p>The council and the state government will be responsible for delivering different parts of the masterplan. But Kapetanakos says how the plan will be funded is vital to its success.</p><p>“The government has to find ways of funding this LGA differently, because it can’t manage any growth of Jindabyne with its current resources. They need more help.”</p><p>Kapetanakos is positive about the development of the new school and education precinct. Currently the school is in the centre of town—this land will be re-zoned for development under the masterplan.</p><p>“The town has been advocating for a new school for the past five years,” he says.&nbsp;</p><p>“At the moment, Jindabyne has the largest central school in NSW, which means it has primary and secondary schools on the same footprint. It has more than 1000 kids in it.”</p><div id="3hJYdVymZuBVx1hrqGS2ok"><picture><img src="//images.ctfassets.net/8pr762qjocl3/3xBmyYBNGmO4Ge8rxMnHVk/857f803c873979970c177e6bd53b02fa/iStock-1310377562.jpg" alt="Moving beyond reliance on the ski season is the main aim of the masterplan." data-mce-src="//images.ctfassets.net/8pr762qjocl3/3xBmyYBNGmO4Ge8rxMnHVk/857f803c873979970c177e6bd53b02fa/iStock-1310377562.jpg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ Moving beyond reliance on the ski season is the main aim of the masterplan.<br><br></span></div></div><p>Kapetanakos says he hopes the curriculum offered at the mooted country university will cater to the area and offer subjects such as sports and leisure management.</p><p>It's understood the Jindabyne community is largely supportive of the masterplan after the region was hard hit by Covid-induced shutdowns and lockouts during the past two years.</p><p>The area is now trying to recover amid dire staffing shortages and rosters affected by Covid and flu on a daily basis.&nbsp;</p><p>Aside from the master plan, the good news is that it has been the best start to the ski season for 20 years, which should go some way to helping the region’s recovery.<br><br></p><hr><p><br><strong>You are currently experiencing <em>The Urban Developer</em> Plus (TUD+), our premium membership for property professionals.<a href="https://www.theurbandeveloper.com/membership-plans" data-mce-href="https://www.theurbandeveloper.com/membership-plans"> Click here to learn more.</a></strong></p><div id="2GhuueZl01Zwo2aFfjNVi2"><picture><img src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg" alt="TUD + Banner" data-mce-src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg"></picture></div>

A 40-year masterplan for the town at the heart of the NSW ski fields will create opportunities for developers as Jindabyne strives to establish a year-round economy…


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<p>With new projects seemingly emerging on a weekly basis, there’s no doubt the Gold Coast is running hot, especially in the residential sector.</p><p>But is that all set to change? Apartment construction on the coast is <a data-mce-href="https://www.theurbandeveloper.com/articles/wave-of-towers-planned-for-gold-coast-beachfront-strip" href="https://www.theurbandeveloper.com/articles/wave-of-towers-planned-for-gold-coast-beachfront-strip" target="_blank" rel="noopener">nearing the peak of its cycle</a> but material shortages exacerbated by the recent floods risk slowing projects down.</p><p>And despite low supply, there’s little appetite for new commercial projects, especially in the office space, with this part of the market showing definite signs of having plateaued.</p><p>PRD Real Estate’s data shows there are 443 projects slated for this year across the Gold Coast.</p><p>Of these, 22 are local government owned and 29 state government owned—none have been abandoned or deferred.&nbsp;</p><p>“All have either firm, commence construction, early or possible project status. The rest of the 392 projects are privately owned,” PRD Real Estate chief economist Diaswati Mardiasmo says.</p><p>“Of these, 19 have been abandoned and 20 have a status of deferred.”</p><p>The 19 projects listed as abandoned range from an estimated value of $2.1 million for a seven-townhouse project at Pimpama-Jacobs Wells, to $350 million for the Orion Towers mixed-use development proposed for Surfers Paradise.&nbsp;</p><div id="6kCPmZ3td2cpTBnLr5O9hy"><picture><img src="//images.ctfassets.net/8pr762qjocl3/4HQfcWVb1nj7rb4nW51IhR/a79417ce6ff3ec038e111dd6fdfb4341/Orion-Towers_12_v1.jpeg" alt="Plans for the 103-storey Orion Towers in Surfers Paradise were dumped in August." data-mce-src="//images.ctfassets.net/8pr762qjocl3/4HQfcWVb1nj7rb4nW51IhR/a79417ce6ff3ec038e111dd6fdfb4341/Orion-Towers_12_v1.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ Plans for the 103-storey Orion Towers in Surfers Paradise were dumped in August.<br><br></span></div></div><p>“Most of the abandoned projects would have added apartments to the market in various areas of Gold Coast. Others included industrial sheds, retirement villages and commercial uses,” Mardiasmo says.&nbsp;</p><p>Rider Levett Bucknall director Jim Krebs​ says it’s been a very positive couple of years for the Gold Coast for revenue growth and sales volumes, and that has resulted in higher approvals values across the board.&nbsp;</p><p>“But the feasibility of some projects is now under pressure and a number have been formally put on hold,” she says.</p><p>“In other instances, developers are taking stock of the market and trying to find a way to make feasibilities work, coming off the back of a couple of years of very solid growth and healthy DA approvals.”</p><p>Krebs notes that the Gold Coast has historically had low supply levels of apartment stock and very low vacancy rates from a rental perspective.</p><p>“So, there's opportunities there for both build-to-sell and build-to-rent projects,” he says.&nbsp;</p><p>While new projects are still coming, construction activity is likely at the top of its current cycle. But solid fundamentals still support the residential market, particularly smaller scale developments and larger apartments aimed at owner-occupiers.</p><p>&nbsp;“There’s been a lot of action at the mid-market level in recent years and there's a couple of reasons for that,” Krebs says.</p><p>“These properties are easier to market and are more suited to owner occupiers versus investors.</p><p>“They are also less risky in terms of the amount of capital needed, size of site, funding availability and risk profile.</p><p>“A number of larger scale, 200-plus unit developments are launching sales this year. So, there is confidence around that sector of the market.”</p><div id="2pNX42lC0cZMLl0N1CYzup"><div id="5wmWNPNkpNaLsigvKq4DEy"><picture><img src="//images.ctfassets.net/8pr762qjocl3/4XWSDJNRiHLSnRVZSZ2tAV/da4897ec6638c7e91effdbc89e98f618/leith_group.jpeg" alt="Sydney developer Leith Group’s planned 27-storey, 96-apartment development in Surfers Paradise." data-mce-src="//images.ctfassets.net/8pr762qjocl3/4XWSDJNRiHLSnRVZSZ2tAV/da4897ec6638c7e91effdbc89e98f618/leith_group.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ Sydney developer Leith Group’s planned 27-storey, 96-apartment development in Surfers Paradise. <br><br></span></div></div></div><p>For the coast’s commercial property sector, CBRE director Tania Moore says while the office market has seen limited new supply during the past decade, above average leasing take-up during the past two years has seen vacancy rates fall to below 10 per cent for the first time since 2008.</p><p>“This reduction in vacancy has activated investigation into the feasibility of new office developments across the Gold Coast and particularly along the M1 corridor where land values are more affordable,” she says.&nbsp;</p><p>Nevertheless, Moore says, market conditions currently do not support a high volume of new supply to enter the market, as happened from 2006 to 2009 when more 110,000sq m of office space was delivered.</p><p>“This is primarily due to lack of land supply, heavy scrutiny on constructions costs due to supply chain issues and rental levels requiring further growth to support current construction costs,” she says.</p><p>“These constraints to new development will ensure a more controlled approach to new supply but also support strong market fundamentals for existing office landlords, based on tenant appetite for space.”&nbsp;&nbsp;&nbsp;&nbsp;</p><p>CBRE’s data shows that currently there is 21,207sq m of office space under construction across six buildings from the southern to northern Gold Coast.</p><p>Only three of these are in traditional office precincts, which will provide challenging market conditions for occupiers who want to be on the coastal strip.</p><p>Buildings under construction are sitting around 40 per cent pre-commitment levels and all buildings are due for competition by the first quarter of 2023.</p><h2>Inflation the challenge</h2><p><br>Inflation affecting the cost of construction is the single largest challenge facing Gold Coast property developments.</p><p>“There has been significant cost escalation, particularly in residential tower developments,” Krebs says.</p><div id="1RhOqSGSXwq4HEyk9bV2bZ"><picture><img src="//images.ctfassets.net/8pr762qjocl3/5peyoPHawchDaT3uSFEwc9/03a70e134abb93fe7a76fa8d82303a0a/21_broadbeach_blvd.jpeg" alt="A render of the 24-storey, $85-million apartment high-rise proposed for Broadbeach by QNY Group." data-mce-src="//images.ctfassets.net/8pr762qjocl3/5peyoPHawchDaT3uSFEwc9/03a70e134abb93fe7a76fa8d82303a0a/21_broadbeach_blvd.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ A render of the 24-storey, $85-million apartment high-rise proposed for Broadbeach by QNY Group.<br><br></span></div></div><p>“This has been driven by substantial increases in materials costs underpinned by rising commodity prices and disruptions to supply chains, increases in logistic costs, shippings, extended lead times and shortages in skilled resources and capacity.”</p><p>This is a particular problem for reinforcement steel, aluminium windows and doors and heavily processed items.&nbsp;</p><p>“A wet summer, a large flood repair bill across south-east Queensland and northern NSW, and geopolitical issues are exacerbating some of the supply chain and logistic challenges. So external market factors are influencing construction more than just economic factors,” Krebs says.</p><p>As for who’s investing in projects, Mardiasmo says there is still a large proportion of projects owned by private entities, who account for 88 per cent of the projects.</p><p>Of the 392 privately owned projects, NSW investors account for 16, Queensland investors for 368, South Australians are funding two projects and Victorian investors have an interest in six.&nbsp;</p><p>“It’s still mostly Queensland players. Overall, 230 of the projects in 2022 are being spearheaded by Gold Coast companies, which will contribute to local job creation,” she says.&nbsp;</p><p>Although the cycle may be close to topping out, there is still optimism in the Gold Coast market.</p><p>“The fundamentals are still very strong in terms of population growth, lifestyle and buyer demand,” Krebs says.</p><p>“Supply is still low, so that will means developments can continue to get out of the ground, albeit with a little bit more scrutiny around ensuring contract prices remain at competitive levels.”<br><br></p><hr><p><br></p><div id="2GhuueZl01Zwo2aFfjNVi2"><picture><img src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg" alt="TUD + Banner" data-mce-src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg"></picture></div>

With new projects seemingly emerging on a weekly basis, there’s no doubt the Gold Coast is running hot, especially in the residential sector. But is that all set to change? 

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<p>Opponents of a proposed $26-million development at Perth’s Cottesloe Beach are stepping up their criticism of the building’s limit-breaking height, warning the approval sets a precedent for other proposed developments in the suburb.</p><p>The Western Australian Planning Commission, acting on an approval from the <a href="https://www.theurbandeveloper.com/articles/perth-western-australia-approval-development-projects" data-mce-href="https://www.theurbandeveloper.com/articles/perth-western-australia-approval-development-projects">State Development Assessment Unit</a>, has approved a seven-storey building at 120 Marine Parade, ignoring the Cottesloe council’s five-storey height limit for the area.</p><p>The quick-tick assessment unit was set up temporarily within the Department of Planning, Lands and Heritage during the pandemic to speed up proposals in a bid to revitalise the WA economy.</p><p>Critics are particularly concerned about what the extra permitted storeys will mean for a 12-storey development proposed nearby at the Ocean Beach Hotel.</p><p>The Cottesloe Council is opposed to the development at 120 Marine Parade in its current form but the assessment unit was given the powers to determine proposals of more than $20 million in metropolitan Perth and more than $5 million in regional areas.</p><p>The unit examines proposed projects of state significance for the commission, whose recent performance in the Cottesloe Marine Parade Central Zone has drawn fire from the town’s Residents and Ratepayers Association.&nbsp;&nbsp;</p><p>“It’s not up to the Western Australian Planning Commission just to wave these through and that's been the experience so far,” association chairperson Greg Boland says.</p><p>“They are not correctly applying the provisions of the planning Act. They need to have due regard to the local planning scheme, orderly and proper planning, preservation of amenity, relevant state planning policies and the other policies of the commission.</p><div id="7Ge18SB3ArmmqZOyLCqjiK"><picture><img src="//images.ctfassets.net/8pr762qjocl3/2DBw5ndGfoPi18lxHqJrAk/fe6aeec6c2ad8d98e64e382a68693871/iStock-458980449.jpg" alt="The landmark Indiana Teahouse on Cottesloe Beach.
" data-mce-src="//images.ctfassets.net/8pr762qjocl3/2DBw5ndGfoPi18lxHqJrAk/fe6aeec6c2ad8d98e64e382a68693871/iStock-458980449.jpg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ The landmark Indiana Teahouse on Cottesloe Beach.<br><br></span></div></div><p>“These developments should not be approved just for the sake of approving developments.”</p><p>The assessment unit is processing applications for four of the 12 buildings in the beachfront zone. Some residents fear the seven-storey clearance for 120 Marine Parade sets a precedent for the remaining three at 140, 122 and 94 Marine Parade to break council height restrictions.</p><p>The proposed development at 140 Marine Parade is the biggest with an application for a <a href="https://www.theurbandeveloper.com/articles/quinlivan-files-updated-hotel-plans" data-mce-href="https://www.theurbandeveloper.com/articles/quinlivan-files-updated-hotel-plans">12-storey, $220-million development at the Ocean Beach Hotel site</a>, which will include apartments, a hotel, bar, restaurants, retail and commercial suites.</p><p>Former Cottesloe mayor John Hammond cautioned the government against allowing the skyline to shoot higher, saying it threatened the town’s character and appeal.</p><p>“If there is discretionary consideration given to height, and developments go higher than seven storeys, it will destroy the beauty of the village,” Hammond says.</p><p>“Once you incorporate high rise into a suburb like Cottesloe, which is Western Australia's most recognised beach, you destroy the character of the beach.</p><p>“That's where people flock on the weekends. They want to get away from high rise.”</p><p>Boland says that as Marine Parade is so close to the water, any high-rise buildings would throw shadows on the beach “and ruin it”.</p><div id="2NDFDrz1qmz9B73LPjmi1A"><picture><img src="//images.ctfassets.net/8pr762qjocl3/1u06UkpadSDQW01MELsExO/7eda3c67c0f0e9546d0e872dd5017950/120_marine_pde.jpeg" alt="A render of the now-approved seven-storey development at 120 Marine Parade, Cottesloe Beach." data-mce-src="//images.ctfassets.net/8pr762qjocl3/1u06UkpadSDQW01MELsExO/7eda3c67c0f0e9546d0e872dd5017950/120_marine_pde.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ A render of the now-approved seven-storey development at 120 Marine Parade, Cottesloe Beach.<br><br></span></div></div><p>“In a lot of places, the built environment is more set back. So you don't get those issues of overshadowing the environment on the beachfront but that’s not the case at Cottesloe,” he says.</p><p>Planned for 120 Marine Parade is a $26.3-million apartments and cafe development. Although the application is still under assessment regarding proposed modifications to the basement, ground and first-floor plans, including the relocation of the vehicle-access point from Marine Parade to Napier Street, the approved building height will remain.</p><p>The original plans were submitted to the council when temporary changes were introduced to Western Australia’s Planning and Development Act 2005 to fast-track developments to help the state counter the pandemic’s effects on the economy.&nbsp;</p><p>“The ability to apply for concessions under the temporary laws ended in January. But the developers took the opportunity to apply to build 10 storeys and were approved for seven,” Boland says.</p><p>The unit is also assessing a $27-million application for an apartment, restaurant and retail project next door at 122 Marine Parade.</p><p>“The nature of the proposal for this property remains to be seen but you could assume they would apply for seven storeys, given that there’s a precedent for that,” Boland says.</p><p>An application has also been lodged for a $75-million development including residential apartments, a restaurant cafe, shops and short-stay accommodation at Sea Pines, 94 Marine Parade.&nbsp;</p><p>“We don't know exactly what that application is,” Boland says.</p><div id="35qU5m7Btilsj2GoIHyjrg"><picture><img src="//images.ctfassets.net/8pr762qjocl3/1uwMUkWKdEBSxyPiuVqUPP/9876a53366126f4505e6afb032ee3519/OBH_story_hero.jpeg" alt="A render of the proposed development at 140 Marine Parade, a 12-storey, $220-million project on the Ocean Beach Hotel site." data-mce-src="//images.ctfassets.net/8pr762qjocl3/1uwMUkWKdEBSxyPiuVqUPP/9876a53366126f4505e6afb032ee3519/OBH_story_hero.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ A render of the proposed development at 140 Marine Parade, a 12-storey, $220-million project on the Ocean Beach Hotel site.<br><br></span></div></div><p>The residents association is also raising concerns over proposals for <a href="https://www.theurbandeveloper.com/articles/andrew-forrest-s-indiana-teahouse-project-dodges-dismissal" data-mce-href="https://www.theurbandeveloper.com/articles/andrew-forrest-s-indiana-teahouse-project-dodges-dismissal">the landmark Indiana Teahouse building</a>, which is on the beach.</p><p>“There's a proposal to add a three-storey hotel, which has been opposed by our association. That’s privatising the beachfront, which is public space,” Boland said of the application by Tattarang, the investment company of WA mining billionaires Nicola and Andrew Forrest.</p><p>But Boland insists his association is not anti-development. </p><p>“For instance, the Cottesloe Beach Hotel was developed a few years back, which fully complied with all zoning rules,” Boland says.</p><p>“More recently, 110 Marine Parade was approved within the local planning scheme at five storeys.&nbsp;</p><p>“So, developers can develop within the local planning scheme. But other developers have seen the opportunity to make a profit.”</p><p>The planning commission will schedule meetings to determine how applications will proceed after assessments have been completed.</p><p>The WA government has announced it plans to re-establish the assessment unit until December 2023.<br><br></p><hr><p><strong><br>You are currently experiencing <em>The Urban Developer</em> Plus (TUD+), our premium membership for property professionals.</strong><a href="https://www.theurbandeveloper.com/membership-plans" data-mce-href="https://www.theurbandeveloper.com/membership-plans"><strong> </strong><strong>Click here to learn more.</strong></a></p><div id="2GhuueZl01Zwo2aFfjNVi2"><picture><img src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg" alt="TUD + Banner" data-mce-src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg"></picture></div>

The WA government has been warned that its approval of a seven-storey development at Cottesloe Beach could open the floodgates and ruin the beachfront strip’s character and appeal…

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<p>Australia’s commitment to achieving net zero carbon emissions by 2050 is prompting a boom in <a href="https://www.theurbandeveloper.com/articles/robertstown-solar-billion-reigns-in-renewables-race" data-mce-href="https://www.theurbandeveloper.com/articles/robertstown-solar-billion-reigns-in-renewables-race" target="_blank" rel="noopener">renewable energy projects</a> around the country.</p><p>It is having flow-on effects in terms of construction and development across regional Australia as well as supporting property prices in rural areas, prompting those in the industry to point to its growing importance to rural communities.</p><p>Fifty per cent of Australia’s main electricity grid is expected to come from renewable sources by 2025, with this figure reaching 65 per cent by 2030. It’s estimated an average of $2.1 trillion a year will need to be invested between 2022 and 2025 to reach net zero emissions by 2050.</p><p>PRD Real Estate’s chief economist Diaswati Mardiasmo notes the biggest project by far is a $51-billion wind and solar farm in East Pilbara in Western Australia.</p><p>Among the dozens of other renewable energy projects going on around the country, there’s two wind and solar farm and battery projects in Goyder in South Australia worth $3 billion and $1.17 billion respectively.</p><p>A $1.61-billion <a href="https://www.theurbandeveloper.com/articles/green-hydrogen-role-property-industry" data-mce-href="https://www.theurbandeveloper.com/articles/green-hydrogen-role-property-industry" target="_blank" rel="noopener">renewable hydrogen project</a> as well as solar and wind farms are being built in Gladstone in Queensland.</p><p>“These projects reflect Australia’s commitment to net zero carbon emissions by 2050. A pipeline of future initiatives in this sector were also outlined in the 2022 federal budget,” Mardiasmo says.</p><p>The Clean Energy Finance Corporation (CEFC) is driving a range of developments. So far, it has invested $10.3 billion in renewable energy projects and it has another $4.6 billion to spend.&nbsp;</p><div id="5wSVjsX9DF0mWpW8tmM8He"><picture><img src="//images.ctfassets.net/8pr762qjocl3/6KQUiurZxynSpLq7tMZbcd/08f232753f8c97eb35ae62db7cbc4de9/220210_Lot-Fourteen-District-Ove.jpeg" alt="An impression of the Adelaide development Lot Fourteen." data-mce-src="//images.ctfassets.net/8pr762qjocl3/6KQUiurZxynSpLq7tMZbcd/08f232753f8c97eb35ae62db7cbc4de9/220210_Lot-Fourteen-District-Ove.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ An impression of the Adelaide development Lot Fourteen.<br><br></span></div></div><p>Its Blind Creek development, part of a joint venture with specialist renewable energy developer Octopus Australia, is a solar and storage generation facility near Bungendore in NSW.</p><p>When it’s built, its 350MW solar farm will produce up to 735,00MWh per year, enough to power more than 124,000 houses. Lamb farming will continue alongside the solar farm.&nbsp;</p><p>The Gippsland Renewable Energy Park, another JV between CEFC and Octopus Australia, is a large-scale clean energy park in Gippsland, an area that has been an important contributor to the National Electricity Market for many years.&nbsp;</p><p>There’s so much development going on around renewable energy projects in regional Australia, it’s <a href="https://www.theurbandeveloper.com/articles/retail-giant-digs-in-to-aud2-trillion-circular-economy" data-mce-href="https://www.theurbandeveloper.com/articles/retail-giant-digs-in-to-aud2-trillion-circular-economy">influencing the nature of new development</a> in urban centres. For instance, there’s enough clean energy being produced in South Australia, new buildings are being designed and built so they are solely powered by renewable sources.&nbsp;</p><div id="5wSVjsX9DF0mWpW8tmM8He"></div><p>“Our 42,000sq m office building development at <a href="https://www.theurbandeveloper.com/articles/google-adelaide-lot-fourteen-tech-hub-precinct-plans" data-mce-href="https://www.theurbandeveloper.com/articles/google-adelaide-lot-fourteen-tech-hub-precinct-plans">Lot Fourteen is totally powered by electricity</a> from renewable sources, rather than gas, because the South Australian electricity grid has become so clean,” says Shane Quinn, executive chairman of property private equity firm Quintessential Equity.&nbsp;</p><h2>Regional network effects&nbsp;</h2><p><br>Renewable energy is an entirely new industry in many regional areas, which has flow-on effects across commercial and residential property developments.&nbsp;</p><p>Mardiasmo says the volume of residential developments planned in regional areas in 2022 and 2023, <a href="https://www.theurbandeveloper.com/articles/plans-filed-for-100-townhouse-lakeside-estate-near-perth" data-mce-href="https://www.theurbandeveloper.com/articles/plans-filed-for-100-townhouse-lakeside-estate-near-perth">particularly for stand-alone houses</a>, is much greater than for capital cities, in part due to the renewable energy development boom.&nbsp;</p><p>“Many of these projects are in areas that still have a low and very affordable median house prices,” she said.</p><p>“For example in Goyder, the median house price is still under $250,000. In fact, properties in most areas where clean energy projects are being built are still undervalued.</p><p>“But during the past 12 months, there has been price growth alongside a rise in the number of sales.”</p><p>CEFC executive director Monique Miller notes multiple flow-on effects accrue for regions where projects are being developed.</p><p>Octopus Australia estimate that construction of the Gippsland Renewable Energy Park will generate hundreds of jobs in the region, which comes with a secondary boost to local businesses that fill a wide range of services to support developments.&nbsp;</p><p>“Having a wind or solar project built in a regional area can deliver a significant boost to the region’s economy, providing opportunities for local businesses across the economy, including hospitality, retail, fencing, roads and security.”&nbsp;&nbsp;</p><p>For example, Beon, a contractor that has built several solar projects in which CEFC has invested, makes a significant effort to offer local employment opportunities in the community, including for traditionally disadvantaged groups.&nbsp;&nbsp;</p><div id="7ACY4CN2OytzgCIQpDmHP5"><picture><img src="//images.ctfassets.net/8pr762qjocl3/21tlAQjRZZArJH1vQOfIeH/7bff0b1adda3eba7994f283a011bd666/iStock-1308196481.jpg" alt="Employment created by the projects is substantial and can play a key roles in a rural community’s viability." data-mce-src="//images.ctfassets.net/8pr762qjocl3/21tlAQjRZZArJH1vQOfIeH/7bff0b1adda3eba7994f283a011bd666/iStock-1308196481.jpg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ Employment created by the projects is substantial and can play a key roles in a rural community’s viability.<br><br></span></div></div><p>One ACTU report notes on one solar project, Beon has provided employment opportunities to&nbsp;90 long-term unemployed people, 38 Aboriginal people, 14 people from culturally and linguistically diverse backgrounds, 12 people on community-based orders and four people with a disability.&nbsp;</p><p>“Providing these opportunities not only boosts the local economy but also really changes the personal trajectory for individuals by skilling them up to participate and benefit from the significant amount of work that will need to be done in regions for the energy transition,” says Miller.&nbsp;</p><p>“Long-term, renewable energy projects can offer a tangible pathway to participating in a clean energy economy that can boost local regional economies and strengthen local energy supplies and reduce reliance on more expensive alternatives.”</p><p>This is particularly relevant in light of the challenges that have affected regional Australia in the last few years including bushfires, drought and, more recently, <a href="https://www.theurbandeveloper.com/articles/flood-disaster-tipped-to-intensify-construction-crisis" data-mce-href="https://www.theurbandeveloper.com/articles/flood-disaster-tipped-to-intensify-construction-crisis">floods</a> as well as the decline of local industries that might include timber and coal-based generation.&nbsp;</p><p>Miller says that solar projects can offer local employment opportunities that build skills transferable to other project types.&nbsp;</p><p>“Regional hubs of renewable energy have been developed in towns like Port Augusta, Collinsville and in the coming years the Gippsland region, and local businesses in these towns also benefit from the ongoing operations and maintenance opportunities.”&nbsp;</p><div id="4JtBgyklWqXjvXZgi0VaTl"><picture><img src="//images.ctfassets.net/8pr762qjocl3/3VmkgblvKVgwQ7VD5p30MK/93d57a3f4cb23ae905a745080eb3e104/0534e6cb50d8d9c4f2c686f492df8986.jpeg" alt="Clean energy projects and traditional uses of the land including farming can co-exist." data-mce-src="//images.ctfassets.net/8pr762qjocl3/3VmkgblvKVgwQ7VD5p30MK/93d57a3f4cb23ae905a745080eb3e104/0534e6cb50d8d9c4f2c686f492df8986.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ Clean energy projects and traditional uses of the land including farming can co-exist.<br><br></span></div></div><p>Miller notes the Blind Creek project also shows that sheep grazing and solar farming can co-exist and provide a diversified revenue stream to local landholders.&nbsp;</p><p>“This can make a meaningful difference to individual farmers who can drought-proof their farm earnings and help maximise the possibility of the farm remaining in the family for future generations. Smaller scale renewable energy projects can support regions too.&nbsp;</p><p>“The CEFC has worked with agriculture and food businesses that are cutting costs and improving productivity by investing in energy efficient equipment.”</p><p>Regional areas will only continue to benefit as the pipeline of renewable energy projects gathers pace around the country towards the 2050 net zero emissions deadline.<br><br></p><hr><p><strong><br>You are currently experiencing <em>The Urban Developer </em>Plus (TUD+), our premium membership for property professionals.<a href="https://www.theurbandeveloper.com/membership-plans" data-mce-href="https://www.theurbandeveloper.com/membership-plans"> Click here to learn more.</a></strong></p><div id="2GhuueZl01Zwo2aFfjNVi2"><picture><img src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg" alt="TUD + Banner" data-mce-src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg"></picture></div>

Property and sites near billion-dollar clean energy projects remain undervalued, but prices, along with sales, are growing as people start to pay attention… 

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<p>The sale of <a href="https://www.theurbandeveloper.com/articles/house-prices-offset-construction-costs-for-stockland" target="_blank" rel="noopener" data-mce-href="https://www.theurbandeveloper.com/articles/house-prices-offset-construction-costs-for-stockland">Stockland’s $987-million retirement living portfolio</a> to Sweden’s EQT Infrastructure in February was part of a major reshuffle of two commercial property subsectors—retirement living and aged care.&nbsp;</p><p>RetireAustralia’s $1-billion portfolio of retirement village assets is also on the block. Experts predict a shake-up of these markets in the years ahead.</p><p>A major shift driving aged care accommodation and retirement living is the transition to a <a data-mce-href="https://www.theurbandeveloper.com/articles/home-care-package-budget-seniors-living" href="https://www.theurbandeveloper.com/articles/home-care-package-budget-seniors-living" target="_blank" rel="noopener">“living in place” model</a> that brings together these presently disparate parts of the commercial property market.</p><p>The idea is for people to stay in the one spot as they age. But combining aged care and retirement living is easier said than done, as aged care is a federal responsibility, while retirement living is managed by the states. Working through this will take years to resolve.</p><p>“The increasing emphasis on ageing in place will drive <a data-mce-href="https://www.theurbandeveloper.com/articles/baby-boomers-retirement-demand" href="https://www.theurbandeveloper.com/articles/baby-boomers-retirement-demand" target="_blank" rel="noopener">new types of retirement villages</a> and significant change in the fabric of our suburbs,” says PRD chief economist Diaswati Mardiasmo.</p><p>Mardiasmo says Australian communities need to become increasingly age-equitable and inclusive.</p><p>So, multi-disciplinary design teams including urban planners, public realm and placemaking specialists and architects need to work together to achieve good outcomes.</p><p>Australian Unity’s Better Together model is designed around the living in place concept and supports seniors as they transition from independent retirement accommodation through to assisted living and then into age care.</p><div id="2G1Pz6GIUJv5fWbmoRKS1z"><picture><img src="//images.ctfassets.net/8pr762qjocl3/6JGT1DPjn9H4ygb2AmAjX1/376b39920b0a58bc56147f2bd0cf48c9/M22019_Rathdowne-Place-Aged-Care_copy.jpeg" alt="Inside Rathdowne Place in Melbourne's Carlton." data-mce-src="//images.ctfassets.net/8pr762qjocl3/6JGT1DPjn9H4ygb2AmAjX1/376b39920b0a58bc56147f2bd0cf48c9/M22019_Rathdowne-Place-Aged-Care_copy.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ Inside Rathdowne Place in Melbourne's Carlton.<br><br></span></div></div><p>One of its flagship developments is its Rathdowne Place precinct, which has a 162-bed aged care facility and 92 vertical retirement living apartments in the inner city suburb of Carlton in Melbourne.&nbsp;</p><p>David Bruce-Clarke is JLL’s Australian senior director for alternative investments. He says property owners in retirement living and aged care are working out the best ways to transition to a living in place model.</p><p>“Some will maximise existing facilities or find ways to move obsolete stock by selling or redeveloping,” he says.</p><p>Mardiasmo says two models are likely to become popular as the aging in place strategy gains traction.</p><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><hr></div></div></div><div class="row ci"><div class="cell cell-sm-3 cx12"><div class="ci cl"><div><picture><img src="//images.ctfassets.net/8pr762qjocl3/4YFqaD7dF585dgfhF97pV8/1d870c577244b2c168cf03e864faa113/residential_manufactured_home_vsummit_cta_image.jpg" alt="Hotel vSummit CTA" data-mce-src="//images.ctfassets.net/8pr762qjocl3/4YFqaD7dF585dgfhF97pV8/1d870c577244b2c168cf03e864faa113/residential_manufactured_home_vsummit_cta_image.jpg"></picture><div><br></div></div></div></div><div class="cell cell-sm-9 cx12"><div class="ci cl"><p>Join <em>The</em> <em>Urban Developer's</em> Developing For An Ageing Demographic vSummit on April 28. <a data-mce-href="https://www.eventbrite.com.au/e/the-urban-developer-developing-for-an-ageing-demographic-vsummit-tickets-314033802557?aff=tudwebsite0content0supplementary2" href="https://www.eventbrite.com.au/e/the-urban-developer-developing-for-an-ageing-demographic-vsummit-tickets-314033802557?aff=tudwebsite0content0supplementary2" target="_blank"><strong>Click here</strong></a> to secure your ticket.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><hr></div></div></div><p>The rural model combines retirement living and aged care accommodation located in affordable suburbs outside city areas. Examples include Aveo’s The Parks property in Cairns in Queensland and Lend Lease’s Woodvale property in&nbsp; Western Australia.&nbsp;&nbsp;</p><p>The other, city-based model co-locates aged care and retirement living in high rise and other buildings in urban centres.</p><p>“This is ideal for those who would like to stay within the community in which they have lived for many years,” Mardiasmo says.</p><p>Examples include Aveo Newstead in Brisbane, Australian Unity’s Drummond Place in Melbourne and Adventist Care’s Australis at Rossmoyne in Perth.&nbsp;</p><div id="3qpMVCvYShWdsZi8xgBDjK"><picture><img src="//images.ctfassets.net/8pr762qjocl3/3RPL21oE046mHPfO1rLcrL/811444be81ef3ec79f8bb1bdab617f16/The_Parks_Village_Streetscape_lo.jpeg" alt="Aveo’s The Parks property in Cairns." data-mce-src="//images.ctfassets.net/8pr762qjocl3/3RPL21oE046mHPfO1rLcrL/811444be81ef3ec79f8bb1bdab617f16/The_Parks_Village_Streetscape_lo.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ Aveo’s The Parks property in Cairns.<br><br></span></div></div><p>An international trend yet to be adopted in Australia are developments where adult children can reside with elderly parents.</p><p>“This will become more popular as multi-generational living becomes more accepted in Australia,” says Mardiasmo.</p><p>University or school-based retirement communities where elderly residents are connected with and share facilities with learning institutions, sometimes even working for them, are another possibility.</p><h2>Making the figures work<br></h2><p><br>One of the challenges in this sector is to strike a balance between property investors’ and developers’ requirement to generate a return from a highly regulated market, with the community’s need to care for people at the end of their lives whatever their means.&nbsp;</p><p>“Operators are looking at how best to manage their existing property portfolios in light of this and how to work with what they've got in the interim period,” says Bruce-Clarke.</p><p>“At the same time, they are exploring how to deliver the correct accommodation product for the next generation of retirees and seniors.</p><p>“Developing aged care has always been tricky to get right financially. Bigger groups have been more successful but this is tougher for the smaller end of the market.”&nbsp;&nbsp;</p><p>The financial drivers within the aged care sector are changing, further complicating an already complex area.</p><p>Market intel suggests fewer people want to pay a refundable accommodation deposit (RAD), which has been the preferred approach for residents entering new aged care facilities.</p><div id="17FmrnyamENtX6u84feIvf"><picture><img src="//images.ctfassets.net/8pr762qjocl3/59DQ6loyJmxQtLzWgUOnVH/0b6dafc6123d371b1a3d3ea5a46c38e8/Rossmoynehero.102902.jpg" alt="Adventist Care’s Australis at Rossmoyne in Perth." data-mce-src="//images.ctfassets.net/8pr762qjocl3/59DQ6loyJmxQtLzWgUOnVH/0b6dafc6123d371b1a3d3ea5a46c38e8/Rossmoynehero.102902.jpg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ Adventist Care’s Australis at Rossmoyne in Perth.<br><br></span></div></div><p>Aged care developers may need to re-think the business model if each bed costs $300,000 to build, but they can’t underwrite the investment with RADs.&nbsp;</p><p>In terms of financing, Australian Unity often co-invests alongside private third-party capital.</p><p>Its general manager of social infrastructure Ryan Banting says the challenge is how to repay investors when aged care beds are empty, and therefore not generating a return, because operations are going to be discontinued at the facility or it’s going to be renovated.</p><p>“RADs are the most obvious choice to repay any significant capital investment the group has made for a new asset, but they are not the only way,” says Banting.</p><p>&nbsp;“If residents pay a combination of both a RAD and daily accommodation payments, we can securitise those ongoing payments to cover the capital cost of the investment.”</p><p>But, refundable accommodation deposits are expected to be phased out as part of the new Australian National Aged Care Classification. Banting expects aged care sector funding to increase as part of this evolution.&nbsp;</p><p>Australian Unity finances construction of some new facilities through development funds, which are bespoke investment vehicles that pay for the construction and delivery of new assets.</p><p>“We look to raise equity from wholesale investors to partner with the Australian Unity group and build brand new assets,” says Banting.</p><p>“And the majority of those assets have been co-located assets.”</p><p>Case in point is the Rathdowne Place retirement village and aged care facility.&nbsp;</p><div id="7xuyLxNXukjBFN0mQQPFzW"><picture><img src="//images.ctfassets.net/8pr762qjocl3/fbyeD0rCkfQtg38rvIeAA/f585f21850ac57968632a691779f69c3/drummond-place-apartments-banner.jpeg" alt="Australian Unity’s Drummond Place in Melbourne." data-mce-src="//images.ctfassets.net/8pr762qjocl3/fbyeD0rCkfQtg38rvIeAA/f585f21850ac57968632a691779f69c3/drummond-place-apartments-banner.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ Australian Unity’s Drummond Place in Melbourne.<br><br></span></div></div><p>An obvious question is why investors would remain exposed to the highly-regulated aged care sector if they can get the same level of return in another sector, without having to meet stringent regulatory requirements, which have only become more onerous following the Royal Commission into Aged Care Quality and Safety in 2018.</p><p>“Governments and stakeholders need to work together to encourage private industry and developers to continue to develop,” says Bruce-Clarke.</p><p>But it’s worth noting investors can see aged care versus other property sub-sectors as having very different risk-reward propositions, with both having a place in a property portfolio.</p><p>Plus, returns from aged care and retirement living are attractive, another reason investors remain exposed to the sector.&nbsp;</p><p>Of course, some assets won’t lend themselves to the co-location of retirement living and aged care accommodation.</p><p>Other properties built long ago may not be suitable to remain as senior accommodation and will be knocked down or repurposed into another property type.</p><p>What is certain is demand for both retirement and aged care accommodation will only grow as the population continues to age, which will keep developers and investors exposed to these sectors for decades to come.&nbsp;</p><hr><p><strong><br>You are currently experiencing <em>The Urban Developer</em> Plus (TUD+), our premium membership for property professionals.</strong><a href="https://www.theurbandeveloper.com/membership-plans" data-mce-href="https://www.theurbandeveloper.com/membership-plans"><strong> </strong><strong>Click here to learn more.</strong></a></p><div id="2GhuueZl01Zwo2aFfjNVi2"><picture><img src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg" alt="TUD + Banner" data-mce-src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg"></picture></div>

[+] camellia-rosewood hero web.jpg

<p>The first steps to transform an industrial heartland into a residential hub on the doorstep of Sydney’s CBD have been taken with submissions closing for the Camellia-Rosehill Place Strategy.</p><p>The initiative is a 20-year plan to redevelop an under-utilised, complex and toxic site that, nevertheless, has potential. The precinct includes the historically significant Rosehill racetrack.&nbsp;</p><p>“The NSW government’s Camellia-Rosehill Place Strategy will feature a town centre and thousands of new homes that will be supported by infrastructure and public spaces,” says Tony Durante, Colliers’ national director of industrial.</p><p>“This will be accompanied by a new urban services precinct as well as heavy industrial land that will ensure there is a broad mix of employment opportunities within the precinct.”</p><p>The place strategy is zoned mixed-use, with an emphasis on urban renewal.</p><div><picture><img src="//images.ctfassets.net/8pr762qjocl3/QEkGwavOvwys0DMsRmhj7/63c66691d09494ba252a0bb44e2b7b16/sp-mpl-ATC-Rosehill-Racecourse-0.jpeg" alt="The Camellia-Rosehill precint is 18km west of Sydney." data-mce-src="//images.ctfassets.net/8pr762qjocl3/QEkGwavOvwys0DMsRmhj7/63c66691d09494ba252a0bb44e2b7b16/sp-mpl-ATC-Rosehill-Racecourse-0.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ The Camellia-Rosehill precint is 18km west of Sydney.<br><br></span></div></div><p>As Jazmin van Veen, the acting director of the Greater Parramatta and Olympic Peninsula, told a recent online forum discussing the future of the precinct, there is an opportunity to create an integrated network of green infrastructure and <a data-mce-href="https://www.theurbandeveloper.com/articles/camellia-metro-west-station-sydney" href="https://www.theurbandeveloper.com/articles/camellia-metro-west-station-sydney">complete the missing link along the Parramatta River</a> to connect the Parramatta CBD through to Olympic Park.&nbsp;</p><p>“The place strategy is also looking at improved road accessibility, which will enhance the productivity of both the current industrial uses and encourage employment growth,” she says.</p><p>The self-contained, 300ha precinct is defined by clear borders—the Parramatta River to the north, Duck River to the east, the M4 to the south and James Ruse Drive to the west.</p><p>The site will be crossed by the <a data-mce-href="https://www.theurbandeveloper.com/articles/parramatta-light-rail-stage-2-in-doubt" href="https://www.theurbandeveloper.com/articles/parramatta-light-rail-stage-2-in-doubt">Parramatta light rail</a>, which is key to opening up the precinct. The land includes the asbestos-contaminated Viva Energy site, a major hazard facility at the east of the precinct, which requires remediation.</p><p>The precinct is at the heart of a massive program of infrastructure investment in western Sydney, accounting for approximately 90 per cent of future transport infrastructure funding that has been allocated by the NSW government to date.</p><p>The <a data-mce-href="https://www.theurbandeveloper.com/articles/transurban-consortium-spends-20bn-to-control-westconnex" href="https://www.theurbandeveloper.com/articles/transurban-consortium-spends-20bn-to-control-westconnex" target="_blank" rel="noopener">$16.8-billion WestConnex road</a>, a 33km underground motorway between Homebush and Kingsgrove, to be completed in 2023, is a crucial piece of infrastructure.</p><div id="6S2CHHeIwQpfrx2WgMnGKF"><picture><img src="//images.ctfassets.net/8pr762qjocl3/OMvtVoe7TZNJarwFHDmgy/dd17d86bda4ad7c5ab19bb21343bbf90/cr_mid1.jpeg" alt="A concept render of the Camellia-Rosewood precinct." data-mce-src="//images.ctfassets.net/8pr762qjocl3/OMvtVoe7TZNJarwFHDmgy/dd17d86bda4ad7c5ab19bb21343bbf90/cr_mid1.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ A concept illustration of part of the landmark Camellia-Rosewood precinct.<br><br></span></div></div><p>Assuming it is approved, the Camellia-Rosehill place strategy makes provision for a thriving town centre and a late-night entertainment precinct next to the existing Rosehill racecourse.</p><p>The proposal details new public open spaces, including opening up the Parramatta river foreshore, as well as new schools. There will still be some heavy industrial land use on the site so as not to compromise the precinct's role as an industrial and employment hub.</p><p>The NSW government estimates renewal of the precinct will create 14,500 jobs and lead to 10,000 new homes being built.</p><p>The government says the plan takes a holistic approach to addressing the contamination of the Viva Energy site, and addresses the potential for land use conflict between industrial and residential uses.</p><p>It guides future land use and infrastructure investment decisions across public and private use. The document includes a masterplan and draft land use framework, including planning controls that will be considered and refined should rezoning of the precinct progress.</p><p>Professor of practice at the University of NSW Shane Geha&nbsp;says the rezoning of the Camellia-Rosehill precinct needs to be carefully managed so there is an agglomeration of commercial uses in the one precinct.</p><p>“If not, the desired rents are usually not able to be achieved and, therefore, the precinct typically declines over time,” he said.</p><div><picture><img src="//images.ctfassets.net/8pr762qjocl3/4BgnxryML1MY0FRv2cgQbj/12056e6b21ea9e664051c4bbb8faeb65/rosehill.jpeg" alt="Historic Rosehill racecourse is included in the area under review." data-mce-src="//images.ctfassets.net/8pr762qjocl3/4BgnxryML1MY0FRv2cgQbj/12056e6b21ea9e664051c4bbb8faeb65/rosehill.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ Rosehill racecourse is included in the area under review.<br><br></span></div></div><p>The Camellia-Rosehill site has numerous restrictions with which developers will have to grapple. For example, a significant volume of heavy vehicle traffic uses the precinct, but access is constrained by just two roads.</p><p>As recent weather has demonstrated, the <a data-mce-href="https://www.theurbandeveloper.com/articles/flood-disaster-tipped-to-intensify-construction-crisis" href="https://www.theurbandeveloper.com/articles/flood-disaster-tipped-to-intensify-construction-crisis">precinct is subject to flooding</a> from the Parramatta River, the Duck River, Duck Creek and A'becketts Creek.&nbsp;</p><p>Geha says these barriers should not be underestimated.&nbsp;</p><p>“The water table and site contamination needs a detailed approach. The water table is very high in Parramatta,” he says.</p><p>“This is a serious issue for both flooding and the travel of contaminants in the soil and subsurface rocks. This is typically treated by full removal from the site or sealed containment on-site under an open space area. Both have been done very successfully in the past on many projects.”&nbsp;</p><div><picture><img src="//images.ctfassets.net/8pr762qjocl3/1S3MzSAtl2UWXUsNyTdzSm/5bf8de73726bcf97ae9c89aae80ba998/mid_cr_3.jpeg" alt="There are considerable hurdles to overcome before the precint's transformation can come to fruition." data-mce-src="//images.ctfassets.net/8pr762qjocl3/1S3MzSAtl2UWXUsNyTdzSm/5bf8de73726bcf97ae9c89aae80ba998/mid_cr_3.jpeg"></picture><div><span style="opacity: 0.8;" data-mce-style="opacity: 0.8;">▲ There are considerable hurdles to overcome before the precint's transformation can come to fruition.<br><br></span></div></div><p>Colliers’ Durante says it is a mistake to underestimate the scale of what’s required for access.</p><p>“The largest barrier facing rezoning is that land that was formally zoned for heavy industrial purposes will require suitable remediation to qualify for an alternative and rezoning.”</p><p>He says transport is the main planning constraint, although this is being resolved with improved connections, including light rail and road upgrades scheduled to be incorporated into the development.&nbsp;</p><p>While the development strategy is comprehensive, there are many problems to address as the rezoning of this site progresses. How these are solved, and the success or otherwise of this landmark proposal, will be keenly watched across the property sector.</p><hr><p><br><strong>You are currently experiencing <em>The Urban Developer</em> Plus (TUD+), our premium membership for property professionals.<a href="https://www.theurbandeveloper.com/membership-plans" data-mce-href="https://www.theurbandeveloper.com/membership-plans"> Click here to learn more.</a></strong></p><div><picture><img src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg" alt="TUD + Banner" data-mce-src="//images.ctfassets.net/8pr762qjocl3/12UMq5eMSEOh0QxJVBYaDt/d7507cf4ceb1365cc9ce7eaff84d06cc/tud___banner.jpg"></picture></div>

The rebirth of an industrial heartland into a residential hub near Sydney’s centre is nothing if not ambitious. Two decades in the planning and counting, The Urban Developer looks at where the project is now, and what’s ahead…

Foreign investors to pick off local property assets in 2022

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Offshore investors sunk $16.6 billion into local office, retail and hotel assets this year, rounding out a strong year of foreign investment in Australian commercial property. </p><p>The Singaporeans led the charge, making up 39 per cent of dollars exchanged, while North American investors accounted for 31 per cent of foreign activity in the local real estate market. </p><p>And the trend is likely to continue into 2022 as borders re-open and bullish offshore investors indicate an appetite for a high level of real estate allocation. </p><p>Major transactions involving foreign money included the $925-million sale of a 50 per cent stake in Grosvenor Place to Blackstone, the $3.8-billion sale of the Milestone industrial portfolio to a partnership between GIC and ESR Australia, the $538.2-million sale of a half stake in Sydney’s Queen Victoria Building, The Strand Arcade and The Galeries to a Link REIT and EG Funds partnership and the $315-million sale of the Sofitel Wentworth Sydney hotel to KKR, Futuro Capital and Marprop. </p><p>Office remained the most invested in asset class, with a rise in office asset values predicted for 2022. </p><p>Industrial and logistics followed close behind, with Australia highlighted as a key destination for capital deployment next year, according to Colliers’ capital markets report.</p><p>CBRE’s Pacific head of capital markets Mark Coster says international capital is expected to play a continuing role in commercial property investment next year. </p><p>“Australia is an attractive proposition given available returns and the relative strength of the economy compared to some parts of Asia, North America and Europe,” he says. </p><p>Coster expects overseas investors to be especially interested in retail assets in 2022. </p><p>“The amount of international capital assessing retail assets has increased significantly during 2021 and we’re also fielding considerable interest in alternative asset classes such as life sciences and data centres.”</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/34c8a4d7-6496-493f-8ec2-e05d90dc64c5.jpg" width="1600"/></picture><div><span style="align-content:center;opacity:0.8">▲ Private equity giant Blackstone has swooped on a half share in the Sydney Grosvenor Place tower earlier this month.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>Australian assets are especially attractive to European family offices from the risk-adjusted return as well geographical diversification perspective. </p><p>Martin Lechner, founder of Singapore’s Corecam Family Office, which has European clients, told a recent Private Debt Investor podcast that, as an international allocator of capital, he looks at the risk return opportunities of the different segments and sectors from a global perspective. </p><p>Lechner says European high-net-worth clients are attracted to Australia real estate assets due to Australian demographic trends, migration trends and to get exposure to the currency, “that made us allocate quite a substantial percentage of our global real estate lending to Australia.”</p><p>In general, overseas investors are keen on the local market’s unique specs. </p><p>“When we think about outsized returns, Australia is a stable market, with stable governments and proven and reliable rule of law,” MaxCap managing director Wayne Lasky says.</p><p>“It’s particularly creditor friendly and, prior to the most recent technical recession, we had 28 years of consecutive economic growth.”</p><p>RBA governor Philip Lowe’s assertion that the cash rate of 0.1 per cent will remain at that historic low for years to come is also attractive to overseas investors because it indicates a high degree of stability.</p><p>“This is relevant since most real estate lending in Australia is on a floating rate basis. That being said, you&#x27;ll find loans that are fixed against wholesale bank bill rates that are highly correlated to the cash rate,” Lasky says.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/8ba83887-f2e4-49da-9852-20db39818233.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ ESR nabbed Blackstone’s $3.8b Australian logistics property portfolio in April.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>Nick Browne, director of alternative assets management firm Jameson Capital, says offshore investors are very interested in Australian real estate due to the nation’s strong response to contain Covid, bipartisan political and economic support for the economy, strong rule of law and investor-friendly environment relative to other markets in the region. </p><p>“Overseas investors are an important part of the mix thanks to lack of funding alternatives in a market with limited capital market sophistication,” he said. </p><p>“Biases from domestic investors also tend to concentrate local capital in specific markets, creating excellent opportunities for offshore investors on a risk adjusted basis.”</p><p>Browne says that next year, investors will remain focused on the core commercial sectors of office industrial and retail, with a gradual re-weighting away from retail to industrial and logistics. </p><p>“These are the largest and most liquid sectors with the greatest amount of deal flow and therefore attract the most amount of capital,” he said. </p><p>“Some investors are also starting to realise there is substantial value in non-traditional sectors such as student accommodation and build-to-rent that have become very popular over the past decade. </p><p>“Some of these non-core sectors are extremely large asset classes in Europe and North America and offshore investors see the growth potential for these markets to expand over the coming decade in Australia.”</p><p>Browne also notes more specialised opportunities that generate high returns don’t tend to be popular with larger capital allocators that lack in-house expertise. </p><p>But they are a focus for regional fund managers, private banks, multi-managers and offshore family offices.</p><p>When it comes to asset values, offshore investors, like all investors, seek relative value to other investment opportunities they are considering. </p><p>“If they do not believe the Australian real estate market is priced competitively relative to other markets in the region, they won’t be deploying capital in Australia.”</p><p>Jameson also doesn’t expect foreign investment into Australia to create price distortions in the market. </p><p>“Changes in price that do not reflect underlying market fundamentals can be the result of investors allocating capital for reasons other than seeking purely financial returns. </p><p>“This was most recently seen through the middle of last decade where specific groups of offshore investors sought to move capital from their home market into Australia, which resulted in price growth beyond that which could be supported by domestic investors. </p><p>“The implementation of capital controls in some of those markets has dramatically reduced the velocity of these inflows to Australia.”</p><p>While nothing’s certain in a topsy turvy world, it will be interesting to see which assets pique offshore investor interest this year. </p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><hr/></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><strong>You are currently experiencing </strong><strong><em>The Urban Developer</em></strong><strong> Plus (TUD+), our premium membership for property professionals. </strong><a href="https://www.theurbandeveloper.com/membership-plans"><strong>Click here to learn more</strong></a><strong>.</strong></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/4fb872c4-2507-449c-af93-4c928c2ed849.png" width="800"/></picture><div></div></div></div></div></div></div></div>

With 2022 upon us, we look at the specialised opportunities in the property sector global money will chase this year…

[+] Privatisation of AREITS Tipped to Ramp Up

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>It’s expected a number of ASX-listed Australian real estate investment trusts may move off the bourse and into private hands this year, given many REITs are trading at below net asset values. </p><p>“I think privatisation of listed real estate assets is likely to an extent, but not to the same degree as we’ve seen in the infrastructure space, because assets aren’t quite as unique in property,” Morningstar analyst Alex Prineas says.</p><p>“There’s many more office buildings and shopping malls than there are toll roads or airports. But privatisations are likely, particularly with properties or REITs that own assets with significant development opportunities, or that have particularly unique characteristics.”</p><p>Real estate assets require significant active management. So, rather than buying assets directly or taking over REITs, private investors could buy assets using the services of property fund managers like Charter Hall and Goodman Group. </p><p>“That way, assets continue to be managed by teams that already have scale. Some of the bigger players may choose to build their own scale and property management platforms by acquiring a REIT with an inbuilt platform,” Prineas says. </p><p>“One thing that is for sure is competition will increase in the space regardless.” </p><p>Prineas says rare assets, or those that have traded at a significant discount to tangible value, are especially sought-after, with prices reflecting a degree of uncertainty in the market given shifts such as working from home and e-commerce are yet to fully play out. This will have a bearing on transactions involving listed assets next year.</p><p>“We expect some enduring structural changes and working from home was already happening before the pandemic. Long-term, there will still be a need for offices, although maybe in a different way. In the long run, office supply always adjusts to the level of demand.”</p><p></p><p></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/bbbd9b7b-b485-4d29-887e-a1a6c29882c4.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ The popularity of logistical assets has surged during the pandemic and is tipped to continue in 2022.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>E-commerce was also a trend in place before Covid that has accelerated, which has <a href="https://www.theurbandeveloper.com/articles/industrial-property-prices-australia-yet-to-peak">favoured industrial and logistics property</a>, and hampered retail. These trends will also play out in privatisations this year. </p><p></p><p>“We think there’s still great competition out there for consumer eyeballs and malls are still a good way to get in front of consumers.</p><p>“For instance, we’ve seen new electric car brands like Tesla build their brand by selling cars out of shopping malls, which has <a href="https://www.theurbandeveloper.com/articles/developers-eye-car-yards-as-sector-shifts-gear">disrupted the traditional car yard</a>. You can test drive cars from the car park,” he says.</p><p>Stockspot senior manager Marc Jocum says REITs that may have experienced some level of financial distress and are still recovering from the pandemic may be privatised. </p><p>“This could include a range of sectors such as retail and office real estate with market capitalisation trading below net asset values.”</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><h2><strong>Plenty of pluses</strong></h2></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Cost of capital is one of the main advantages of taking assets private. </p><p>For example, Unibail-Rodamco-Westfield, the operator of Westfield’s assets in Europe and North America, is perceived to have too much debt. The business could address this by selling assets in the physical market or raising equity in the listed market. </p><p>But, with the stock trading at roughly a 40 per cent discount to its physical assets, it makes more sense to sell assets in the physical market than it does to raise equity.</p><p>Jocum says privatising assets may also be a desired path to reduce the compliance and governance burden that comes with being a publicly listed entity. </p><p>“Despite the transparent pricing and liquidity, there’s always the potential volatility of daily market pricing,” he says.</p><p></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/54b49256-9ce1-430b-8a02-2be73c2685a1.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ REITS that have endured financial stress are among those tipped to consider privatisation.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>Taking assets private might also make sense to address problems REITs face in raising money to fund their project pipelines, particularly if they are trading below their intrinsic value. </p><p>Privatisation also allows more leverage to be applied to real asset ownership, which can help magnify returns but comes with associated higher risks, a dynamic that played out during the GFC real estate bubble.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><h2><strong>Understanding the downsides</strong></h2></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>While there are pluses, there are also disadvantages when it comes to de-listing real estate assets. Moving into an unlisted form means less transparency, limited liquidity, the potential for redemption freezes and infrequent valuations that can lead to time lags in returns. </p><p>Prineas says a thinning out of management may be another disadvantage. </p><p>“But in terms of the actual returns, it’s arguable acquirers can potentially take a more long-term view. So they may not need to be worried about quarterly earnings, and the optics of things in the media. That can be an advantage.” </p><p>There are other red flags to watch for, Jocum says. </p><p>“While privatised REITs can be an attractive asset class to invest in, there needs to be greater transparency and better pricing mechanisms to facilitate an efficient, fair and accurate market.” </p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>“Failure to do this can create some significant issues. For example, there is potential for superannuation executives and trustees to take advantage of arbitrage delays in revaluation of unlisted assets, which we believe is an inherent conflict of interest.”</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><h2><strong>Likely buyers</strong></h2></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Super funds are, however, likely to be some of the most active buyers of listed real estate assets as they seek to divert their investment strategy from publicly listed markets into private assets such as direct real estate. This strategy allows them to access the illiquidity premium most unlisted assets attract. </p><p>“Many superannuation funds currently only have between 5 per cent to 10 per cent of their assets invested in property. They are looking to increase this to boost the return and yield profile fuelled by a low interest rate environment,” Jocum says. </p><p>“Super funds like the idea of assets with longer durations that have a long weighted average lease expiry that aligns with their long-term investing framework and positive cash flow profile, given the majority of superannuation assets are in the accumulation phase.”</p><p>Some may choose to invest in a consortium to compete with private equity firms for assets. </p><p> Private equity firms such as Blackstone and Brookfield are likely to be active players that already have form taking assets private. For instance, the Investa Office Fund was delisted in December 2018 after Blackstone acquired it. </p><p>Over the next year, it’s expected a number of players with strong purchasing power and low costs of capital may look to acquire assets, fuelling public-to-private activity in real assets in 2022.  </p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><hr/></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><strong>You are currently experiencing </strong><em><strong>The Urban Developer</strong></em><strong> Plus (TUD+), our premium membership for property professionals. </strong><a href="https://www.theurbandeveloper.com/membership-plans"><strong>Click here to learn more.</strong></a><strong></strong></p><p><strong></strong></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/4fb872c4-2507-449c-af93-4c928c2ed849.png" width="800"/></picture><div></div></div></div></div></div></div></div>

It’s expected a number of ASX-listed Australian real estate investment trusts will move into private hands next year...

[+] No Lots Left: Behind Queensland’s Land Shortage

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Land for development is facing an acute shortage in south-east Queensland as government incentives, low interest rates and interstate buyers conspire to turbo-charge demand.</p><p>Pressure is growing on the Queensland government to release new land to meet the seemingly insatiable appetite for greenfield lots across the region.</p><p>Avid Group general manager Bruce Harper says the supply and demand for land in south-east Queensland has always been a topical issue for developers, councils and the state government. </p><p>“The industry feels we’re running short of supply. Even land that’s not likely to be zoned for development for up to 10 years has been optioned,” he says.</p><p>Harper says most developers have consumed their developable land during the past 18 months. </p><p>“Demand for lots has been way in excess of previous years—in some cases demand has been up to 100 per cent higher than normal. If anything, there’s a shortage of land.”</p><p>And the availability of land has plummeted—less than 400 lots were on the market in September, <a href="https://www.theurbandeveloper.com/articles/south-east-queensland-land-stock-plummets-70pc-in-year">a 70 per cent decline from the 1299 lots</a> up for grabs in September 2020.</p><p>There are a number of reasons demand for land has been so strong. One is the federal government’s HomeBuilder $25,000 grant, which has prompted many first home buyers to <a href="https://www.theurbandeveloper.com/articles/private-new-house-sales-australia-october-2021-hia">bring forward plans</a> to purchase a property.</p><p></p><p>“Sales have been extremely strong. If you can buy a block of land now, it’s usually off the plan, because there’s virtually no developed lots available in south-east Queensland. People are buying lots off the plan that won&#x27;t be titled for six to 12 months,” says Harper.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/47b444e0-2236-411c-8d1e-88747f263aa0.jpg" width="1600"/></picture><div><span style="align-content:center;opacity:0.8">▲ The Sunshine Coast’s Caboolture West has been earmarked by the Queensland government as a major growth area.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>CBRE residential development director William Poole says investors have been a driving force in the south-east Queensland property market demand. “Confidence in the housing market and wider economic recovery has spurred elevated activity levels in new dwelling investment and renovations.”</p><p>Ultra-low interest rates are the other reason why buyers are clamouring for land. </p><p>“It’s created demand we haven’t seen for more than a decade,” says Harper, who believes the market will only continue to strengthen as interstate buyers re-enter the market when state and international borders fully open.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><h2><strong>Land releases in pipeline</strong></h2></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>The release of new land in south-east Queensland’s major development corridors and the delivery of infrastructure and services is critical to unlocking future supply. </p><p>“Both state and local governments must provide clear infrastructure planning and accelerate land supply,” Poole says.</p><p>Looking to future land releases, the Queensland government has anointed Caboolture West as a major growth area. </p><p>Other new land releases are likely to be in Logan to Brisbane’s south and Ripley to the west. </p><p>“This includes an allocation of funding to deliver critical infrastructure, including a sewerage pumping station. This will be instrumental in kickstarting the delivery of this major expansion area, which is eventually expected to provide approximately 30,000 homes for around 70,000 people,” says Poole.</p><p>However, the lacklustre pace at which councils are approving developments, and the slow speed at which infrastructure such as water and power is being connected to greenfield developments, is placing upward pressure on property prices and causing frustration, say some developers. </p><p>At the other end of the scale, land around the Gold Coast where there’s little greenfield land for development is likely to be very tightly held. </p><p>“That area will come under substantial price growth pressure, as will the Sunshine Coast. There’s very little land other than the holdings at Palmview, of which we are part owner and Aura, held by Stockland, which we are developing,” says Harper. </p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/5a7be9b7-5b41-4b4b-b43c-9f185d6e44f4.jpg" width="1600"/></picture><div><span style="align-content:center;opacity:0.8">▲ Avid Group’s Brentwood Forest at Bellbird Park in the western growth corridor between Brisbane and Ipswich.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>The Property Council of Australia’s Queensland executive director Jen Williams agrees the availability of readily developable land is a huge issue facing south-east Queensland. </p><p>“Some corridors, such as Logan and Ipswich, have large parcels of land ready to bring to market. The planning work has been done in advance and infrastructure arrangements are in place to service expected growth,” says Williams.</p><p>“However, other corridors, for example the Gold Coast and Sunshine Coast, are experiencing unprecedented demand for residential land. There simply is not the supply of land available to keep up with the demand for new housing.</p><p>“Swift action will be needed over the coming weeks and months to fast-track development applications, streamline the structure planning process, and sort out the funding and delivery of infrastructure to get new supply on the ground.”</p><p>Harper notes people have bought blocks of land that won’t settle for six to 12 months. At the same time, development approvals have been slow, effectively hamstringing the market. </p><p>“Builders won’t enter a fixed-price contract for something that&#x27;s not going to be delivered for 12 or 18 months. So the slowdown in build approvals is not an indication demand for land is slowing. </p><p>“Developers are often accused of sitting on land banks to increase the price. But if you’re a developer sitting on land now, you’re developing it as quickly as you can because prices are high and demand’s high and you don’t know how long that’s going to last.”</p><p>Looking ahead, Poole says Queensland’s affordability advantage over Sydney and Melbourne is an opportunity to reignite a new cycle of land supply releases over the short to medium term.</p><p>“We are currently experiencing the highest levels of interstate migration in well over a decade,” he says. </p><p>“The south-east Queensland greenfield property market benefited from domestic migration from Sydney and especially Melbourne as a result of Covid lockdowns.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/595e14cd-9507-47f1-a798-58f6dab1e098.jpg" width="1600"/></picture><div><span style="align-content:center;opacity:0.8">▲ Future land releases are expected in Ripley to Brisbane&#x27;s west. Image: Sekisui House&#x27;s Ecco Ripley</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>“Despite record price growth in Queensland during the past 12 months, it hasn’t been of the same magnitude as property price hikes in Sydney and Melbourne, which bodes well for the Queensland market medium-term.”</p><p>In fact, Poole says, a new cycle of larger scale, high-rise development may not be far off as Brisbane prepares to host the 2032 Olympic. </p><p>“Local and interstate developers have continued to grow their development pipeline of sites during the past two years. </p><p>“The focus in Queensland is on inner-city nodes that benefit from existing access to services and amenities and are near major infrastructure projects such as Cross River Rail and Brisbane Metro.</p><p>“In the meantime, smaller, higher quality developments targeting owner occupiers and downsizers continue to offer opportunities.”</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><hr/></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><strong>You are currently experiencing </strong><em><strong>The Urban Developer</strong></em><strong> Plus (TUD+), our premium membership for property professionals. </strong><a href="https://www.theurbandeveloper.com/membership-plans"><strong>Click here to learn more.</strong></a></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/4fb872c4-2507-449c-af93-4c928c2ed849.png" width="800"/></picture><div></div></div></div></div></div></div></div>

 Developers are crying out for more land to be released as south-east Queensland runs white hot...