Poly Global to Scale Back Australian Operations

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Property developer Poly Global is reassessing its development footprint and operations in Australia with plans to furlough staff by the end of the year.</p><p>The Shanghai-listed developer’s Australian arm, Poly Australia, is now set to take a more passive approach to large-scale development. </p><p>“The economic challenges confronting both Australia and the world have forced all businesses to review their strategies and activities,” a Poly Australia spokesperson told <em>The Urban Developer</em>.</p><p>“These challenges place a responsibility on the management of companies such as Poly Global to ensure we survive the downturn and are well-positioned in future.</p><p>“This involves scrutinising all aspects of our business operations to ensure we retain our strong financial position locally.”</p><p>The company’s Australian arm is one of Poly Global’s largest international branches, and has grown to have projects in NSW, Victoria and Queensland.</p><p>Poly Australia currently has upwards of 20 <a href="https://theurbandeveloper.com/articles/poly-switches-richmond-project-from-residential-to-commercial">commercial and residential projects</a> on the go.</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/75ccb389-3cd3-427b-9b93-6a8d380f7a37.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ A model of Poly&#x27;s Spring Square in Bankstown being showcased at a 2019 launch.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>However, in a sign of difficult current market conditions, Poly walked away from a $300 deal with global developer Lendlease, to buy a 200-hectare residential development in Sydney’s south-west after lengthy and advanced negotiations.</p><p>Poly said it remained firmly committed to the Australian market after demonstrating its commitment to job-creation across a wide-range of markets in recent years.</p><p>“We believe in adding value to the assets we develop and own in Australia,” a Poly Australia spokesperson said.</p><p>“While some companies simply hold assets, we invest to improve the lives of our owners, employees and the broader community.”</p><p>During recent years, Poly has built a pipeline of residential and office projects across the east coast, partnering with local investors to create managed investment trusts, in order to navigate Foreign Investment Review Board approvals.</p><p>Poly’s larger residential projects include a $344 million mixed-use development in Epping with 500 apartments and a 500-apartment development of the Wentworthville mall site in Sydney’s west.</p><p>In April, Poly <a href="https://theurbandeveloper.com/articles/poly-global-holds-on-to-circular-quay-as-market-turns">commenced construction</a> on its flagship commercial development, the $500 million Poly Centre, a 107-metre tall Grimshaw-designed tower at Circular Quay in Sydney.</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/e5e10b69-71b2-4733-a0d2-47932126b901.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ Poly, which launched in Australia in 2014, has built up a pipeline of more than $2 billion under the guidance of managing director Arthur Wang.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>The developer has since put <a href="https://theurbandeveloper.com/articles/poly-makes-asset-management-move-sells-circular-quay-tower-stake">feelers</a> out for investors to help carry the project, <a href="https://theurbandeveloper.com/articles/poly-global-seeks-investors-210-george-street-1000-la-trobe">offering a half-stake</a> in the the A-grade 27-storey commercial tower at 210 George Street and at 1000 La Trobe Street in Melbourne, where it is building a 23-storey commercial tower which will span about 31,500 square metres.</p><p>It pitched bringing in partners as part of a strategic play to help expand its global asset management ­business, which has a focus on value-add opportunities and ­developments.</p><p>The developer has also recently purchased a 26-storey office tower at <a href="https://theurbandeveloper.com/articles/poly-pads-out-portfolio-with-golden-270m-sydney-buy--">59 Goulburn Street</a> for $270 million, as well as making its foray into Queensland, buying a 6.2-hectare site in Ascot for $35.25 million, before rolling out <a href="https://theurbandeveloper.com/articles/poly-gets-green-light-for-234-lot-ascot-project">plans</a> for a 234-dwelling development.</p><p>Poly had previously said it was in the market for more Queensland projects and development opportunities as well as targeting a development pipeline of up to 3,000 apartments in NSW, as well as commercial buildings and retirement villages.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Meanwhile, Poly has moved ahead on its <a href="https://theurbandeveloper.com/articles/poly-wins-approval-for-620-apartments-in-sydney-">masterplanned development</a>, known as Spring Square, in Bankstown, with Westbourne Constructions appointed and set to commence construction next month.</p><p>Located on the site of the old Bankstown RSL at the north western core of Bankstown’s CBD, the residential project will feature 516  apartments across five towers, with significant retail and a commercial components also proposed.</p><p>Poly picked up the 46,400sq m site at 32 Kitchener Parade site in 2017 for $53.6 million and quickly set about plans to deliver a residential scheme.</p><p>The developer secured approval from the Sydney South Planning Panel in April 2019, completion is billed for late 2022.</p></div></div></div></div></div>

Developer and investor Poly Global is reassessing its development footprint and operations in Australia with plans to furlong up to 100 staff...

Federal Budget 2021

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>The landmark 2021 federal budget is all about business productivity and jobs to drive the post-pandemic economic recovery. </p><p>In terms of the headline numbers, federal treasurer Josh Frydenberg announced a budget deficit of $106.6 billion for 2021-22, which was little changed from the $108.5 billion deficit the federal government forecast at the December 2020 mid-year economic and fiscal outlook.</p><p>A huge emphasis on infrastructure spending is set to buoy property development while funds allocated to the aged sector are likely to spearhead investment in aged care homes.</p><p>It’s a similar story with child care, with new subsidies poised to encourage property investment in this sector. </p><p>Stimulus measures prompted by the Covid-19 pandemic have seen the national debt approach $1 trillion, although budget papers reveal the coalition now expects the JobKeeper wage subsidy will cost $12.5 billion less than expected, given the economic recovery has been stronger and faster than anticipated. </p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Treasury is also expecting an extra $5.1 billion from income tax versus its 2020 estimates. </p><p>The strong iron ore price is also helping to boost government earnings in the current financial year. </p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><h2><strong>Incentives will apply additional stimulus to housing market</strong></h2></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Two budget measures are likely to change the dynamic in the residential property market.</p><p>The federal government has extended the First Home Super Saver Scheme so Australians can contribute up to $50,000 to their super fund to be used for a deposit, up from $30,000 when the scheme was introduced in the 2017-2018 budget. </p><p>An extra 10,000 places will also be added to the First Home Loan Deposit Scheme so first home buyers who are approved for the scheme can buy or build a new home with a deposit of just 5 per cent. </p><p>Single parents will be backed to buy their own home with a 2 per cent deposit.</p><p>The federal government is also continuing it’s incentive to underwrite lenders’ mortgage insurance for this group of borrowers. </p><p>These measures are designed to give first-home buyers a leg up into the booming property market.</p><p>Treasurer Josh Frydenberg has also indicated he’s open to the idea in the future of people using their super to buy a home.</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/81b5911e-ae07-48d1-9680-eea616197046.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ Ten thousands places will be added to the First Home Loan Deposit Scheme (rebranded as the New Home Guarantee).</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>At the other end of the spectrum, the age at which retirees can access the downsizer scheme has been lowered from 65 to 60. </p><p>The measure allows people older than 60 and are in retirement who sell the family home to contribute $300,000 from the sale proceeds to their super fund over and above other contribution rules. </p><p>Couples are able to add $600,000 to their super savings from this scheme.</p><p>The government will spend $780 million on additional stimulus to the housing market through an extension to the HomeBuilder scheme.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><h2><strong>Infrastructure, roads and rail get $15.2bn boost</strong></h2></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Infrastructure spending is a huge focus of this year’s budget, with the federal government adding an extra $10 billion to its $100 billion, 10-year infrastructure plan. </p><p>Key initiatives include $2 billion each for a new Melbourne intermodal terminal and upgrades to sections of the Great Western Highway in NSW.</p><p>Western Australian infrastructure will receive a $1.3 billion injection for road and rail projects and northern Australia will receive $190 million in the next five years for development funding. </p><p>The Building Better Regions Fund is also getting an extra $250 million for infrastructure projects in rural and regional areas. </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/7a630c1b-b9d2-4b41-8c3e-8661687e69c0.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ Nationally $10 billion will be spent on roads and rail.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>Plus, there’s $600 million for a National Recovery and Resilience Agency, which will also help to re-build areas affected by recent natural disasters.</p><p>Property in popular holiday spots is likely to get a boost thanks to a range of measures designed to support a tourist sector battered by border closures and frequent lockdowns during holiday periods. </p><p>This spending bonanza can be a huge boon for property development, not only for the projects themselves, but also for related building and construction.</p><h2><strong>Migration, international students slow to return to pre-pandemic levels</strong></h2><p>While the government made a commitment to restoring the permanent migrant intake to 160,000 annually, it is unlikely to happen before 2024. International students are expected to start trickling in later this year, and increase from 2022.</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/fa3dbb2c-64e7-400e-baa1-24dd3b0fbdff.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲Net overseas migration won&#x27;t return to pre-pandemic levels until 2024, according to budget papers. </span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>“Inbound and outbound international travel is expected to remain low through to mid-2022, after which a gradual recovery in international tourism is assumed to occur,” the budget papers said.</p><p>Australian Industry Group&#x27;s Innex Willox said greater effort should be made on returning migration to pre-pandemic levels.</p><p>“The government [should] stick to a more ambitious plan to reopen our borders to migration and trade in services to drive our economic recovery,” he said.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><h2></h2><h2><strong>Federal government responds to the aged care royal commission</strong></h2></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>The federal government has set aside $10 billion for aged care, with the centrepiece of this initiative spending on home care packages. This could play out in property in a number of ways. </p><p>The intention is to keep people in their homes rather than aged care facilities. </p><p>But that’s not to say the property sector won’t be involved in retrofitting residential properties so they are suitable for senior Australians. Watch this space.</p><p>The National Disability Insurance Scheme is also getting a $26-billion injection next year and an extra $13.2 billion over three years, some of which will also go into residential facilities.</p><p>Working families are also a priority this year, with a $1.7-billion childcare package to support women to re-enter the workforce after having children. This is likely to drive construction of new childcare centres</p><p>Overall, while the budget bottom line is vastly better than expected, we’re not going to see a surplus for some time. </p><p>However, the economy and community will be the winners from the cash splash.</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"><u><strong>Click here</strong></u><strong> 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>

The landmark 2021 Federal budget is all about business productivity and jobs to drive the post-pandemic economic recovery...

Two-thirds of Deals Progress Despite Covid Crisis

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Transaction activity across Australia’s capital markets has continued to flow despite the Covid-induced uprooting of the office sector, with Knight Frank reporting that two-thirds of its deals has progressed since March.</p><p>According to commercial real estate agency&#x27;s latest capital markets report, 31 per cent of deals under way in March have now settled or are unconditional while 34 per cent are progressing and just under 9 per cent have been put on hold.</p><p>While deal completions remained healthy, total turnover across the office, industrial and retail markets during the first half of 2020 was $10.37 billion, 43 per cent below the $18.26 billion recorded during the same period in 2019. </p><p>The office market, crippled by ongoing uncertainty around <a href="https://theurbandeveloper.com/articles/property-council-office-market-report-july-2020">occupancy and rental abatements</a>, has the highest proportion of deals in flux, with 41 per cent still progressing. </p><p>The industrial sector, <a href="https://theurbandeveloper.com/articles/industrial-sentiment-shines-light-in-dark-times">dominated by non-discretionary assets</a>, saw turnover of $3.71 billion in the first half of the year, only 10 per cent below the same period last year, and the highest completion rate for deals of 47 per cent.</p><p>Retail, which had already been subject to <a href="https://theurbandeveloper.com/articles/rent-relief-for-retailers-scca">fluctuating investor</a> demand across 2019, has seen turnover fall a further 45 per cent, with $1.74 billion in transactions completed.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><strong>Prime CBD office market yields</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/42ccf3af-ece2-4f92-a0e5-94555a1444b1.png" width="1642"/></picture><div></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><sup><sub>^ Source: Knight Frank Research</sub></sup></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Knight Frank chief economist Ben Burston said a gradual recovery in liquidity within the commercial market was on the horizon following a a pullback from investors “adjusting” to the new environment.</p><p>“Core real estate will remain highly sought after but greater priority will be given to stability and length of income and this will favour prime assets than can easily adapt to social distancing and cater to changing occupier requirements,” Burston said.</p><p>Over 2020, smaller commercial deals have been easier to progress during Covid, with less than 25 per cent of assets in the $50 million-plus range completing.</p><p>Deals ranging between $5 million and $50 million have remained more difficult to see through, with 9 per cent unconditional and 24 per cent settled since March. </p><p>Sales of under $5 million had a 56 per cent completion rate for deals over the same period.</p><p>Knight Frank national head of capital markets Paul Roberts said activity across institutional-grade assets, of $50 million-plus, remained strong, with increased demand for assets with <a href="https://theurbandeveloper.com/articles/finance-for-developers-gold-brick-assets">limited short-term tenant risk</a>.</p><p>“It has been more difficult to achieve completion on larger deals, where we typically see interest from interstate or offshore investors and more intensive due diligence processes,” Roberts said.</p><p>“These deals are taking some time to complete, with more than 75 per cent still in progress.”</p><p>Deals in Victoria’s commercial markets have slowed down further since the second wave emerged in July, and remain 43 per cent down on 2019.</p><p>The uncertainty across Melbourne has left 42 per cent of deals pending, 33 per cent of which are on-hold for “more favourable timing”. </p><p>In Sydney, just under half of active deals remain in progress. The city also recorded the highest percentage of properties—27 per cent—withdrawn from sale. </p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><h2><strong>Business as usual for Brisbane’s office market</strong></h2></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>According to Knight Frank, deals in Brisbane’s <a href="https://theurbandeveloper.com/articles/brisbane-office-market-remains-steady">commercial markets</a> performed best over the the last six months, with only 21 per cent of deals withdrawn and 46 per cent completed.</p><p>Roberts said Brisbane had seen the highest levels of completions, followed by Sydney and then <a href="https://theurbandeveloper.com/articles/melbourne-office-vacancy-covid">Melbourne</a>, due to its low exposure to lockdowns.</p><p>“To date, Brisbane has been fortunate to have less time under restrictive lockdowns than its southern counterparts, which has buoyed activity,” Roberts said.</p><p>More than 90 per cent of Brisbane’s completed deals were below $25 million, with private buyers more active within the depressed market.</p><p>The city’s fringe markets have also been buoyed by renewed developer interest and investment, with a <a href="https://theurbandeveloper.com/articles/fortitude-valley-brisbane-fridge-office-market-development-application">spate of commercial schemes</a> lodged since March.</p></div></div></div></div></div>

Smaller commercial deals have been easier to progress during Covid, with less than 25 per cent of assets in the $50 million-plus range completing.

Las Vegas Sands Sell its Vegas Properties for $6.25bn

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Las Vegas Sands Corporation, the upscale resort and casino company founded by the late Sheldon Adelson, is leaving its namesake city and selling two flagship properties in a US$6.25 billion (A$8.1bn) deal.</p><p>Sands, the most valuable gaming company in the world, has sold its Las Vegas properties—the Venetian Resort and the Sands Expo Convention Centre, to private equity firm Apollo Global Management.</p><p>The resort includes more than 7,000 guest rooms, 21,000sq m of gaming space and 210,000sq m of conference space.</p><p>The casino operator, which will remain headquartered in Las Vegas, flagged the potential sale in October, three months before the death of founder Adelson.</p><p>Las Vegas Sands chief executive Robert Goldstein said the business, which will shorten its name to Sands as a result of leaving Las Vegas, remained focused on growth and was actively on the lookout for opportunities on a variety of fronts.</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/da3c1a6b-969a-4578-b119-83878235aa99.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ The Venetian casino and hotel came complete with fake canals. </span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>“Asia remains the backbone of this company and our developments in Macao and Singapore are the centre of our attention.</p><p>“There are also potential development opportunities domestically, where we believe significant capital investment will provide a substantial benefit to those jurisdictions while also producing very strong returns for the company,” Goldstein said.</p><p>Las Vegas Sands, which suspended dividends last year as Covid-19 hit, reported a loss of US$1.69 billion across 2020, the biggest in its history.</p><p>The deal with Apollo represents 12.8 times the earnings reported in 2019 from the Las Vegas properties before interest, taxes, and depreciation after it’s cash and short-term investments halved to US$2.12 billion (A$2.75bn) in 2020 compared to the year prior.</p><p>While the global health crisis wasn&#x27;t directly cited as a reason for the sale it follows the company posting a quarterly loss of almost US$300 million (A$390m) in January.  </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/31f10154-9004-471c-b608-70431b8a0eb0.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ The casino giant also owns Marina Bay Sands in Singapore.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>“The property is a best-in-class asset with a talented team of people operating it, know I will be rooting for them,” Goldstein said.</p><p>“I am confident Las Vegas will soon return to a more normal operating environment and The Venetian’s hardworking and dedicated team members will continue delivering a world-class experience to guests eager to enjoy it.”</p><p>One of Sands’ new projects in Asia is the US$2bn (A$2.6bn) Londoner Hotel which it hopes will win back tourists to Macau after a dramatic fall in numbers from the Covid-19 pandemic.</p><p>The resort will feature a 96-metre tall replica of Big Ben, a Crystal Palace inspired atrium and a full-scale replica of the Eros fountain once building finishes 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 cell-sm-3 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/ecec9181-44c5-45f8-ad46-2cc502c02010.jpg" width="640"/></picture><div></div></div></div></div><div class="cell cell-sm-9 cx12"><div class="ci cl"><p><br><a href="https://theurbandeveloper.com/articles/what-is-the-outlook-for-australias-hotel-sector"><strong>Australia’s Hotel Sector Outlook</strong></a><br>Hear from industry leaders who will share the latest research and forecasts for the sector...</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>Apollo Global co-lead partner David Sambur said the firm’s bullish view on the travel recovery, following its investment in Expedia last year, had allowed it to pick up the hotel and function centre.</p><p>“We’ve been among the most active in terms of expressing a view that once people are comfortable and feel safe enough to do, they’ll resume past behaviours.</p><p>“Traditionally business travel is correlated with corporate profits and the stock market, both of which are doing quite well,” Sambur said.</p><p>Apollo Global Management Inc&#x27;s affiliate-managed funds will buy the operating company of the Venetian for US$2.25 billion (A$2.92bn) and VICI Properties will buy the land and real estate assets of the Venetian for US$4 billion (A$5.1 billion).</p></div></div></div></div></div>

  Las Vegas Sands Corporation is leaving its namesake city and selling two flagship properties in a US$6.25 billion deal...

a25a84ce-2508-4dab-ac5c-28ca0412542d

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Amid uncertainty in office markets due to the ongoing economic impact of Covid-19, Melbourne-based property investment group Collective Capital has snapped up a suburban Melbourne office building for around $20 million.</p><p>Located at 454-472 Nepean Highway, Frankston, the property comprises a five-level building with a net lettable area of 6254sq m and ground floor retail on a 2501sq m site, with three street frontages and parking for 142 cars.</p><p>In an off-market deal brokered by CBRE&#x27;s Mark Wizel and Melbourne middle markets director Josh Rutman, the largely government tenanted building in Melbourne’s south-eastern bayside was sold 78 per cent leased with a net passing income of nearly $1.24 million. The yield was not disclosed.</p><p>The sale is a positive sign for a sector hard hit in the early stages of Covid-19 when the large-scale shift to working from home caused the suspension of some of the country’s largest office campaigns, and now, as vendors and purchasers<a href="https://theurbandeveloper.com/articles/office-markets-rent-income-coronavirus"> fall out </a>over post-pandemic prices.</p><p>Wizel said the result reflected the property’s &quot;defensive tenancy profile&quot;—a sought-after characteristic as challenges around the office tenant market continue to gain momentum.</p><p>&quot;This was an astute purchase which delivered a very satisfying level of income security at a time when income security is at a premium across all types of investment classes.</p><p>&quot;Interest in this and other defensive income properties, especially non-discretionary retail, has <a href="https://theurbandeveloper.com/articles/investor-confidence-woolworths">risen markedly</a> in recent times and should continue to escalate while uncertainty remains,&quot; Wizel said.</p><p>The <a href="https://theurbandeveloper.com/articles/covid-19-pushes-46pc-to-work-from-home-abs-australian-office-market">growing trend</a> of a decentralised workforce, with office workers preference shifting to working either at or closer to home to reduce travel times without compromising productivity was also becoming a factor under consideration for investors, according to Rutman.</p><p>&quot;Investors are seeking out opportunities where they can reposition buildings to cater for these changing worker needs in strategic locations which will be able to service a specific tenant catchment or industry.</p><p>&quot;This building, and others like it, are well-placed to come through the current crisis in good shape.&quot;</p><p>Rutman said while there was little doubt that risk was being assessed &quot;more prudently&quot; at present, Melbourne’s white-collar tenancy diversity was a positive in driving medium- to longer-term confidence in the market.</p><p>Collective Capital&#x27;s director Nicholas Thompson said he was confident the property would provide strong returns.</p><p>&quot;The asset was strategically targeted due to its very strong government and government-funded tenancy profile, which, during these uncertain times, will provide our investors with a high level of income security,&quot; Thompson said.</p><p>Although lease transactions had slowed during the coronavirus pandemic, CBRE’s head of suburban office leasing, Gianni Macdonald, said the Melbourne <a href="https://theurbandeveloper.com/articles/covid-19-office-markets-rents-may-fall-25pc-">metropolitan office market</a> had seen a significant increase in enquiry from government tenants looking for fitted tenancies close to train stations.</p><p>&quot;Buildings that are easily accessible by public transport and have tenancies ready to go are seen as a &#x27;no-risk&#x27; solution for occupiers looking for new office space.&quot;</p></div></div></div></div></div>

Amid uncertainty in office markets due to pricing misalignments post-Covid-19, Collective Capital has paid $20m for a Melbourne office building …

Queensland showed resilience in the face of Covid-19 with land sales surging by 24 per cent during the March quarter.

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Queensland land markets showed resilience in the face of Covid-19 with sales surging by 24 per cent during the March quarter.</p><p>The two year high showed the land values continued to increase in the early part of the year, according to research by Oliver Hume. </p><p>The key issues the state was yet to overcome were the <a href="https://theurbandeveloper.com/articles/virgin-hq-coronavirus-investors">fate </a>large employer Virgin Australia as well as <a href="https://theurbandeveloper.com/articles/domestic-travel-tourism">border closures</a> hindering domestic and international travel. </p><p>Driving land sales up were good long-term fundamentals including liveability, population growth, economic prospects as well as major <a href="https://theurbandeveloper.com/articles/major-development-projects-brisbane">infrastructure projects</a>.</p><p>The property development research for south-east Queensland and Victorian markets indicated the market was already starting to recover.</p><p>This sentiment was reflected by developers including Stockland and Satterley who said since restrictions were eased and display were reopened, house and land sales traffic was increasing.</p><p>Related: <a href="https://theurbandeveloper.com/articles/victoria-fast-tracks-12bn-shovel-ready-projects">Victoria Approves $1.2bn of ‘Shovel-Ready’ Projects</a></p><p>The March quarterly insight showed  a “tale of two halves” the first half showed strength through low-interest rates and first home buyer grants followed by a global economic shock.</p><p>The median purchase price over the quarter jumped significantly to $297,000 compared to $280,000 in 2019 attributed to increased borrowing power.</p><p>The majority of buyers were born in Australia (48.8pc) followed by India (29.4pc), Pakistan and Sri Lanka (both at 4.4pc)—a shift from 2019 when Australian-born purchasers made up 60 per cent of the market.</p><p>The drop in migration had caused some <a href="https://theurbandeveloper.com/articles/falling-migration-will-slash-construction-demand-by-half">concern </a>for developers for house and land sales, however the research team said the full impact of Covid-19 was yet to be felt.</p><p>Related: <a href="https://theurbandeveloper.com/articles/australian-property-market-2010-2020-a-decade-in-review-house-prices">Australian Property Market to Recover in 5 Years—PIPA</a></p><p>In south-east Queensland the most commonly sold lot was 376-400sq m with a median size at 419sq m, price $250,000 equating to a value rate of $597 per square metre.</p><p>This compared to Melbourne where the most commonly sold lot was the same size however the median size was 400sq m, price $317,000 giving a value rate of $799 per square metre.</p><p>Oliver Hume national head of research George Bougias said there were still plenty of buyers in the market and land sales were still happening but the short to medium-term outlook would depend very much on the economy.</p><p>“Prior to the outbreak we were seeing some good signs that 2020 would be a much better year than 2019,” Bougais said. </p><p>“Some of the factors driving that recovery, including low interest rates and government assistance to home buyers, are still in place and should help the market return to more normal conditions.”</p><p>The head of research said any sustained recovery from Covid-19 was reliant on a range of factors.</p><p>“Employment growth and confidence are absolutely critical to the performance of the land market,” Bougias said. </p><p>“If buyers are confident and they expect the economy will remain resilient overall, they will continue to take advantage of low interest rates.”</p></div></div></div></div></div>

Queensland showed resilience in the face of Covid-19 with land sales rising by 24 per cent during the March quarter...

A-REITs have good gearing buffers to withstand the looming property value declines due to weak demand and slowing economic activity caused by the Covid-19 pandemic according to Moody's Investors Service - Australian Real Estate Investment Trusts

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Property values would need to fall at least 34 per cent to have an impact on Australian Real Estate Investment Trusts, according to a Moody’s report.</p><p>A-REITs have good gearing buffers to withstand the looming property value declines due to weak demand and slowing economic activity caused by the coronavirus pandemic.</p><p>Covid-19 hit the sector hard with stock prices falling almost 50 per cent from 20 February to 23 March on the S&amp;P/ASX 200 A-REIT Index (XPJ); it has since recovered 27 per cent.</p><p>According to the report, retail properties would see the largest decline in value in response to Covid-19, at 10 to 30 per cent.</p><p>Office values were likely to experience moderate declines at 3 to 8 per cent and industrial properties would steam along, supported by <br>e-commerce and a focus on supply chains, either staying at the same value or dropping slightly by 3 per cent.</p><p>Related:<a href="https://theurbandeveloper.com/articles/infrastructure-construction-key-to-economic-recovery-moodys"> Infrastructure Construction Key to Economic Recovery</a></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>Breakdown of A-REIT property portfolios </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/ddc94373-7792-4017-afaf-539d2f6c022f.jpg" width="801"/></picture><div></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><sup>^ Source: Moody’s Investors Service, as at 31 December 2019</sup></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>Moody’s Investors Service vice president Saranga Ranasinghe said property values would need to fall significantly for A-REITs to breach gearing and covenant thresholds.</p><p>“We expect retail property values to decline in the next 12-18 months. Office property values will fall to a lesser degree, and continued demand will support industrial property values.</p><p>“But average property values would need to fall 34 per cent to breach the top end of the rated REITs’ target gearing (debt/asset) ranges and fall 55 per cent to breach their covenant thresholds,” Ranasinghe said.</p><p>“The REITs came into the downturn with balance-sheet buffers to withstand an increase in gearing.”</p><p>Despite <a href="https://theurbandeveloper.com/articles/ubs-give-three-coronavirus-pandemic-scenarios-for-a-reits">uncertainty </a>in the market and A-REITs withdrawing guidance during Covid-19, the big companies have moved forward with mega projects and transactions including the <a href="https://theurbandeveloper.com/articles/gpt-parramatta">amalgamation </a>of three sites in central Parramatta, <a href="https://theurbandeveloper.com/articles/mirvac-completes-groundscraper-in-south-eveleigh">completion </a>of a “ground-scraper” in South Eveleigh and the <a href="https://theurbandeveloper.com/articles/dexus-45-clarence-street-sydney">sale </a>of a $530 million tower in the Sydney CBD.</p><p>The A-REITs were expanding into the <a href="https://theurbandeveloper.com/articles/the-emergence-of-an-institutional-residential-sector-co-living-and-build-to-rent">emerging </a>build-to-rent and co-living sector in a bid to strengthen portfolios.</p></div></div></div></div></div>

Property values would need to fall at least 34 per cent to have an impact on Australian Real Estate Investment Trusts, according to Moody’s ...

Joint-venture developers Urban, Hamilton Marino and CHT Architects signed The Ascott Limited’s new hotel brand Lyf on their 105-room Collingwood building slated to open 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>Victorian developers are forging ahead with new hotel plans as operators and project timelines are updated on two Melbourne sites.</p><p>Ashe Morgan “confidently” signed Nesuto to their $100 million 211-room hotel in The District, Docklands which is expected to be built early next year and opened in 2023.</p><p>Joint-venture developers Urban, Hamilton Marino and CHT Architects also signed The Ascott Limited’s new hotel brand Lyf on their 105-room Collingwood co-living building, slated to open in 2022.</p><p>This comes as dismal travel results are recorded for the state in June by the Australian Bureau of Statistics. </p><p>They reveal a 99.3 per cent drop in international visitors to 1,140 and a near 100 per cent drop in international students as Covid-19 cases started to pick up in Victoria.</p><p>There were just 70 long-term visitor arrivals and 660 short-term visitors in June 2020 compared to solid growth in arrivals for the state since 2010. </p><p>In 2019 people from Singapore, China and New Zealand represented the largest number of visitors while in 2020 the arrivals came from New Zealand, the United Kingdom and United States.</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>Short-term visitor arrivals in Victoria</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/211f3fb9-578f-4495-bf83-67fb05567ac0.jpg" width="800"/></picture><div></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><sub><sup>^ Source: Australian Bureau of Statistics </sup></sub></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>CommSec senior economist Ryan Felsman said that with conditions worsening, not much of an improvement was expected for the state.</p><p>“The renewed lockdown in Melbourne and the re-closure of Queensland’s state border in recent weeks have made life for beleaguered tourism operators even more difficult,” Felsman said.</p><p>According to the ABS there was some improvement nationally when comparing June to May with an increase of international visitors by 56.8 per cent and returned residents by 17.8 per cent.</p><p>Related: <a href="https://theurbandeveloper.com/articles/hotel-performance-str-airdna-occupancy">Global Hotel Performance Up from Rock Bottom</a></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"><h2><strong>Melbourne hotel operators move in</strong></h2><p>The District Docklands chief executive George Karabatsos said they were moving forward with their long-term <a href="https://theurbandeveloper.com/articles/ashe-morgans-67m-docklands-fresh-food-precinct-starts-construction-">plans </a>for the site.</p><p>“Despite current market conditions, we are confident retail and tourism remains crucial to Victoria’s rebuild post-Covid-19,” Karabatsos said.</p><p>Located at 80 Waterfront Way, Nesuto Docklands Apartment Hotel will form part of the open-air precinct of The District Docklands. </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/84edfe80-8701-4208-900e-833bee61e83d.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ AsheMorgan signs the Nesuto Docklands Apartment Hotel as a milestone expansion to Melbourne’s The District Docklands mixed use precinct.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>The partnership sees Nesuto add its first Victorian property to its existing portfolio of 11 operating, and one in-the-pipeline, hotels in Australia and New Zealand.</p><p>The apartment hotel, designed by Melbourne-based architects Fender Katsalidis, will feature 58 one-bedroom, 20 two-bedroom and 133 studio apartments.</p><p>The Collingwood hotel development at 42 Oxford Street sits within Urban’s C&amp;L development on a triple street block along Cambridge, Langridge and Oxford Streets.</p><p>The hotel is expected to attract “millennials” and the “millennial-minded” who will use a mobile app to tap or swipe to open doors, check-in and out and make contactless payments.</p><p>Urban director Bart O’Callaghan welcomed Singapore-based Ascott as operator of the ensuite and studio apartments.</p><p>“Lyf will be Collingwood’s first co-living hotel and the first of its kind in Australia,” O’Callaghan said.</p><p>Ascott’s other serviced residences and hotel brands include Ascott The Residence, Somerset, Quest, Citadines and Citadines Connect.</p></div></div></div></div></div>

Victorian developers are forging ahead with new hotel plans as operators and project timelines are updated on two sites...

Labour Shift Weighs On Property Markets 

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>The latest ABS jobs figures data for the first half of March, released on Thursday, held up better than expected but it is the “calm before the storm”, according to economists.  </p><p>With a residential market <a href="https://theurbandeveloper.com/articles/coronavirus-impact-property-unclear-unemployment-rate-10pc">beset with uncertainty </a>as to exactly how Covid-19 will impact jobs, migration and mobility going forward, house price growth has started to lose momentum. </p><p>Corelogic data through to mid-April has seen combined capital city housing value growth rates slip into negative territory week-on-week for the first time since August last year.</p><p>The headline job numbers are a key indicator of how the housing market will fare going forward, and while the March labour market data did not show a noticeable impact from Covid-19, unemployment won’t remain contained for long.</p><p>Commsec senior economist Ryan Felsman said that job numbers will be volatile in the coming months as the hit to labour demand intensifies. </p><p>“An earlier-than-anticipated return to work for some businesses—supported by additional government stimulus—is critical in the economic recovery phase,” Felsman said.</p><p>“Until a Covid-19 vaccine is found, the economy will likely be susceptible to rolling stoppages as virus outbreaks re-occur, impacting consumer spending and job hiring intentions.” </p><p>UBS has now materially <a href="https://theurbandeveloper.com/articles/stimulus-not-enough-to-offset-house-price-falls-ubs-">revised its forecasts</a> in line with its “full-pandemic <a href="https://theurbandeveloper.com/articles/ubs-give-three-coronavirus-pandemic-scenarios-for-a-reits">scenario</a>” to a decline of at least 10 per cent in house prices over the coming 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>Rolling 7-day change in dwelling values</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/3c7a24eb-79ce-462a-8b0f-01ba685d6222.png" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ Combined capitals. Source: Corelogic</span></div></div></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>Employment minister Michaelia Cash said the small increase in the unemployment rate to 5.2 per cent exceeded all market expectations.</p><p>“While these figures [saw] the creation of 5,900 jobs, the data only represents the early impacts of Covid-19. </p><p>“The government expects the unemployment rate to rise over the coming months.”</p><p>Capital Economics economist Marcel Theliant forecasts that the unemployment rate will hit 12 per cent. Australia’s peak unemployment rate reached 11.2 per cent in 1992.</p><p>“Google searches for ‘unemployment benefits’ surged at the end of March and were on past form consistent with around two million unemployed people, or an unemployment rate of nearly 15 per cent,” Theliant said. </p><p>Corelogic head of research Eliza Owen said that the extent of decline in activity across Corelogic’s platforms show clear signs of a sharp slowdown in housing market activity. </p><p>“With plunging property volumes across listings, and less activity from real estate agents and valuers, there is likely to be a severe drop in the number of properties transacted over the coming months.</p><p>“But less listing activity also speaks to the moderation of supply against less demand for property. This is one reason that property values are unlikely to fall as quickly, or to the same extent, as transaction volumes.</p><p>National cabinet agreed on Thursday that current restrictions will remain in place for at least the next four weeks.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><hr/></div></div></div></div></div>

Data through to mid-April has seen a continuation in this trend, with the combined capital city measure slipping into negative territory.

 CBD Tenant Demand Sags as Sub-Leasing Surges

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>The amount of office space available for sublease in the Sydney and Melbourne CBDs has begun to swell as the coronavirus crisis continues to hit corporate Australia, forcing tenants to question the prospects of once-thriving city towers.</p><p>The trend, driven by businesses downsizing and relocating, is expected to push vacancy rates up in cities nationally, and with incentives also on the rise, this will ultimately put pressure on values.</p><p>Charter Keck Kramer national director Steve Kingston said additional sublease vacancy is likely to come online in both Sydney and Melbourne in the final quarter of this year as occupiers start to make critical decisions about how much space they need.</p><p>“Many occupiers have begun to look more critically at their accommodation overhead costs and overall footprint post-pandemic, with most commentary appearing to suggest that the workplace ‘shake-up’ is here to stay,” Kingston said.</p><p>“While we are still yet to understand the sweeping impacts of Covid-19 on the office leasing market, we know that tenant demand remains low and that vacancy in all CBD markets is expected to further increase over the next 12 months and beyond.”</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/17370ebf-5284-40ad-b415-ac9f2c71ce15.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ Sydney has continued to record the largest increase in sublease vacancy of all CBD markets.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>Subleasing data, which paints a broader picture of the overall health of an office market by revealing just how much space in the CBD is fully occupied.</p><p>This data, otherwise hidden by the headline vacancy rate, acts as a forward indicator for weakening tenant demand as existing leases complete and new deals are struck.</p><p>Vacancy rates in the country’s two biggest office markets have already risen significantly over the last six months.</p><p>According to recent Property Council of Australia data, Melbourne office vacancy rose from 3.2 per cent to 5.9 per cent over the first six months of the year, equating to 280,000sq m of the CBD market.  </p><p>Sydney’s vacancy rate has expanded from 3.9 per cent to 5.6 per cent with aggregate tenant demand flat, and mainly driven up by increases in new supply.</p><p>According to the latest figures from JLL, 135,000 square metres—or 2.7 per cent of Sydney’s total CBD office stock—is for sublease, while 123,000sq m of sublease has come online in Melbourne.</p><p>Two-thirds of Sydney’s sublease vacancy is concentrated in prime grade buildings, with the remainder largely in B-grade stock.</p><p>“In NSW, where restrictions have eased in recent months, many organisations are still operating under a hybrid model, with employees splitting their time between the office and home,” Kingston said.</p><p>“Many of these CBD sublease vacancies are fully fitted and ready for occupation, presenting cost-effective opportunities for tenants seeking to relocate and driving competition among landlords seeking to fill direct vacancy.”</p><p>According to the Property Council, 117,000sq m of new stock is due to enter the market in the second half of 2020 in the Sydney CBD, while 100,000sq m of stock will enter the Melbourne CBD, equating to more than 2 per cent of additional vacancy through subleasing alone.</p><p>“The increase in sublease space is enticing tenants into the market,” CBRE office leasing director Chris Fisher said.</p><p>“We are seeing larger, opportunistic tenants seek out cost-competitive leasing options, with an increase in inspection activity for both sublease and direct space. </p><p>“This is leading to an uptick in proposal requests in both market segments, which is expected to result in space coming off the market in the coming months.”</p></div></div></div></div></div>

The amount of office space available for sublease in the Sydney and Melbourne CBDs has begun to swell...

19a587b5-f9a4-43a1-88a3-91df78ecfbf9

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Despite ongoing <a href="https://theurbandeveloper.com/articles/rents-record-oversupply-sydney-melbourne">weakness</a> in the Sydney and Melbourne markets Australia’s housing market held up over the June quarter, Corelogic’s quarterly property market and economic report shows.</p><p>The decline in Australian dwelling market values was 0.8 per cent in the three months to June, impacted by Covid-19 which has forced a pause on international migration and declines in employment across tourism and hospitality sectors.</p><p>The effects of the pandemic saw values fall by 1.1 per cent across capital city markets, with houses down 1.3 per cent and units 0.5 per cent.</p><p>In Melbourne, where lockdown measures have been reintroduced, values fell by 2.3 per cent.</p><p>Before the June quarter, Melbourne prices had made a full recovery from the 2017-19 slump but sales activity, home listings and clearance rates collapsed in April after the first lockdown imposed in late March.</p><p>Sydney saw a milder decline of 0.8 per cent across the quarter however prices have continued to trend lower impaired by job and income loss across the city.</p><p>The Brisbane dwelling market declined by 0.2 per cent while the Sunshine Coast and Gold Coast dwelling markets saw dwelling price increases of 1.0 per cent and 0.7 percent respectively.</p><p>Hobart saw values increase by 1 per cent over the quarter while Hobart and Adelaide both recorded lifts of 0.7 per cent.</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/711f31e8-1486-4408-b6ac-69fdba384f0e.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ Nationally, data is showing some of the trends evident in economic and housing market performance since the onset of the pandemic.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>Corelogic research analyst Eliza Owen said record low mortgage rates, home loan repayment deferrals and various demand-side government-issued stimulus packages had combined to reinvigorate buyer sentiment.</p><p>“The main impact of the pandemic on the dwelling market has not been value declines, rather, social distancing and plunging consumer confidence led to a sharp fall in in transaction activity,” Owen said.</p><p>“Listings and sales volumes initially trended down significantly amid the stage two restrictions rolled out in late March [which saw] sales volumes fall by over a third in the month of April. </p><p>“Despite divergent performance, the renewed restrictions across Victoria are likely to put downward pressure on economic performance nationally, which will ultimately impact purchasing capacity for housing, and prices. </p><p>“For this reason, it is anticipated that the housing market decline will become more broad-based in the second half of 2020.”</p><p>Corelogic said regional markets had been relatively <a href="https://theurbandeveloper.com/articles/regional-property-price-growth-outpaces-capital-city-markets-over-year">resilient</a>, increasing by a further 0.3 per cent in the same period. </p><p>Finance activity fell in the June quarter, with lending to owner occupiers down 9.9 per cent, while lending for investment property fell 12.6 per cent.</p><p>Investor housing finance as a percentage of total housing finance fell to 25.4 per cent of total lending, well below the decade average of 36.3 per cent. </p><p>Corelogic said an increase in transaction activity over May and June signalled the start of a <a href="https://theurbandeveloper.com/articles/first-home-buyer-lending-hits-decade-high">rebound</a> in new lending with refinancing activity amid record-low mortgage rates offsetting some of the decline in new home lending.</p><p>However, flow-on effects to the economy from less migration, less tourism and fewer education and commodity exports could start to filter through to the labour markets, which could affect confidence and have a dampening effect on the rapid rate of price growth.</p><p>“The impact of Covid-19 has been an enormous negative shock to the economy,” Owen said.</p><p>“The trajectory of the market is largely dependent on overcoming the current health crisis, which would allow the flow of people and economic activity to resume.</p><p>“A housing market recovery is unlikely until borders re-open, and the labour market makes a consistent recovery.”</p><p>Last week, Australia’s largest lender Commonwealth Bank <a href="https://theurbandeveloper.com/articles/house-prices-to-fall-10pc-cba">reaffirmed</a> its home price targets for the next six months, with expectations of a 10 per cent fall in house prices from the peak to trough across the capital cities.</p><p>ANZ and NAB have also predicted a fall 10 per cent, while AMP Capital’s initial forecast of a decline in dwelling values of up to 20 per cent has been revised in recent weeks to reflect a softer landing for the housing market.</p></div></div></div></div></div>

Australia’s housing market has held up over the June quarter, CoreLogic’s quarterly property market and economic report shows.

Coronavirus: Home Sales Set to Halve in Near Term 

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>By late February home sales had lifted to the highest levels in more than six years, while housing construction had finally <a href="https://theurbandeveloper.com/articles/building-approvals-rise-abs-coronavirus">picked up</a> after a protracted two-year downturn. </p><p>It is a markedly different outlook to the <a href="https://theurbandeveloper.com/articles/investors-look-at-options-in-downward-market-">current state</a> of the market, with home sales likely to more than halve in the short-term as the crisis of Covid-19 uncertainty weighs on the residential sector. </p><p>In a note on Australia’s housing market, UBS analysts George Tharenou, Carlos Cacho and Jim Xu said that house prices will inevitably start to fall.</p><p>“We expect existing home sales volumes will collapse as long as the ban on auctions and open home inspections remains.”</p><p>And with the <a href="https://theurbandeveloper.com/articles/shopping-malls-stay-open-auctions-banned-">ban on public auctions</a> and open home inspections likely to persist for months—NSW has formalised its lockdown until June at the earliest—the near to medium-term outlook for home sales is bleak.</p><p>It is expected a significant proportion of the 3,051 capital city homes scheduled to go to auction this weekend will be withdrawn.</p><p>Final auction reporting figures from last week showed the clearance rate dropping to its lowest levels since Corelogic commenced auction reporting. </p><p>More than 50 per cent of properties were <a href="https://theurbandeveloper.com/articles/caution-urged-as-house-prices-start-to-fall">reported as withdrawn</a>.</p><p>Related: <a href="https://theurbandeveloper.com/articles/property-market-plunge-coronavirus-corelogic">Property Market to Temporarily Plummet</a></p><p><strong>Corelogic house price index</strong></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><table><thead><tr><th></th><th>Month</th><th>Annual</th><th>Median value</th></tr></thead><tbody><tr><th>Sydney</th><th>1.1%</th><th>13%</th><th>$882,849</th></tr><tr><th>Melbourne</th><th>0.4%</th><th>12%</th><th>$695,299</th></tr><tr><th>Brisbane</th><th>0.6%</th><th>3.1%</th><th>$506,553</th></tr><tr><th>Adelaide</th><th>0.3%</th><th>0.9%</th><th>$437,296</th></tr><tr><th>Perth</th><th>0.5%</th><th>-3.1%</th><th>$445,614</th></tr><tr><th>Hobart</th><th>-0.2%</th><th>4.2%</th><th>$483,032</th></tr><tr><th>Darwin</th><th>2%</th><th>4.7%</th><th>$626,932</th></tr><tr><th>Canberra</th><th>0.6%</th><th>4.7%</th><th>$626,932</th></tr><tr><th>National</th><th>0.7%</th><th>7.5%</th><th>$554,229</th></tr></tbody></table></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>                                                                   <sup><sub>^ Corelogic Hedonic Home Value Index, 31 March 2020.</sub></sup></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>The extent of the fall in house prices—the more bearish <a href="https://theurbandeveloper.com/articles/caution-urged-as-house-prices-start-to-fall">forecasts</a> are more than 20 per cent across the year—will be determined in large part by the length of the recession and how far unemployment rises.</p><p>“Capital growth trends will be contingent on how long it takes to contain the virus, and whether additional constraints on business or personal activity are <a href="https://theurbandeveloper.com/articles/wage-subsidy-loan-deferrals">introduced</a>,” Corelogic head of research Tim Lawless said.</p><p>“Once the virus is contained, we expect economic conditions to quickly improve, driving a turnaround in consumer spirits which should flow through to housing market activity.</p><p>“When that will be, remains highly uncertain.”</p><p>If price falls become a material risk to the economy, the government would need to pull the lever on policy intervention, Tharenou said.</p><p>The expansion of the first home buyer scheme, temporary reductions in land tax and stamp duty or support for the build-to-rent industry are all potential policy options.  </p><p>“If price falls do become very significant and potentially a macro-stability risk, we would expect further government support,” Tharenou said.</p><p>In its March minutes published on Wednesday, the RBA said it is likely that the “material contraction” in economic activity would spread across the March and June quarters—and potentially longer.</p></div></div></div></div></div>

By late February this year, home sales had lifted to the highest levels in more than six year.

COVID-19