Residential Property 2021: Industry Reviews the Year

It has been a stellar year for Australia’s housing market despite the ongoing uncertainty created by the pandemic.

Fiscal stimulus, pent-up demand and record-low interest rates helped support household and business spending across the country as states were plunged into rolling lockdowns.

The leading light has been Australia’s housing market and its breakneck capital growth over 2021.

Prices have surged by 22.2 per cent nationally, the largest annual increase since 1989, to push the estimated value of residential real estate to $9.4 trillion.

Federal and state governments have also driven city-shaping with major public infrastructure activity now set to double over the next three years, peaking at $52 billion in 2023.

To find out more about the year that was, we turned to the residential property industry and discovered what their biggest takeaways and learnings were from a trying 2021.

Riye Arai-Coupe
Co-founder
Bluebird

“The past 12 months have been an incredible rollercoaster and demand in the south-east Queensland residential market, in particular the coastal lifestyle markets, has been overwhelming.

“The announcement of the Olympics for our river city will also undoubtedly maintain the momentum over the coming ‘golden decade’.

“The competition has accelerated the volume and quality of offerings now in the market, along with significant pressure on the construction industry.”

Clinton Arentz
Head of Property Assets
Trilogy Funds

“The growth in the value of the Australian residential property market over the past year surpassed most commentators’ expectations.

“The pandemic has been notable for driving a strong shift in consumer sentiment towards lower density living, and for causing a flight from capital cities to regional areas.

“However, easing border restrictions and the eventual return of overseas students, immigrants, and hospitality workers, as well as businesses and nightlife, are expected to reverse this trend and boost demand for city accommodation.”

Danny Avidan
Managing Director
Dare Property Group

“2021 has been a year of expansion for Dare Property Group.

“Coming out of lockdown our predictions have been reaffirmed and we have seen record prices across the commercial and residential sectors we operate in.

“After the sell-out launch of Kalypso in Tamarama, where I still hold the penthouse, and the increasing demand for our Zero Gipps commercial building in Melbourne, our focus has never been clearer as we gear up to launch three new projects in 2022.”

Matthew Belford
Joint Managing Director
ID_Land

“The industry certainly saw its challenges in 2021, but the sustained popularity of the regions—driven by lifestyle benefits and continued infrastructure investment and the desire to get into the market—has fuelled another year of solid growth throughout Melbourne and Queensland’s booming growth corridors.

“Some of this activity was certainly fuelled by the ‘fear of missing out’, particularly among first-home buyers.

“We expect this current trend of regional migration, particularly to Queensland, to continue well into 2022, as a combination of factors including affordability, lifestyle benefits, and greater ability to work-from-home continue to drive buyer demand.”

Michelle Ciesielski
Head of Residential Research
Knight Frank

“Over the past year we’ve seen exceptional advancement in the prestige residential market across Australia.

“As the evolution towards luxury apartment living continues, so has the delivery expectation of the affluent population to a truly exceptional global standard.

“Accordingly, watching the number of new and established super-prime apartment sales surge, was a defining moment in 2021.”

Nerida Conisbee
Chief Economist
Ray White

“The year started off with very different property market conditions—demand was starting to pick up and price growth was well and truly happening.

“The stand-out however has been how extreme conditions have been. Sydney’s median is now up over 50 per cent since the start of the pandemic, while Canberra has just hit a $1-million median. Hobart is now the fourth most expensive capital city in Australia.

“The biggest learning I think has been—don’t listen to the noisy commentary out there but stick to looking closely at a wide range of data sets, as well as speaking to people on the ground, to get a good understanding as to what is going on.”

Rory Costelloe
Executive Director
Villawood Properties

“Materials have become tight pushing building costs up. The overall effect threatens to be inflationary, which isn’t what we want when a key issue facing the industry is affordability.

“The biggest setback in regional Victoria is the introduction of the Windfalls Gains Tax, which is already leading to developers walking away from purchases.

“This is due to the valuation used for the tax margin being based on council rates rather than the higher price by the developer—meaning the land could actually cost up to 50 per cent than what it is worth. This will exacerbate already critical land shortages.”

Kris Daff
Director
Assemble

“The standout moment for me for 2021 is that we now have a team of almost 50 professionals supported by armies of consultants and contractors.

“The reality is that all elements of the development industry are exhausted and needs time to reset—we have all put our heads down and got on with the job in really tough and changing times and I applaud everyone for that stoic performance.

“At a more operational level, we have doubled the size of the team and increased our footprint in Victoria, Queensland and Western Australia with commitments to enter New South Wales, ACT and South Australia in the next six months.”

Charles Daoud
Director
Traders in Purple

“The test has been the response to these conditions, with the pandemic perhaps best described as a ‘Black Swan’ event for the property industry and other industries, of course.

“A standout of 2021 was the effectiveness of increased liquidity in the economy in an already very low interest rate environment, meaning more open lending criteria for both residential and commercial property buyers and business investment giving the country an insight into the effectiveness of liquidity to regulate economic activity.

“This doesn’t come without long-term consequences and management of these will be a challenge for governments of the future.”

James Greener
Fund Manager – Build-to-Rent
Investa

“This year saw the emerging build-to-rent sector in Australia really gain momentum with new projects, partnerships and platforms being announced each week.

“I am encouraged by how the broader industry and government is reacting to the new sector and, to single out a defining moment in 2021, the NSW and Victorian governments have made a great first move to ensure the sector receives fair tax treatment which has in-turn kick-started construction on a number of projects. It is drastically needed to ease the housing issues across the country.

“It now seems logical that the federal government would also come to the tax table.”

Matt Gross
Director
The National Property Research Company

“The year 2021 has been dominated by the non-bank sector in financing new projects with the weight of capital looking for a home, particularly high net worth investors through to offshore super funds, meaning competition for development sites making many potential projects borderline given the generally compressed margins.

“While the Olympics is the obvious answer for south-east Queensland and how it will generate infrastructure growth over the next decade, the short-term defining moments extend to many capital city local council areas having a shortage of greenfield land available for development which saw house prices escalate rapidly and thereby excluding the first home buyer segment.

“Consequently APRA has stepped into the residential mortgage space attempting to put the brakes on the rapid house price movement, much like it did in slowing the investment cycle of 2016-2018.”

Tim Gurner
Director
Gurner

“The slowdown in the build-to-sell market has cemented build-to-rent’s status in Australia—this has been one of the most significant turning points in the Australian property market in recent years.

“Tensions with China has had a massive impact, and there’s been pullback from large developers and individual investors alike—there is still a lot to play out here and the impact this has will be very important.

“Soaring construction costs off the back of the trade and importing restrictions remain one of the biggest threats to our industry into 2022.”

Sarah Hunter
Chief Economist
BIS Oxford Economics

“Given the ongoing challenge of the pandemic, from lockdowns, supply chain disruptions and inflation, the economy and the property sector within it have generally been resilient.

“Restrictions have knocked both residential construction and housing market activity at times, but in general the sector is in a stronger position now (in terms of activity levels and prices) than it was before the pandemic.

“Fiscal and monetary policy support have clearly played a major part in this. But for me, this year has also confirmed the fundamental importance to people of where and how they live their lives.”

Colin Keane
Director
Research4

“The 2021 year was a record-breaking one for the national greenfield market with land sale volumes 170 per cent higher than 2019 and 43 per cent higher than 2020.

“A major change has been the rise in the popularity of peri-urban and regional land markets.

“Markets such as the Hunter Region, Geelong surf coast, Ballarat, and the Sunshine Coast have all experienced significant lifts in underlying demand for land while smaller metropolitan markets such as Adelaide experienced a doubling of demand and Perth’s greenfield market registered a 127 per cent increase in activity.”

Daniel Laruccia
Director
Spyre Group

“Spyre backed its knowledge gained in the market over the past decade, and acted on it, securing six sites this year.

“We saw it as optimal timing, others saw it as achievable in a market not yet ready for this level of product.

“Spyre’s three master crafted products, which will be built on the Burleigh headland at 10 Goodwin Terrace, will definitely be one of our proudest, defining moments in our development career and especially in 2021 when the world is at the height of uncertainty.”

Teena Lynch
Capital and Acquisitions
Dealcorp

“A stand out for me was the day the Victoria government decided to shut down the whole construction industry for two weeks. That was a defining moment in 2021.

“The impact and ripple effect of the construction shutdown on families, businesses and the property development sector was far greater than any loud message the government was wanting to send to a very small minority of disrupters.

“It’s a typical government approach of act first, think later and demonstrates their inability to think laterally and commercially through this pandemic in order to find some kind of balance in managing health, lives and the economy.”

Ben Lyons
Director
Urbis

“The announcement that Brisbane will host the Olympic and Paralympic Games in 2032 delivered an immediate boost in investment-attracting confidence that will continue to build throughout the next decade.

“We’ll look back on 2021 as a turning point for transformational growth for south-east Queensland.

“It is our collective responsibility to think bigger, to be courageous in our decision-making, and to plan further into the future to 2032 and beyond, with a global perspective.”

Avalon Nethery​
Associate Director
Fortis

“Funding assumptions based on limited pre-sales relies on non-bank lenders. Fortunately our projects have been aligned with Pallas Capital which has allowed us to push ahead and deliver the quality that the market expects in a reasonable timeframe.”

“Consistent and transparent communication with buyers throughout uncertain times, such as government mandated construction shutdowns, is absolutely essential.

“Being on the front foot of communication and being available to answer queries maintains and provides the platform for a trusting and working relationship between the developer and buyer.”

Chris O’Keefe
Director
Time & Place

“The pandemic has increased the tendency for people to live and work in isolation which can have a negative influence on our lives and we need to be able to return to our cities, attend sporting events, enjoy the arts and travel again.

“A takeaway for us was that as people adjusted to remotely working for a second year in a row, there was an expectation for a different type of amenity within a commercial space—something that better reflected the transition in the work/home balance.

“I think that 2021 gave us the opportunity to collectively reevaluate what we want from our lives and while I think that we did lose an element of joy from our lives, it has given us a great opportunity to rethink how we live post-pandemic.”

Shane Oliver
Chief Economist
AMP Capital

“The standout defining moment for the property sector in 2021 was the 2.8 per cent surge in national home prices in March reflecting a combination of record low mortgage rates, incentives and a rush out of inner-city units into suburban and regional houses.

“The key learnings are that low rates trump an economic downturn in driving home prices if incomes are protected and defaults are avoided; that an absence of immigrants and foreign buyers does not necessarily mean that property prices go down as long as there are offsets working the other way: and that technology is set to have a profound impact on where we work and live.

“The latter is profound—while the pandemic was the change agent, the work from home phenomenon, made possible by technology, provides a path toward more affordable decentralised regional living.”

Eliza Owen
Head of Research
Corelogic

“Over the course of 2021 we saw more buoyancy in consumer sentiment through lockdown periods, where consumer sentiment remained above 100 all through lockdowns between June and October.

“I think people became ‘used’ to these periods, saw that the housing market wasn’t really affected by them price wise, and became less cautious about making purchases.

“This year has seen some extraordinary figures with Australian residential real estate hitting a record high $9.4 trillion, sales volumes reaching the highest level since 2003 and rental values reaching the highest since 2008.”

Shannon Peach
Director
Milieu

“This year has provided us with a renewed sense of optimism for the future of inner city multi-residential living.

“In particular, being close to friends, family, community and amenities is as important as ever.

“The past 12 months have seen the demand for high-quality home-sized apartment living unwavering—it is now considered a highly desirable option for more people, many of whom are living and working with more flexibility.”

Stuart Pelkins
Head of Residential
Mirvac

“There hasn’t been a defining moment as such, but rather consistent performance across both our masterplanned communities and apartment projects.

“The industry continued to demonstrate great resilience through the ups and downs of 2021 and we finished the year in a strong place.

“It reinforced to us that great products always sell—that is what we have found, with strong pre-sales for a range of apartment projects we launched this year.

Nicola Powell
Senior Research Analyst
Domain

“Stalled population growth, due to international border closures, hasn’t hindered underlying demand. In fact, demand has been so strong it exceeded the rate of new listings coming to market, depleting overall total stock to a multi-year low.

“The year’s heightened level of activity is not just a result of pent-up demand from lockdown, it reflects changed property decisions compelling more households to make a move. It has been the year of change and nothing shows this more than consumer behaviour when searching for property.

“The pandemic has forced us all to use our homes differently as we spent more time than ever in them and perhaps forever made a mark on our purchasing decisions, property wish lists and architectural trends.”

Liz Ronson
Managing Director
Jinding Developments

“A stand-out moment for the residential sector over the past year was seeing the scale of the impact that various federal and state government policy measures introduced to stimulate the property sector had on the industry and more broadly, on the Australian economy.

“From a customer perspective, the past 12 months have continued to highlight that shifts in work life and home life balance are driving home buyers and renters to re-evaluate what’s important.

“We’re generally seeing customers in the residential market demanding more either in terms of the quality of their home design, or in respect to location for lifestyle which has aligned well with Jinding’s communities.”

Illan Samuel
Managing Director
Samuel Property

“Experience, patience and passion matters.

“The days of developments sprouting up by unknown developers without a track record but still being able to secure pre-sales, construction funding and a builder are few and far between.

“Whereas, those with a strong track record who are visible and able to engage with their market, and have existing relationships in the industry with funders and professionals are still able to navigate forwards.”

Lochlan Sinclair
Director
Neometro

“In January, we launched our townhouse project at South Crescent [Victoria] and it sold out in five days.

“This was a real defining moment for us where we realised that ultimately, pandemic or not, if you are designing high-quality homes they will always sell.

“From a sales perspective, we are noticing that potential buyers are more knowledgeable than ever and have a much better understanding of what they are looking for—this makes it easier for us to find the right Neometro home from them.”

Iwan Sunito
Chief Executive
Crown Group

“The pandemic was undoubtedly the dominating factor affecting the property industry and economy in general this year; particularly in markets most directly affected by prolonged lockdowns including Greater Sydney and Melbourne.

“Pre-Covid, foreign buyers made up at least 50 per cent of purchasers, while during the pandemic they were nowhere to be seen.

“The second half of 2021 saw strong buyer demand for completed new apartments given the shortage of existing housing stock on the market and by the fourth quarter we saw the return of investors in the off-the-plan market.”

Lang Walker AO
Executive Chairman
Walker Corporation

“The resilience of the property industry is testament to the attitudes within, as we forged ahead with our $30-billion project pipeline, to ensure 2021 remained a big year for us.

“While the pandemic restricted interstate and international travel we shifted gear and learnt new ways to keep delivering on our vision.

“The success is on the scoreboard, as we’ve sold over 500 lots in 10 months since launching Riverlea—South Australia’s largest masterplanned community, feeding the supply lines of Australia’s booming housing market.”

Harley Weston
Managing Director
Solaire Properties

“The past 12 months have certainly been interesting, however, I believe the way in which Queensland responded to Covid-19 and the lifestyle that we represent overall as a clean, fresh and vibrant state really drove up the demand for our property sector.

“The pandemic brought what was probably undervalued real estate in line with our southern counterparts.

“I have also begun to see a marked increase in sustainable features within the construction space, particularly from the larger players as this becomes fashionable and necessary at the same time.”

 

Article Source: www.theurbandeveloper.com

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Property Industry Weighs In On the 2022 Commercial Market

It has been a mixed year for a wide variety of property types across the diverse commercial property landscape in Australia, but where do things go from here?

The lockdowns and restrictions introduced by the federal government in 2020 caused an unprecedented level of economic disruption and resulted in once heavily populated CBDs turning into ghost towns.

Incentives for office leasing in the major CBD markets are now at or nearing their peaks, following the reopening of Sydney and Melbourne after significant citywide lockdowns in the second half of 2021.

Meanwhile, the breakneck industrial sector momentum shows no sign of slowing after stay-at-home shopping during the pandemic skyrocketed warehouse values with a little sign of a slowdown as major deals continue to flow.

Loosening Covid-19 restrictions helped retail sales bounce 10.1 per cent above pre-pandemic levels with customer traffic at shopping centres across the country now nearing where it was in 2019.

Shopping centres, student accommodation and hotels are now expected to benefit from high vaccination rates, increased mobility and the reopening of international borders.

Liquidity is returning to these sectors and a more diverse range of capital sources is expected to seek out counter-cyclical opportunities in 2022.

To learn more, The Urban Developer has turned to some of Australia’s leading property experts for their thoughts on the year ahead.

Andre Bali
Head of Development
Centuria Capital

“Centuria has been an early mover in emerging markets that are now coming to the fore, including industrial and healthcare.

“We believe demand for prime-grade assets in these sectors will continue in 2022, with current supply shortages driving development.

“Additionally, with a federal election on the horizon, it will be interesting to see how policymakers address two of the biggest challenges in the development sector—that is supply chain material constraints and skilled labour shortages. Easing of border restrictions will hopefully see more flexibility with skilled labour moving throughout the country.”

Andrew Ballantyne
Head of Research
JLL

“Covid-19 impacted real estate sectors will see improved investor sentiment, while the evolution of the digital economy and changing demographics support the real estate alternatives investment thesis.

“Healthcare related assets are in strong demand for their exposure to a growth sector of the economy and low volatility of returns. We believe that all institutional investment will be viewed through an ESG lens.

“ESG factors are becoming more significant in the real estate sector as they quantify the sustainability of non-financial impacts of investments and are viewed to have a positive influence on long-term return and risk profiles.”

Luke Berry
Director – Sales Marketing
Thirdi Group

“The pandemic taught us a lot of things about consumer behaviour and that if you cover the key fundamentals they will be there to support you.

“Regardless if you are building an office tower, a residential development and/or a retirement resort, if the product is outstanding and ticks all the boxes—location, views, amenity, level of finish, technology—the market will support it.”

Sally Box
Managing Director
Cabot Properties

“Cabot Properties believes there are structural forces at play around the way consumers choose to live and access food and retail.

“The pandemic did not create these, only accelerate them and they are beneficial to the industrial sector as a whole.

“We predict we will start to see real rental growth coming through in Australian industrial markets, particularly in Melbourne and Sydney, this will eventually be in line with the growth we see in other global markets such as the US and UK.”

Matthew Burke
Regional Manager – Pacific
STR

“Australia has been in the midst of a hotel development boom and 2022 will be the peak year of hotel openings with the highest increases in Melbourne—3900 rooms, Sydney—2250 rooms, and the Gold Coast—1300 rooms.

“CBD properties are expected to see a sustained recovery as the corporate travel and business meeting segment is pivotal to helping mid-week occupancies.

“We anticipate that there will continue to be high demand for regional destinations particularly in peak holiday times which will undoubtedly flow through to achieved rates, whilst the outlook for capital cities is less clear as operators balance more competition to evolving demand profiles.”

Chakyl Camal
Chief Executive
Panthera Group

“With change and uncertainty more prevalent in user behaviours, the year ahead will see businesses seeking more flexibility on their property commitments; especially from an office and workplace perspective.

“We are seeing continued strong growth in demand by investors in particular, for assets servicing everyday and experience-based needs such as food stuff, retail services, food and beverage and entertainment—especially in the liberated post-pandemic period.

“We have continued to monitor increases in local-based discretionary disposable income as people change their spending habits avoiding more risky international experiences.

“Overall, economic growth over the medium term is expected to be stronger than the years prior to the pandemic.”

Michelle Ciesielski
Head of Residential Research
Knight Frank

“Some may have felt the need to pause or delay their purchase over lockdown, but the intention is still there to ‘make the move’ to a low maintenance way of living.

“As travel is back on the agenda for many Australians, we will see a growing rise in demand for the branded residences concept and the premium willing to be paid to secure the lifestyle a hotel-led development delivers.

“Branded residences are considered a safe, high-yielding investment to lock-up-and-leave, with exceptional levels of serviceability. As this branded residence segment undergoes rapid growth and evolution, these factors will play a big part in shaping new developments in the coming years.”

Belinda Coates
Director
Slattery

“Pre-pandemic, Australia’s developers became increasingly interested in the opportunity to partner with major universities.

“Developers could see the opportunity to link commercial office, retail and residential with the benefit of campus foot traffic and the share of the international student wallet.

“Post-pandemic, universities are realising that significant benefits lie in the opportunity to raise revenue and create tangible value for the student community.”

Trudy Crooks
Managing Director
Resort Brokers

“I think we are going to see a huge amount of activity in 2022 as there is a lot of pent up momentum across the country. In particular, the ever strengthening in interest regional assets is set to make for a very exciting year.

“Increasing capital will flow towards the regions, not only because of the relatively strong returns, but also because many Australians are discovering how amazing these locations are for the first time, and this can only lead to long-term stability in these regional areas.

“We will continue to see the tightening of capitalisation rates on freehold hotels, motels and caravan parks. This combined with low interest rates and increased domestic tourism makes for a very exciting year ahead.”

Jesse Curtis
Head of Industrial Real Estate
Centuria Industrial

“With industrial vacancy rates at an all-time low of 1.3 per cent nationwide, according to CBRE’s Q3 2021 research, we can expect to see more supply constraints within key infill urban locations and further yield compression along with strong rental growth.

“Quality tenant customers are paramount to delivering value in addition to strong tenant covenants such as long-term lease and triple-net leases.

“We expect to see a continuing shift to on-shoring supply chains to ensure continuity, especially within the manufacturing market. These extends to food manufacturing and packaging products.”

Michael Di Russo
Joint Head of Property
Clean Energy Finance Corporation

“The past year has shown that despite the challenges posed by ongoing Covid-19 disruption, optimism around fundamentals prevails. Investor and capital appetite for ESG will continue to grow as retrofitting properties while considering sustainability aspects accelerates along with being considered from inception for new developments.

“Reducing the embodied carbon in materials used in the delivery of projects by the construction sector will be more of a focus for builders and developers.

“The mid-market is another area that will see further growth as demand continues to expand for energy efficiency in the built environment as developers capitalise on the ongoing recovery, delivering market leading projects that raise the stakes for sustainable buildings across the country.

Stephen Gaitanos
Managing Director
Scape

“In 2022, Australia must be able to leverage its strong pandemic management position and economic credentials to be able drive recovery in our education and tourism sectors. Our assumption remains that recovery will begin in 2022 —assuming borders remain open—and begin to normalise back to 2019 levels in 2023.

“The key student recruitment and tourist markets of China and south-east Asia will rebound and we expect to see a significant volume of customers from these markets over the next 12-24 months.

“The higher ranked Australian universities will outperform their domestic peers and will lead the recovery in international student recruitment in our opinion. We also expect to see stronger demand from domestic students who have for the most part had to study online over the last 2 years, but are likely to be more and more mobile.”

Michael Gibson
Director
PwC Australia

“There will be increasing demand on Universities to provide both a physical and digital campus experience for students and staff.

“Strategies to shrink, repurpose or consolidate campus facilities will continue to be implemented across the sector, with a renewed focus on reducing administrative space and repurposing underutilised spaces.

“Bringing industry on campus to provide work integrated learning opportunities for students along with research collaborations is also likely to be a key priority going forward.”

David Hall
National Director – Industrial
Colliers

“The continued uptake of technology platforms (e-commerce and on-line ordering etc) is now the interface between consumers and producers to facilitate their consumption requirements (both discretionary and non-discretionary).

“Producers will invest heavily in fortifying their supply chain and grow their ability to facilitate direct to customer via warehouse/distribution facility.

“Ultimately we will continue to see strong demand on industrial assets well into 2022.”

Matt Hemming
Partner
Mitchell Brandtman

“From a construction pricing and competition level, confidence needs to improve before we see a return of true competitive tender pricing as there would certainly be a case of ‘once bitten, twice shy’ so to speak, which is completely expected.

“A good six months of stability without noise of drastic price increases will assist in building confidence.

“Confidence will also come from working more collaboratively and openly, particularly when entering into longer term contracts. Any assumed risk will come with a hefty price tag in this new market so make sure you start with the right advice and on the front foot.”

Sass J-Baleh
Head of Industrial Research
CBRE

“We expect that demand for industrial and logistics space will continue to be driven by e-commerce activity, as we forecast the e-commerce penetration rate to reach 20 per cent in the next four years.

“In addition to this, we have seen some significant upward movements in rents in the back end of 2021 and this is likely to continue into 2022.

“The pandemic and the acceleration of e-commerce has also led to the reassessment of inventory levels, and therefore rising inventory requirements in the short to medium term will result in greater demand for space.”

Oscar Ledlin
Director
Ledlin Group

“We can’t know if 2022 will be the end of this pandemic and the year that we see a significant step towards a post-Covid normality. What we do know, is that while the underlying core drivers of human behaviour will eventually resurface, the demands of our clients have substantially changed.

“[As a company] we are enthusiastic about moving further into the suburban office space and meeting our clients’ increased expectations with a focus on enhanced amenity in our business parks.

“More public open spaces, extensive landscaping with outdoor workspaces, communal rooftop terraces and an overall more integrated business community within our industrial estates.”

Brooke Lloyd
Director
Cox Architecture

“The pandemic has undoubtedly changed organisations’ approach to commercial space.

“I think we will see new strategies emerging for leasing and tenanting buildings to cater for new attitudes towards co-working, collaboration, and community.

“I think the hub and spoke model for large organisations will become more prevalent and drive a degree of consolidation of CBD stock and a rebirth of the fringe and suburban workplace sector.”

John Musca
National Director – Pub Investment Sales
JLL

“There will be more of the same in 2022 as the sheer weight of both public and private capital for the asset class, and indeed across real estate sectors, continues to fund consolidation and board-room acquisition mandates.

“The big will get bigger, and we will see a new wave of alternate, enhanced or development uses emerge for smaller hotels as sites are optimised and the diminishing appetite of undercapitalised hands-on operators gives rise to ownership fatigue.

“Expect a number of new closed funds to arrive alongside JV group operators with roll-up strategies and expect continued yield compression for investment hotels as it continues to evolve as the retail asset class of choice, underwritten by valuable perpetual approvals, licences and businesses attracting more sophisticated tenancy covenants.”

Chris O’Keefe
Director
Time & Place

“My early prediction is that office environments won’t retreat or become redundant, but there may be a need to increase floor space, making offices bigger to cater for more people to interact away from the home office.

“I think that changes will occur across all commercial sectors, including retail, office and industrial, as each model adapts to a more flexible and mobile society.

“I think it’s likely that we will see the push for decentralised working and distribution through existing assets such as office and retail centres, changing the way these buildings are used.”

David Oudshoorn
State Director
MaxCap Group

“The pandemic—hopefully in a milder form—is here to stay and our industry has proven that we can deal with that.

“The major risk relating to the pandemic in 2022 is the level of uncertainty around government decision making.

“The construction industry in particular needs international and domestic borders open with certainty to ensure free flow of labour and materials to minimise further cost escalation.”

Phil Pearce
Chief Executive
ESR Australia

“The adoption of e-commerce during the pandemic has underpinned a lasting change in consumer behaviours. As a result, the demand for quality warehousing and supply chain solutions will be sustained throughout 2022.

“Pandemic prompted shortages in the supply chain and human capital across all sectors will mean businesses will have to innovate to cater to existing and future demand.

“This could mean a sustained demand for warehousing for the industrial sector due to customers wanting to hold more significant quantities of inventory in the short to medium term, paired with the accelerated adoption of robotics and automation.”

John Sears
Head of Research
Cushman & Wakefield

“Trends that accelerated during the pandemic, such as online shopping and work from home, are expected to continue in 2022. These will either aid or offset the expected tail winds of forecast above-average GDP growth, and an equally strong labour market.

“Industrial sector strength is also likely to continue into 2022, with a wind-back of retail space in favour of warehousing expected to help industrial rents catch up to the surge in land values recorded in 2021.

“While work-from-home is likely here to stay to some degree, an attractive workplace will be key in helping to attract and retain staff in a competitive employment environment.”

Andrew Simons
Head of Industrial Development
Charter Hall

“[The pandemic] has accelerated the structural shift to automation. Rather than should a tenant customer automate, to how much automation can the business model support.

“Moving forward there is going to be a significant focus on providing ‘last mile’ solutions to allow our tenant customers to deliver their products directly to their customers’ homes or businesses.

“This will require significant change to permitted land uses, a need to rethink strategies around zoning, permitted uses, hours of operation and concepts such as multi-level, high density warehousing. This will become critical to allow our cities to function effectively in the future.”

Sarah Slattery
Managing Director
Slattery

“Consulting firms who have a strong government and infrastructure pipeline are now back to pre-pandemic staffing levels and yet still require more staff. Some larger firms are starting to turn work away.

“Consultants are seeing more confidence from commercial and residential developers.

“Coupled with the already strong pipeline we are seeing from the government stimulus, 2022 is looking to have a high volume of work across the board. Works ramping up include airports, rail and road infrastructure, station precincts, industrial, logistics and storage, build-to-rent and retail mixed-use.”

Nick Sparks
Partner
Maddocks

“We expect to see that purpose built student accommodation projects will restart and accelerate as the flow of international students recommences, possibly after an extension of the current pause while excess capacity is reabsorbed into the system.

“Public universities with large campuses, particularly on the urban fringe and in the regions, are already actively exploring ways to better utilise the land available to them through conventional capital works programs but also in partnerships with private and superannuation funds to develop multi-use and mixed commercial space on campus.

“As for urban campuses, we see that they will continue to expand upwards with more vertical projects replacing low-rise buildings, while bringing some real architectural merit to many of their projects.”

Vivek Subramanian
Managing Director
Sandhurst Retail & Logistics

“The pandemic hasn’t changed our focus, and if anything it has cemented our vision of delivering places to visit that offer more than just shopping.

“We aren’t expecting the logistics boom to go away any time soon, and we will continue pushing into that sector and growing our pipeline to deliver sustainable solutions to tenants.

“With so many new residents and houses coming to the regions, there is an opportunity to bring in industry-leading design to create landmark centres that people will be proud of, and that will feel like home for new communities.”

Adam Vaggelas
Partner
GreenFort Capital

“The pandemic has propelled a trend towards the integration of real estate uses and the promotion of flexibility in how we live and work.

“With a high relative vaccination rate, and international borders opening next year, we see the Australian real estate market strengthening further into 2022.

“We also expect to see a continual diversification of institutional portfolios towards the residential and alternative real estate sectors which have performed well over the past few years.”

 

Article Source: www.theurbandeveloper.com

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How to end a fixed-term lease early

Terminating a fixed-term lease can be a costly decision but, whatever your reasons for doing so, experts say the No.1 rule is to give plenty of notice of your intention to vacate.

The first step is to put in writing your plans to break your lease as soon as possible to help minimise disruption between the old and new tenant, according to Stone Real Estate ACT property management director Amanda Tehle.

“Gone are the days when you had to try to find someone to take your place,” she said. “It’s still important for agents out there to try to find the best possible tenant for their owners, too. That’s what we are here for.”

In almost every Australian state other than NSW, the typical penalty for tenants breaking a lease is to reimburse their landlord for any expenses incurred as a result of the break lease, including any loss of rent, Raine and Horne property management national manager Maria Milillo said.

“It’s pretty much that way in every state apart from NSW,” she said. “They’re the only state where the determination of the amount of money you pay is fixed. So if you have, for example, 75 per cent of your lease still pending then you must pay four weeks rent.”

However, Ms Milillo said her advice would always be that a tenant checks their lease agreement, as well as the governing body websites for information, because the length and terms of leases in some states could vary.

Readvertising the property for rent is a common cost for tenants choosing to vacate early, as well as a letting fee, which could be between one to two weeks’ rent.

“For anyone facing financial hardship, they should make sure they’ve researched and are completely aware of all the support that’s available first before they go down this road because it could be quite costly,” Ms Milillo said.

“Depending on the financial position of the landlord, some are able to be fairly generous and really support tenants but not every landlord is in that position, as they too could be affected financially. So, that’s why communication is really key.”

Belle Property head of property management and escapes Melinda Cotton said tenants considering breaking their lease should carefully consider their decision.

“It’s not always wise to go to a higher rental property,” she said. “Tenants think, ‘Yes, I can afford to do it’, but don’t take into account if something were to happen.”

“Be careful about your reasons for moving into a property and give yourself a little wiggle room, financially.”

State by state guide to breaking a lease

ACT Tenants in the first half of a tenancy agreement will incur a maximum fee of six weeks’ rent, and if the agreement is in the second half, it’s a maximum of four weeks’ rent.

“The penalty, though, can be shortened if we find a tenant in, say, week three of that six-week period. You would only pay up to the day prior to the new tenant starting,” said Ms Tehle.

If a new tenant moves in during that period, landlords may charge administrative costs, such as advertising fees, from the vacating tenant up to a maximum of one week’s rent.

In certain circumstances, such as financial hardship, where a court has made a protection order, where a tenant has accepted a social housing or aged-care place, or where a tenant has been posted away from Canberra for work, tenants may terminate leases without paying compensation.

Minimum notice periods depend on the reason for terminating the fixed agreement.

Western Australia Tenants who terminate a fixed lease early may have to pay rent or other reasonable costs (such as advertising) incurred by the landlord until a new tenant is found or the original tenancy period expires.

Tenants affected by family violence may terminate a tenancy agreement with seven days’ notice.

Fixed leases can also be ended by mutual agreement without penalty or the need to issue notices. Both the landlord and tenant need to agree, in writing, that the tenancy agreement should end on a specified date, and both parties must sign a clear, written statement to this effect.

Tasmania Tenants may end a lease by giving the landlord or agent 14 days’ notice if the owner has not done something the lease says they must do, has done something the lease says they must not do, or has not done repairs within the required timeframe.

If a tenant breaks a lease before the end date without proper reasons or a notice to terminate, they are responsible for paying rent until a new lease starts or until the end date of the lease, whichever happens first.

The owner must make reasonable attempts to try to find a new tenant, and the tenant will have to pay any advertising costs charged to the owner.

Northern Territory Tenants who break a fixed-term lease will be liable to pay the loss of rent for the remainder of the lease or until the property is re-let, and may also have to pay fees such as advertising costs to the real estate agent.

Tenants should give landlords or agents as much notice as possible to arrange a new tenant before their departure date.

South Australia Tenants who break a fixed-term lease are responsible for costs related to re-letting the property.

Landlords can claim loss of rent until the property is re-let, as well as advertising and re-letting fees charged to the landlord by an agent.

Formulas developed by the South Australian Civil and Administrative Tribunal (SACAT) must be applied to all advertising and re-letting costs. If the tenant breaks the lease in the first quarter of their lease term, full costs can be claimed.

If landlords need to reduce rent to re-let the property quickly, they can claim the difference from the tenant until the date their lease ends. If the property is re-let at a higher rent, the landlord is profiting from the lease break, and tenants can expect the profit to be offset against the landlord’s loss of rent, advertising and re-letting fee.

Queensland Tenants who break a fixed-term lease may need to compensate the owner or property manager for costs incurred. These include rent until a new tenant is found or until the end date of the agreement, as well as reasonable re-letting costs (usually one week’s rent plus GST) and advertising costs. Owners and property managers must mitigate any losses.

Tenants experiencing excessive hardship may make an urgent application to QCAT for an order terminating the agreement, however, QCAT may still order compensation to be paid.

 

Article Source: www.brisbanetimes.com.au

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Forecasters predict Australia’s hottest property market in 2022

More jobs, more interstate migrants and the 10-year insurance policy of hosting the world’s biggest sporting event will send South East Queensland property prices to record heights next year, industry experts say, with the current housing boom tipped to burn into the early months of 2022.

Despite an astonishing year of price hikes that saw median house prices rise by up to $2400 a day in some Sunshine Coast and Gold Coast suburbs, a decade of catching up for lost time coupled with a tidal wave of southern migration is predicted to keep the real estate revival in motion, with the re-opening of international borders expected to soften the blow of future interest rate hikes.

Domain chief of research and economics Nicola Powell said, out of all the capital cities, Brisbane would be the one to watch in 2022, with the Gold Coast and the Sunshine Coast markets also firing at a velocity that was simply too fast to falter in the near future.

“What we’ve seen is much stronger rates of growth in Brisbane than Sydney and what we’ve got – particularly in South East Queensland – has been this shift in migration … and that adds to the fact that it offers lifestyle and job prospects as well as the Olympics (in 2032) and all the infrastructure projects that are being completed,” Dr Powell said.

“That’s going to continue to put demand on housing, particularly when you put it on the backdrop of the fact that house price growth has gone sideways for a number of years.

“Brisbane has under-performed compared to other capitals, so there’s more room for growth. And it hasn’t had a massive upswing, so there’s still strong growth to come.”

Homes in Brisbane, the Gold Coast and the Sunshine Coast have been snapped up.CREDIT:GLENN HUNT 

According to Domain’s latest House Price Report – for the September quarter – Brisbane house prices climbed almost $30,000 in three months to a record high of $702,455, a figure that’s still almost $300,000 shy of the combined median house price for the nation’s capitals and close to $800,000 less than Sydney’s median house price.

While Sunshine Coast median house prices outperformed the capital – leaping to $875,000 over the quarter – Dr Powell said the sheer ferocity of buyer appetite for the coastal hot spot indicated the upward trend would continue.

“There’s still some steam there – more so than the Gold Coast – and we’ve had four really robust quarters back-to-back (on the Sunshine Coast),” she said.

“At the start of the year we saw nine per cent house price growth in a quarter, which is a phenomenal rate of growth,” she said.

“But affordability will also be affecting buyers now … and that will take away some of the demand. That said, some out-of-state buyers will see these prices as affordable when you look at the Sydney median.

“We’ve also got a rising number of investors who are really looking to the ‘sunshine state’ because they are expecting capital growth in property … so while there’s obviously some headwinds with rising interest rates and also further moves from APRA (the Australian Prudential Regulation Authority) to contain lending growth … overall affordability is still there – especially for buyers coming from Sydney.”

Dr Powell said houses would continue to be the standout performers next year as buyers continue to crave space and a backyard, with units expected to nevertheless enjoy slight price rises as investors and international students wade back into South East Queensland.

McGrath Paddington senior agent Alex Jordan said while there was no evidence Brisbane had reached its home price peak, the rapid rate of growth would slow.

“I don’t see the same magnitude of growth that Brisbane benefited from in 2021 … this was a historically unprecedented level of capital growth,” Mr Jordan said.

“But there’s still pent-up demand and I think we’ll see the highest level over the next few months.

“There are also signs and indications (now) that inflation is kicking into the global economy … and that suggests interest rates might move higher than what people anticipated, and we’ve already seen evidence of that with banks recently increasing their fixed rates.”

While some property punters anticipate a new wave of migration once borders fully re-open, Mr Jordan felt the highest rates of migration had already been clocked, with a steadier stream tipped for 2022 with the region’s lifestyle lure and the Olympics weaving a compelling tale for migrants.

Infrastructure investment for the Brisbane Olympics is tipped to boost property prices.CREDIT:ALBERT PEREZ/GETTY IMAGES 

“The 2000 Olympics put Australia on the map … and we’re already seeing investments into upgrades here, so I think Brisbane is well positioned to become a global city,” Mr Jordan said. “Leading up to the Olympics there’ll be strong demand.”

Infrastructure spending and the lure of a beachside lifestyle will also keep the Gold Coast’s market fire simmering, Ray White Surfers Paradise Group CEO Andrew Bell said, with the heat expected to cool somewhat in autumn.

“I think with the Gold Coast, history tells us that markets have their strong surge and then they do take a strong breather,” Mr Bell said.

“It’s essential to allow people to catch up, so I suspect in 2022 we’ll see a softening of the intensity of the real estate market but the demand will be ahead of where it’s been for many, many years.

“But you’ll also find buyers will say they won’t pay any more and we’ll get pushback and I think that’s healthy because if you keep blowing up a balloon essentially it will burst.”

SQM Research’s Christopher’s Housing Boom and Bust Report 2022 named Brisbane as next year’s winner of the Australian real estate market – with the city expected to dominate dwelling value growth in 2022.

The report, released in late November, also predicted median property prices across the capital would increase by up to 14 per cent.

 

Article Source: www.brisbanetimes.com.au

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