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Lenders interest in build-to-rent is ramping up as conditions swing towards favouring the development sector’s new poster child.According to CBRE’s latest Lender Sentiment Survey, lenders are seeing population growth projections, an ever-tightening rental market and a more favourable taxation environment strengthen the sector’s growth prospects, and want to be a part of it.Australia’s industrial and logistics sector remains the clear top pick for lenders, with build-to-rent in at second place in the survey.CBRE Research tapped 31 local and international banks and non-bank lenders for its 2023 first-half survey of Australian commercial real estate lenders.The majority expect lending costs to increase while there was a moderate dip in the percentage of respondents expressing a desire to grow their commercial loan books—from 44 per cent in October last year to 32 per cent when this month’s results were calculated.However, CBRE managing director of debt and structured finance Andrew McCasker said domestic banks, offshore banks and non-bank lenders were still participating with varying appetites across all the asset classes in Australia.“The majority are willing participants in the industrial and build-to-rent sectors, and we see that continuing to build out over 2023, moving into 2024,” McCasker said.“The underlying fundamentals of Australia’s housing economy is creating significant opportunities in the build-to-rent sector and the desire by domestic and offshore financiers to fund projects will see this sector continue to grow in the coming years.”CBRE Pacific head of research Sameer Chopra said the top line results showed that industrial remained the favoured asset class, with more than 75 per cent of the survey respondents expressing a preference to lend into that sector.“The overall reduction in lending appetite was most prominent among non-banks, although the results show they are still interested in growing their build-to-rent, residential-to-sell and industrial portfolios,” Chopra said.“Tighter credit conditions are placing undue downward pressure on future supply, which could boost longer-term rent growth across all sectors.”Preferred asset class for new investment<div id="HWyBp1NPXiWBieLk0DfID"><picture><img src="//images.ctfassets.net/8pr762qjocl3/7DOlpaDdfQEsTeYRfG36c3/c19d6509437cab229cec2350f68a3c49/pref_asset_class.jpg" alt="null" data-mce-src="//images.ctfassets.net/8pr762qjocl3/7DOlpaDdfQEsTeYRfG36c3/c19d6509437cab229cec2350f68a3c49/pref_asset_class.jpg"></picture><div>▲ Source: CBRE </div></div>Credit margins could continue to experience upward pressure of about 20bps, with over 40 per cent of lenders indicating such a move over the next three months.An Interest Coverage Ratio (ICR) requirement of 1.5x for new investment grade lending was preferred by more than 80 per cent of the institutions surveyed, with ICR also the main focus for new underwriting.While Loan to Value (LVR) ratios have been stable around 40 per cent to 60 per cent, Chopra said “this might come under pressure as assets are revalued during the coming two quarters, with a slight uptick in hedging requirements since October last year.“Lenders also indicated higher average credit spreads, LTV and ICR requirements for prime office assets compared to their industrial counterparts.”

Financiers are keen to add development’s poster child to their exposure as conditions change in its favour…

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A “rare and city-shaping” block has come to market in the nation’s capital.The site, spanning almost 2ha, is next to City Hill and is part of the ACT government’s renewal of Canberra’s city centre.The permit-approved site is mooted to become a new gateway to the city centre from the south with a focus on residential and retail space.JLL is handling the sale, via an international expressions-of-interest campaign, for the land, Block 1 Section 121 City.JLL&nbsp;managing director, ACT Tim Mutton&nbsp;said that with frontages to London Circuit, Edinburgh Avenue, Vernon Circle and Commonwealth Avenue, the block “is one of the most significant development sites to come to market in Canberra’s history”.“Land release offerings have been extremely rare within the central city area, let alone one of this scale.“The site provides 18,959sq m of prime development land and presents an opportunity for developers to create something that will become part of the history of Canberra’s renewal.”The Canberra City Centre is currently going through its biggest transformation in recent memory. As the population grows and the ACT government delivers on its urban densification goals, the city centre continues to be Canberra’s biggest beneficiary, Mutton said.Ongoing investment from private and public organisations has delivered the first stage of light rail, a new Magistrates Court and award-winning developments such as Constitution Place and Civic Quarter.The ACT government also committed $28.477 million to the design of a world-class arts and entertainment precinct in Civic Square.&nbsp;“The sale conditions will ensure a sustainable and high-quality development fitting of its significant city centre location,” Mutton said.“The new development can feature a combination of residential accommodation and retail space, as well as potentially office or hotel space.”The expressions-of-interest campaign closes July 4.

The site, spanning almost 2ha, is part of the ACT government’s multi-million-dollar City Centre renewal program…

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There Is A Lot Going On.As the six-word title slide of his keynote presentation flashed on to the screen, Urbis director Paul Riga could feel the collective thought bubble popping up in the room.It was quite an understatement, to say the least.To be fair, however, and as Riga quickly pointed out, emphasis was given to the third and fourth words.“I've underlined the ‘a lot’ bit because there is a fair bit happening right now and that’s probably an understatement in itself,” he said.The irony of the title’s succinctness and simplicity also was not lost on the gathering of 300 industry players at The Urban Developer Brisbane Residential Developer Summit.Things have got somewhat chaotic and complicated in the Queensland capital’s development sector of late.The city’s to-do list—with the 2032 Brisbane Olympics the cherry on top—is enviable but somewhat of a blessing and a curse in the current challenging and uncertain environment.“There’s all these things happening and it is a lot going through people’s minds,” Riga said. “But I guess sometimes it’s easy to forget that the fundamentals for pure residential property demand are still relatively strong.”State government forecasts for population growth indicate at least 190,000 new residents will be coming into the Brisbane LGA by 2036.“That’s a lot of people that we’re needing to house,” Riga said. “And depending on how you cut that figure in terms of persons per household, it could be anywhere between 70,000 and 100,000 homes required over that period. That’s 7000 to 7500 homes we need to deliver per annum.“Then there’s other factors that are coming in and—while again we look at these and say ‘fantastic’ from the perspective of investment, creating opportunity, creating jobs and therefore pulling people into our region—they do perhaps provide some challenges in construction and delivery of our residential homes.”Specifically, he cited a combined $24.7-billion-plus, resource-sucking pipeline—focused largely in the state’s south-east—including healthcare-hospital and transport infrastructure as well as the delivery race to get the city match fit to stage the XXXV Olympiad.Overlaying all of that is a worsening housing supply and affordability “emergency”, as Riga described it, compounded by ongoing escalation in building costs and a demand-driven crunch that has maxed-out the city’s construction capacity due to a critical shortage of skilled labour.According to Riga, overall unemployment was low but construction unemployment was “even tighter”—with estimates currently sitting at about 2 per cent.Quantity surveyor and Mitchell Brandtman partner Caitlin Shields told the summit that construction cost escalation—by its estimates, forecast to rise on average a further 7.5 per cent over the next 12 months across south-east Queensland—was “all about the labour now”.“We’ve got to figure out this labour problem … and opening up migration internationally should help a little bit.“There’s a famous quote that says ‘build it and they will come’ but maybe we should be saying ‘they will come and they need to build it’.“So, hopefully we’ll end up with some more skilled labour because we’re lacking in that regard.”Shields said with the additional pressure of rising inflation and interest rates, the industry was “at a turning point where sales are cooling off a bit and the feasibilities are starting to get challenged”.The trend, according to Riga, was reinforced by the lastest data—particularly in the last quarter—that showed “supply is starting to drop off”.&nbsp;“And it’s not looking like it’s going to come back in the next 12 months to figures where we probably need them to be,” he said.Nevertheless, both he and Shields agreed there were opportunities to be had for developers going forward.Riga said the medium-term outlook for Brisbane and Queensland’s south-east was a “tale of two markets”—the rising build-to-rent sector and the premium boutique-scale apartment market.“We know from clients there’s significant [build-to-rent] interest here in SEQ, given the complete lack of supply that we’ve got going in the market.“That product typology in itself has the ability to supply markets relatively quickly … not necessarily within the next 12 months, which is potentially when we need some of that supply, but it will come on and supply the market in time.“And over the next 10 years there’s a potential depth of market just within inner-Brisbane of 25,000 to 30,000 new renters ... so there’s quite a market there.”Meanwhile, activity was expected to continue in the top end of the boutique multi-residential market because “from a price point, there’s a bit more tolerance from a buyer perspective, less reliance on interest rate movements and affordability caps to enter that market”.Nevertheless, Riga said, innovation, collaboration and partnerships would be needed across the board to deliver projects in the next 12 months and beyond.“We’re already seeing that happening and, ultimately, for us to be able to potentially move from the emergency we’re in from a housing supply perspective a lot more of that will be required.“It’s certainly going to be a bit of a challenge ... but where there’s a will there’s a way.“And there are definitely opportunities out there. But it’s getting on top of some of those constraints that is going to be key.”Yes, as Riga's opening slide concisely articulated, there is a lot going on in the Brisbane market and—judging from Shields’ final words of advice to the summit delegates—clearly much more to come.“Hold on for the ride,” she said “There’s a lot of excitement, there’s a lot of activity and there’s a lot of challenges out there.” <hr> You are currently experiencing The Urban Developer 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><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>

Labour shortages, a “resource-sucking” infrastructure pipeline, housing shortfalls—Brisbane is facing challenges, but opportunities remain, a summit in the capital has been told…

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More than a quarter of residential property transactions in Australia’s eastern states last year were funded without a mortgage.According to research released this week by PEXA, the total value of residential sale settlements in the nation’s eastern states was $478.6 billion in 2022.Of this, $122.5 billion was cash funded, making up 25.6 per cent of these purchases, according to PEXA’s Cash Purchases Report.In the report, cash purchases are defined as having no mortgage registered on the property title at settlement and may include alternative finance sources.And while 2022 trended similarly to 2021, which had $124.8 billion of property exchanged without a mortgage attached, it is significantly higher than the $83.6 billion recorded in 2020, illustrating a notable shift in buyer behaviour—potentially attributable to heightened market boom post-pandemic, PEXA said.The research found postcodes that had the highest proportion of cash purchases were mainly located in regional areas popular with older Australians.PEXA head of research Mike Gill said the report “shines light on an often-overlooked segment of the property sector”.“Given these transactions represent more than a quarter of all residential property purchases, it is important to consider that this is a sizeable cohort of buyers who are less impacted by rising interest rates, having not taken out a loan.“Our research found cash buyers tended to be older and more likely to be buying in regional locations, which does highlight the generational divide between borrowers.“Younger homeowners are more likely to have larger home loan balances, particularly those who have purchased recently, while many older homeowners are likely to have paid their home loan off or be able to pay cash for a home to retire in.“Therefore, as the <a data-mce-href="https://www.theurbandeveloper.com/articles/reserve-bank-hikes-interest-rates-to-11-year-high" href="https://www.theurbandeveloper.com/articles/reserve-bank-hikes-interest-rates-to-11-year-high" target="_blank" rel="noopener">RBA raises interest rates</a> to slow the economy and fight inflation, the burden falls more towards younger Australians who are more sensitive to rising rates and less so on older generations who may in fact benefit if they have savings.”<div id="2azELDt7FTip2zE2evjQXM"><picture><img src="//images.ctfassets.net/8pr762qjocl3/7nZgFTePTH1iN7Wx6gElh3/78c731f4504301ef82af8b77e343e689/iStock-1008683848.jpg" alt="null" data-mce-src="//images.ctfassets.net/8pr762qjocl3/7nZgFTePTH1iN7Wx6gElh3/78c731f4504301ef82af8b77e343e689/iStock-1008683848.jpg"></picture><div>▲ Tara in the state’s central west in the top postcode for cash purchases by percentage in Queensland. </div></div>In 2022, 65.2 per cent of cash purchases in Queensland were in regional areas, in NSW it was 56.3 per cent while Victoria had a lower proportion of cash purchases in regional areas at 36.8 per cent.These postcodes shared a number of key parallels—higher median ages, lower labour force participation and their primary family composition, according to ABS, was “couple family without children”, the PEXA report said.Notably, the median prices for cash purchases in these postcodes were significantly lower than state averages. These postcodes also had lower than average family incomes due to the high proportion of retirees.The top three postcodes for cash purchases by percentage in Queensland were Tara 4421 (78.4 per cent), Russell Island 4181 (76.4 per cent) and Gin Gin 4671 (71.9 per cent).In NSW, Emmaville 2371 (73.3 per cent), Gloucester 2422 (65.2 per cent) and Woombah 2469 (62.5 per cent) led the way, while Yarram 3971 (57.5 per cent), Paynesville 3880 (57.1 per cent) and Metung 3904 (56.9 per cent) ranked highest in Victoria.The report said the highest transaction value associated with cash purchases was concentrated in urban centres, with higher priced properties and larger populations living in these postcodes.Postcode 4218 (Broadbeach) in Queensland topped the eastern states with $1.33 billion &nbsp;spent on cash purchases in 2022 alone.Blue chip metropolitan postcodes 2088 (Mosman) and 3142 (Toorak) topped the rankings in Sydney and Melbourne respectively.

While the latest rate rise is causing pain for many, new research has revealed just how many properties won’t be affected, one way or another…

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Australia’s pandemic-era “revenge spending” boom was sweet but the hangover from the retail sugar hit is coming as the dark clouds of an economic downturn gather.Although the throbbing come down is imminent, however, from a retail property perspective the wheels are not expected to fall off the shopping trolley.According to property economics specialist and Location IQ director Gavin Duane, the retail sector is battle fit for the challenges that lay ahead.“The real issue is the ability of your retailers to pay rent,” he said. “And if they’re not getting sales growth, how do you get increases in rents over time?“My view is that these retailers have gone through Covid and undertaken a lot of cost cutting around rents, a lot of leasing spreads have been negative over that period of time, and therefore they’ve also reduced their store networks.“So the hope from my point of view is that they’re in much better shape post-Covid than they were pre-Covid to deal with this downturn, which was inevitably going to come at some stage.”Duane will be among presenters <a data-mce-href="https://cvent.me/8bP8PV?rt=X_aufiJPxEeHOTaMYZfoiQ" href="https://cvent.me/8bP8PV?rt=X_aufiJPxEeHOTaMYZfoiQ" target="_blank" rel="noopener">The Urban Developer Retail Property vSummit</a> on Thursday, 22 June, when he will detail the state of the sector and drill down into the challenges it is facing.“Retail has been pumping since Covid and up until recently we’ve still had very strong sales growth,” he said. “Sales to March this year had been growing 7 per cent year-on-year whereas the long-term average is about 5 per cent.“But what we’re starting to see now are those headwinds from inflation and interest rate increases starting to impact on what the growth will be going forward.&nbsp;“We’ve seen a lot of those larger format retailers, those with bigger [exposure to] discretionary spending, they’ve certainly experienced sales decline since the start of the year and we suspect apparel and other categories are going to start reporting a slowdown in sales.<div id="1g6YV7keoEWGRXcvHHWOp1"><picture><img src="//images.ctfassets.net/8pr762qjocl3/3w8sJpW8pS6GQ8ZNQdBWqE/5b3a6009360354d4342704f164d239d9/Untitled_design_-_2023-06-07T144114.327.jpg" alt="Strong post-Covid sales growth is slowing in the retail sector but it is battle fit to face the challenges ahead." data-mce-src="//images.ctfassets.net/8pr762qjocl3/3w8sJpW8pS6GQ8ZNQdBWqE/5b3a6009360354d4342704f164d239d9/Untitled_design_-_2023-06-07T144114.327.jpg"></picture><div>▲ Strong post-Covid sales growth is slowing in the retail sector but it is battle fit to face the challenges ahead. </div></div>“So the big picture is that it has been very strong, but it’s slowing and where we go from here is really the piece we’ll be concentrating on.”Duane said the fact that few retail development were coming online due to the impact of escalating construction costs would further help the sector buffer the impending downturn.“For the time being, there are no major projects proposed in the retail industry … generally speaking there’s not a level of activity of new builds occurring because it just doesn't stack up at the moment.“For existing owners of property that means you haven’t got a lot of competition coming because no one’s been building.“And the last thing you need in a retail environment if you’ve got a slowdown is also a hit from competitive facilities.“So the existing space should be able to hold up reasonably well in that environment … and retail is always a good investment so long as we don’t overbuild.” <hr> The Urban Developer&nbsp;Rental Property vSummit will take place on Thursday, June 22.&nbsp;<a data-mce-href="https://cvent.me/8bP8PV?rt=X_aufiJPxEeHOTaMYZfoiQ" href="https://cvent.me/8bP8PV?rt=X_aufiJPxEeHOTaMYZfoiQ" target="_blank" rel="noopener">Click here to register and learn more.&nbsp;</a>

Australia’s pandemic-era “revenge spending” boom was sweet but the hangover from the retail sugar hit is coming as the dark clouds of an economic downturn loom...

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Australia’s industrial vacancy rate has fallen to a record low, according to data released this week.In its review of the Australian industrial sector, global property consultants Knight Frank found vacancies in east coast capital cities fell by 18 per cent in the first quarter of the year.Just 445,000sq m of available space remains vacant along the eastern seaboard, which is a record low.And just 10 per cent of that remaining space is available in Sydney—39 per cent of it in Melbourne, while Brisbane accounts for 51 per cent.With stiff competition among tenants for limited available space, rents have continued to climb. Brisbane rents are up 8.6 per cent for the quarter and Sydney is up 8.2 per cent.Knight Frank says a record supply of about 2.5 million square metres coming to market in 2023 is not expected to alleviate the widespread undersupply.&nbsp;&nbsp;About 43 per cent of the new space is pre-committed and a further 10 per cent owner occupied.The overall drop in vacancy in Sydney, Melbourne and Brisbane follows a 56 per cent fall over the 2022 calendar year, and an 8 per cent fall over the last quarter of 2022.Across Australia’s east coast there is now almost 2 million square metres less space available now than was the case in the peak in October 2020, when there was 2,405,857sq m—a fall of about 82 per cent.Industry leaders have been warning of critical industrial and logistics space shortages for more than a year, arguing an additional 1.8 million sq m of&nbsp;<a href="https://www.theurbandeveloper.com/articles/industrial-development-must-double-sector-told" data-mce-href="https://www.theurbandeveloper.com/articles/industrial-development-must-double-sector-told">space will be needed in Australia</a>, or twice as much as it currently has, over the next five years to accommodate the forecast growth of online shopping.Knight Frank partner for research and consulting Jennelle Wilson said Sydney had overtaken Perth for the fastest growing rents year on year, with prime rents up 38 per cent over 12 months.Prime rent growth average across major capitals<div id="57e7jXrpYJJAHnGKWBRmkv"><picture><img src="//images.ctfassets.net/8pr762qjocl3/2KmZgMePJoSmf8RjWDgm5Q/1a1271130f44c8a3c6d5bd9795402370/Industrial_Shortages_1_Mid.jpg" alt="A graph showing how prime rent growth has climbed in most cities. Sydney leads the way with 38 per cent growth in the past year. Source: Knight Frank Research. " data-mce-src="//images.ctfassets.net/8pr762qjocl3/2KmZgMePJoSmf8RjWDgm5Q/1a1271130f44c8a3c6d5bd9795402370/Industrial_Shortages_1_Mid.jpg"></picture><div>▲ Source: Knight Frank Research. </div><div> </div></div>“Adelaide and Perth reported 2.5 per cent and two per cent rental growth over the same period, while Melbourne saw moderate growth of 1.5 per cent on limited deals across most submarkets,” Wilson said.According to the new data, both prime (340,921sq m) and secondary industrial space (103,760sq m) are at record lows as tenants compete for space.National head of industrial logistics James Templeton said ongoing strong tenant demand was being met with constrained supply, which had led to increased competition.“Secondary vacancy is now particularly low as tenants are grabbing immediately available options, with less of a concern regarding grade as long as it is functional,” Templeton said.“Prime vacancy is also seriously low, however this grade is being somewhat replenished as speculative developments start construction.”Last-mile industrial and logistics managers are <a href="https://www.theurbandeveloper.com/articles/urban-logistics-last-minute-play" data-mce-href="https://www.theurbandeveloper.com/articles/urban-logistics-last-minute-play">increasingly building speculatively</a>, safe in the knowledge tenants are clamouring for space.“Indeed speculative space accounts for more than two-thirds of the current vacancy – with almost 194,500sq m of this still under construction and not available for imminent occupation,” Templeton said.“As existing options have been absorbed speculative developments have taken a greater weighting in available space.“This has also supported further prime rental growth with speculative developments needing to set rents at a level which makes the project feasible – at times a further step upward for the market.”Templeton said the gradual easing of the cost of materials and supply chain pressures would help the supply pipeline.The Knight Frank research found Brisbane has a substantial development pipeline, with 843,573sq m forecast to be delivered in 2023, compared to its long-term average of 357,940 square metres.In Sydney new developments are forecast to reach 807,641sq m, while Melbourne will deliver about 845,231 square metres.

Australia’s industrial vacancy rate has fallen to a record low, according to data released this week.

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While the nation awaits the RBA’s decision on interest rates for this month, research has found more than a quarter of the nation’s mortgage holders are already “at risk of mortgage stress”.According to the data from Roy Morgan, released ahead of Tuesday’s RBA decision, about 1.38 million mortgage holders were now in the “at-risk” category in the three months to April 2023.The period encompassed two interest rate increases of 0.25 of a percentage point, taking official interest rates to 3.6 per cent in April.This is the highest number of mortgage holders considered “at risk” since August, 2008, when there were more than 1.4 million in the category.At 27.8 per cent, the proportion of mortgage holders considered “at-risk” is the highest for more than a decade when 28.3 per cent were in the category in October, 2011.“The number of Australians at risk of mortgage stress has increased by 529,000 during the past year as the RBA increased interest rates at 11 of its past 12 monthly meetings,” a spokesperson said.“Official interest rates are now at 3.85 per cent in May 2023, the highest official interest rates since May 2012 more than a decade ago.<div id="4OqM2vVfgJPgJxwRXVYebV"><picture><img src="//images.ctfassets.net/8pr762qjocl3/2iBxh9T8OYTXRaAZu3c3Fk/8eb60fdad82238adf3cbc9c352557b64/Mid_article_resizes__6_.jpg" alt="null" data-mce-src="//images.ctfassets.net/8pr762qjocl3/2iBxh9T8OYTXRaAZu3c3Fk/8eb60fdad82238adf3cbc9c352557b64/Mid_article_resizes__6_.jpg"></picture><div>▲ More than a quarter of mortgage holders are at risk of mortgage stress, according to Roy Morgan research. </div></div>“Despite the sharp increase in the level of mortgage stress during the last year it remains below the high reached during the Global Financial Crisis in early 2009 of 35.6 per cent (1.45 million mortgage holders).”The research found the number of mortgage holders considered “extremely at risk, has now increased to 881,000 (18.5 per cent) in the three months to April, 2023 which is now significantly above the long-term average during the past 15 years of 661,000 (15.9 per cent).“Official RBA interest rates are now at a decade high of 3.85 per cent and there is a fair chance interest rates increase in June by 0.25 of a percentage point and perhaps in July as well by 0.25 per cent,” a spokesperson said.“The latest ABS CPI figures for the month of April 2023, released last week, show an annual inflation rate of 6.8 per cent—well above the target range of 2-to-3 per cent over the course of the cycle.“Roy Morgan has modelled the impact of two potential RBA interest rate increases of 0.25 per cent in June, taking the rate to 4.10 per cent, and July, a 0.25 per cent rise, taking the rate to 4.35 per cent.“This would lift the number of ‘at risk’ mortgagees to more than 29.2 per cent in June and 30 per cent by July.”

More than a quarter of the nation’s mortgage holders are at risk of mortgage stress thanks to rising interest rates, according to new research…

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The demand from owner-occupiers and investors for Melbourne CBD office and retail space is intensifying, says JLL, with four properties in the one tower selling for a combined $11.21 million.The properties at ground, Level 1, Level 2 and Level 9 at 420 Collins Street, Melbourne, sold after an expressions-of-interest campaign that attracted local, interstate, and international interest, according to the agents.JLL’s Melbourne CBD Sales agents, Nick Peden, Josh Rutman, Tim Carr and Mingxuan Li, handled the campaign for 420 Collins Street on behalf of partners at Grant Thornton Australia in their capacity as the agents for the mortgagee.With 30 offers to purchase and more than 200 buyer enquiries, the campaign generated competitive bidding from motivated owner-occupiers and investors based locally and off-shore.The successful purchaser was a Victorian investor who bought all four properties in-one-line.The sale price of $11,210,000 reflects a building rate of $8236 a square metre, a building record, and a 55 per cent premium on the sale of level 6 in the same building in April 2023.Director and head of JLL Melbourne CBD sales Nick Peden said there was “no doubt that transaction volumes in the Melbourne CBD are lower than the long-term average”.“However, this most recent deal is evidence of the significant current demand for well-located Melbourne CBD real estate.<div id="5nbMsH3Q0jScPmkos7VU93"><picture><img src="//images.ctfassets.net/8pr762qjocl3/3dY6PTVg07jkVOXaSaoPgz/83766b61306d90f283bb9e8587589a7f/iug0lukdvwnswogr8e2q_3.jpeg" alt="null" data-mce-src="//images.ctfassets.net/8pr762qjocl3/3dY6PTVg07jkVOXaSaoPgz/83766b61306d90f283bb9e8587589a7f/iug0lukdvwnswogr8e2q_3.jpeg"></picture><div>▲ The ground level of the Collins Street tower. </div></div>“To generate 30 offers to purchase highlights the depth of interest and the current scarcity of opportunities to purchase.“The sale of 420 Collins Street is a clear signal of the strong fundamentals of the Melbourne CBD market driving the immense appetite to purchase from the wider buyer market.”The ground floor retail showroom, Level 1, Level 2 and Level 9 provided a total building area of 1361sq m and was the previous home of Victory Offices.

The sales to one investor show demand for Melbourne office and retail spaces is intensifying, according to JLL…

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The Urban Developer’s latest Melbourne housing market insights reveal that the median home value climbed to $755,871 in May 2023, which was a 0.9 per cent bump from the previous month.

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The Urban Developer presents its Retail Property Development vSummit, a virtual conference focused on the dynamic Australian retail property sector.Amid the profound aftermath of the pandemic, landlords, building owners, developers and tenants have been compelled to adapt their strategies to navigate the evolving market landscape.Join us for engaging keynotes and insightful panel discussions, where industry experts will delve into the current state of the retail sector in Australia and provide valuable predictions for its future in 2023 and beyond.Discover the latest trends, emerging opportunities, and strategies to thrive in this rapidly changing environment.<a data-mce-href="https://cvent.me/8bP8PV?rt=X_aufiJPxEeHOTaMYZfoiQ" href="https://cvent.me/8bP8PV?rt=X_aufiJPxEeHOTaMYZfoiQ" target="_blank" rel="noopener">Click here to register.</a> <hr>AGENDA<hr> KEYNOTE The Big Picture: The Changing Landscape of Retail An insightful keynote exploring the impact of economic factors and consumer behaviour on the retail property sector. Presenter: Gavin Duane - Director, Location IQ PRESENTATION Trends and Insights in Retail Sales, Leasing, and Development Activity in Australia Insights on capital transaction, retail leasing, and developer activity, defining past transactions, tenant-developer relationships, sector segments, state performance and future outlook.Presenter: Yosh Mendis - Head of Agency | Partner, Burgess Rawson PANEL Navigating Change: Strategic Portfolio Adjustments in Australia's Retail Property Sector Exploring how retail landlords in Australia are shaping their portfolios amid rapid transformations.Panelists:<ul><li>Briar Dowsett - Director, Real Estate Strategic Partnerships &amp; Mandates, QIC Real Estate</li><li>Ben Ellis - Chief Executive Officer, Retail, Charter Hall</li></ul> PRESENTATION Paying Attention: The New Commodity for a Changing World Hames Sharley presents research on capturing consumer attention in a post-COVID-19 world. Explore the competitive retail environment amidst consumer distractions and limited discretionary time.Presenter: Harold Perks - Director, Retail &amp; Town Centres Portfolio Leader, Hames Sharley CASE STUDY Developing a $15m Convenience Centre in Central NSW During a Pandemic A case-study presentation on how Spectrum Retail Group overcame pandemic-related challenges to deliver a $15m convenience retail centre in Robin Hill, Bathurst. Learn how they overcame construction cost escalations, material shortages, softening valuations, rising finance costs, and protracted approvals.Presenter: Julian Ackad - Managing Director, Spectrum Retail Group PANEL Driving Innovation in Retail Property Development Join a panel discussion featuring key representatives from SRL, Panthera Group, and Tipalea Partners, as they share their perspectives and expertise on driving innovation in retail property development.Panelists:<ul><li>Vivek Subramanian - Managing Director, SRL</li><li>Chakyl Camal - Chief Executive Officer, Panthera Group</li><li>Scott Spanton - Chief Executive Officer, Tipalea Partners</li></ul> <hr> The Urban Developer Retail Property Development vSummit will take place virtually on Thursday 22 June 2023. <a data-mce-href="https://cvent.me/8bP8PV?rt=X_aufiJPxEeHOTaMYZfoiQ" href="https://cvent.me/8bP8PV?rt=X_aufiJPxEeHOTaMYZfoiQ" target="_blank" rel="noopener">Click here to learn more and register.</a>

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The value of new loans has slid backwards, dropping in April after a solid rise the previous month.According to the latest data from the ABS, the value of new loan commitments for housing fell 2.9 per cent to $23.3 billion in April (seasonally adjusted), after a 5.3 per cent rise the previous month.ABS head of finance statistics Mish Tan said the value of new owner-occupier loan commitments fell 3.8 per cent to $15.4 billion in April, while the value of new investor loan commitments fell 0.9 per cent to $7.9 billion.The value of new owner-occupier home loan commitments (excluding land and alterations, additions and repairs) fell 3.9 per cent to $14.3 billion.Meanwhile, the number of these commitments fell just 0.1 per cent.Compared to pre-pandemic levels from February 2020, the value of new owner-occupier home loan commitments was 10.2 per cent higher in April 2023, while the number of these commitments was 5.3 per cent lower.The average value of these loans has risen by 21.8 per cent (in original terms) over this period.The number of new owner-occupier first home buyer loan commitments fell 0.9 per cent, after a rise of 16.5 per cent in March.This was 16.2 per cent lower compared to a year ago.The value of new owner-occupier housing loan refinances between lenders fell 8.6 per cent but remained high at $13.0 billion, after reaching a record high of $14.2 billion in March. Borrowers continued to switch lenders&nbsp;amid a high interest rate environment.The value of total new loan commitments for fixed term personal finance rose 1.5 per cent. Lending for the purchase of road vehicles rose slightly by 0.5 per cent.The number of properties coming to market has slowed in recent months.According to PropTrack, nationally, new listings in April decreased 28.3 per cent compared to the previous month.Compared to last year, new listings were down 23.5 per cent in April.Oxford Economics Australia senior economist Maree Kilroy said the imbalance between underlying demand and supply has placed a floor under prices.“New listings have fallen to a decade low, and price growth has returned in markets where households have a greater incidence of purchasing with cash such as the upper quartile of Sydney, Melbourne and Perth,” she said.<div id="7qOFPzh0lOfP0l16crUABd"><picture><img src="//images.ctfassets.net/8pr762qjocl3/77suaI5w5Kqc8XBTwC6PYy/533c83090f4cea7ea6d4e5c0eb86baa0/Mid_article_resizes__5_.jpg" alt="null" data-mce-src="//images.ctfassets.net/8pr762qjocl3/77suaI5w5Kqc8XBTwC6PYy/533c83090f4cea7ea6d4e5c0eb86baa0/Mid_article_resizes__5_.jpg"></picture><div>▲ Oxford Economics Australia senior economist Maree Kilroy says new listings have fallen to a decade low. </div></div>“Whether price growth is sustained over the remainder of 2023 is uncertain.“The impact of rising interest rates on existing at-risk borrowers is yet to play through, with a wave of fixed-rate mortgages to soon rollover. “This still has the potential to trigger a material lift in pressured sales that can offset the current momentum in property prices in the back half of 2023.”Canstar finance expert Steve Mickenbecker said the combination of higher interest rates and supply constraints could mean even more potential buyers miss out in today’s strained market.“The recovery in property prices in capital cities around the country in recent months is largely driven by a shortage of supply, rather than a return to buoyant demand for property.“Sellers are sitting back waiting for more favourable conditions and that demand is unlikely to come before interest rate cuts become a near certainty.&nbsp;“Raising a deposit is still a hurdle to home ownership, made all the more difficult by higher rents and other living costs.“But affordability of repayments has now become an even greater deterrent and it is going to be quite some time before we see any relief.”Canstar’s analysis shows the average variable rate for existing borrowers has risen from 2.98 per cent in April 2022 to reach 6.73 per cent after the cash rate rise of May of this year.This adds about $1133 a month to repayments on a $500,000 loan over 30 years or $2268 on a $1-million loan.&nbsp;&nbsp;&nbsp;

The value of new loan commitment in April slid backwards—sellers playing a waiting game could be why…

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Changes in NSW to requirements for hostel and aged-care development have sparked a rush of applications as designers and builders attempt to beat the deadline.And experts say the new requirements—that those who work on developments in these sub-sectors must be registered—will cause delays and increase costs for builders, and then their clientsThe amendments have been introduced as part of the state’s push to improve building standards and public confidence in the construction sector.&nbsp;The Building Legislation Amendment (Building Classes) Regulation 2023 broadens the scope of the Design and Building Practitioners Act (DBP Act) to include class 3 and 9c building types. Class 3 buildings encompass boarding houses, guest houses, hostels, or backpackers, while 9c buildings are residential care buildings that may contain residents with various care level needs.At the moment, the act applies only to class 2 buildings—essentially apartments.&nbsp;The amendment relates to the construction of new buildings from July 3, 2023, and does not apply to alterations and renovations of existing class 3 or class 9c buildings until July 1, 2024.The extension of the Act means all design and building practitioners who work on hotels and aged-care facilities in NSW will need to be registered.“The expansion into additional classes is a continuation of the NSW government’s <a href="https://www.theurbandeveloper.com/articles/nsw-appoints-building-commissioner" target="_blank" rel="noopener" data-mce-href="https://www.theurbandeveloper.com/articles/nsw-appoints-building-commissioner">commitment to restore public confidence</a> in the building and construction industry,” NSW building commissioner David Chandler says.<div id="4MVO5C7bpUGWZ8roD5qazY"><picture><img src="//images.ctfassets.net/8pr762qjocl3/4kjJohHAz7d1y3mmAsvrF0/56bcb3b0c90d72770ec87e088c8d645d/3.jpg" alt="null" data-mce-src="//images.ctfassets.net/8pr762qjocl3/4kjJohHAz7d1y3mmAsvrF0/56bcb3b0c90d72770ec87e088c8d645d/3.jpg"></picture><div>▲ Making buildings safer and improving the industry’s reputation in NSW are at the heart of the changes. </div></div>“These changes are designed to ensure buildings are safe and secure, the industry is more customer-focused and better data is captured throughout the building life cycle.“Lifting residential apartment completions close to 30,000 starts a year is important in helping to meet the housing needs of NSW households. But we must never sacrifice quality.”But it is likely the extension of the act will lead to delays in the construction of some commercial aged-care facilities and hotels in NSW as businesses will need to factor into project budgets the time and cost of registering design and building practitioners, as well as the time and cost of complying with the new regulations.<h2>Adding pressure</h2> CBRE&nbsp;Australian healthcare and social infrastructure director Jimmy Tat says amendments to the Act will put pressure on projects in the planning phase to get started before the rules kick in next month.“Builders and consultants will be trying to get projects into councils before this cut off,” he says. “But it is positive, because it means better quality buildings will be built.”Tat says builders will have to work out how to pass on increased costs from complying with the amended Act to property buyers.“There is going to be a trickle-down effect, which is what happened when the better design guidelines came out for apartments,” he says.&nbsp;<div id="5DI0FhcV0xNEWxYPbawZXP"><picture><img src="//images.ctfassets.net/8pr762qjocl3/5JteIYRTGLrSXoPCGmHtzA/41b0763d84d60c07de7a8ced0cb0f3f8/1.jpg" alt="null" data-mce-src="//images.ctfassets.net/8pr762qjocl3/5JteIYRTGLrSXoPCGmHtzA/41b0763d84d60c07de7a8ced0cb0f3f8/1.jpg"></picture><div>▲ CBRE&nbsp;Australian healthcare and social infrastructure director Jimmy Tat. </div></div>“That prompted developers to really work with architects and consultants to deliver these projects.”The extension of the Act is likely to have a mixed impact on the timing of the construction of commercial buildings in NSW.&nbsp;“There will be some delays as businesses comply with the new requirements. But there could also be higher demand for commercial buildings as a result of the improved quality of buildings and safety standards,” PRD Real Estate chief economist Diaswati Mardiasmo says.“There are long-term benefits in terms of quality of buildings and safety, and this is needed, especially for aged care and our responsibility to provide the best buildings for our older generation.&nbsp;“But this is another item that needs to be considered and absorbed by the building industry, on top of all the current challenges.”<h2>Building confidence</h2> The DBP Act and regulations are part of the NSW government’s moves to respond to recommendations of the 2018 report into improving compliance and enforcement systems in Australian building and construction industry, known as the Shergold Weir report.&nbsp;The recommendations are aimed at overhauling the building and construction industry to restore public confidence in the sector, which was shattered after a series of dangerous and shoddy projects came to light.Over the longer-term, the intention is to expand the scope of the legislative framework to include other building typologies.&nbsp;<div id="2ya8QocfutBgQiY2hWmH5l"><picture><img src="//images.ctfassets.net/8pr762qjocl3/7irjsqVQjxuliUNSIW13Y3/e1a1d0d98404969321eb428915eb77dc/2.jpg" alt="null" data-mce-src="//images.ctfassets.net/8pr762qjocl3/7irjsqVQjxuliUNSIW13Y3/e1a1d0d98404969321eb428915eb77dc/2.jpg"></picture><div>▲ PRD Real Estate chief economist Diaswati Mardiasmo. </div></div>But Mardiasmo is cautious about whether the act should be further extended to other sub-sectors within commercial property.“There is potentially a need for the DBP Act to be amended to cover other commercial buildings, but the timing is not ideal.“Already, many builders and development companies are facing significant challenges, including higher construction costs and material and labour shortages.&nbsp;“Administrative delays and higher costs from dealing with red tape and regulations at a local council level are additional burdens on the sector.”&nbsp;Looking to the future, Tat says there is potential for the rules to be applied to other health sub-sectors, such as rehabilitation centres.&nbsp;“There is already strict governance around rehab facilities. So, this would only mean even tougher rules for a sector that is already highly regulated.”&nbsp;Perhaps unsurprisingly, there are pros and cons to the coming changes, but only time will tell what the real effects for the construction sector and its customers will be. <hr> You are currently experiencing The Urban Developer 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>

While the push to improve quality for aged care and co-living is being applauded, the sector is furrowing its brow over what it will mean to costs and timelines…

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