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Welcome to The Urban Developer's housing market pulse check for the city of Melbourne...

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The Urban Developer’s latest Brisbane housing market insights reveal that the city’s property prices have continued to deflate, as the Reserve Bank’s persistant rate-rising campaign to fight inflation puts pressure on residential property values across the nation. This resource, updated periodically, will collate and examine the economic levers pushing and pulling Brisbane’s housing market.

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The Urban Developer’s housing market insights combines market research, rolling indices, and expert opinion to unpack Sydney’s real estate market...

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<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 languishing on the market for about six months, One Barangaroo’s $100-million penthouse is receiving strong interest from the local market. </p><p>Knight Frank partner Erin van Tuil said there had been “good interest” from locally based buyers.</p><p>The two-storey, six-bedroom penthouse on Level 81 of Crown’s $2.4-billion hotel and residential tower features 360-degree views of the Sydney Harbour Bridge, the Opera House, and out to the Blue Mountains. </p><p>Van Tuil said she was confident in the high-end apartment market, with <a href="https://www.theurbandeveloper.com/articles/first-look-crown-resorts-2bn-one-barangaroo">90 per cent of the sold Crown residences occupied and more than 80 per cent of buyers from the local market</a>.</p><p>“Buying into branded residences is a lifestyle choice,” van Tuil said.</p><p>“We’ve maintained very steady activity … <a href="theurbandeveloper.com/articles/high-rollers-scoop-up-south-east-queenslands-premium-market">we have a fantastic product and we know that there’s demand for [premium apartments]</a>.”</p><p>James Packer settled on a two-storey apartment in the One Barangaroo tower for more than $72 million last month.</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/f81a8774-a9d7-4408-a193-6e5eec21eb36.jpg" width="1000"/></picture><div><span style="align-content:center;opacity:0.8">▲ This six-bedroom penthouse has multiple entertaining areas with over six-metre high floor to ceiling windows and a private plunge pool, cinema room, and gym.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>There are more than 400 branded residences worldwide, most of which are hotel branded, according to Knight Frank research.</p><p>The research showed more than a third of prime international buyers were willing to pay a premium for a branded residence, according to a survey of more than 900 buyers globally. </p><p>In Australasia almost half of buyers said they would pay more for services and amenities provided as part of the branded residences experience. </p><p><a href="https://www.theurbandeveloper.com/articles/australian-city-leaps-into-top-five-preferred-investment-destinations">High yields and building maintenance </a>also weighed into the appeal, according to the research. </p><p>“One of the most compelling aspects of living in a branded residence is the level of service and amenity provided, and at Crown Residences at One Barangaroo residents take advantage of the 24-hour operations, personalised nature of every service and ability to leverage other amenities at Crown Sydney to entertain themselves, their friends and their families,” van Tuil said.</p><p>“Given residents’ appetite for these bespoke, luxury experiences, the team is constantly inventing new ways to create new experiences for the residents.”</p><p>Crown Residences is the only fully integrated hotel brand residence in Australia and Crown Resorts development manager Jennifer Tracy said no two residences were the same.						</p><p>“There’s no repetition anywhere. From the column placement and the layout to the shape and interior design. Every decision that was made in its creation was unique to that individual floorplate,” Tracy said.</p><p> “Our roots are in hospitality so One Barangaroo has been created with that same ethos, which is to treat our guests in a customised, bespoke manner and to really get to know them to deliver the absolute best in effortless hospitality.” </p></div></div></div></div></div>

Despite languishing on the market for about six months One Barangaroo’s $100-million penthouse is receiving strong interest from the local market...

With rising demand for high-end apartments, are the days of harbourside mansions numbered? Frank Knight’s Erin van Tuil explains why the top end of the market is turning away from freestanding homes.

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Sydney is arguably one of the most enviable places in the world to live, and it continues to attract investment into luxury property. </p><p>As such, prime property prices, the top five percentile by market value, <a href="https://www.theurbandeveloper.com/articles/sydneys-high-end-to-chalk-up-12pc-growth">continues to record growth</a> increasing 10.7 per cent in the 12 months to September 2021. </p><p>While the beauty of the city’s luxury houses could hardly be questioned, demand for apartment living in Sydney continues to increase and will pave the way for luxury living in Sydney’s future.</p><p>Recent research by Knight Frank reveals that 73 sales of super-prime property in Sydney, homes valued over US$10 million (A$14 million), were recorded in the second quarter of 2021, up 138 per cent on last year. </p><p></p><p>Contributing to this sales surge is the purchase of super-prime apartments. In the first half of 2021, Sydney recorded eight times the 10-year average of super-prime apartment sales.</p><p>The desire for apartment living has been documented by global research by Knight Frank—of buyers surveyed, 38 per cent are looking to cities for their next property purchase, and demand for apartments has increased to 19 per cent from 12 per cent last year.</p><p>So what’s driving this surge to apartment living? At face value, it’s likely that this reflects demand for larger more spacious apartments and mid-week bases in city centres. </p><p>However, when you dive a bit deeper in Australia, a trend named <a href="https://www.theurbandeveloper.com/articles/high-end-apartment-shortfall-prices-up">“rightsizing” continues to sweep the prime property sector</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/9e5ee70f-92a8-4c37-971d-30a89910a0a9.jpg" width="900"/></picture><div><span style="align-content:center;opacity:0.8">▲ Crown Resort&#x27;s One Barangaroo has racked up more than $1.1 billion in sales.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>Rightsizing is the move from large free-standing houses to luxury apartment living, providing homeowners with a wealth of lifestyle benefits. In making this move, buyers are offered a hassle-free lifestyle, over the maintenance that comes with free-standing homes. </p><p>There are three trends behind rightsizing recorded in recent months: Australians seeking a low-maintenance, high-quality home environment with house-like proportions for entertaining; those seeking a secured luxury apartment residence that can be easily locked-up and cared for when they jet-off for long periods of international travel again next year; and the emerging trend from the pandemic of those Australians who have embraced the concept of a co-primary home, where the second home is almost equal in every way to their main residence.</p><p></p><p>Crown Resorts, the developer of Crown Residences at One Barangaroo, identified early the demand for this calibre of home and the 76 luxury residences have now recorded more than $1.1 billion in sales to October, 2021. </p><p>This includes record sales of five transactions over $40 million and 16 over $20 million.</p><p>Knight Franks has found that the Australian buyer appetite for branded residences is well above the global average, at 44 per cent compared to 39 per cent. </p><p>For 48 per cent of Australian respondents, the key motivation for purchasing a property in a branded residence development was the service provision and physical amenities available.</p><p>With the population of ultra-high-net-worth individuals <a href="https://www.theurbandeveloper.com/articles/sydney-ranks-8th-spot-in-global-city-wealth-index">forecast to grow 3.8 per cent annually</a> over the next five years, developers of future homes would be wise to account for this increased demand for luxury apartment living, as well as the hotel-branded residences concept. </p><p>Differentiating the offering of service and amenity available will be a crucial means to attract buyers to new apartment complexes. </p><p>Traditionally in Australia the quality of apartments increases as you get higher in the building, with penthouses the pinnacle. Ensuring that all homes within the building are finished to the same high quality will mean that homeowners can choose within what part of the building they want to live in without compromising on quality. </p><p>Similarly, it’s recently been observed that not all homeowners seek the highest view within a building. By offering a mix of apartment sizes all the way up a building, developers better cater to all.</p><p>As prime property prices continue to grow in Sydney and the ultra-high-net-worth individuals population continues to increase, so will demand and desire for a new era of luxury living. </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>Author</h2><p>Erin van Tuil<br>Partner, Knight Frank Australia </p></div></div></div></div></div>

With rising demand for high-end apartments, are the days of harbourside mansions numbered? 

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<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Sydney has cemented its high-end property market as one of the strongest in the world, chalking up a 10.7 per cent increase in values over the past 12 months. </p><p>It is the 35th consecutive quarter that Sydney’s prime market has recorded price rises—and the forecast is for strong price growth into 2022.</p><p>Knight Frank’s Prime Global Forecast, which provides data on the world’s prime property markets, has predicted Sydney’s house prices will rise 9 per cent next year, second only to Miami at 10.1 per cent. </p><p>Knight Frank’s head of residential research Michelle Ciesielski said 2021 had been a year of strong performance with a third of cities in the index recording growth in excess of 10 per cent. Sydney is expected to hit 12 per cent by the end of the year. </p><p>“Although <a href="https://www.theurbandeveloper.com/articles/sydney-housing-market-update">Sydney’s mainstream market has rebounded to record 24 per cent annual growth</a> in the year to [September], the prestige market has experienced a lengthier run of upward trajectory in prices as this market advances in line with other developed global cities,” Ciesielski said. </p><p>“There have now been 35 consecutive quarters of uninterrupted positive annual growth in Sydney’s prime market, averaging 7.3 per cent growth since 2013. </p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>“Although we’re hearing of record prices being achieved at the very top end, the growth in the prestige market is steadily coming off a much higher footing.</p><p>“If we were to compare this prime property performance to the mainstream market, there have been only eight quarters of positive annual growth to date, following seven quarters of decline when impacted by the tightening of lending restrictions.</p><p>“Contributing to Sydney’s prime values, the super-prime market is performing exceptionally well with many suburban records being achieved in excess of $10 million, especially for those homes located close to the water.”</p><p>Sydney wasn’t the only Australian city to perform well with Perth and the Gold Coast recording prime price growth above 10 per cent. </p><p>The Knight Frank report has flagged an 8 per cent prime property price growth on the Gold Coast in 2022, Melbourne could record 7 per cent growth, and Perth and Brisbane at 6 per cent.</p><p>“There are a number of global trends that may affect the movement of prime markets in 2022,” Cieselski said.</p><p>“The winding back of <a href="https://www.theurbandeveloper.com/articles/interest-rate-hike-exposure">ultra-accommodative monetary policy is likely to bring asset prices back from being artificially inflated</a>, and we are likely to see rental recovery across the board with top tier cities seeing demand accelerate as CBDs reopen and the buy-to-let institutional investment market heats up.</p><p>“Many governments around the world are also prioritising greater regulation of the rental market, with property cooling measures, non-resident restrictions and tighter regulation across the board of holiday rental platforms such as Airbnb a key focus.”</p><p>The Gold Coast, where prices have surged by 38.2 per cent between Broadbeach-Burleigh, is also earmarked for prime residential market growth next year.</p><p>The city, which has for the last three consecutive quarters recorded the highest number of prime sales transactions on record, will experience prime price growth of 8 per cent next year, whilst Melbourne will hit 7 per cent, followed by Perth and Brisbane at 6 per cent, respectively.</p><p>Cieselski said analysts would watch New Zealand as a bellwether for other prime markets following interest rate hikes.</p><p>More than 80 per cent of the 45 global cities monitored in the Knight Frank Global Cities Index recorded house price rises over the past 12 months, and more than a third experienced a steep rise in excess of 10 per cent.</p><p>Prime price growth has mirrored a rapid uptick in the number of millionaires in recent years.</p><p>According to new research commissioned by platform provider Praemium Limited, the number of millionaires skyrocketed by 30 per cent from an estimated 485,000 to 635,000.</p><p>Australian millionaires now control $2.77 trillion in assets, up 37 per cent from $2.02 trillion in 2020.</p><p>The number of millionaires in Australia has remained steady between 2017 and 2020 before dramatically rising this year. There were 424,000 in 2017; 434,000 in 2018; and 458,000 in 2019.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><strong>Global cities index: September 2021</strong></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><table><thead><tr><th>Rank</th><th>City</th><th>12-month change</th><th>Quarterly change</th></tr></thead><tbody><tr><th>1</th><th>Miami</th><th>26.4%▲</th><th>8.1%▲</th></tr><tr><th>2</th><th>Seoul</th><th>22.6%▲</th><th>6.5%▲</th></tr><tr><th>3</th><th>Shanghai</th><th>20.5%▲</th><th>1.3%▲</th></tr><tr><th>4</th><th>Toronto</th><th>20.4%▲</th><th>-1.5%▼</th></tr><tr><th>5</th><th>San Francisco</th><th>20.2%▲</th><th>4.2%▲</th></tr><tr><th>6</th><th>Taipei</th><th>18.9%▲</th><th>3.5%▲</th></tr><tr><th>7</th><th>Los Angeles</th><th>18.2%▲</th><th>4.2%▲</th></tr><tr><th>8</th><th>Guangzhou</th><th>17.6%▲</th><th>-0.1%▼</th></tr><tr><th>9</th><th>St Petersburg</th><th>15.5%▲</th><th>2%▲</th></tr><tr><th>10</th><th>Vancouver</th><th>15%▲</th><th>0.4%</th></tr><tr><th>11</th><th>Stockholm</th><th>11.6%▲</th><th>1.9%▲</th></tr><tr><th>12</th><th>Geneva</th><th>10.8%▲</th><th>2.4%▲</th></tr><tr><th>13</th><th>Sydney</th><th>10.7%▲</th><th>2.3%▲</th></tr><tr><th>14</th><th>Gold Coast</th><th>10.5%▲</th><th>2.1%▲</th></tr><tr><th>15</th><th>Perth</th><th>10.4%▲</th><th>0.8%▲</th></tr><tr><th>16</th><th>Auckland</th><th>9.8%▲</th><th>6.8%▲</th></tr><tr><th>17</th><th>Beijing</th><th>8.8%▲</th><th>-0.1%▼</th></tr><tr><th>18</th><th>Edinburgh</th><th>8.5%▲</th><th>2%▲</th></tr><tr><th>19</th><th>Manila</th><th>8.4%▲</th><th>-2.6%▼</th></tr><tr><th>20</th><th>Brisbane</th><th>8.4%▲</th><th>1.1%▲</th></tr><tr><th>21</th><th>Zurich</th><th>7.6%▲</th><th>1.8%▲</th></tr><tr><th>22</th><th>Hong Kong</th><th>7.2%▲</th><th>1.6%▲</th></tr><tr><th>23</th><th>Melbourne</th><th>6.5%▲</th><th>2.1%▲</th></tr><tr><th>24</th><th>Tokyo</th><th>6.3%▲</th><th>3%▲</th></tr><tr><th>25</th><th>Monaco</th><th>5%▲</th><th>3.9%▲</th></tr><tr><th>26</th><th>Dublin</th><th>4.9%▲</th><th>3.2%▲</th></tr><tr><th>27</th><th>Berlin</th><th>4.7%▲</th><th>2%▲</th></tr><tr><th>28</th><th>Frankfurt</th><th>4.5%▲</th><th>1.1%▲</th></tr><tr><th>29</th><th>Singapore</th><th>4.3%▲</th><th>0%▲</th></tr><tr><th>30</th><th>Vienna</th><th>3.6%▲</th><th>2.8%▲</th></tr><tr><th>31</th><th>Paris</th><th>3.1%▲</th><th>2.4%▲</th></tr><tr><th>32</th><th>Lisbon</th><th>2.4%▲</th><th>0.3%▲</th></tr><tr><th>33</th><th>Madrid</th><th>2%▲</th><th>0.5%▲</th></tr><tr><th>34</th><th>Nairobii</th><th>1.3%▲</th><th>0.1%▲</th></tr><tr><th>35</th><th>Shenzhen</th><th>1%▲</th><th>-2.1%▼</th></tr><tr><th>36</th><th>London</th><th>0.7%▲</th><th>0.2%▲</th></tr><tr><th>37</th><th>Bucharest</th><th>0.6%▲</th><th>0.1%▲</th></tr><tr><th>38</th><th>Delhi</th><th>0%▲</th><th>0%▲</th></tr><tr><th>39</th><th>Mumbai</th><th>-0.1%▼</th><th>0.2%▲</th></tr><tr><th>40</th><th>Kuala Lumpur</th><th>-0.9%▼</th><th>0%▶</th></tr><tr><th>41</th><th>Bengaluru</th><th>-1.1%▼</th><th>0%▶</th></tr><tr><th>42</th><th>New York</th><th>-1.8%▼</th><th>1.7%▲</th></tr><tr><th>43</th><th>Bangkok</th><th>-2.3%▼</th><th>4.4%▲</th></tr><tr><th>44</th><th>Dubai</th><th>-3.6%▼</th><th>0.3%▲</th></tr><tr><th>45</th><th>Jakarta</th><th>-4.2%▼</th><th>-4%▼</th></tr></tbody></table></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><sup><sub>^Source: Knight Frank Prime Global Cities Index</sub></sup></p></div></div></div></div></div>

Sydney’s prime market has recorded price rises for the 35th consecutive quarter and the forecast is for strong price growth into 2022...

Hobart Leads Australia in Global Cities Index

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Hobart’s dramatic home price rise has catapulted it into the top 20 of Knight Frank&#x27;s Global Residential Cities Index, topping all other Australian capitals.</p><p>The Tasmanian capital’s 24.6 per cent growth in home prices during the year to June lifted it to 14th place from 23 on the global ranking of 150 cities by annual price change.</p><p>Hobart is now behind Wellington’s 24.7 per cent increase.</p><p>The Canadian city of Halifax, which returned 30.8 per cent growth, topped the list while other Canadian cities Hamilton and Ottawa also made the top 10 as housing supply levels across the country continue to track at critically low levels. </p><p>Sydney surged to 28 from its spot at 55 in March, reflecting the city’s annual rate of growth from 8.6 per cent in the first quarter to <a href="https://www.theurbandeveloper.com/articles/sydney-housing-market-update">18.7 per cent</a> in the second. </p><p>The city’s current median value for dwellings surpassed $1 million in June, and has risen another $16,500 over the month of September.</p><p>Melbourne and Brisbane also moved up, from 70th and 89th on the index to 44th and 54th after <a href="https://www.theurbandeveloper.com/articles/melbourne-housing-market-update">13.7 per cent</a> and <a href="https://www.theurbandeveloper.com/articles/brisbane-housing-market-update">11.2 per cent </a>gains respectively. </p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><strong>Top 10 global residential cities index</strong></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><table><thead><tr><th>Rank</th><th>City</th><th>12-month change %</th></tr></thead><tbody><tr><th>1</th><th>Halifax, Canada</th><th>30.8%▲</th></tr><tr><th>2</th><th>Izmir, Turkey</th><th>30.0%▲</th></tr><tr><th>3</th><th>Seoul, Korea</th><th>30.0%▲</th></tr><tr><th>4</th><th>Moscow, Russia</th><th>29.3%▲</th></tr><tr><th>5</th><th>Hamilton, New Zealand</th><th>28.8%▲</th></tr><tr><th>6</th><th>San Diego, USA</th><th>28.0%▲</th></tr><tr><th>7</th><th>St. Petersberg, Russia</th><th>27.1%▲</th></tr><tr><th>8</th><th>Istanbul, Turkey</th><th>26.7%▲</th></tr><tr><th>9</th><th>Ottawa, Canada</th><th>26.4%▲</th></tr><tr><th>10</th><th>Ankara, Turkey</th><th>25.8%▲</th></tr></tbody></table></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><sup><sub>^Source: Knight Frank Research, ranked by annual % change (Q2 2020 - Q2 2021)</sub></sup></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Canberra continued its climb up the global rankings, moving from 17th to 15th position after posting a 23.5 per cent lift in property values.</p><p>Two in five of the 150 cities tracked had price rises of 10 per cent or more during the 12-month period.</p><p>According to Corelogic’s index, property prices nationally are up 18.4 per cent in the past year, the fastest pace of growth since 1989.</p><p>Aside from US cities—including Phoenix, San Diego and Seattle— other high-performing housing markets dominated the rankings in Canada, South Korea, Russia and New Zealand.</p><p>New Zealand’s average house price is also closing in on the $1 million mark, with Real Estate Institute data recording a 31 per cent increase over the year to July.</p><p>Auckland experienced a price increase of 18.6 per cent over the year to be the 30th fastest-growing global market.</p><p>Knight Frank head of international residential Research Kate Everett-Allen said many cities were now outpacing their national housing markets with prices rising by 9.8 per cent on average in the year to June.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><strong>Knight Frank global residential cities index: Australian cities</strong></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><table><thead><tr><th>Rank</th><th>City</th><th>12-month change %</th></tr></thead><tbody><tr><th>14</th><th>Hobart, Australia</th><th>24.6%▲</th></tr><tr><th>15</th><th>Canberra, Australia</th><th>23.5%▲</th></tr><tr><th>24</th><th>Darwin, Australia</th><th>19.1%▲</th></tr><tr><th>28</th><th>Sydney, Australia</th><th>18.7%▲</th></tr><tr><th>42</th><th>Adelaide, Australia</th><th>13.9%▲</th></tr><tr><th>44</th><th>Melbourne, Australia</th><th>13.7%▲</th></tr><tr><th>48</th><th>Perth, Australia </th><th>12.5%▲</th></tr><tr><th>54</th><th>Brisbane, Australia</th><th>11.2%▲</th></tr></tbody></table></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><sup><sub>^Source: Knight Frank Research, ranked by annual % change (Q2 2020 - Q2 2021)</sub></sup></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>“Predictions of ‘the death of the city’ now seem a distant memory,” Everett-Allen said.</p><p>“The question now is how long the boom, one largely confined to advanced economies, has to run.</p><p>“Our view is that demand will start to wane as pandemic-amassed savings diminish and as monetary policy tightens.</p><p>“After 18 months of inertia, governments with heated housing markets are formulating their policy responses, meaning we expect the index rankings to look very different in 12 or even six months.”</p><p>But the report, which puts price movements of Australian cities in a global context, also shows the slowdown that has hit other housing markets globally.</p><p>In 2016, 15 Chinese cities tracked by Knight Frank’s index averaged 23 per cent growth year-on-year while just two years ago six Chinese mainland cities averaged over 10 per cent growth annually.</p><p>Now, only the city of Guangzhou has broken the 10 per cent increase on an annual basis following a series of government measures aimed at cracking down on excessive borrowing in the real estate sector.</p><p>As a knock on, the country’s biggest property developer Evergrande is still attempting to <a href="https://www.theurbandeveloper.com/articles/developer-chinas-evergrande-on-the-brink-of-collapse">untangle more than $400 billion of debt</a> which economists say the potential collapse of which could be the “biggest test that China&#x27;s financial system has faced in years”.</p><p>“The Evergrande debacle has cast a shadow over once surging urban house prices in China,” Everett-Allen said. </p><p>“Although the gravity of the situation only emerged in the third quarter there was evidence of a slowdown in price growth in the second quarter and sales activity has continued to slow.”</p></div></div></div></div></div>

Australia’s runaway property prices have propelled a number of cities to now be amongst the strongest growing housing markets on the planet...

A residential boom-to-bust scenario ‘unlikely’ with house prices rising 7.4 per cent nationally and Australia going strong.

<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 current residential boom is unlikely to bust thanks to housing undersupply, high employment levels and a strong economic forecast underpinning the market, according to new research.</p><p>House prices have increased 7.4 per cent on the average globally with Canberra the best performing city in Australia, the Knight Frank Global Cities Index has found.</p><p>Turkey’s Izmir and Ankara along with Wellington in New Zealand took out the top places in the 150 city index, which reported on house price growth in 128 locations.</p><p>The report predicted three factors would continue to push prices up: a fear of missing out, locking in lower mortgage rates and an increase in household savings during the pandemic.</p><p>The house price growth rate in Australian cities was strong but not quite in the same league as other countries including New Zealand where prices jumped 19.6 to 30.1 per cent, and Russia, up around 22 per cent.</p><p>In the past 12 months house prices have increased at the fastest rate since the start of the global financial crisis.</p><p>“However, unlike during the last global recession, banks now operate under tighter lending rules, households are less indebted, the tapering of fiscal stimulus measures is not expected to bring about a sudden jump in unemployment,” the Knight Frank report said.</p><p>“With inflationary pressures deemed to be ‘transitory’, a sudden hike in interest rates looks unlikely, and the US Federal Reserve envisages it will be 2023 before it makes two small rises.”</p><p><strong>Annual change in house prices</strong></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><table><thead><tr><th>Q1 Rank 2021</th><th>City</th><th>Growth rate</th><th>Q4 Rank 2020</th><th>Q4 growth rate</th></tr></thead><tbody><tr><th>17</th><th>Canberra</th><th>15.7%</th><th>56</th><th>6.6%</th></tr><tr><th>23</th><th>Hobart</th><th>13.8%</th><th>22</th><th>11.2%</th></tr><tr><th>41</th><th>Darwin</th><th>10.8%</th><th>84</th><th>4.5%</th></tr><tr><th>44</th><th>Adelaide</th><th>9.8%</th><th>50</th><th>7.3%</th></tr><tr><th>51</th><th>Perth</th><th>8.9%</th><th>66</th><th>6.0%</th></tr><tr><th>55</th><th>Sydney</th><th>8.6%</th><th>85</th><th>4.5%</th></tr><tr><th>70</th><th>Melbourne</th><th>6.4%</th><th>100</th><th>3.6%</th></tr><tr><th>89</th><th>Brisbane</th><th>5.0%</th><th>91</th><th>4.2%</th></tr></tbody></table></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><sup><sub>^Source: Knight Frank Global Residential Cities Index Q1 2021<br><br></sub></sup>In Australia, lending laws were relaxed during the pandemic while interest rates hit a record low at 0.10 per cent with the Reserve Bank forecasting the strong economic recovery will continue.</p><p>“Housing credit growth has picked up, with strong demand from owner-occupiers, including first-home buyers,” the board said in its latest statement. </p><p>“There has also been increased borrowing by investors. </p><p>“Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.”</p><p>Meanwhile employment hit a record high at 13.37 million Australians were employed in June according to Roy Morgan.</p><p>Roy Morgan chief executive Michele Levine said the June results were compiled before the lockdowns.</p><p>“Before these lockdowns the employment trends were very good with employment increasing 305,000 to a record high of 13.37 million in June,” Levine said.</p><p>“Since bottoming in late March 2020, when the nation-wide lockdown was introduced, full-time employment has now increased by over 1 million and has increased every month since October when Victoria’s long second lockdown ended.”</p><p>Levine said the lockdowns in Victoria had had a negligible impact on employment rates, suggesting support measures there had been effective.</p></div></div></div></div></div>

A residential boom-to-bust scenario ‘unlikely’ with a housing undersupply, high employment levels and strong economic forecast underpinning the market

Melbourne’s build-to-rent pipeline is nearly double Sydney’s and quadruple Brisbane however there are fears a new tax could change this… 

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Melbourne’s build-to-rent pipeline is nearly double Sydney’s and quadruple Brisbane’s but there are fears a new state tax could derail the sector.</p><p>In Australia’s build-to-rent “epicentre” there were more than 6000 apartments either under construction, approved or submitted for approval to councils, according to a report by Knight Frank Research.</p><p>The Daniel Grollo-backed Home Residential build-to-rent platform has <a href="https://www.theurbandeveloper.com/articles/marvel-stadium-build-to-rent-towers">submitted one of the most recent applications</a>—for two towers with 676 apartments in the Docklands.</p><p>The number of apartments in Melbourne’s pipeline is way ahead of Sydney&#x27;s 3300 and Brisbane&#x27;s 1600. </p><p>Last year 11.1 per cent of development sites in Melbourne were purchased for high-density, build-to-rent projects while in Sydney it was just 0.7 per cent.</p><p>Both of these build-to-rent markets were benefiting from a 50 per cent land tax discount, which was announced last year and expected to be in force until 2040. </p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>As these projects are a long-term investment of more than 15 years, developers, including US real estate giant Greystar, want the 2040 deadline for the tax discount to be extended.</p><p>However, a new premium land transfer tax, to be levied on properties worth more than $2 million to be introduced from July 1, is creating concern among developers and property industry lobby groups. </p><p>The windfall gains tax, which was also <a href="https://www.theurbandeveloper.com/articles/pallas-budget-victorian-property-taxes">announced</a> in the Victorian budget, has become another consideration for developers, adding a 50 per cent tax for rezoned land.</p><p>Knight Frank director of investment sales in Victoria James Thorpe said developers were currently deciding what to do with existing assets.  </p><p>“Properties holding permits for higher density development are being considered for repositioning into the build-to-rent space,” James said.</p><p>“Although Melbourne currently holds the highest number of build-to-rent schemes in the pipeline, recent tax announcements by the state government could derail the momentum for this emerging asset class.”</p><p>Property Council of Australia Victoria executive director Danni Hunter said the taxes announced in the state budget would impact future developments.</p><p>“The increase in land tax will already negate a large portion of whatever that discount was going to, so be so it won’t be as significant,” Hunter said.</p><p>“We know there are a number of build-to-rent projects that are being currently contemplated for pause.</p><p>“Unless the land tax discounts wipe out the land tax hikes that the government has announced in this budget, the development of Victorian build-to-rent will be severely held back.”</p></div></div></div></div></div>

Melbourne’s build-to-rent pipeline is nearly double Sydney’s and quadruple Brisbane as the property industry pushes to keep taxes under control...

Raw 20ha Site Tests Western Sydney’s Mamre Road Precinct Market.
The amalgamated land, at 244-270 Aldington Road in Kemps Creek, is tipped to garner interest for around the $75 - $80 million mark. 

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>A 20-hectare land parcel located within the Mamre Road Precinct will test demand in the Western Sydney market. </p><p>Marketing collateral says the amalgamated site, at 244-270 Aldington Road in Kemps Creek, is tipped to garner interest for around the $75 million to $80 million mark. </p><p>The property spans two titles, 244-256 Aldington Road Kemps Creek and 258-270 Aldington Road, and is being sold as an amalgamated offering.</p><p>Property records show the 244-256 Aldington Road site last translated in June 1980, for $77,400.  While the 258-270 Aldington Road Kemps Creek site last sold $64,000 in August 1977. Both sites are occupied by residential dwellings.  </p><p>In October last year, the Barba and Putrino families <a href="https://theurbandeveloper.com/articles/badgerys-creek-farm-sells-western-sydney-airport-precinct">snapped up</a> a nearby 3.96-hectare farm at Badgerys Creek for $14.5 million.</p><p>The 205 Lawson Drive purchase signalled the first transaction since the area was officially rezoned by the NSW government in June last year, and followed the state’s <a href="https://theurbandeveloper.com/articles/badgerys-creek-farm-sells-western-sydney-airport-precinct">green-light</a> as part of a fast-track announcement.</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/f401c53f-8d9c-468c-99d3-2ca716f21c6a.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ A 20-hectare land parcel at 244-270 Aldington Road in Kemps Creek.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>The long-time landowners at Aldington Road are now selling following the recent rezoning of the precinct and exhibition of the draft Mamre Road Development Control Plan.</p><p>Agents say the sale is expected to generate interest from private developers, owner-occupiers, speculators and institutional investors from domestic buyers and interest from the Asia Pacific.</p><p>The international expressions of interest campaign is being managed by Mark Litwin, Grant Bulpett and Angus Klem of Knight Frank who said the site is one of the last raw parcels available within the Mamre Road Precinct. </p><p>“Major amalgamated parcels are already spoken for, and there are few amalgamation potentials left that aren’t affected by water corridors or transmission easements,” Litwin said.</p><p>As a surge in demand for logistics space has been seen in recent times, Frasers Property Industrial and Altis Real Estate Trust will <a href="https://theurbandeveloper.com/articles/frasers-property-altis-to-develop-118ha-western-sydney-site">develop</a> 118 hectares of industrial land, spanning properties from 649-to-763 Mamre Road, at the Mamre Road Precinct. </p><p>The joint venture team follow listed-developer Mirvac, which has its own plans for a 56-hectare industrial estate within the Mamre Road area after buying the site for $71 million in late 2018.</p><p>The <a href="https://theurbandeveloper.com/articles/nsw-mirvac-mamre-road-industrial-precinct">Mamre Road</a> precinct spans 850 hectares and is one of 10 key precincts in the Western Sydney Aerotropolis.</p><p>Nearby, the Western Sydney Airport is anticipating to be <a href="https://theurbandeveloper.com/articles/first-images-of-western-sydney-airport-unveiled">operational </a>by 2026.</p><p>The airport precinct came under the spotlight last year due to the Leppington Triangle land <a href="https://theurbandeveloper.com/articles/gov-pays-29m-in-western-sydney-airport-land-deal-audit-">scandal</a>, which triggered an Australian Federal Police <a href="https://theurbandeveloper.com/articles/criminal-investigation-into-30m-western-sydney-airport-land-deal">investigation</a>.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><hr/></div></div></div></div></div>

 A 20-hectare land parcel located within the Mamre Road Precinct in Western Sydney Aerotropolis will test demand in the Western Sydney market

City strength, office adaptation and investment performance are at the forefront real estate top property predictions for Australia 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>A CBD rebound, office adaptation and investment performance are at the forefront of real estate concerns as the industry moves into 2021.</p><p>In residential real estate what looked like a horror 2020 shifted course with with home values finishing the year at 2 per cent higher in capitals cities combined and up 6.9 per cent in regional areas according to Corelogic.</p><p>The office sector was plagued with lockdowns and work-from-home arrangements impacting occupancy <a href="https://theurbandeveloper.com/articles/cbd-workers-slowly-return-to-office-">rates </a>while the hotel occupancy also suffered with border closures. </p><p>Meanwhile the industrial market steamed ahead with an increase in logistics demand which hit a <a href="https://theurbandeveloper.com/articles/industrial-appetite-hits-10-year-high">10-year-high </a>as retail stores closed and infrastructure pipelines ramped up. </p><p>Following the pandemic and huge changes across the market Knight Frank has listed its top 10 predictions for real estate in 2021. </p><p><strong>Top 10 property market predictions </strong></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><table><thead><tr><th>Rank</th><th>Prediction</th></tr></thead><tbody><tr><th>1</th><th>Urbanisation on hold, but cities will reassert their strength</th></tr><tr><th>2</th><th>Governments ‘thinking big’ on next wave of transport and social infrastructure projects</th></tr><tr><th>3</th><th>Offices will adapt to remain key to collaboration, training and cultural cohesion</th></tr><tr><th>4</th><th>The landlord-tenant relationship will adjust</th></tr><tr><th>5</th><th>Shifting pattern of prime residential demand to continue</th></tr><tr><th>6</th><th>Short supply of prestige residential rentals</th></tr><tr><th>7</th><th>Investment performance will be relatively strong compared with previous downturns</th></tr><tr><th>8</th><th>Premium on income security as investors look to re-weight and adapt their portfolios toward industrial and specialist sectors</th></tr><tr><th>9</th><th>Overseas investors to drive the office market in 2021</th></tr><tr><th>10</th><th>Lower return environment will drive appetite for debt strategies and boost competition in non-bank lending</th></tr></tbody></table></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><sub><sup>^Source: Knight Frank</sup></sub></p><p>Knight Frank chief economist Ben Burston said cities will remain the engine rooms of the national economy however regional areas will grow.</p><p>“Regional cities like Wollongong, Newcastle, Geelong and the Gold Coast will see accelerated growth,” Burston said. </p><p>“They have sufficient scale and critical mass of service sector jobs to continue to develop rapidly, while also benefiting from a tilt in lifestyle choices due to the pandemic that will see some people opting for a less CBD-centric working life.”</p><p>Burston added hybrid work arrangements will transform offices into central places for collaboration, culture and connection while tenants seek more flexibility.</p><p>“Reflecting uncertainty over future space needs, large tenants will seek a mix of core leased space and flex spaces which can be scaled up and down as needed, and also look for an end-to-end service where workplace planning, design, fit-out, head lease and flex space are managed under the one umbrella,” Burston said. </p><p>“Alongside more frequent break clauses, this will place greater management pressure on assets with long WALE tenancy schedules potentially having a number of break points.”</p><p>Knight Frank head of residential research Michelle Ciesielski said lockdowns and closed state and international borders have given people time to reflect on their lifestyles. </p><p>“As a consequence, more and more people are seeking detached family homes and favouring waterfront and rural homes in particular,” Ciesielski said.</p><p>“Large gardens and outdoor space are now more of a priority, with the lockdown period emphasising the connection between wellbeing and the great outdoors.”</p><p>Ciesielski added this will drive a strong demand for prime property and rentals with Sydney, Perth and the Gold Coast set to rise.</p></div></div></div></div></div>

City strength, office adaptation and investment performance are at the forefront real estate issues as the industry moves into 2021...

Office Markets Increasingly Viable for Offshore Investors

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Sovereign wealth and pension funds looking for stable markets to deploy capital in are increasingly finding confidence in Australia’s commercial markets, according to JLL head of research Andrew Ballantyne.</p><p>Speaking at <em>The Urban Developer’s</em> Commercial Real Estate <a href="https://the-urban-developer.myshopify.com/">vSummit</a>, Ballantyne said the key to reviving Australia’s subdued commercial markets would come down to the nation’s economic “Japanification” in the eyes of offshore investors.</p><p>“The spread between economies like Australia and other mature economies, in particular Japan, is narrowing,” Ballantyne said.  </p><p>“The gap in maturity of Australia’s markets has long been wide because of our high-growth, high-inflation economy.</p><p>“If you look at our potential GDP, population growth and inflation, we are much closer to Japan than where we were 20 years ago and that will have implications for commercial asset pricing.”</p><p>Ballantyne said Australia, traditionally a difficult location for offshore players to hit return hurdles, was now an increasingly viable and relevant option and recognised a core market in Asia Pacific following its successful neutralisation of Covid-19.</p><p>“A lot of the capital currently needing to be deployed is looking for exposure to mature markets, low volatility of returns and certainty of cash flow.</p><p>“Our GDP growth is now expected to be one of the strongest globally over the next decade and population growth, while expected to be weak this year and the year after, is projected to bounce back strongly.” </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/1ba32638-c94c-4646-9f10-2154bcce951c.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ Australia&#x27;s capital market is shifting closer to Japan in terms of maturity and reliability with a GDP closer to 2.5 per cent and RBA inflation targets due to be rolled back.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>The value of commercial real estate transactions in Australia has picked up pace over the closing months of the year with total sale volumes across the year now at $13.63 billion.</p><p>Figures compiled by JLL show a strong resurgence in capital markets activity across November, with almost $1.5 billion in deal flow negotiated in one week.</p><p>In the second week of November, almost $1.5 billion of property exchanged hands.</p><p>Major transactions included Chinese sovereign wealth fund Chinese Investment Corp <a href="https://theurbandeveloper.com/articles/cic-snap-up-half-stake-in-185bn-dexus-asset-grosvenor-place">picking up a stake</a> in the Grosvenor Place office tower in Sydney from Dexus for $925 million and Charter Hall’s <a href="https://theurbandeveloper.com/articles/bunnings-portfolio-sells-for-353m">acquisition</a> of six Bunnings stores for $353 million.</p><p>Attractive yield spread, historically low financing costs, low vacancy levels on a relative basis and a resilient economy firmly in control of the Covid-19 pandemic, remain appetising factors for domestic and offshore investors. </p><p>Despite the uptick in recent deals, the current annual tally of $13.63 billion—excluding hotels—remains grim reading in comparison to the all-time record high of $36 billion transacted across 2019.</p><p>National office investment markets recorded $7.21 billion of sales—above $5 million—over the course of 2020, plummeting from 24.2 billion in sales over the full calendar year in 2019.</p><p>Volumes rebounded by 35 per cent quarter-on-quarter, and while overall third quarter numbers were down 19 per cent year-on-year, transactional activity accelerated across several major markets as investors deployed capital with more confidence.</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/2b65abb0-2964-4085-8b56-2bfc4431cd75.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ Earlier this month GPT Group offloaded its 25 per cent share in Sydney’s 1 Farrer Place to Lendlease for $584.6 million.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>The most active offshore groups across the year have been from Singapore ($2.28 billion), Germany ($1.30 billion) and China ($1.29 billion) which have made up the vast majority of offshore investment activity.</p><p>Foreign investment volumes across the office, retail and industrial sectors have totalled $5.97 billion over the year, a 44 per cent of total transaction activity. </p><p>Meanwhile, foreign investment volumes across the office, retail and industrial sectors the year prior totalled $12.09 billion, which was 34 per cent of total transaction activity.</p><p>According to recent findings from Knight Frank, over the past five years 60 per cent of large office sales— north of $100 million, have been to overseas investors, while 40 per cent were to domestic investors.</p><p>Knight Frank chief economist Ben Burston said overseas investors were likely now to be the more dominant buying group in Australia’s office market in 2021 as they were more prepared than domestic buyers to accept lower returns.</p><p>“We expect overseas investors to maintain or strengthen their presence in 2021, making up at least 75 per cent of buyers for large office sales, if not more.</p><p>“Australia has been slower to see the dramatic reduction in real and nominal interest rates that other major economies saw post-GFC, and so major global funds are more accustomed to the shift-down in IRRs and income returns that it implies.”</p><p>The Knight Frank 2021 outlook revealed office investment performance in the Australian market moving forward was expected to be relatively strong compared with previous downturns.</p><p>“We expect capital growth for office property to weaken further through the rest of the year and into 2021, with expectations of -1 per cent in 2020 and -2 per cent in 2021, leaving total returns a little over four per cent and three per cent respectively, compared to 11.5 per cent in 2019,” Burston said.</p><p>“Assuming the economy continues to recover in 2021, asset performance should recover in 2022 as conditions in the commercial property market improve with lag. </p><p>“Capital growth is expected be around four per cent in 2022, with total return rising to nine per cent.” </p></div></div></div></div></div>

The value of commercial real estate transactions in Australia has picked up pace over the closing months of the year...

KNIGHT FRANK