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Premium portfolio offers triple development treat in Melbourne CBD

Thu, 16 May 2013 09:24:00 +1000

A trio of premium development sites strategically located across the Melbourne CBD have hit the market in one of the most unique portfolio sales in over a decade.

Colliers International’s John Marasco and Matthew Stagg, in conjunction with CBRE, are marketing a premium portfolio comprising three prime CBD sites suited to a variety of high-rise development outcomes including residential, commercial, hotel and retail (STCA).

The sites are located across the East (9-23 MacKenzie Street, Melbourne), Central (224-250 LaTrobe Street, Melbourne) and Flagstaff (229-241 Franklin Street, Melbourne) precincts of the Melbourne CBD, close to major train stations, tram routes and commercial, education and retail hubs.

Mr Marasco, Colliers International Managing Director – Investment Services, said the portfolio sale represented an extraordinary opportunity to secure a future development pipeline with holding income.

“Melbourne’s population is predicted to grow by one million people by 2020, and this population growth is driving demand for inner city residential accommodation,” Mr Marasco said.

Over the past five years, the City of Melbourne has grown at an average rate of 6.1 per cent. The current reporting year is the second consecutive year to see inner city population growth which rivals that of the outer suburbs, illustrating the growing trend towards inner city living.

“This positive sentiment has resulted in Melbourne becoming increasingly popular with major international developers who have acquired key sites throughout the CBD and commenced development projects immediately, whilst in some instance purchasing sites for future residential apartment development,” Mr Marasco said.

“Therefore, high quality sites in prime Melbourne CBD locations are becoming scarce and difficult to acquire which no doubt is also being driven by the consistently strong performance of the high rise residential apartment market that continues to attract buyers both locally and from abroad “

The portfolio is expected to attract significant interest from a range of local and off shore developers and landbankers.

The centerpiece of the portfolio is a 3,197sq m site comprising a major 689-bay commercial car park at 224-250 LaTrobe Street. Zoned Capital City 1, the prime site is situated directly opposite Melbourne Central, the CBD’s largest shopping centre.

The property has substantial development upside, with the potential to accommodate several major high-rise buildings as well as providing scope for multi-level retail tenancies. It will provide the successful buyer with an opportunity to create the Melbourne CBD’s next landmark building.

Anticipated to draw interest in excess of $40,000,000, the asset benefits from existing improvements comprising a 10-storey plus basement car parking station, operated by Wilson Parking, which services Melbourne Central Shopping Centre. There are two ground floor retail tenancies fronting LaTrobe Street and three fronting Little LaTrobe Street, with a combined net lettable area of 852.3sq m.

The 2,030sq m (approx.) development site at 9-23 McKenzie Street is located in a mixed-use zone in one of the CBD’s most sought after precincts and is expected to yield interest in excess of $20,000,000.

“This property has excellent development potential for a high-rise residential apartment tower,” Mr Marasco said. “The neighboring property at 33 MacKenzie Street provides a strong indication of the development potential for this site.

“The successful project, 33M, was developed by Singaporean group Chip Eng Seng and comprises 35 levels, 388 apartments and 151 car parks.

“The Eastern precinct is the most prestigious precinct in the Melbourne CBD, anchored by the State Parliament of Victoria on Spring Street and associated government offices. It therefore attracts major corporations, including Telstra, Australia Post, Origin Energy, and the Australian Tax Office, and is close to major hospitals and health services.

“The area attracts affluent white collar workers and medical professionals who want to live close to work as well as enjoy the cosmopolitan lifestyle that the location provides. It is a highly sought-after area.”

The 1,548sq m (approx.) site at 229-241 Franklin Street is home to an existing two-level warehouse constructed over the full site, with a total building area of around 2,000sq m. The property is zoned Capital City 1 and is expected to receive interest in excess of $16,000,000.

The Western precinct is the fastest-growing precinct in the Melbourne CBD, benefiting from massive investment by both the private and government sectors over the past decade and home to major destinations such as Queen Victoria Market, Southern Cross Station, Telstra Dome and Docklands.

The location has become popular for residential development given the lifestyle it affords residents, with its easy access to Melbourne CBD amenities, retail and entertainment destinations.

With a large site area, the property has excellent residential development potential underpinned by its close proximity to Melbourne’s world leading educations institutions, RMIT and Melbourne University.

Other successful residential developments in the precinct include Art on the Park (330-360 William St, 35 levels, 596 apartments); The Istana Melbourne (218-236 A’Beckett St, 25 levels, 320 apartments); and CityTEMPO (181 A’Beckett St, 29 levels, 229 apartments).

The three properties are being offered for sale by International Expressions of Interest closing Friday June 21 at 3pm. They are to be sold individually, in any combination or as a portfolio. The total realization of the portfolio as a whole is anticipated to be in excess of AUD $75million.

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Commercial property surge in Stonnington and surrounds

Tue, 14 May 2013 14:09:00 +1000

A spike in enquiry for value-add and securely leased commercial properties has been noted by Colliers International agents in some of Melbourne’s metropolitan hot spots, particularly the municipality of Stonnington.

According to Colliers International agent Ben Baines, investors are becoming active as they identify the time as ripe for making a move in the property market.

“Many savvy investors who have been long-term holders of property, even decades, see the current conditions as an opportune time to sell their well-located commercial assets,” Mr Baines said.

“This is predominantly due to a lack of competing quality stock on the market, pent-up demand from investors due to the volatility of the stock and property markets over the past five years and low interest rates which have resulted in a much deeper pool of purchasers.

“Value-add properties, as well as securely leased assets, are most desirable at present and enquiry on these type of assets is up about 20 per cent on the previous two years.

“We have witnessed this first hand of late, with multiple Colliers International on-market campaigns generating in excess of 70 enquiries each.”

Mr Baines said properties within the City of Stonnington had been particularly sought after, among both local and offshore investors, as demand remained strong from tenants wanting to be within close proximity of the CBD without the traffic hassles of the CBD grid.

Examples in the past few weeks of strong results included 21-25 St Edmonds Rd in Prahran (price undisclosed), 969-975 High Street in Armadale ($5.82million), 36 Garden Street in South Yarra ($1.49million) and 73-75 Union Street in Armadale ($2.9million).

The Prahran properties, sold by Colliers International agents Daniel Wolman and Jeremy Gruzewski, were sold well before the scheduled auction date.

A small, one-level brick building leased to a well-established catering company was sold to a private investor on a yield of about 3 per cent, three weeks before auction, and the high profile, two-level building at 25 St Edmonds Road, leased to Prahran’s well known Helen Gory Art Gallery and a successful multimedia studio, was sold the following week to an owner-occupier following high demand and several attractive offers.

“Our campaign closed two weeks prior to the scheduled auction date with well over 100 enquiries, demonstrating a strong start in this market for 2013,” Mr Wolman said.

“Situated in the heart of Melbourne’s premier city fringe retail precinct, surrounded by major international businesses and a diverse range of dining and entertainment venues, these properties grabbed the attention of investors, developers and owner-occupiers alike – as we expected they would.

"Prahran is a high-demand area for retail and residential property, which is reflected in the high value of a typical property in the area.”

According to Colliers International’s new H1 Metropolitan Office Research & Forecast Report, investors are returning in droves to Melbourne’s suburban office markets, with a particular focus on the city fringe and inner east.

Almost 70 per cent of the all sales transactions over $5million in the Melbourne Metropolitan market occurred in these two precincts in 2012.

Gold Coast apartment market firmly on the way back up

Tue, 14 May 2013 12:59:00 +1000

The Gold Coast new apartment market is clearly on the way back up, according to new research from Colliers International.

The latest Colliers International Gold Coast Apartment Report, which analyses new apartment sales over both the Gold Coast and Tweed Coast, found 202 new apartments were sold in the first quarter of this year, which is the highest level of quarterly sales reported in three years.

Lynda Campbell, Colliers International Research Manager, said new apartment sales volumes have now increased for five consecutive quarters.

“Throughout 2012 sales volumes increased each quarter and that trend has continued into the first quarter of 2013,” she said.

“The rise in the first quarter of this year was a 26 per cent increase on the previous quarter and was up 78 per cent on the same period last year.”

Tony Holland, Colliers International Residential Director, said the latest figures indicate the Gold Coast apartment market has gone past the bottom and is on the way back up.

“A total of 546 new apartments were sold during 2012 and with 202 sales already for the first quarter this year 2013 is on track to show an improved sales rate on the previous year,” he said.

“The level of supply also continues to decline – at the moment there are around 1000 new apartments on the market, and based on the current quarterly sales rate, stock will be absorbed within 16 months. If the sales rate continues to increase, as it has now done for the past five quarters, this time frame will of course be reduced.

“The amount of new apartments currently on the market is a significant reduction from the peak in mid-2007, when supply levels were sitting at around 2500 apartments.

“Some areas have virtually no new stock – 93 per cent of current available apartment stock is between Broadbeach and Hope Island and areas south and west of Broadbeach are recording extremely low levels, with only around 100 new apartments on the market.”

Mr Holland noted that a new high-rise apartment building had been put on the market on the Gold Coast for the first time in three years.

“Synergy at Broadbeach, containing 137 apartments, was put on the market in the March quarter, along with Etesian at Harbour Quays in Biggera Waters, which is a medium-rise project with 61 apartments,” he said.

“Etesian was the best performing project across the Gold Coast in the quarter, recording 29 sales.

“The addition of these projects, in conjunction with the increased sales rate for new apartments, has kept the supply level on par with the previous quarter.”

Ms Campbell said there were currently 36 projects for buyers of new apartments to choose from across the Gold and Tweed Coasts, which was the lowest level in 11 years.

“While two new projects were put on the market, one was sold out – Sirocco at Harbour Quays,” she said.

“Of the 36 projects remaining for sale, only eight have stock levels of any significance – that is, over 50 apartments.

“The remaining 28 projects have stock levels of less than 50 apartments and 15 of these have stock levels in single digit figures.”

Mr Holland said buyers who were adopting a ‘wait and see’ approach may miss out on securing new apartments, as stock levels continue to decline to decade-low levels.

“Opportunities that are in the marketplace now will most likely never be repeated as developers struggle to get new projects off the ground,” he said.

“New apartment buildings do not suddenly appear on the market. It takes years of planning before a new project is taken to the market, and the addition of Synergy at Broadbeach is a good example of that, being the very first high-rise project to enter the market in three years.

“Several projects have been reported to be commencing soon, but to date most of these have been put on hold.”

The Colliers International Gold Coast Apartment Report found the average sale price of a new apartment across the Gold and Tweed Coasts over the March 2013 quarter was $720,000.

The report also found the high-rise sector was the standout performer for the March 2013 quarter, with 117 new apartment sales reported.

“This is the highest sales volume for the high-rise sector in three years, and double the figure from the previous quarter,” said Ms Campbell.

“The bulk of the high-rise apartment sales during the March quarter were in Surfers Paradise and Broadbeach; together these suburbs accounted for 100 of the 117 sales.

“The Oracle Tower II was the strongest performing high-rise project, with a total of 25 sales for the quarter, followed by the Hilton Orchid tower, which had 25 sales, and the newly included Synergy building with 20 sales.”

The Colliers International report found the medium-rise sector recorded 69 sales during the March 2013 quarter, a significant rise from the 25 sales recorded for the same period last year and in the low-rise sector, only 16 apartments were sold.

“The low-rise sector has an extremely low level of supply, with only 30 apartments now available for sale,” said Ms Campbell. “Based on the current sales rate, low-rise stock will be sold out in less than six months, unless new projects are introduced to the market.

“In the high-rise sector, there are 807 apartments remaining available for sale, and in the medium-rise sector there are 239 apartments remaining available for sale.”

The North Shore precinct has again proven to be the strongest performing precinct across the Gold and Tweed Coasts, according to the Colliers International report.

“It has in fact been the strongest performing precinct for the fifth consecutive quarter,” said Ms Campbell. “In the March quarter of this year the precinct recorded 71 sales across nine projects in the medium and low-rise sectors.”

More than 20,000 ha of prime plantation farming land

Tue, 14 May 2013 09:24:00 +1000

Colliers International has been appointed by Mirvac Funds Management Limited and ASIF (WA) Pty Ltd to sell a significant portfolio of prime plantation/farming land.

The portfolio comprises 68 prime plantation/farming land parcels across South Australia, Victoria and Western Australia, with a total area of approximately 20,657 hectares.

The sale campaign will be managed by Colliers International Director of Rural & Agribusiness, Tim Altschwager and Colliers International Executive for Rural & Agribusiness, Jesse Manuel.

The portfolio is for sale as a whole or in parts via an Expressions of Interest campaign closing Thursday June 20 at 4pm (CST).

“This is a truly significant and important portfolio offering in the current market,” said Mr Altschwager.

“Since 2010 ownership in this sector has been diversifying and as an asset class, it is now considered a very attractive investment for institutional, private and offshore investors,” he said.

Mr Altschwager believes the broader rural and agribusiness market is better placed so the opportunity to acquire the portfolio will be well received.

“It is well known that a number of institutions and offshore funds are actively seeking opportunities of this size and calibre in Australia so we have no doubt that we will be dealing with genuine interest to acquire the portfolio from these groups.

Mr Altschwager said the portfolio was established by Timbercorp from 1999 to 2002.

“The properties were selected for their long term strategic value in terms of their suitability for hardwood (Bluegum) plantation forestry, soil type profile, amenity to infrastructure facilities and regional climatic characteristics.”

He said the majority of the South Australian and Victorian properties are leased to Australian Bluegum Plantations Pty Ltd (ABP).

“The opportunity to acquire such a large holding of prime plantation/farming land is rare,” said Mr Altschwager.

“We envisage this will appeal to forestry industry participants and all those attracted to the holding’s development potential.”

He said the option to continue plantation forestry or other agricultural pursuits through remediation to other forms of rural production will appeal to rural developers and existing land holders seeking to expand operations.

Industrial is the new black

Tue, 14 May 2013 09:13:00 +1000

Industrial assets are the new black of property investment, according to the latest research from Colliers International.

Malcom Tyson, Colliers International Managing Director | Industrial, said savvy local and foreign investors demanding value were now looking at the shed market – once an overlooked asset class - in a new light.

“World beating yields and prospects of steady, stable rental growth are the attractive features of industrial assets leading REITs, syndicates and private investors to the industrial precincts of Australia and New Zealand,” he said.

“In comparison to other countries around the world, Australian prime grade industrial property generates high yields – for instance, the largest industrial market in Australia, Sydney West, has a prime yield of 7.75 per cent, which is more than Berlin at 7.4 per cent, US at 5.5 per cent, Singapore at 4.8 per cent and Hong Kong at 4.4 per cent.

“Not only are these yields attractive by world standards, but they also compare favourably to other commercial property sectors – for example, prime grade Melbourne industrial assets offer yields of 7.7 per cent, which is higher than the seven per cent on offer by Melbourne CBD A-grade office and the 6.5 per cent on offer for regional shopping centres.

“In 2013 so far, the highest average reversionary yield for industrial property was recorded in Brisbane at 8.43 per cent and the lowest was in Melbourne at 7.7 per cent.”

Mr Tyson said another attractive factor for investors was the stability of industrial rents in Australia and New Zealand.

“Industrial rents in these markets do not fluctuate wildly, but generally increase at a steady rate of between two and four per cent per annum,” he said.

“Going forward, we expect rental growth to be moderate over the next few years, with average annual growth rates moving generally in line with each state’s gross domestic product growth, and for New Zealand, the rate of growth of their national gross domestic product.

“Sydney is expected to have the biggest increase in rents over the next year, with average net face rents moving from $139 in the first quarter of this year to a predicted $148 in the first quarter of 2014.”

Mark Courtney, Colliers International Research Director, said the latest Colliers International Industrial Research and Forecast report found rental growth in the industrial market was not likely to be impacted by upcoming supply additions, as new supply coming online nationally is low.

“For facilities of 10,000sq m or greater, within the national development pipeline there is only 367,000sq m of large warehouse floorspace under construction, with around one third of this being in Melbourne,” he said.

“Meanwhile, prime grade large industrial facilities – of 10,000sq m or more – are tightly held, and consequently there are now only a handful vacant around Australia. For example, in across all the industrial precincts of Sydney, Melbourne and Brisbane there are only nine, 12 and three facilities available respectively.

“The tightness of supply comes on the back of strong demand for warehousing and distribution centre floorspace in Australia and New Zealand’s key industrial precincts due to the continued relocation of manufacturing from industrialised nations in the west to Australia.

“This tightness of supply, along with a low level of supply additions going forward, means rental growth will be supported.”

Mr Courtney said the Colliers International Industrial Research and Forecast report, which looks at transactions of $5 million and more, showed that despite the tightly held nature of investment grade stock in Australia, total investment in 2012 still totalled some $2.9 million.

“This was down from the recent peak of $5.2 billion in 2007, as well as the next highest level of $4.3 billion in 2011, but the fall was largely due to the lack of available stock rather than a lack of interest from buyers,” he said.

“Interest in the industrial property market is expected to continue to rise from hereon in, building on the levels established in 2012.

“Already in 2013 there have been 50 transactions totalling $967.2 million.”

The report found Sydney has seen the most activity with 19 industrial property transactions totalling $441.2 million, followed by Brisbane with 11 transactions totalling $212 million.

Mr Tyson said institutional investors were by far the most dominant buyers in the Australian industrial property market.

“This has been the case for some time, and this trend has continued into 2013, with well over 60 per cent of the total investment so far this year being comprised of significant purchases by institutions including Goodman, Growthpoint, Charter Hall and Dexus,” he said.

“The biggest deal this year has been the purchase of the Metcash Regional Distribution Centre in Perth for $132.4 million by Charter Hall.

“Private investors have also increased their activity, representing about 20 per cent of the market in 2012 and 2013 so far, which is well up from the levels of activity from this group in 2011.

“Meanwhile, syndicates such as Sentinel Property Group have also seized the opportunity in 2012 and 2013 in the secondary grade market, primarily in Queensland, where development or revenue growth opportunities are available.”

Mr Tyson said with all the fundamentals in the industrial market aligning, now was a good time for purchasers to get in, and indeed, it was also a good time for vendors who want to sell to do so.

“Over the next year we expect Australian and New Zealand prime grade industrial assets to continue to represent a stable and strong yielding investment for domestic and foreign purchasers alike, with yields to be in the range of 7.5 per cent to 9.5 per cent, moderate rental increases and some opportunity for capital growth, particularly in the transport infrastructure-rich sub markets,” he said.

“The most sought after properties are likely to continue to be the wholesale/retail and logistics facilities.

“We also expect the overall tightness of supply to lead to higher levels of interest in second grade stock, particularly for investors seeking development opportunities and acquisitions of long-term high-yielding investment grade facilities.”

Opportunities in accommodation for senior Australians

Mon, 13 May 2013 09:53:00 +1000

Australia’s ageing population is creating opportunities for property investors in the healthcare and retirement living space, according to Colliers International.

Phil Smith, Colliers International National Director of Healthcare and Retirement Living, said while there are currently two million people in Australia over 65, by 2021 this was projected to grow to three million and will steadily increase from there.

He said due to the rapidly ageing population, demand for beds in the aged care sector could significantly outpace supply, and more than 500 new aged care facilities would potentially be needed by 2016 to cope with demand.

“In 2011 there were 0.47 aged care beds for every person over 85 in Australia,” he said.

“To maintain this same ratio in 2016 there needs to be an increase in bed capacity of around 55,000 beds.

But while there is a huge need for aged care facilities, Mr Smith said it was not as simple as just having any investor or developer going and building a facility.

“The Federal Department of Health and Ageing issues a limited number of bed licenses annually, and only allows ‘Approved Providers’ to operate aged care facilities,” he said.

“While it is likely that the market will open in the longer term, with the current regulatory environment, property investors would be wise to partner with existing aged care providers if they want to conservatively and passively invest in the sector.

“Aged care involves operational risk – experienced operators make money, poor operators don’t.”

Mr Smith said the ageing population was also creating positive opportunities for investors in the retirement living space.

“Retirement living developments involve less operational risk and it is a sector that appeals to traditional property investors,” he said.

“The sector is regulated by state legislation, but much of these rules are more directed at consumer protection and property issues rather than operation compliance.

“Retirement villages do involve market risk, the same as most other property asset classes, however there are some unique investment considerations with this sector such as rollover rate, which is the estimated length of tenure of a resident, and type of tenure agreement which affects the amount of deferred fees an investor obtains.”

Mr Smith said there were two big challenges within the retirement village sector - the first is the inability to obtain unequivocal pre-sales (selling off the plan), which makes bank funding very difficult and effectively prohibits ‘vertical’ developments.

“The second challenge is the slowdown in the residential market,” he said.

“The fact is, most Australians still have a lot of their personal wealth in their family homes. They may need full value in the sale of the family home if they are downsizing to a retirement living unit, as much of the ‘saving from downsizing’ – which is the difference between sale price of family home and purchase of retirement unit - will be used to fund them for the rest of their lives.

“We have seen a significant fall off in sales of retirement village units, which correlates to the slowdown in the residential market.”

Matthew Meynell, Colliers International NSW Team Manager Insolvency Property Services, said banks are far more sensitive to aged care and retirement living than they are with some other property asset classes.

“Aged care facilities will rarely see a receiver and manager appointed – given the sensitivity of these facilities, banks tend to be more proactive and call in experts to mitigate potential damage,” he said.

According to the recently released Colliers International Insolvency & Distressed Assets report, the healthcare and retirement sector saw a minor increase in the number of distressed properties on the market in 2012, and Mr Meynell said basically all of those distressed properties were retirement villages.

“There were only nine distressed properties in this sector, with 18 transactions in total over 2012, but distressed properties only made up 16 per cent of the total quantum of sales,” he said.

With the pressures of an ageing population and the residential market starting to pick up there are greater opportunities in the retirement living space for those in the property market, but Mr Smith pointed out that investors need to be sure they do their homework and work with the right partners.

Rural residential development site up for grabs

Mon, 13 May 2013 09:46:00 +1000

A rural residential development site in the Nerang area on the Gold Coast is up for sale in a campaign being marketed by Colliers International.

The Hidden Woods estate, at 181 Nerang-Murwillumbah Road in Advancetown, has approval for 80 lots in total over three stages.

All of the 15 lots in stage one have already having been sold by the original developer with new houses already completed. Now stage two, which consists of 36 lots across 20 hectares of land, is up for sale in one parcel, ready to be developed and the residential lots individually sold.

Geoff Lamb of Colliers International, who is marketing the development site with colleague Darrell Irwin, said all the hard work had been done for the eventual buyer and developer of stage two in the estate.

“Approvals are in place, preliminary earthworks have been completed and many of the lots have already had electricity and water connected,” he said.

“This is a great opportunity for someone to just walk in and take over developing an existing maturing estate that’s already established on the map as a successful project.”

Mr Irwin said sales that had taken place in the first stage of the Hidden Woods estate were evidence that the project was popular amongst buyers.

“There are plenty of things attracting buyers to this estate, not the least of which is the fact that it offers acreage lots,” he said.

“Acreage is proving to increasingly popular amongst buyers for many reasons, including the space it provides, and subsequently, the lifestyle on offer.

“This property is set in parkland – most of the Hidden Woods estate has actually been dedicated to council as public open space and conservation parkland.”

The entire Hidden Woods estate sits on 187 hectares of land, but just 59 hectares of that has been approved for a residential subdivision. The remaining 128 hectares has been dedicated as open public space.

Hidden Woods is rich in history – it was formerly part of what was called Miandetta Farm, which, for the past 100 years, was used for arrowroot, dairy and beef cattle. It is owned by the Mills family, who are long standing dairy farmers in the area, and partly adjoins the Grand Golf Course.

Mr Lamb said that while the acreage component of Hidden Woods would appeal to buyers, the fact that the estate was close to amenities was also a big plus for the development.

“The estate is just seven minutes from the Nerang CBD, which has all the amenities and services one needs, including shopping centres, cinemas, hotels and public transport, with a train station in the suburb,” he said

“Being so close to Nerang means Hidden Woods also has easy access to the M1, so residents of the estate can enjoy the idyllic country setting while also being able to easily access other areas of the Gold Coast or get a quick start to Brisbane.”

The residential lots in the Hidden Woods estate range in size from 4,028sq m to 2.03ha, with the average size being 6293sq m.

Colliers International raises record amount at annual charity lunch

Fri, 10 May 2013 11:20:00 +1000

Colliers International raised $55,000 for the Down Syndrome Association of Queensland (DSAQ) at its fourth annual charity lunch last week.

220 guests attended the event, held at Brisbane’s Tattersalls Club, and fittingly feasted on lamb as they were entertained by special guest Sam Kekovich, who is perhaps best known as Australia’s ‘lambassador’, but is also an Australian media personality, sports commentator and former Australian Rules football player. Steve Haddan, comedian and Nine News sports presenter and journalist, mediated proceedings as the MC.

The $55,000 for DSAQ was raised through corporate sponsorships and donated items that were raffled off or auctioned. Raffle items included a tool chest and tools, a golf voucher, a weekend getaway and ski jackets. Auction items included a VIP match day experience at The Gabba for 10 people with a choice of one of three Brisbane Lions matches and a commercial marketing campaign valued in excess of $20,000.

Colliers International surpassed its expectations of raising $50,000 on the day, with $55,000 ending up in the kitty, a record amount raised at its annual charity lunch.

Colliers International has been supporting DSAQ for the past four years – as well as raising money at its annual charity lunch, Colliers has provided sponsorship to the Down Syndrome Down Under Swimming Organisation (DSDUSO) by supplying uniforms and cash sponsorship for local events. Colliers has also sponsored Michael Cox, the son of Simon Cox, Colliers International Real Estate Management National Director, directly for the past three World Swimming Championships.

Colliers International builds presence in the Hotels sector

Fri, 10 May 2013 10:11:00 +1000

Colliers International has announced a major expansion in the Hotels property sector with the appointment of several highly-experienced industry professionals and a renewed focus to meet investor demand.

“Colliers International is pleased to announce the appointment of Stephen Burt as Managing Director – Hotels, Asia Pacific,” said John Kenny, Colliers International Chief Executive Officer – Australasia. “Feedback from the market indicated that there was opportunity for an alternative service in the hotel property sector which offered a high level of expertise. We felt that the time was right and acted quickly.”

“Stephen is a highly respected senior figure in the hotel industry with over 25 years’ experience. He was a founder of JLW TransAct (now Jones Lang LaSalle Hotels and Hospitality) and most recently held the role of CEO for the Mirvac Hotel Group where he managed their hotel management company of 45 hotels and their specialist hotel funds management platform valued at $1 billion.

"Whilst at Mirvac Stephen was integrally involved in Australia’s largest hotel transaction involving the sale of Mirvac Hotels & Resorts to Accor and the sale of the Mirvac Wholesale Hotel Fund to a group of investors led by the Singapore based Ascendas Pte Ltd.

“In this newly created position with Colliers International, he will lead a team of transactional and valuation professionals totally focused on the hospitality sector."

“We plan to immediately differentiate our business from our competitors with our extensive hotel investment background,” said Stephen Burt. “We know what owners want when it comes to buying and selling and we will deliver the required outcomes.”

In addition to the appointment of Mr Burt, Colliers International has recently appointed Dean Humphries from Jones Lang LaSalle Hotels and Hospitality to lead the New Zealand Hotels business based in Auckland. Mr Humphries has over 20 year’s expertise within the hotel sector across New Zealand and Australia.

On the valuation side of the business Colliers International has recruited Sean Pacey from CBRE Hotels based in Brisbane whilst Nick Thompson and Maria Verner from Jones Lang LaSalle Hotels and Hospitality will also join the team in Auckland.

Mr Burt added: “The recent appointments together with our existing valuation professionals lead by Jim Macey in Melbourne and Michael Thomson in Sydney mean that Colliers International now has one of the regions strongest dedicated hospitality valuation teams.”

John Kenny further noted: “Notwithstanding our significant progress over recent weeks we are still building and therefore are in the market for high quality recruits that want to be part of a successful dedicated hospitality team. The recent recruitment and restructure provides Colliers International with a leading specialist hospitality business in Asia Pacific focused on accelerating the success of our clients and our people.”

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Offshore investors target $18bn Australian commercial property in 2013

Fri, 10 May 2013 10:06:00 +1000

Offshore investors are currently looking to invest around $18billion in office, retail and industrial property in Australia, according to new research from Colliers International.

Colliers International’s latest research has found foreign investment into Australian commercial property markets totalled $759million in the first quarter of 2013, with the total value of direct property transactions up slightly from $735million on Q1 2012.

James Quigley, Colliers International National Director – Capital Markets, said demand from foreign investors was as strong as ever.

“This demand is in fact increasing, with recent acquisitions by groups such as Bright Ruby Resources and Greenland, both from China, examples of new investors entering the Australian market,” Mr Quigley said.

“We have calculated that offshore investors are currently looking to invest circa $18billion in our office, retail or industrial property.

“Consistent with our first-hand offshore experiences, the Asia Pacific region continues to be the most dominant as a source of investment into the Australian market, representing 82 per cent of foreign investment in our assets for Q1 2013."

Some of the Asia Pacific investment involved European and North American funds investing through the regional hubs of Singapore and Hong Kong.

“Based on our recent visits to Asia, where we met with more than 50 investors and fund managers, we anticipate an increase in investment from China as more companies and private investors look to diversify their property holdings throughout Asia,” Mr Quigley said.

“During the next 12 months, we expect new investors from China, Canada, USA, South Korea and Japan to enter the Australian market. Notwithstanding the ongoing discussion regarding possible yield compression in our markets, our yields remain relatively attractive for core assets compared to other countries."

New South Wales attracted the lion’s share of foreign investment in Q1 2013, with 42 per cent, primarily as a result of the sale of 231 Elizabeth Street in Sydney to Bright Ruby Resources for $201million and Colliers International’s sale of 465 Victoria Avenue in Chatswood to Hines Global REIT for $92million.

Western Australia has been the next most favoured destination to date in 2013, attracting 31 per cent of foreign capital. This incorporated the sales of 18 Parkland Road for $10567 million to MGPA Asien Spezialfonds and 254 Rockingham Road for $75.821million to Rockworth, both Singaporean groups.

"The office sector continues to be the preferred investment choice for the majority of offshore groups, with particular interest in Sydney and Melbourne markets,” Mr Quigley said. “Offshore investors generally target office assets from the outset and as they become more educated and comfortable, begin to diversify into the retail and industrial markets.”

55 per cent of foreign investment in Q1 2013 came from institutional buyers, with 36 per cent from corporates/end users and 9 per cent by private investors.

Commercial property investment opportunity with a difference in North Geelong

Fri, 10 May 2013 10:03:00 +1000

An opportunity has arisen for an investor or owner-occupier to capitalize on the sale of a vacant food processing facility below replacement value in North Geelong.

Colliers International’s Ben Young, Jonathon Lumsden and Nick Saunders have been appointed by Mr David Mansfield of Moore Stephens as liquidators to market a 2,445sq m food processing facility at 62-66 Cowie Street in North Geelong.

The property, located just 500m from Princes Highway, is being sold well below replacement cost with vacant possession.

“This is an opportunity to purchase 4,874sq m of Industrial 2 land, with excellent access to a network of major roads including the Princes Highway,” Mr Young said.

“Situated on the land is a purpose built food processing facility, originally constructed circa 1990, with subsequent building additions.

“Floor construction is reinforced concrete, brick external walls and metal deck roof, and features include food processing areas with drainage, chiller rooms and blast freezers, packing room, dry goods storage, loading dock, and office with lunchroom and amenities.”

Mr Lumsden said the well positioned property had easy access to Melbourne CBD, Melbourne’s western industrial estates and both Tullamarine Airport and Avalon Airport.

“Businesses in the immediate area include Metalcorp Recycling, Benders Busway, A & S Katos Fish Processors and Australia Post,” he said.

"The City of Greater Geelong has grown strongly in population over the last five to 10 years on the back of employment growth in service industries, as well as increased demand in coastal resort areas.”

The property is for sale by Expressions of Interest closing on May 17 at 3pm.

Banks must pass on rate cut for impact to be felt

Tue, 07 May 2013 15:03:00 +1000

Today’s 25 basis point reduction in the cash rate by the Reserve Bank of Australia (RBA) has the potential to benefit the property market but only if the banks passed it on, according to Colliers International.

“It doesn’t seem likely that the banks will pass on the reduction,” said Mark Courtney, Colliers International Research Director.

“If they did though it would be great news for the property industry. Another 25 basis points off the mortgage variable rate and that becomes interesting.

“We’re at the point now where housing finance figures are well up from the lows of 2010, but they are still below the five-year average.

“What we really need is sustained capital growth in the residential market, and another 25 basis point cash rate reduction is a good step in the right direction.

“It would instil confidence in the market overall – people love to see their assets start to increase in value.”

Mr Courtney said if the banks failed to pass on the rate cut, it would still prove to be a stimulus for the overall economy, which would feed back into property markets.

“One of the biggest things this reduction could impact upon is the high Australian dollar – it could limit any further potential upward pressure on the dollar,” he said.

“That could only be a good thing, as the high Aussie dollar is the culprit of the malaise within a number of economic sectors. Further reductions in interest rates would place some downward pressure on the dollar which could serve to improve confidence overall.”

Mr Courtney said there were several reasons why the RBA had decided to cut the cash rate this month.

Firstly there was a key comment made at the RBA Board meeting last month: “with inflation likely to be consistent with the target, and with growth likely to be a little below trend over the coming year, an accommodative stance of monetary policy is appropriate. The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand.

“In the last few weeks the likelihood of today’s move firmed up even further with evidence provided by GDP, CPI and labour force data releases,” said Mr Courtney.

“The latest inflation data from the Australian Bureau of Statistics (ABS) shows that annual headline inflation rose 0.4 per cent in the March quarter 2013, compared with a rise of 0.2 per cent in the December quarter 2012.

“The CPI rose 2.5 per cent through the year to the March quarter 2013, compared with a rise of 2.2 per cent through the year to the December quarter 2012.

“The results show that the inflation rate continues to sit easily within the RBA’s target range of two to three per cent.”

Mr Courtney said in seasonally adjusted terms, GDP increased 0.6 per cent during Q4 2012, slightly down from 0.7 per cent in the previous period. On an annual basis Australian economic growth remained firm, increasing 3.1 per cent.

“However, Federal Treasury has reduced its assumed growth rate from three per cent to 2.75 per cent for 2012-13 and into 2013-14,” he said.

“The latest ABS Labour Force data showed that the labour market weakened slightly with an unemployment rate increase of 0.2 per cent to 5.6 per cent on a seasonally adjusted basis.

The monthly data Australia’s participation rate fell 0.2 per cent to 65.1 per cent during March.

“ANZ job ads figures for April fell a seasonally adjusted 1.3 per cent in April which followed a 0.5 per cent decline in March. Job ads of 136,470 were down 18.2 per cent on April last year, but still up for the first four months of this year.”

Mr Courtney said housing finance approvals still remain delicately positioned and eased by 0.5 per cent in February to be 44,931, which is still a way off from the five year average of 46,806 finance approvals but considerably higher from the recent low of 41,511 recorded in June 2011.

Investment and development activity responds to record occupancy rates in Hotel sector

Mon, 06 May 2013 17:25:00 +1000

Strong returns attract Asia based investors.

Asia based investors will continue to dominate hotel acquisition activity in 2013, attracted by consistently strong and stable total returns relative to other regions in Asia Pacific, according to Colliers International’s new Hotels Research & Forecast Report. The report, released today, also indicates strong transactional activity is anticipated during 2013 with a number of landmark hotels and portfolios expected to change hands.

Stephen Burt, Colliers International’s Managing Director – Hotels, Asia Pacific, said “Asia based investors will again be the primary purchasers of Australian hotels in 2013 but it is expected private capital will dominate whereas 2012 was characterised by institutional capital with Malaysia based YTL and Singapore based Ascendas the dominant players.

“Local buyers are focussed on the smaller end of the market in 2013, particularly as more hotels in regional locations are brought to the market,” Mr Burt said. “Local private buyers are actively seeking higher returns or the opportunity to value add”.

Total hotel sale activity for 2012 was in excess of $1.25billion, excluding the successful float of the Ascendas Hospitality Trust. This represented an increase of 30 per cent on the total value for 2011.

In regard to transaction activity during 2012, which was the strongest since 2007, Asia based capital accounted for more than 70 per cent of all sales, with investors from Malaysia, Hong Kong and Singapore the most prevalent. Vendors of hotels across 2012 were predominantly Australian institutions.

The largest single hotel property sale during 2012 was the purchase of the Shangri-La Hotel in Sydney for $330million by Hong Kong based Shangri-La from the Government of Singapore Investment Corporation. The largest portfolio sale during 2012 was Malaysia based YTL’s purchase of three Marriott hotels for approximately $415million from Colonial First State Global Asset Management. The largest hotel transaction of 2012 involved Mirvac’s sell down of its hotel business with Accor buying Mirvac Hotels & Resorts and a group of investors led by the Singapore based Ascendas Pte Ltd acquiring all of the securities in the Mirvac Wholesale Hotel Fund.

The largest transaction to occur so far in 2013 was the sale of the Holiday Inn on Flinders in Melbourne, which traded for close to $50million. The 4.5-star hotel was purchased by New Zealand based Priscilla David Ltd and sold by Singapore-listed Lasseters International Holdings. It was listed for sale last year together with the Cypress Lakes Resort at the Hunter Valley in New South Wales.

“We have seen increased interest in north Queensland tourism assets in-line with the anticipated recovery of this sector,” Mr Burt said. “Currently on the market is the 296-room Daydream Island Resort in the Whitsundays. Last year Lindeman Island on the Barrier Reef traded for approximately $12million and more recently, a Sydney-based Chinese investor purchased the Marina Mirage at Port Douglas.”

Mr Burt also commented that there are likely to be more ownership changes of Australian hotel management companies. “Toga is in the final stages of their arrangement with Far East Group and we are also aware of a number of Asian companies looking to secure a position in the Australian market.”

On the broader tourism market, it was noted international visitor arrivals were up 4.6 per cent in 2012, with more than 6.1 million visitors to Australia during the year. Visitor numbers from China, Malaysia, Singapore and Hong Kong in particular grew strongly. Domestic travel by Australians also accelerated in 2012, particularly to Western Australia and Queensland.

“High occupancy rates have driven the announcement of a number of major hotel developments and as a result, we anticipate an increase in supply levels over the medium-term,” said Mr Burt.

“This new supply is expected to both absorb excess demand and meet new accommodation requirements, and is not likely to significantly affect occupancy rates or diminish market growth rates. New hotels are a key component of major waterfront developments in Perth and Sydney in particular.”

Click here for the full report.

For further information please contact:

Megan McKay

National Manager | PR & Communications

Tel: +61 2 9257 0210

Email: megan.mckay@colliers.com

Development spending still strong in Southport

Mon, 06 May 2013 09:02:00 +1000

Development spending in the Southport area on the central Gold Coast is down overall this year, but infrastructure spending remains strong, according to the latest research from Colliers International.

Total spending for development projects either planned or underway is currently $6.855 billion, down from last year’s figure of $7.64 billion, but infrastructure spending sits at $4.3 billion, around the same level as last year.

Infrastructure spending in the Southport area, which comprises not only the suburb of Southport, but also Arundel, Ashmore, Labrador, Molendinar and Parkwood, is so high mainly because it is home to two of the Gold Coast’s biggest infrastructure projects – the $1.8 billion Gold Coast Light Rail project and the $1.76 billion Gold Coast University Hospital.

But there are plenty of other infrastructure projects in the pipeline, with the number of projects increasing by two this year to hit 13.

Four new infrastructure projects have been added, including the $35 million Griffith University Business School, the $20 million Queen Park Tennis Centre upgrade, the $10 million Smith Street upgrade and the Molendinar to Gaven power network upgrade, for which a dollar value has not yet been disclosed.

Other major infrastructure projects in the area, which have been underway for some time, include the $201 million upgrade of Olsen Avenue and the $150 million Griffith University Health Centre.

Lynda Campbell, Colliers International Gold Coast Research Manager, said infrastructure projects within the Southport area were concentrated within the suburb of Southport itself, and indeed, the majority of development projects overall were situated in the suburb of Southport.

“Nearly $5.96 billion – or around 87 per cent – of the total development spending for projects underway or planned in the Southport area are situated within the suburb of Southport,” she said.

“Much of this consists of infrastructure projects, with 11 of the 13 infrastructure projects – worth a total of $4.296 billion, or more than 99 per cent of the total infrastructure spend - within the suburb of Southport.”

Labrador is second to Southport in terms of the overall development spend in the Southport area, with $595 million in the pipeline. Arundel is third with $235 million, followed by Ashmore at $54 million, Molendinar with $8 million in the pipeline and Parkwood, which has $5 million in the pipeline.

Stewart Gilchrist, Colliers International Gold Coast Director in Charge, said while the Southport area was clearly the Gold Coast’s infrastructure hotspot, there were other factors contributing to the big spend in the area.

He said a significant amount of spending in the Southport area was related to the upcoming Commonwealth Games, to be held on the Gold Coast in 2018.

“There is currently around $770 million in projects in the pipeline that are related to the Commonwealth Games, and the likelihood is that this figure will increase in the years leading up to the event,” he said.

“The biggest of these projects is the $700 million Commonwealth Games Athletes Village, which is a mixed-use project that is in the planning stages.

“Other projects include the $41 million Gold Coast Aquatic Centre upgrade, the $20 million Queens Park Tennis Centre upgrade and the $8 million Labrador Sports Club upgrade, all of which will be used for sporting events at the Games upon completion.”

Mr Gilchrist said while the Commonwealth Games would provide a boost to the Southport area, another major asset for the location would be the light rail.

“The Stage Two plans for the project will see it run to the Gold Coast Airport in time for the Commonwealth Games in 2018,” he said.

“This would be a major advantage for the area, particularly given that major events such as swimming will be taking place in Southport, and the Athletes Village will be located in Southport too.”

Ms Campbell said the overall drop of 10 per cent in development spending in the Southport area this year from $7.64 billion to $6.855 billion could be attributed to projects being completed, as well as some being downsized – the largest of which was the Brighton on Brightwater apartment project.

“The spending on this project was $1 billion at its peak, but since much of it is complete and there is only one more tower to be built, it has been scaled back to $200 million,” she said.

“While the overall development spend has dropped, there were 13 new projects added to the development pipeline in Southport, however they were all smaller scale projects, with the biggest worth $50 million.”

After infrastructure, the sector to have the second greatest development spend in the Southport area is apartments, with $1.331 billion in the pipeline. This is followed by the mixed-use sector, which has $913 million in the pipeline; the residential sector, which has $152 million worth of development projects in the pipeline; the commercial sector, which has $117 million worth of projects in the pipeline; and the retirement sector, which has just $38 million of projects in the pipeline.

The Southport area has the second highest level of development projects actually under construction on the Gold Coast – 60 per cent of the development spend is being built, which is second only to the Robina area, which has 64 per cent underway.

Key Toowoomba retail asset with redevelopment potential for sale

Fri, 03 May 2013 14:35:00 +1000

Institutional investors are expected to be amongst buyers vying for Wilsonton Shopping Centre – one of Toowoomba’s biggest shopping centres - when it hits the market later this week, with offers expected to be in excess of $60 million.

Wilsonton Shopping Centre, situated in the western Toowoomba growth corridor, in the suburb of Wilsonton, will be taken to the market via an expressions of interest campaign run by Stewart Gilchrist and Lachlan MacGillivray of Colliers International and Jacob Swan and Sam Hatcher of Jones Lang LaSalle closing Thursday, May 30.

The 4.43ha site was acquired by private interests in 2009 from Multiplex, following its acquisition of the centre from Clive Berghofer in 2007.

The shopping centre, which currently has 16,004sq m of lettable area over several buildings, has both Coles and Woolworths as anchor tenants, with both supermarket retailers on 20-year leases expiring in 2032 and 2031 respectively.

It also has a medical centre and allied health offerings, as well as 63 specialty stores, with tenants including Subway, Hungry Jack’s, KFC, NAB, Australia Post, BWS, Heritage, Woolworths Petrol and RT Edwards. The property has 874 carparks and five ATMs.

The property, which underwent a refurbishment in 2012, is situated on Bridge Street – otherwise known as the Warrego Highway – and is easily accessible to residents from surrounding regions. The Warrego Highway is the major east-west carriageway into the Toowoomba region, connecting it with major towns in southwestern Queeensland, including Dalby, Chincilla, Roma and Charleville.

Mr Swan said the shopping centre itself also had all the attributes sought after by major investors – in particular having a secure holding income with potential for future expansion.

“The centre has the potential for further expansion, with the ability to include a DDS and link the two supermarkets with an internal retail mall, however this would be subject to approvals.”

Mr Gilchrist said institutional investors were increasingly looking at investing in Toowoomba, and as such, it was likely they would be interested in purchasing the Wilsonton Shopping Centre.

“Major institutions are significant investors in the region, particularly in the retail market – Colonial owns Clifford Gardens Shopping Centre, ISPT owns K-Mart Plaza and QIC has recently announced a significant expansion of Toowoomba’s Grand Central shopping centre,” he said.

“Despite some challenges in the retail sector in recent years, retail assets remain appealing from an investment perspective.

“In particular, high-quality, dominant shopping centres are still performing well despite the slowdown in retail turnover growth. They continue to be viewed as a defensive investment class, especially neighbourhood centres anchored by supermarkets, as food retailing, reliant on non-discretionary spending, is where the growth has been in the retail sector.”

While retail assets are appealing to investors in the current market, Mr Gilchrist added that the location of Wilsonton Shopping Centre would also be an attraction for potential buyers, as well as the specific attributes of the shopping centre itself.

“The major institutions investing in Toowoomba are being driven by strong economic fundamentals,” he said.

“The Toowoomba region has experienced significant market activity and improvement due to the proximity to the Surat Basin, where there is in excess of $180 billion in gas, coal and energy projects, which results in a massive supply chain to the Darling Downs.

“With plenty of employment opportunities in the area, people are increasingly moving to Tooowoomba – it is one of the largest regional cities in Queensland, and its population is projected to increase by 3000 to 4000 residents in the foreseeable future.

“Wilsonton Shopping Centre is situated on the western side of Toowoomba, which benefits from population growth driven by residential development in the area, as well as the extensive mining related industry commitment to the Charlton Welcamp Industrial Park.”

The Wilsonton Shopping Centre has three-street frontage to Bridge Street, Richmond Street and Erin Street adjoins the Wilsonton Hotel and a proposed Dan Murphy’s.

Land is back in Melbourne West industrial market

Fri, 03 May 2013 11:03:00 +1000

Land is back in demand in Melbourne’s industrial market, with a sales surge in the first quarter of 2013 – including the first englobo sale in four years – setting the scene for a big year in this key sector.

Colliers International agents have experienced a fast start to the year in land sales as owner-occupiers and developers re-assert their presence in the market by snapping up well-located sites.

A four-year drought in major englobo land sales in Melbourne's western industrial market was broken recently with the sale of 297-303 Palmers Road, Truganina by Colliers International and Corser Property at auction. The 30.76ha site, zoned for future development as Industrial 3 land, was marketed as a Mortgagee Sale.

According to Colliers International selling agents Nathan Bingham and Nick Saunders, the response from the campaign was proof that appetite for correctly priced industrial development land was back.

“More than 60 enquiries were received during the campaign, with over 80 people attending the auction which was held onsite,” Mr Bingham said.

“The buyer demographic ranged from some of the largest developers in the country, to major owner-occupiers and private speculators.”

44 bids were secured on the day, with the property finally being knocked down to a private investor for $7.74 million.

The site is located in the heart of the major distribution centre development precinct of Truganina, and adjoins parcels of land held by Investa, Peet Limited and Berton Investments.

In Ravenhall, 11 lots have been sold at one industrial estate in Q1 alone. Cameron Hunter, Colliers International Executive – Industrial sold five of the 11 parcels of land, as well as another two in Derrimut.

“Land is back with a vengeance in the western suburbs. It has been a very positive start to 2013 with many owner-occupiers and developers re-entering the market,” Mr Hunter said.

“There have been some excellent results across the board, which is a very encouraging sign that times are changing in the industrial sector.”

Mr Hunter sold five parcels of land in Ravenhall to owner-occupiers and developers, with ongoing interest in other lots in the area. The lots sold ranged from 1,040sq m to 5,033sq m, with sale prices ranging from $130/sq m to $240sq m.

“Land sales have been slow in the past few years, however the results we have seen so far this year prove that land is on the move again, which is great news for the market in Melbourne’s West,” Mr Hunter said.

“This will mean more options for businesses in the next 6-12 months in a market that is currently thin on A-grade stock.”

Colliers International continues to grow national retail team

Fri, 03 May 2013 10:54:00 +1000

Colliers International has made a new senior appointment in New South Wales as it continues to grow its national retail team.

“We are pleased to announce that James Wilson has joined our national Retail Investment Services team in the role of Director – NSW,” Lachlan MacGillivray, Colliers International National Director of Retail Investment Services, said.

Mr MacGillivray said Mr Wilson would further strengthen Colliers International’s retail presence not only in New South Wales, but nationally.

“James has a strong background in retail investments, most recently having worked with Tipalea Partners and Knight Frank,” he said.

“James will be focusing on the NSW sub-$40million market and building relationships with key private and institutional investors.

“The Colliers International Retail Investment Services team has had a strong start to the year, with $700million currently sold, on the market or in due diligence, and we look forward to building on this early success with James coming on board.”

Gold Coast service station snapped up by investor

Fri, 03 May 2013 10:46:00 +1000

A service station situated on a prominent corner site on the Gold Coast has changed hands following a campaign that generated huge buyer enquiry.

The property at 75 TE Peters Drive in Broadbeach Waters was bought by Indian-based private investors for $1.09 million in a deal negotiated by Alan Robertson and James Crawford of Colliers International, acting under instructions from Receivers and Managers Ken Whittingham and David Webb of BDO.

In addition to the service station, the 1783sq m site is also occupied by a convenience store and mechanics garage, which all fit under the roof of one single-level freestanding commercial building.

Neumann Petroleum, trading as Matilda Fuels, has a five-year lease for the service station and convenience store, while a mechanic operator has signed a three-year lease for the mechanics garage. Both leases started around the beginning of this year and the total income for the property is in excess of $115,000 per year.

Mr Robertson said the expressions of interest campaign for the property at TE Peters Drive generated strong interest from potential buyers, with 80 enquiries being fielded and 11 offers to purchase being received.

“There is strong investor demand for properties priced between $1 million and $2 million in the marketplace at the moment, and there were several investors vying for ownership of this property,” he said.

Mr Robertson said one of the biggest drawcards of the property was the quality of the tenants in place.

“Neumann Petroleum is Queensland’s largest independent fuel supplier, and that is a pretty good covenant for any investor to have,” he said.

“The strength of the covenant has also been strengthened by the fact that Neumann Petroleum has recently been sold to Swiss-based Puma Energy, which has a network of more than 1500 service stations around the world and is owned by Trafigura, a global company.”

Mr Robertson added: ““Investors particularly like service stations, as they usually provide long-term income security. In this case the tenants of this property have just signed brand new leases, so the buyer has that safeguard of guaranteed income for the next five and three years respectively.”

Mr Crawford added that the TE Peters Drive property was in a great location, which was another big attraction for any buyer.

“It is situated directly behind the Gold Coast Convention Centre and Jupiters Hotel and Casino, within close proximity of the heart of Broadbeach and shopping centres such as Pacific Fair and the Broadbeach Mall,” he said.

“Positioned on a corner site, it has excellent exposure, and with a service station having operated from the property for many years, its location is well known in the area.

“Furthermore, it is one of the few service stations in the neighbourhood servicing Broadbeach Waters and Clear Island Waters to an extent, which means it has a strong residential catchment, and that further strengthens the appeal of the property.”

Mr Robertson said properties of this calibre were tightly held on the Gold Coast, so opportunities to buy this type of property rarely came up.

“It is difficult to find investments of this quality and particularly at this price point,” he said.

“The property at 75 TE Peters Drive sold for a price that is within reach of a large number of buyers, and it was that affordability that was one of the big selling points.”

Japanese retailer to open Melbourne flagship

Thu, 02 May 2013 10:00:00 +1000

Japanese retailer Daiso is the latest in a wave of international retailers flocking to Australian shores, with the doors of its largest Australian store set to open in the Melbourne CBD later this year.

Ben Tremellen, Colliers International Manager of Retail Leasing, and leasing agent Michael Di Carlo, of Savills, together with Tim Boyce, Daiso Property Executive and former Coles Group Head of Property, have facilitated a new lease under which Daiso will occupy 1800sq m at Level 1, 2 Elizabeth Street on a 10-year lease, with the doors due to open in late August.

Mr Tremellen said while Daiso had several existing franchise outlets in Australia, this store, at the corner of Elizabeth and Flinders Streets, would become one of the first company-owned and operated stores to be opened in Australia. Daiso opened its first company-owned store at the Myer Centre in Brisbane on April 23 to strong customer traffic.

“Traditionally, retailers have had a strong preference for ground floor shop fronts, but as vacancy across the Melbourne CBD remains tight I believe we will see an increase in what we call vertical retailing, particularly with big box international retailers,” Mr Tremellen said.

“At Colliers International, we are working with numerous landlords to activate multiple levels for retail use. This new Daiso store will be one of the largest Level 1 retail offerings in the Melbourne CBD when it opens later this year.

Daiso’s Australian CEO, Kit Cheong – a former senior executive at the Coles Group and Pacific Brands – said the Daiso concept of providing everyday life solutions for one price of $2.80 was perfectly suited to the Australian retail market.

“With up to another dozen stores to open this calendar year along the east coast, the business is already well positioned to capitalise on some excellent locational opportunities that have emerged,” Ms Cheong said.

Large Molendinar industrial property to go under the hammer

Tue, 30 Apr 2013 08:51:00 +1000

A large industrial property with redevelopment potential in the heart of Molendinar is expected to generate competition amongst buyers when it goes under the hammer next month.

The 3.36ha site at 27 Industrial Avenue will be auctioned at 11am on May 16 onsite, following a marketing campaign being handled by Pat Cavanagh of Colliers International and David Corke of CBRE.

Mr Cavanagh said the property first went on the market at the end of last year and the owner, Value Added P/L, had now decided to take it to auction in an effort to cut ties with the site once and for all.

“The facility is occupied by Southport Timbers, which has been servicing the building and hardware industry for the past 10 years, but with this business consolidating its operations and moving elsewhere the property will be offered as vacant possession,” he said.

“The owner is motivated to move the property and would welcome offers prior to or even on the auction day.”

Mr Cavanagh said the property offered a rare and prime opportunity.

“It is one of the largest sites to come up for sale in Molendinar within the past five years,” he said.

“This rare feature alone is enough to generate interest from potential buyers because it provides an enormous range of opportunities.

“We believe there is a market for a property of this size and type in Molendinar, particularly given that the owner’s motivation, and it is expected there will be good interest from a wide range of buyers, including large multinational corporations and developers, at the auction.

“Larger-scale operators are increasingly coming to the Gold Coast, and that means there are larger industrial users out there looking for these bigger sites, but they don’t come up very often, so when they do there is usually quite a bit of competition for them.”

The Molendinar property currently houses around six buildings including a caretaker’s residence, timber milling workshops, storage sheds and a small hardware outlet.

It is a flat and level site ready for the development and construction of a new industrial facility, or multiple facilities, with the site potentially allowing for buildings of up to 17,000sq m, subject to council approval.

Mr Corke said the property had excellent exposure to Olsen Avenue, and this was just another tick in the box for developers looking at the property.

“There are plenty of opportunities for redevelopment on the site,” he said. “Developers might consider an industrial park, or it could even be a major industrial headquarters for an owner-occupier.

“The property is in a perfect spot for a development – Molendinar is the hub of industrial activity on the Gold Coast and is an easily accessible area, which is a key requirement for industrial business, particularly those involved in distribution.”

Mr Corke said that in addition to great exposure, the property has the potential for dual-street access from the east and west, with the potential for entrances to be incorporated into any new development from both Industrial Avenue and Enterprise Street, the latter of which runs along the back of the property.

Both Mr Cavanagh and Mr Corke noted there had been more interest over the past 12 months in the Gold Coast industrial market for large-scale land holdings, from both owner-occupiers and industrial developers.

“There has been an acceptance of where the market price has come to, and buyers are seeing better value for money now in the land.

“Developers and owner-occupiers are finding they are able to make a development project work because it is now financially feasible.”

Demand for larger properties is strong due to a lack of new industrial product constructed in the past five years, Mr Cavanagh added.

Investors look to the Sydney metro office market

Mon, 29 Apr 2013 14:48:00 +1000

Investors have finally started to notice the strength of Sydney’s metropolitan office market, especially those from offshore and interstate, according to the latest research from Colliers International.

The Colliers International Sydney Metro Office Research and Forecast Report found around $1.22 billion – including indirect and portfolio sales – worth of Sydney metro office assets change hands during 2012, the highest volume since 2007.

Jon Chomley, Colliers International National Director of Capital Markets, said over the past year the fundamentals of Sydney metropolitan office market had been strong, with tight vacancy rates, decreasing incentive levels, strong rental growth for the better quality assets and low levels of vacant new supply.

“The strength of Sydney’s metropolitan office market has been slow to attract attention, but this has turned around over the past 12 months,” he said.

“The performance of the markets has seen investment activity ramp up, with owners selling non-core assets and investors looking to acquire assets that fit their investment strategies.

“It has also seen a rise in interest and enquiry from offshore buyers as new, high-yielding A-grade assets hit the markets which are difficult to source, on or off market, within the CBD.”

Mr Chomley said the biggest sale that had taken place over the past year was Eclipse Tower at 60 Station Street in Paramatta – it sold for $167.5 million in November last year.

“This brand new A-grade building was purchased by Retail Employees Superannuation Trust (REST) and reflected a light equivalent reversionary yield of 7.4 per cent,” he said.

“While this sale took place in 2012, strong investment activity levels have carried over into 2013, with more than $140 million worth of property in the metro office markets transacting in the first quarter.

“This included the sale of the FKP refurbishment at 465 Victoria Avenue in Chatswood to Hines for $92m and the sale of a 50 per cent share in Space 207 in St Leonard.

‘Both of these properties were A-grade office buildings with strong tenant profiles and good lease WALEs (weighted average lease terms).

“The benefit of the suburban markets is the lack of new development which is adding to the low vacancy levels and pushing rentals higher.”

Rob Gishen, Colliers International National Director of Office Leasing, said rental growth was one of the biggest factors attracting investors to the Sydney metro office markets.

“Ongoing tight vacancy rates, the delivery of high quality developments and positive absorption levels has seen metro rents continue to grow, in some cases strongly,” he said.

“For instance, North Sydney has been one of the strongest performing metro markets – effective A-grade rents rose by as much as 14 per cent during 2011 and although growth slowed to four per cent over the past 12 months, it has still been a strong performer for landlords.

“Overall, effective rents have increased by as much as 10 per cent in some markets over the past 12 months as face rental growth continues and incentives remain tight.”

Mr Gishen said in contrast, Sydney’s CBD has experienced a decline in effective rents and higher levels of large vacant space over the same period.

“This has seen metropolitan tenants, particularly from North Sydney and Milsons Point, begin to look at, and move to, comparatively priced accommodation within the CBD,” he said.

“That said, cost conscious tenants and consolidation by businesses has also seen CBD tenants look to reduce their accommodation bill and move out to the CBD fringe and other metropolitan markets.”

Mr Gishen said tenant demand in the Sydney metro office market remains at below average levels, but the diversity amongst the tenants had been a driver of leasing activity.

“Employment growth in the healthcare, medical, pharmaceutical and education industries has helped to offset the softening in tenant demand from the manufacturing and business services sectors,” he said.

“Finance and insurance tenants have also increased their presence in metro markets to reduce costs by moving ‘back of house’ staff and operations.”

Mr Gishen said the only constraint in the leasing market was the lack of large, high-quality space, and this structural challenge has forced tenants to consider other locations.

“A classic example of this is a property that Colliers International are appointed to sell in Mascot, directly opposite the domestic airport where 21,000sq m of high quality refurbished space will come on stream in 2014,” he said.

“Several major tenants that are scouring the market to consolidate their various sites under one roof are seriously considering this opportunity given the lack of options in the suburbs and the 100 per cent certainty of delivery, making it a risk free option.”

Mr Gishen said that the fundamentals of the Sydney metropolitan office market were expected to remain solid over the medium term, but the true strength of each market would be tested over the next 24 months.

Land sales provide evidence of market recovery

Mon, 29 Apr 2013 10:01:00 +1000

Strong enquiry and sales for residential land in Brisbane, particularly on the city’s southside, is evidence of the recovery in this sector of the property market, according to Colliers International.

In just the first quarter of 2013, the company sold almost $20 million of residential land across the four southside projects it is marketing – Parkvue at Oxley, Pioneer Valley at Kuraby, The Parks at Stretton and Teviot Downs at Greenbank.

Mr Scriven said the strong sales in the residential land market so far this year had come off the back of strong enquiry from purchasers at the end of last year.

“That strong level of enquiry has continued into this year, particularly from local buyers looking to upgrade in established suburbs,” he said.

“These buyers are acting due to improved confidence – interest rates are low and the established market is recovering, and this is giving them confidence to sell their homes, which they can do for a good price now, and upgrade.

“They are bucking the trend of the post economic downturn environment and getting on with life.”

Parkvue at Oxley, being developed by Unison, has clocked up 17 sales totalling $5 million since the beginning of the year, when land in the project was first released.

The project, situated just 12 kilometres from the Brisbane CBD, has attracted mainly local upgraders, as well as some local first homebuyers, and the blocks have sold for an average of $290,000.

Pioneer Valley at Kuraby has racked up around $6 million in sales in the first quarter of this year, with 18 blocks of land being snapped up by local buyers.

The project, which is one of the last parcels of land left to be developed in Kuraby, around 16 kilometres from the Brisbane CBD, has seen blocks ranging in size from 480sq m to 700sq m change hands for prices ranging between $300,000 and $365,000.

Teviot Downs at Greenbank, around 28 km from the Brisbane CBD, has been selling acreage lots at the rate of one per week.

This project offers acreage property and as the southside’s closest acreage to the Brisbane CBD it is fulfilling a resurging demand for acreage lots near Brisbane. In this development, half acre or full acre blocks have been purchased for prices ranging between $245,000 and $280,000, with an average of one block per week selling in the first quarter of this year.

Acreage appears to be experiencing a resurgence in demand, and is attractive to buyers for several reasons, including that it provides space, more privacy and a quieter rural lifestyle. (See points below for more reasons)

The Parks at Stretton, around 18 kilometres south of the Brisbane CBD, has seen $3.5 million worth of sales take place this year, with seven blocks of land changing hands for prices ranging between $365,000 and $450,000.

Mr Scriven said that while only seven blocks of land have sold so far this year in this development, the sales for the first quarter are already well ahead of what sold in 2012, so the project is off to a very good start in 2013.

“This is also considered to be the southside’s premier aspirational estate, and with more traditional sized blocks and higher buy-in prices, it is only logical that there have been fewer sales in this development so far this year compared to other projects,” he said.

“The sales that have taken place so far over the first quarter have been very promising, and provide strong evidence that the residential market is well and truly on the way back up.”

Mr Scriven said these southside projects were attracting buyers largely because they are in sought after locations, where available land was scarce.

“These projects are in areas where people want to live and that are rich in amenity, and as such affordability is not a factor for these developments,” he said.

“Well located projects will always get a better sales rate than those that are not well located.”

Mr Scriven added that now was a good time to buy and build as many builders were providing incentives to attract business, such as throwing in air conditioning or upgrading inclusion packages.

“This means buyers are getting more bang for their buck,” he said. “What they are buying represents good value in most cases.”

Mr Scriven said this year marked the start of the residential property market recovery in Brisbane, and more broadly Australia, and the market would only continue to improve over the coming years.

“On the basis of enquiry and sales trends, we can certainly see that we are entering the recovery phase of the property cycle,” he said.

“We have clearly hit the bottom of the market and started on the upswing.

“I don’t see much price growth in 2013, but given the supply constraints 2014 could be the start of price growth in the residential market. We are already seeing sales volumes improve this year and that will likely be followed by price growth later this year or early next year.”

Top reasons for buying acreage

• Space – it provides space for people to create a larger home, as well as having those extras such as sheds and toys (boats/bikes/cars)
• Lifestyle – it provides a rural quiet lifestyle and clean living
• Privacy – living on acreage means you are not living on top of your neighbours like you might on the average town block
• Room – it provides room for outdoor living for the whole family
• Trees – there are plenty of trees around, and while this doesn’t appeal to everyone, most people like the fact that there are plenty of trees either on their lot or close by

Gold Coast office market continues to improve

Fri, 26 Apr 2013 11:43:00 +1000

The Broadbeach office market continues to have the lowest vacancy rate of the five office precincts across the Gold Coast, but other precincts have been recording significant improvements, according to new research from Colliers International.

Bundall has recorded the strongest performance over the latter six months of 2012, with a decrease in the vacancy factor of five per cent.

“This fall is encouraging,” said Lynda Campbell, Colliers International Research Manager. “Bundall recorded a 10-year high of 32.1 per cent in mid-2012, which has now fallen to 27.1 per cent.

“Gold Coast City Council purchased the Waterside East and West towers in June last year, and as a result of this, these buildings are now reported as fully occupied, which has removed around 5000sq m from the market.

“While this fall in Bundall’s vacancy is encouraging, the vacancy rate in Bundall remains one of the highest of all the office precincts on the Gold Coast.”

The Southport office market has also seen an improvement - its vacancy factor is sitting at its lowest level in four years and the precinct has the second lowest office vacancy rate of all the Gold Coast precincts.

“Southport is the largest office precinct on the Gold Coast, with 149,240sq m of space, and it has a current vacancy rate of 16 per cent,” said Ms Campbell.

“Southport Central office building had a take up of around 2600sq m during the six month period to January, and continues to hold the second largest area of vacant office space in Southport, with the Seabank building having the largest vacancy with 4170sq m.”

The Broadbeach office precinct continues to record the lowest vacancy rate of the five Gold Coast precincts, currently sitting at 14.2 per cent. However, while this remains lower than other precincts, the vacancy rate in Broadbeach did record an increase for the first time in two years from 11.1 per cent in mid-2012 to 14.2 per cent in January 2013.

Surfers Paradise has the highest vacancy rate of all the Gold Coast office precincts at 28.4 per cent, recording a negligible decrease of 0.1 per cent over the past six months, but Ed Howard, Colliers International Gold Coast Office Leasing Manager, said things could soon turn around for the precinct.

“The largest vacancy in Surfers Paradise is currently in the 50 Cavill Avenue building, which has 10,716sq m of vacant space, which is more than half the total vacant space across the whole precinct,” he said.

“However, the building is undergoing a refurbishment which should see tenants return and would lead to an improvement in the vacancy factor for Surfers Paradise.”

Meanwhile, the vacancy rate in the Robina and Varsity Lakes precinct continues to steadily fall – it now sits at 18.2 per cent after falling from its high of 28.7 per cent in January 2010. Robina has the lower vacancy rate of 11.3 per cent, while Varsity Lakes is recording a vacancy factor of 26.8 per cent.

The largest take-up of office space in the precinct occurred at the Titans Centre of Excellence (1250sq m) and Robina Quays Corporate Park (1218sq m).

Mr Howard said vacancy figures across the Gold Coast office market were encouraging, and evidence that conditions were continuing to improve.

“The Gold Coast office vacancy rate has been slowly improving over the past two years,” he said. “In January 2011 it was sitting at a 10-year high of 24.1 per cent, but latest figures from the Property Council of Australia have the vacancy rate now recording 20.3 per cent across the five main office precincts.

“The office market should continue to improve going into 2013, with limited new space coming onto the market.”

Mr Howard said tenants were currently taking advantage of reduced rental space for brand new office space on the Gold Coast, and it was this type of space that was currently the most sought after in the region.

“Businesses can often receive a better leasing deal to relocate rather than stay in their used older-style accommodation,” he said.

“Better parking, improved services such as lighting and air conditioning, and an enhanced corporate image are the main motivators for tenants to relocate, and this, coupled with considerable reductions in rental rates, can make moving a very worthwhile exercise.”

With great demand for brand new office space on the Gold Coast, Mr Howard said the availability of this type of space was rapidly diminishing.

“Only 15,000sq m of new office space is remaining available to occupy across the city, which is half the amount available 12 months ago,” he said.

“New supply is now particularly limited for contiguous areas above 500sq m, and tenants with larger space requirements will increasingly be looking to backfill A and B-grade buildings.”

Southport currently has the biggest supply of new office space, with 5300sq m available. This is followed by Varsity Lakes with 3361sq m, Bundall with 2760sq m, Broadbeach with 1873sq m and Robina with 1710sq m.

The Colliers International office research found B-grade office space recorded the strong improvement in vacancy over the second half of 2012, decreasing from 20.7 per cent to 15.3 per cent in January 2013.

“This is the lowest vacancy factor of the four office grades,” said Ms Campbell. “C-grade space remained static at 18.8 per cent, while A-grade increased by 2.1 per cent to 27.7 per cent.

“D-grade was the weakest performing office grade over the past six months, recording an increase of 7.6 per cent to reach 28.3 per cent.”

Gold Coast office market continues to improve

Fri, 26 Apr 2013 11:34:00 +1000

Ballarat hardware store hits the market

Wed, 24 Apr 2013 13:39:00 +1000

Another independent hardware store is closing its doors as a large site in Ballarat, home to long standing family-run hardware store Dahlsen’s, goes up for sale through Colliers International.

Colliers International’s Charles Kennedy, Andrew Lewis and Tom Noonan have been appointed to sell 55-63 Albert Street in the Ballarat suburb of Sebastopol on behalf of the Dahlsen family.

The huge 15,400sq m site incorporates 5,365sq m of building space, 8,240sq m of hardstand and a sealed car park for 125. The property has good rear access and a wide frontage of 85m.

Mr Kennedy said the property was in a key location in a major Ballarat retail precinct, within a strong growth corridor and a strengthening commercial activity zone.

“Along with the local Safeway store, this evolving retail strip is also home to big-name brands including Aldi, McDonalds, KFC, Ford, UFS and Plus Petrol.”

“The current business, Dahlsen’s Hardware, has been run by a local family for the past seven years,” he said. “This site was home to the oldest hardware chain in Ballarat, Coltmans Mitre Ten, dating back to the gold rush, which was then sold to Dahlsens.

“This family business is now making way for a new retail business opportunity, and given the location opposite a strong trading Woolworths outlet we expect keen interest from some major national retailers.”

“Dahlsens have chosen to get out of retail/DIY hardware in this area and concentrate on operating on a trade-only basis, as a result the company’s large site in Ballarat’s Sebastopol area is now being offered for sale,” Mr Kennedy said.

Mr Noonan said strong interest was expected from major retailers looking to position themselves close to other strong national retailers including Woolworths and Aldi, as well as a number of development groups.

“Retail offerings of this scale are not common in regional markets such as Ballarat, and the recent portfolio sale of Shepparton CBD retail properties which included 16,766sq m of additional zoned retail land to the Lascorp Development Group, showed the continued interest from Melbourne-based groups looking to capitalise on the significant growth prospect in Victoria regional areas,“ he said.

Mr Kennedy said Ballarat had been centre stage in a national hardware tussle which had played out over the past two years, which peaked with the launch of the Masters home hardware chain by Woolworths.

Recently, the ACCC called for review a proposed takeover of three local independent home hardware stores by Masters, who is currently completing a new store in Learmonth Road in Wendouree, citing concerns about the future market dominance of the two national retailers. It came on the back of the recent relocation of Bunnings from its original Wendouree premises, in a former BBC store, to a new, more centrally located 8,400sq m purpose built store in Creswick Road.

The property will be offered with vacant possession and will be sold by Expressions of Interest closing May 17 at 4pm.

Agents raise more than $17k for Oxfam in 100km walk

Tue, 23 Apr 2013 15:59:00 +1000

Eight Colliers International agents have raised more than $17,400 to help Oxfam fight poverty around the work by walking 100km with no sleep.

Colliers International agents Jeremy Gruzewski, Ben Baines, Hamish Burgess, Andrew Ryan, Rob Joyes, Ted Dwyer, Leigh Melbourne and Tony Landrigan formed two teams to participate in the Oxfam Trailwalker Challenge last weekend.

The challenge saw 750 teams walk 100km from Wheelers Hill through the Dandenong Ranges National Park to Wesburn from April 19-21. The Colliers International participants walked through the night, with no sleep, through seven check points to complete the trail in 28 hours.

Mr Gruzewski said each team had set a fundraising target of $5,000, which had been easily exceeded. At last count, the combined Colliers International fundraising total stood at more than $17,400.

“We’ve been blown away by people’s generosity – we’ve well exceeded our original fundraising goal and it’s a huge thrill to know that all the pain, exhaustion and blisters were worth it,” Mr Gruzewski said.

“Oxfam do great work across the world to fight poverty, and we’re so glad the physical challenge we embarked upon will contribute, even in small way, to this very worthy cause.

“Since November last year we have been enduring blisters, chafing, sore legs and buckets loads of sweat to train for this challenge, which was everything we expected and so much more.

“It was a grueling challenge, which tested us not only physically but mentally and emotionally as well. We were pushed to our limits, but every step was worth it to know that we have been able to help Oxfam in their ongoing fight against poverty.”

Oxfam Trailwalker began in 1981 as a military training exercise for the elite Queen's Gurkha Signals Regiment in Hong Kong. It has since grown into one of the world's leading team endurance challenges, with 15 events in 11 countries.

The event launched in Australia in 1999, with Melbourne joining in 2003 and steadily growing each year since. According to Oxfam, the 2013 Melbourne event comprised 3,024 walkers and, to date, has raised almost $2.3million.

To donate, visit: https://trailwalker.oxfam.org.au/team/home/14033 or https://trailwalker.oxfam.org.au/team/home/14034

For more information, go to: https://trailwalker.oxfam.org.au/

Private hospital in Sydney sold for circa $30m

Tue, 23 Apr 2013 10:31:00 +1000

The freehold interest in Sydney’s Westmead Rehabilitation Hospital has been sold for nearly $30 million in a deal negotiated by Colliers International’s Healthcare and Retirement Living team.

Shane Nicholson of Colliers International, who represented the vendor, St Andrew’s Healthcare Pty Ltd, in the transaction, said the sale was significant because private hospitals are such tightly held assets.

“They rarely come onto the market, and when they do, they are often sold in off-market transactions,” he said.

“There is high demand amongst buyers for these types of assets because Australia’s healthcare sector is such a solid and desirable sector for investors to be in. Asian REITs have also demonstrated an appetite for these assets.

Mr Nicholson said that while private hospitals were generally sought after, the Westmead Rehabilitation Hospital was considered to be a particularly good asset because it is one of New South Wales’ finest specialist rehabilitation hospitals”.

The hospital is a purpose-built, 60-bed private rehabilitation hospital located in western Sydney’s Merrylands, three kilometres south of Parramatta and within close proximity of the Westmead Public Hospital and Westmead Private Hospital.

The successful sale of the Westmead Rehabilitation Hospital further enhances Colliers International’s leading position in the healthcare and retirement sector. It is the third private hospital that Colliers International Healthcare & Retirement Living has sold in twelve months.

Mr Nicholson said part of the sale had involved unwinding the existing leasing arrangements which was negotiated over the past couple of months.

“A new lease arrangement between publicly listed companies Pulse Health and Generation REIT has now been signed”
The result for St Andrews Health Pty Ltd was a gross amount $29.86m, which represented a yield on current rent of approximately 8.75% ,combined across both rental streams”, he said.

“The transaction is expected to be completed at the end of May.”

Mr Nicholson said given the demand amongst buyers for private hospitals in Australia, the sale was a big win for both Generation REIT and Pulse Health.

New appointment in Queensland

Tue, 23 Apr 2013 09:57:00 +1000

Sean Pacey has recently joined Colliers International in Queensland as Manager | Hotels and Leisure in the Valuation team.

Sean has spent over 10 years in the valuation industry at CBRE and DTZ Australia, with five years specifically valuing hotels.

He brings a wealth of specialist knowledge in the value of hotels to the rapidly expanding Colliers International Queensland Valuation team, which will broaden its service offering and client base in the state.

Colliers International to host fourth annual Charity Lunch next month in Queensland

Mon, 22 Apr 2013 08:51:00 +1000

Colliers International is hosting its fourth annual Charity Lunch at the Tattersalls Club on May 2 to raise money for the Down Syndrome Association of Queensland (DSAQ).

Sam Kekovich, Australian media personality, sports commentator and former Australian Rules football player, will be the special guest at this year’s invite-only event, while Steve Haddan, comedian and Nine News sports presenter and journalist, will again mediate proceedings as the MC.

Colliers International is aiming to raise over $50,000 on the day.

Colliers International has been supporting DSAQ for the past four years – as well as raising money at its annual charity lunch, Colliers has provided sponsorship to the Down Syndrome Down Under Swimming Organisation (DSDUSO) by supplying uniforms and cash sponsorship for local events. Colliers has also sponsored Michael Cox, the son of Simon Cox, Colliers International Real Estate Management National Director, directly for the past three World Swimming Championships.

New demand drivers in fringe office market

Fri, 19 Apr 2013 10:21:00 +1000

New demand drivers are expected to pick up the slack left by mining in Brisbane’s metropolitan office market, according to the latest research from Colliers International.

Office demand in Brisbane’s fringe over the past two years has been driven by the resources sector, with average annual employment growth in mining and agriculture being 18 per cent, and eight per cent in the related sector of professional and technical services - but this is no longer the case.

“Mining and agriculture is no longer the major driver – in fact, this sector is expecting a contraction in employment of 14 per cent this year,” said Warwick Wolfe, Colliers International Office Leasing Director.

“The good news is, however, that the reduction in capital expenditure for major resources projects has not tempered employment growth prospects for the fringe as a whole, with other sectors picking up the slack.

“After a slow start to 2013, the financial and insurance services and information, media and telecommunications sectors are expected to drive demand for floor space in late 2013 and into 2014.

“This has already been evidenced by pre-commitment activity in the metropolitan office market from Optus, Macquarie Bank, the Bank of Queensland and Ventyx.”

Optus has signed up to occupy 5800sq m in Green Square Close II in Fortitude Valley, Macquarie Bank has taken 3000sq m in 825 Ann Street in Fortitude Valley, BOQ has signed up to occupy 14,000sq m in the Gasworks Stage 2 at Newstead and Ventyx has signed up to occupy around 6000sq m at 757 Ann Street in Fortitude Valley.

Mr Wolfe said that while there were already alternative sectors driving demand for office space in the Brisbane fringe, the State Government was also working on developing other sectors to ensure Queensland was not just reliant on mining, and this would benefit the office market further.

Alex Beer, Colliers International Research Analyst, said employment growth for Brisbane’s fringe was predicted to be higher than the CBD, which provided more good news for its office market.

“The latest figures from Deloitte Access Economics forecast white collar employment growth in Brisbane’s fringe to be on trend over the next 12 months before increasing in 2014 and 2015,” he said.

“Forecasts suggest an additional 2246 white collar jobs over 2013 in the fringe, with 44 per cent of these being office based, representing a growth rate of 1.2 per cent higher than that of the CBD.”

Mr Beer said market fundamentals were expected to remain fairly stable over the next six months before starting to improve.

“Leasing and investment activity in Brisbane’s metropolitan office market was tempered by weaker conditions in the broader economy and a softening resources sector over the second half of 2012,” he said.

“The market slowdown was reflected by negative net absorption, a slight rise in vacancy to 9.6 per cent and flat or declining rents across the various fringe precincts.

“This loss of momentum may be seen as a pause in activity prior to some forecasted positive gains in the coming 24 months as economic fundamentals, such as employment growth, improve.”

Mr Wolfe said that rents in the Brisbane fringe were now 20 per cent more affordable than those for office space in the Brisbane CBD, and this was one factor that attracted tenants to metropolitan areas.

“Affordability is one of the reasons that tenants go to the fringe, but the major reason is that there is the appropriate space available in the timeframe required, with developments coming out of the ground much quicker than in the city.

“If, as a tenant, you want to go into a new building in 2014 or 2015, you really don’t have any alternative but to look at a non-city office development.”

According to the Colliers International Brisbane Metro Office Research and Forecast Report around 72,000sq m of new office supply is expected come online in Brisbane’s fringe by the end of 2014, with almost all of this stock currently under construction or nearing completion.

“On aggregate, these projects have achieved pre-commitment levels of around 69 per cent, securing both existing fringe and former CBD occupiers,” said Mr Wolfe.

“In addition to having available space, the fringe is seen as a viable alternative location for office users because it is still in close proximity to the CBD and has all the essential amenities and services on offer, including public transport, cafes, restaurants and shops.”

Mr Beer said the vacancy rate in the Brisbane metropolitan office market was expected to remain fairly stable over the coming six months, even with the addition of close to 50,000sq m of space.

“Net absorption will increase significantly due to project completions and lease commencements in those new developments,” he said.

Full steam ahead in St Kilda Road office market

Thu, 18 Apr 2013 10:04:00 +1000

The St Kilda Road office market is off and running in 2013 on the back of the most active year on record, according to Colliers International research.

According to Colliers International’s H1 Metropolitan Office Research & Forecast Report, the nine transactions which occurred in the St Kilda Road market in 2012 represented the highest sales volume on record for the booming precinct.

Five buildings have been sold on St Kilda Road in the past 12 months alone by Colliers International, the most recent of which was 417 St Kilda Road for $81.3million – the biggest office sale price in St Kilda Road history.

Leigh Melbourne, Colliers International Director of Capital Markets, said the record levels of activity and interest in the St Kilda Road office market were motivated by encouraging economic and market fundamentals.

Mr Melbourne and colleague Nick Rathgeber facilitated the sale of 417 St Kilda Road to Newmark Property Group, a local syndicator, on behalf of Challenger Life Nominees. The sale represented a yield of 8.75 per cent and capital value of $3,977 per sq m.

Mr Melbourne and colleagues Tess Elliott and Peter Bremner were also marketing agents for 14 Queens Road, which was recently sold to Hallmarc for $13million on behalf of Denison Funds Management. The sales capped off the most active year in the St Kilda Road office investment market since 2007, when total sales volumes reached in excess of $230million.

“Not only is the low interest rate environment proving attractive for investors, the yield spread between the average CBD and St Kilda Road office yields is also a pivotal factor,” Mr Melbourne said.

“High quality buildings with limited capital expenditure and leasing risk are increasingly trading at yields towards 8 per cent on St Kilda Road, and we anticipate moderate yield compression in the short-to-medium term, particularly for A-grade buildings.

Syndicators had an increasing presence in the St Kilda Road market in 2012, comprising almost half of the purchaser profile. Most recently, syndicators were involved in the purchases of 417, 324, 570 and 441 St Kilda Road. Privates also remain active in this market.

REITs and institutions had now almost entirely exited the precinct, with recent and current disposals including 437 (Opus Capital), 417 (Challenger) and 615 (BlackRock Investment Management).

Sales volumes were set to remain above average in 2013, although they were unlikely to reach the levels of last year. There was a strong market developing for secondary St Kilda Road properties, although buyers would take slightly more opportunistic pricing strategies when dealing with these assets.

“With the weight of capital chasing Melbourne CBD property, we expect capital to flow through to markets like St Kilda Road,” Mr Melbourne said. “We will see retail funds re-enter the market, in a manner similar to the syndicators. There also appears to be a greater level of understanding and comfort around the unique offering that is St Kilda Road, resulting in highly competitive pricing from all buyer groups.

“We expect momentum to continue throughout the year ahead as investor appetite remains strong and vendors grow increasingly confident in the prosperity of the market.

“Smaller buildings between $20million and $40million are highly sought in the current market by private investors and syndicators and as a result yields are being driven down to below 8.0 per cent. In comparison, larger scale buildings above $50million have a more shallow buyer pool due to the larger amount to equity required and as a result, better quality buildings are selling on higher yields closer to 9.0%. This liquidity discount for larger buildings makes it excellent counter cyclical buying because when the capital returns, yields will compress significantly.”

According to the report, the short term outlook for the leasing market was for the St Kilda Road vacancy rate to peak in early 2014, following the relocation into the CBD/Docklands of Suncorp from 601 St Kilda Road and MLC (NAB) from 509 St Kilda Road.

While the vacancy rate in St Kilda Road was reasonably high, at 9.34 per cent, this was its lowest level since September 2009. Vacancy in A Grade space was at a very low 6.24 per cent, the lowest rate in this Grade since March 2002.

Ben Christie, Colliers International Director of Office Leasing, said given the lack of large open floors in the St Kilda Rd market, the prospects for a reasonably quick let-up period for these new vacancies was good.

“We therefore predict the vacancy peak will potentially last through to late 2014, before the market absorbs the space,” Mr Christie said.

“There are currently 27 available tenancies on St Kilda Road in 18 different buildings that could accommodate a prospective tenant seeking a tenancy area of 750 – 1,250sq m. This is where the majority of the vacancy now sits on St Kilda Road, and in contrast there are very few options that could accommodate an occupier seeking a tenancy area of more than 2,500sq m over contiguous whole floors.”

One of the latest new tenants to enter the St Kilda Road precinct was Gilead Sciences, who signed up to lease Level 6, 417sq m at 417 St Kilda Road in a deal negotiated by Mr Christie. The company will move from Jolimont Road in East Melbourne and will occupy the whole of Level 6.

“This deal was transacted just prior to the previous owner, Challenger Life Nominees, selling the building to Newmark Capital,” Mr Christie said.

“Gilead started honing in very early on St Kilda Road as its first preference, location-wise, due to the quality of building that could be obtained at a relatively affordable price.

“Gilead has agreed a new five-year lease at a commencing rental of $320/sq m per annum, including 40 car spaces with their lease.”

The six months to March 2013 saw some minor net effective rental declines in St Kilda Rd A-grade space, as incentives increased to between 20 and 25 per cent. Rents in B-grade space remained relatively steady.

Freestander on Brisbane fringe snapped up by owner-occupier

Thu, 18 Apr 2013 08:59:00 +1000

A bite-sized freestanding commercial property in a gentrification-rich area on the fringe of the Brisbane CBD has changed hands for $1.25 million.

The property at 10 Edmondstone Road in Bowen Hills was bought by Logiro Wealth from vendor Central Pacific Trading (Australia) Pty Ltd in a deal negotiated by Hunter Higgins and Jock Murray of Colliers International.

Mr Murray said the two-level property, which consists of 473sq m of office/warehouse space on 526sq m of land with five on-grade car parks, went to auction at the end of last year but was passed in, and following further marketing a contract was signed early this year.

“It was previously owned and occupied by a fast food preparation company – the food was prepared onsite and distributed to outlets for sale on a retail level - so consequently the fitout was very specialised,” he said. “It was fully fitted with a commercial kitchen and a cold storage facility.

“Initially interested purchasers were predominantly those in the food industry, looking to use the property with the existing fitout, but this year interest in the property from potential buyers broadened and we saw an increase in interest from investors and other owner-occupiers looking to convert the facility to professional offices.”

Mr Higgins said the spike in demand this year from a range of interested buyers was likely due to the fact that there were limited opportunities to secure freestanding commercial properties on the fringe of the Brisbane CBD, particularly in the size and price range of the property at 10 Edmondstone Road.

“There is limited sub-$1.5 million freehold stock in the immediate fringe and this is what largely led to the strong level of enquiry we had from buyers, along with an improvement in confidence in the overall market,” he said.

The buyer will own and occupy the Edmondstone Road building, housing its financial services business within the property, after undergoing a complete refurbishment. The property is currently being fully gutted and transformed into a modern and funky office facility.

Bowen Hills was declared an Urban Development Area (UDA) under the control of the Urban Land Development Authority in 2008, and Mr Murray said the Edmondstone Road property was prominently positioned in this urban renewal area.

“Historically Bowen Hills was a light industrial area but it has been undergoing a transformation for some time now and the properties are gradually being converted to boutique commercial office buildings.

“Purchasers are increasingly looking to buy the older style buildings in the suburb and refurbish. Some even buy them to turn into residential premises, but in the commercial realm the trend is really towards refurbishing them to transform them into office space.”

Mr Higgins noted that since Virgin Australia had moved its head office to Edmondstone Road several years ago, gentrification in that patch of Bowen Hills had really kicked off.

“Edmondstone Road is really seeing the effect now, with many properties having being refurbished,” he said.

“You can’t go wrong in Bowen Hills really – it is situated only three kilometres from the Brisbane CBD, it has great transport with the train station, and it has plenty of facilities including coffee shops.

“The suburb is set to only get better from hereon in, with numerous mixed-use developments taking place, not only within Bowen Hills itself, but in surrounding suburbs, which will only add to its amenity.

“The property at 10 Edmondstone Road is ideally located on the north side of the street, directly opposite the brand new PCYC facility and Perry Park, just metres from the $61 million Virgin headquarters and within easy walking distance of cafes and coffee shops.”

Mr Higgins added that there were still plenty of buyers around continuing to look for small freestanding properties on the fringe of the Brisbane CBD.

“We have a significant amount of groups looking for this type of product,” he said.

Historic goldmine tourism attraction up for sale

Wed, 17 Apr 2013 09:43:00 +1000

Colliers International Cairns is pleased to present a truly unique historic goldmine tourism attraction 140km west of Cairns for sale by auction.

The historic ‘Tyrconnell’ gold mine commenced operation in 1876 producing large quantities of gold, and launched the development of Far North Queensland with the establishment of port towns Cairns and Port Douglas.

In 1997 the owner shifted their focus from mining to developing a tourist attraction by restoring and developing the site to support a boutique tourism business offering tours, activities, accommodation and meals, underpinned by the heritage listed buildings and plant and equipment.

Tyrconnell mine is held under mining leases and covers an area of 40.79ha. The leases are designated for mining and tourism purposes which allows for the existing uses.

The mine currently supports a fully functional campsite and four heritage style cottages for visitors, with alfresco dining on the verandah, manager’s quarters, barbeque area and a dam for swimming. The sale also contains heritage listed buildings, and plant and equipment.

Colliers International marketing agent, Dan Brown, said, “Rarely do opportunities like this come along. The groundwork has been laid to develop the site into a significant tourist attraction or to just keep it as a low key venture; either way it would provide an enviable lifestyle for anyone with an appreciation of the outback. The property should be considered by anyone looking for a lifestyle change and/or a tourism investment opportunity.”

The property is being offered for sale by public auction on Thursday 2 May, Mareeba Leagues Club at 11:30am. For further details and inspection contact Dan Brown on 0417 342 773.

Historic goldmine tourism attraction up for sale

Wed, 17 Apr 2013 09:26:00 +1000

757 Ann secures anchor tenant

Tue, 16 Apr 2013 09:34:00 +1000

One of Fortitude Valley’s newest office developments has secured its anchor tenant, with Ventyx pre-committing to around 75 per cent of 757 Ann Street.

Ventyx, which is owned by Switzerland-based company ABB, has taken on a 10-year lease for around 7000sq m in the 9000sq m 11-storey A-grade tower at 757 Ann Street in a deal negotiated by Warwick Wolfe of Colliers International.

The office tower, being developed by joint venture partners Office Park Developments (OPD) and Van Reit, is currently under construction and is expected to be completed in mid 2014.

Mr Wolfe said the leasing deal was a significant sign of confidence in the Brisbane office leasing market.

“It is no secret that we have had a few slow years, particularly due to the slowdown in the mining industry, and this deal reflects a renewed confidence in the market,” he said.

“It is one of the biggest deals to take place in Fortitude Valley in the past 12 months. Very few pre-commitment deals take place each year and this is one of those.”

Ventyx, which is a supplier of enterprise software and services for the world’s asset intensive industries such as energy, mining, public infrastructure and transportation, was acquired by ABB, a global leader in power and automation technologies, in 2010.

In 2012 Ventyx joined forces with Mincom, a software and services company that was founded in 1979 and operated globally, but had its headquarters in Brisbane.

Mr Wolfe said Ventyx were currently housed in an office building at 192 Ann Street in the Brisbane CBD, but would relocate to the building at 757 Ann Street on the city fringe when it was completed.

“The tenant looked at what office space was available in the entire Brisbane market, including in the city and fringe, and decided this building in Fortitude Valley was the right location for them, for a number of reasons,” he said.

“For starters, they are able to move into a new building - which is desirable for many tenants – but at a value that was right for them, and this building will give them considerable prominence within the locale.

“The locational attributes were also a huge plus – not only are they just a stone’s throw to the CBD, but they will have access to plenty of amenity and services in the Valley, including the retail amenity at nearby James Street, and excellent transport options.

“As well as the Fortitude Valley train station, there is a great bus network, including the Brisbane City Council’s CityGlider bus service, which provide high-frequency transport from West End to Teneriffe and Ashgrove to Stones Corner.

“Fortitude Valley also has great access to Brisbane’s road network, with proximity to major arterials such the Clem 7 and Airport Link.”

Mr Wolfe said as a location, Fortitude Valley was indeed the first choice of all the Brisbane fringe suburbs for many office users, and had been for some time.

“It is definitely the preferred non-CBD commercial precinct, he said.

“It is popular for all the reasons that Ventyx liked it – the retail amenity, the transport options, and at the end of the day it is so close to the CBD that it is really within walking distance.”

Mr Wolfe said the developers behind 757 Ann Street, OPD and Vanriet, had been instrumental in securing Ventyx as the anchor tenant for the building.

“The relationship between the landlord and tenant is key to any deal, and this was particularly important in finalising this deal,” he said.

“Bill Henderson, who is at the helm of OPD, was key to the outcome here, in particular providing assurance around the outcome for the tenant and demonstrating the ability and track record to deliver the development.”

Mr Henderson and Vanriet founder Jack van Riet have decades of experience between them in the property industry, and decided to embark on the 757 Ann Street project when they identified there were opportunities in Fortitude Valley.

Mr Wolfe said he was continuing to field enquiry from tenants for the remaining space in 757 Ann Street and there was no doubt it would achieve a fully leased status prior to the project’s completion.

“Now that there is a certainty about this project going ahead, it will be a real option for office tenants looking at Fortitude Valley as a location,” he said.

“There is still space available over a couple of floors, which will be suitable for smaller tenants, and as such this development now provides an opportunity for single floor tenants in a new A-grade development in Brisbane’s fringe, where there is currently limited supply.”

Colliers International teams to walk 100km in 24 hours for Oxfam

Mon, 15 Apr 2013 15:40:00 +1000

Eight Colliers International agents will embark on the walk of their lives this month with the aim of raising over $10,000 for Oxfam.

Colliers International agents have formed two teams to participate in the Oxfam Trailwalker Challenge, which will see them 750 teams walk 100km from Wheelers Hill through the Dandenong Ranges National Park to Wesburn from April 19-21.

Colliers International agents had formed two teams – 24 Foot of Grunt, made up of agents Jeremy Gruzewski, Ben Baines, Hamish Burgess and Andrew Ryan, and The Superchargers, represented by agents Rob Joyes, Ted Dwyer, Leigh Melbourne and Tony Landrigan.

Mr Gruzewski said the teams were aiming to complete the grueling hike in 24 hours, with each team setting a fundraising target of $5,000.

“Oxfam do great work across the world to fight poverty, and we’re hoping the physical challenge we are embarking on will contribute, even in small way, to this worthy cause,” Mr Gruzewski said.

“Since November last year we have been enduring blisters, chafing, sore legs and buckets loads of sweat to train for this challenge.

“On April 19, we will be embarking on a 100km trek and are aiming to complete the grueling course in 24 hours.

“Whilst this will challenge us on many levels, the most important challenge of all will be in reaching our combined target pledge of $10,000 for Oxfam Australia. Every dollar counts.”

The event launched in Australia in 1999, with Melbourne joining in 2003 and steadily growing each year since. To date, the Australian team fundraising total stands at $49million.

To donate, visit: https://trailwalker.oxfam.org.au/team/home/14033 or https://trailwalker.oxfam.org.au/team/home/14034

For more information, go to: https://trailwalker.oxfam.org.au/

New premium apartments running out on Gold Coast

Mon, 15 Apr 2013 13:03:00 +1000

Buyers looking to acquire new premium apartments on the Gold Coast now have limited opportunity to buy them, with predictions current supply may be completely sold out within two years.

Tony Holland, Colliers International Residential Director of Project Marketing, said apartments in the region’s three luxurious ‘super towers’, namely The Oracle in Broadbeach, and Hilton and Soul in Surfers Paradise, were being snapped up by buyers that recognised the extraordinary value of current pricing levels.

The latest Colliers International research on the Gold Coast new apartment market found 546 apartments were sold in total over 2012, with 229 – or nearly 42 per cent – of these being in the three super towers. This is in stark contrast to 2011 and 2010, when there were only 74 and 68 sales reported respectively.

Lynda Campbell, Colliers International Research Manager, said with late 2012 settlements still to come through, the final 2012 sales figures for these luxury apartments may prove to be even higher.

Mr Holland said that the super towers had attracted pent up demand after pricing in both Hilton and The Oracle was adjusted in early 2012.

“The figures speak for themselves,” he said. “Buyers are clearly seizing the opportunity to buy high quality new luxury apartments on the Gold Coast at prices that are currently below replacement.

“The prices these premium apartments are selling for now simply cannot be replicated in the future.”

In addition to seeing the market as great value, Mr Holland said a sense of urgency was being created amongst buyers of super tower apartments because the availability of new stock was drying up.

“These two factors are pushing smart buyers to re-enter the market, and to act quickly,” he said. “They know they need to act now or there will be nothing left.

“There is now clearly limited opportunity remaining to buy a new premium apartment on the Gold Coast – and at the current sales rate of 229 per year the 438 remaining apartments in the three super towers will be sold out within two years, if not quicker.

“Buyers recognise developers cannot reproduce developments of this quality and in such premium positions in the foreseeable future at the price points currently being offered, therefore they are moving now to purchase so that they do not miss this opportunity.”

Mr Holland said the increased activity at current pricing levels was evidence that buyers were recognising we had clearly passed the bottom of the market.

“Savvy buyers understand the value paradigm,” he said. “A significant number of apartments in each of the super towers have sold at prices 35 to 40 per cent above current prices, and logic is that over coming years, current values will improve.”

Mr Holland noted there had been a lot of negativity surrounding the Gold Coast apartment market in recent years, with a great deal of talk about oversupply and high prices, particularly in relation to the super towers. But he said things had now clearly turned a corner.

“There is no doubt the negativity is dissipating,” he said. “There was a cloud over the region’s residential market and that cloud is now lifting.

“Buyers are engaging; we are seeing a return of buyers to the Gold Coast after a lean 2010 and 2011.

“Recent data indicates that residential prices in Australia on the whole are on their way back up, with confidence returning, and the Gold Coast is set to follow suit.

“While we don’t foresee immediate significant price growth in the Gold Coast new apartment market in the short term, we do foresee it down the track due to the undersupply situation. The law of economics dictates that when demand significantly exceeds supply there is upward pressure on pricing.”

The rise of Australian metropolitan office markets

Tue, 09 Apr 2013 12:52:00 +1000

Strong fundamentals are luring investors back to Australia’s metropolitan office markets on the back of tightening vacancy rates, low levels of new supply and steady rental growth.

According to the new Colliers International Metropolitan Office Research & Forecast Report, Australia’s tightly held metropolitan markets, and the quality assets within them, are set to receive increased enquiry levels from buyers and tenants in the year ahead.

“Astute investors, particularly cashed-up private investors and syndicates, have begun to take notice of the strong fundamentals that many of these markets have to offer,” John Marasco, Colliers International Managing Director – Capital Markets & Investment Sales, said.

“Domestic, as well as an increasing number of offshore buyers, have been tracking this strength and have now decided it’s time to buy in. We predict increased sales volumes in 2013 and an emerging presence of offshore buyers.”

According to the report, which encompassed Sydney, Melbourne, Brisbane and Adelaide markets, more than $2.3billion worth of investment transactions occurred within metropolitan office markets during 2012 – the strongest result since 2007.

“Investors have also been encouraged by the relatively large amount of high quality A-grade assets hitting the market over the course of the year, which is in stark contrast to the tightly held Prime Grade stock across the capital city CBDs,” Mr Marasco said.

“Offshore buyers are stepping up their efforts to research, understand and commit to office assets outside our capital city CBD markets.

“Last year we saw foreign buyers acquire circa $720million worth of metropolitan office assets, compared with $405million in 2011.”

Offshore buyers accounted for just 9 per cent of sales in 2010, a figure which rose to 23 per cent in 2011 and 32 per cent in 2012.

These groups have mostly targeted Brisbane and Sydney metropolitan assets with the likes of Hines Global REIT and Heitman purchasing assets in both markets.

In the first major acquisition within Sydney’s North Shore for 2013 – and a prime example of offshore groups venturing into metropolitan markets – 465 Victoria Avenue was purchased recently by US-based Hines Global REIT from FKP Property Group for $92 million. In Queensland, the sole major transaction in the second half of 2012 was 252 St Pauls Tce in Fortitude Valley, which sold for $17.37million to a private investor.

The Melbourne metropolitan market, in contrast, remains a domestic buyers’ market, with no foreign purchasers in 2012. One of the biggest sales across all metropolitan markets in 2012 was in Victoria, with Cromwell’s $116.75million purchase of the 913 Whitehorse Road development in Box Hill, which will be anchored by the ATO.

“Despite their increased activity, foreign groups remain somewhat uneasy about directing capital into metropolitan markets, as many don’t fully understand the fundamentals that make them ‘tick’, especially the demand side equation, which is usually based on very local dynamics and not often influenced by global factors,” Mr Marasco said.

“This has seen groups team up with local developers, institutions and investment managers who have expertise within these regions – a trend that we have also witnessed in the industrial market.”

However, despite this rise in foreign investment acquisitions, domestic buyers continue to be the most dominant buyer type.

“In particular, syndicates have begun to re-emerge as major investors within the metropolitan office markets,” Mr Marasco said.

“Groups such as Primewest, Property Bank and GDI have been driven by the high yields that these assets offer and are mainly seeking Secondary grade, Core Plus or Opportunistic assets with a Weighted Average Lease Expiry (WALE) of less than four years.”

Another key driver for investors, according to the report, was the widening spread between yields and borrowing costs.

“The cost of debt has reached as low as 5 per cent – even cheaper for offshore groups – while A-Grade yields have remained stable ranging from 7.5 per cent to more than 8.5 per cent, resulting in a large positive spread for purchasers,” Mr Marasco said.

“Looking forward, increased competition from buyers looking for relatively high yielding assets may cause yields for quality Prime Grade assets begin to tighten.

“We expect investment activity to remain high as REITs and other institutions continue to sell out of non-core assets while at the same time, syndicators and domestic privates continue to scout the market and acquire both A and Secondary Grade opportunistic assets with potential to redevelop or reposition.”

According to Colliers International research, the ongoing lack of supply and new development activity in metropolitan office markets has had positive flow-on effects for landlords, particularly when combined with the movement of tenants into these markets looking for more cost competitive office accommodation.

“This has generally resulted in tight vacancy rates and strong rental growth of 4 per cent per annum over the past three years, compared to 1.3 per cent in CBD markets over the same period,” Simon Hunt, Colliers International Managing Director of Office Leasing, said.

“Markets with ongoing low vacancy rates and those with small pockets of vacancy, as opposed to large contiguous available space, have experienced particularly strong rental growth over the past 12 months. These include North Sydney (4 per cent), Parramatta (4.2 per cent) and Melbourne’s City Fringe (4 per cent).

“This scenario is likely to continue until developers and financiers gain more confidence to develop and the next supply cycle begins.”

Overall, the national metropolitan office vacancy rate increased from 7.8 per cent in September 2012 to 8.15 per cent as of March 2013, predominantly due to a slowdown in tenant demand and a handful of new developments entering the market.

“As a whole, metropolitan vacancy rates continue to be higher than those in our CBD markets,” Mr Hunt said.

“Each market, however, has a common theme of ongoing demand for a limited amount of available quality A Grade space, with the majority of vacant space remaining in the secondary grade markets.

“This is evident in markets such as Sydney Olympic Park, Adelaide Fringe, North Ryde, Parramatta and Southbank, which all have vacancy rates under 5 per cent.”

According to Colliers International forecasts, the national metropolitan vacancy rate was expected to rise over the next six months, reaching about 8.4 per cent by September 2013.

“This is on the back of soft tenant demand, an increase in sub-lease space as businesses continue to consolidate operations and the completion of a number of new developments,” Mr Hunt said.

“The North Sydney, Southbank, St Kilda Road, Chatswood and Brisbane Fringe markets have all seen an increase in sub-lease space over the last 12 months. The latest PCA data has Australia’s non-CBD sublease vacancy rising by 32,817sq m from January 2012 to January 2013.

“Overall, metropolitan office markets have seen net effective rental growth average 4 per cent per annum over the past three years, which is strong when compared with 1.3 per cent per annum in CBD markets for the same period.”

The report found soft tenant demand, an increase in supply levels and affordability issues would contribute to a slowing in rental growth over the next 12 months. In some instances, rising incentives could see effective rents soften over the short to medium term.

It is a tenants market

Mon, 08 Apr 2013 11:01:00 +1000

In the current economic climate tenants in the commercial property market - rather than landlords – have the upper hand, according to Colliers International.

Simon Crouch, National Director Tenant Representation, said tenants were increasingly looking at the bottom line and with landlords keen to retain tenants, there were opportunities for tenants to negotiate a better deal.

“Tenants are continuing to examine their entire business to identify where cost savings can be generated and given that one of the major costs to all businesses is the premises they operate from, this is a good place to start,” Mr Crouch said.

“The current economic conditions have created a tenants market, so now is the time for tenants to examine every space their organisation occupies and explore the strategies available to reduce risk, maximise operating efficiency and drive down costs.

“This market provides the perfect opportunity for tenants to reposition and enhance their businesses and this can be done primarily through workplace improvement and upgrades.”

Mr Crouch said there were several ways in which office tenants could benefit in the current market, and the best way to capitalise on the opportunities was to outsource property requirements to experts.

“Tenants need to be aware of what is on offer so they do not simply exercise an option or sign another long-term lease without looking at the options available,” he said.

“In this type of market landlords are keen to retain or secure tenants on long-term leases to guarantee income and extend their Weighted Average Lease Expiry (WALE), so any tenant with two years or less remaining on their lease should look to engage with a tenant representative now to ensure the best outcome.

“There are opportunities, for instance, for tenants to renegotiate or restructure their lease and receive a significant cash incentive from their landlord for extending. There are numerous examples recently where 100 per cent of a tenant’s new fitout was covered by well negotiated incentives.

“In addition, there is often additional incentives left over from the fitout to be contributed towards rent reductions or rent free periods. Many tenants whose fitout, building and location meets their needs may elect to allocate the entire incentive towards rent to drive down operational costs.”

Mr Crouch said the best opportunities for tenants at the moment were in the Sydney and Melbourne CBDs, as this is where incentives for office space were proving to be the highest.

“Incentives in the Sydney CBD range from 22 per cent to 30 per cent, with B-grade space in the southern precinct having the highest incentives of 28 per cent to 30 per cent. There are instances in particular buildings with large vacancy where incentives are pushing above 30 per cent.

“The Melbourne and Brisbane CBDs are not far behind, with incentives ranging from 20 per cent to 30 per cent.”

Meanwhile, incentives in the Adelaide CBD range from five per cent to 20 per cent, in the Perth CBD they range from five per cent to 10 per cent and in Canberra they range from eight per cent to 20 per cent.

Mr Crouch said that while tenants clearly secured a benefit from incentive arrangements, it was not only the tenant who benefitted.

“It is a win-win for the tenant and the landlord, as the landlord retains or secures a tenant on a long-term lease, locking in their cash flow with no let-up time,” he said. “The opportunity cost of a tenant vacating is significant, with let up time for larger space between six to 18 months in addition to building upgrades required to attract new tenants.”

As well as securing incentives, office tenants also have the opportunity to negotiate on clauses in their lease agreements that are more difficult in an environment that favours landlords, such as rent reviews, expansion/contraction clauses and ‘make good’ provisions.

“This type of flexibility is essential for tenants in the current economic climate to enable growth and contraction to meet an organisation’s changing needs,” said Mr Crouch.

“The office environment will need to be able to adapt to the changes in the business over the entire lease term, which includes being able to expand or contract the head count in the same amount of space.”

Mr Crouch added that tenants had a further opportunity to approach landlords to make upgrades to their buildings – for instance bathroom, air conditioning, lighting, carpet or lobby upgrades.

“Landlords are likely to cooperate when it comes to these requests, given their desire to retain tenants and ensure their asset remains competitive in the market,” he said.

One of the other major benefits of the current market for tenants is the opportunity to snare a newly refurbished space for great commercial terms.

“Due to an increase in new supply in most markets over the next two years, a major trend will be an increase in backfill space due to large tenants consolidating their operations and moving into new developments providing superior quality accommodation,” said Mr Crouch. “We will see this for instance with Westpac, and KPMG moving in to the Barangaroo development.

“As large tenants move to new spaces, landlords will be forced to upgrade their buildings through refurbishment to attract new tenants and they will also be forced to offer high incentives for the backfill space to attract tenants.

“Over the past six months we have already been witnessing a significant increase in activity in the sublease market - better sublease space is being made available in the wake of major companies reducing headcount and seeking operational cost savings. Consequently this space is competing with new space that is available at greatly reduced rentals, often with high quality fitouts included in the offering.”

Peter Black, Colliers International National Design Director, said in addition to negotiating with their landlords to get a better deal, tenants looking to save money should also look at reconditioning the workplace to potentially create greater efficiency and reduce the space required to operate.

“Lease expiries give tenants the opportunity to reconsider their accommodation needs and explore ways to reduce their footprint to save costs,” Mr Black said.

“Tenants looking to consolidate their operations should look at how their existing workplace supports their business strategy and consider whether their work settings actually support the ways their teams work.

“For instance, it might be worth evaluating whether every employee actually needs a designated desk.

“We find that typically, just over half the available desks are in use at any one time in an office. It is rare for staff numbers to break an 85 per cent occupancy rate, which means many businesses may have more space than they actually need.”

Workplace technology is another area where businesses can make savings, noted Mr Black.

“For instance, most organisations will only update their telephony systems and update their network infrastructure when they are relocating,” he said.

“This means long-term occupiers could be losing their competitive edge by failing to provide technologies that enable workplace mobility.

“Technological mobility is a major consideration for businesses looking to consolidate as it allows greater density within an existing footprint.”

Development spending in Runaway Bay at a low

Mon, 08 Apr 2013 09:52:00 +1000

Development spending in the Runaway Bay area has nearly halved over the past 12 months and is currently at a low, according to the latest research from Colliers International.

The dollar value of development either planned or underway in the area, which includes the suburb of Runaway Bay itself, as well as Paradise Point, Biggera Waters, Hollywell, Sovereign Islands and Coombabah, is just $762 million, falling 49 per cent this year from last year’s figure of $1.517 billion. It has now fallen some 80 per cent from its high of $4.2 billion in 2007.

Lynda Campbell, Colliers International Gold Coast Research Manager, said given that 70 per cent of projects in the Runaway Bay area were under construction last year, with little else in the pipeline, it was expected that spending in the area would fall significantly this year.

“Seven projects have been removed from the development pipeline this year and Salacia Waters, which was the biggest project in terms of dollar value in the pipeline in the area last year, has been significantly scaled back, from $650 million to $200 million, with the first stages of the project completed and future stages on hold for now,” she said.

“Back around 2007 there were major projects underway in the area, including Sovereign Islands and Ephraim Island, but these have now been completed which has led to the large decline in development spending.

“There is still activity underway however, with four projects added to the development pipeline this year, but of the 11 projects now earmarked for the Runaway Bay area, only one is currently under construction, with the rest in the planning stages.”

Some of the projects that were completed over the past year in the Runaway Bay area include the $166 million Hope Island Road upgrade from Hope Island to Runaway Bay, the $160 million Runaway Lagoons residential project at Coombabah, the $29 million Coombabah Waste Water Treatment Plant upgrade and the $10 million Runaway Bay Shopping Village upgrade.

Meanwhile, projects that have been added to the development pipeline include:

· Bupa Aged Care retirement project at Coombabah - $25 million

· Pine Ridge Road apartment project at Coombabah - $20 million

· Harbour Terraces apartment project at Biggera Waters - $15 million

· Runaway Bay Sports Super Centre upgrade at Runaway Bay - $9 million

The one project under construction in the Runaway Bay area is the Emandar Group Harbour Quays master plan apartment project at Biggera Waters – the value of this project has been increased this year to $150 million.

Meanwhile, the biggest project in the pipeline for the Runaway Bay area is the $300 million Harbour Quays retirement project. This is followed by the $200 million Salacia Waters, which this year has changed from a mixed-use development to purely an apartment development.

In fact, the apartment sector is where most of the development spend is taking place in Runaway Bay, with $407 million in projects in the pipeline.

The retirement sector comes in second, with $325 million in the pipeline, and infrastructure is third with $30 million in the pipeline. There are currently no commercial or mixed-use developments underway in the area, nor any purely residential projects.

Last year Colliers International noted that Biggera Waters was the suburb where most of the spending in the Runaway Bay area was focused, and this year that trend continues, with $465 million – or 60 per cent of the total spending – taking place in that area.

In addition to this level of spending, there is also another project in the pipeline for Biggera Waters – an Energex Substation on Centre View Drive. While this is planned for the area, there is no set proposal for the development yet, and consequently no dollar figure for the value of the project.

Stewart Gilchrist, Colliers International Gold Coast Director in Charge, said given that Runaway Bay was well established, there was little scope for major development in the future.

“Certainly we will not see any major developments of the scale of Sovereign Islands and Ephraim Island, as there just aren’t the sites available for these types of projects,” he said.

“The major development sites have all been pretty much built out, with the exception of several sites around Harbour Town.

“While Runaway Bay was in previous years a hub of development activity, development spending on the Gold Coast is now concentrated on those parts of the region that of course are not yet fully developed.

“For instance, there is a great deal of development activity in the Gold Coast’s northern corridor, particularly around suburbs such as Hope Island, Pimpama, Ormeau and Coomera – this is largely where there is the available land is to develop.

“Having said that, there will still be some development activity in the Runaway Bay area over the years to come, most likely within infill developments and perhaps some infrastructure.”

Ms Campbell added that Runaway Bay was surrounded by suburbs where there was significant development activity taking place, such as Southport, which is one of the Gold Coast’s infrastructure hotspots, and Hope Island, where small residential projects are prolific.

“Two of the Gold Coast’s biggest infrastructure projects are situated in Southport – the $1.76 billion Gold Coast University Hospital and the $1.8 billion Gold Coast Light Rail - and total spending in the area amounts to more than $4 billion.

“Meanwhile, Hope Island has around $3 billion worth of projects in the pipeline across 44 projects.

“The development underway in these surrounding areas will provide some spin off benefits to the Runaway Bay area, and the area will also benefit from the Commonwealth Games, with the Runaway Bay Sports Super Centre upgrade being related to the sporting event."

Well-known Gold Coast dry cleaner relocates

Fri, 05 Apr 2013 10:53:00 +1100

After operating from the same site for 24 years, a well-known and iconic Gold Coast business has moved to a new home.

Upton Dry Cleaners is relocating from its Bundall shopfront at 65 Upton Street to an industrial property at 2 George Street in Southport. It has signed a 10-year lease with a 10-year option for the 916sq m property, for which it will pay around $70,000 per year.

James Crawford of Colliers International, who negotiated the leasing deal, said the reason behind Upton Dry Cleaner’s move was that Woolworths had purchased its Bundall Road site, with the intention of building a Masters store on it and surrounding sites, which will be amalgamated, in the future.

The George Street property Upton Dry Cleaners are moving to was bought by Ross and Carmel Salmon in 2003 for $425,000 from Captain Smith, the father of one of the partners of law firm Bell & Co.

Mr Crawford said the owners had since undertaken a huge renovation of the property, which was a big plus for Upton Dry Cleaners.

“The property, situated just behind St Hilda’s School, was previously occupied by an old building that was built in the 1960s and was divided into three factories of 408sq m each,” he said.

“The tired old building, which was previously tenanted by Unique Marble Products, was truly ready for a complete renovation, and in 2008 the Salmons secured approval to do just that.”

Mr Salmon said works, which cost $510,000 in total, started on the renovation in February 2009 after the Gold Coast City Council gave the go ahead.

“A huge amount of work and consolidation was done to bring the rear hardstand up to the current floor level, amalgamating the three bays into one serviceable area,” he said.

“Roof levels were increased from three metres to seven metres, a five-metre roof opening was added with a 2000 litre grease trap, and new toilets and a modern kitchen were installed.”

Mr Crawford said as well as the renovation, the owners of Upton Dry Cleaners, David and Marcus Walker and Chris Mills, were attracted to the property’s location.

“Southport is the heart of the Gold Coast, so it was desirable for this iconic business to be situated in the suburb,” he said. “It is also close to where they used to be located, so their existing clients will still be able to use their services.

“This property is a fantastic freestanding corner site with two-street access, as well as front and rear parking.”

Upton Dry Cleaners has equipped their new premises with brand new, state of the art commercial/laundry and dry cleaning equipment that was purchased locally, as well being sourced from Europe and the United States.

The new store will open this month, in an official opening by Gold Coast City Councillor Dawn Crichlow.

Aussie Farmers Direct finds Gold Coast home

Fri, 05 Apr 2013 10:52:00 +1100

Aussie Farmers Direct are poised to set up a home base on the Gold Coast after leasing a property in a central part of the region.

The company, which delivers fruit, vegetables, meat, dairy products and other groceries to customers direct, has signed up to lease a 280sq m industrial unit at 7/34 Ereton Drive in Arundel, in a deal negotiated by Daniel Coburn of Colliers International.

Mr Coburn said main warehouse in South East Queensland for Aussie Farmers Direct was in the southern Brisbane suburb of Rocklea, but the company had now expanded its operations in Queensland.

“Aussie Farmers Direct operates throughout Australia and will now have its own base on the Gold Coast,” he said.

“This property at Arundel will be used as its warehousing depot for the Gold Coast, and it will retain its Brisbane warehouse for the remainder of South East Queensland.”

Mr Coburn said there were several reasons why Aussie Farmers Direct liked this particular industrial property, one of which was its location.

“Arundel is situated on the central Gold Coast, and Aussie Farmers Direct needed a central location for its depot, so that it can easily access all areas of the region,” he said.

“This property is also close to the main arterial roads leading to other parts of the Gold Coast, as well as to Brisbane and south to New South Wales.

“Brisbane Road and the Smith Street Motorway are both within easy reach, and these lead to the Pacific Motorway, which heads north and south.”

Mr Coburn added that the Arundel property was also attractive to the tenant because it was an empty shell and could easily be adapted to its needs, and it also had excellent truck access.

Plant cloning facility and production nursery up for sale

Fri, 05 Apr 2013 10:09:00 +1100

Due to the planned retirement of the owners, a well-respected and highly specialized horticultural business located in North Queensland is being offered for sale.

Clonal Solutions Australia and aligned business Yuruga Native Plant Nursery in the Atherton Tablelands is being offered for sale by Expressions of Interest closing May 9 with Colliers International’s Cairns Office.

This state-of-the-art climate controlled tissue culture laboratory facility has a current annual production capacity of 1 million plants, while its cutting house and nursery has capacity of over 10 million plants – both of which can be easily expanded.

The property is a 31.8ha rural freehold with 20ML of water allocation and on site springs and it has extensive improvements including production nursery with retail exposure, tissue culture laboratory and cutting propagation sheds, packing/storage sheds, shade houses, office complex and manager’s residence.

The developing plant cloning industry has shown strong commercial growth in recent years as growers have seen benefit in superior and more reliable plants developed from proven stock to create uniformity of crops with consistency in production, as well as a reduction in the cost associated with plant failures.

The development of new elite genetics for various agricultural and forestry crops drives the growth and sustainability of farming globally through increased productivity, yields, profitability and competitiveness.

The process begins with identifying exceptionally good performing plants that have high yields and excel in their commercial duty. Through the collection of the identified seedlings the cloning process can begin producing identical copies that are capable of growing an entire crop of superior plants, and according to Clonal Solutions, potentially increasing the performance of a plantation by up to 200 per cent or more.

Clonal Solutions have identified and created base stocks of high quality gene plants for agricultural industries including papaya, avocados, custard apples, coffee, spotted gum, pongamia, ornamental eucalypts, mahogany and teak with production and propagation rights to those plants.

As clones are genetically identical to each other, clonal plantations exhibit a high degree of uniformity and often have lower establishment costs due to a lower stocking rate as there are near to none faulty seedlings. This genetic superiority additionally leads to lower maintenance costs and lower harvesting costs.

In the forestry industry for example, superior timber properties, trunk straightness, disease and drought resistance and tolerance of salinity are criteria that are readily becoming more identified and important to producers.

According to Stacey Quaid, Colliers International’s marketing agent, “Clonal Solutions Australia is one of the leading Clonal nurseries in the field with an established and growing client base throughout Australia as well as worldwide.“

This strong focus in Research and Development has seen success for Clonal Solutions Australia and is important for the future growth of the company.

An R&D program commenced in 2006, with the aim of expanding the variety of clones available for sale and discovering new superior hybrids for commercialisation. This has yielded significant results, and these advancements underpin the future of the business with ongoing supply agreements across a number of plant industries within Australia and overseas.

“Clonal Solutions Australia, incorporating Yuruga Native Plant Nursery, represents a truly unique opportunity for an existing agricultural enterprise or investor to capitalize on the production and supply of elite genetic plants across a multitude of industry sectors,” said Mr Quaid.

“Even at this pre-marketing stage, we have seen interest from large specialist growers in the business acquisition, looking to secure on-demand supply of superior plant stocks for use within their own plantations.

“Clonal Solutions Australia and Yuruga Plant Nursery provide an established and regarded platform for an entry investment into the future development of agribusiness in Australia.”

Tenants turn to Chatswood in droves as amenities in area improve

Wed, 03 Apr 2013 13:11:00 +1100

A newly refurbished office building on Help Street is the latest property to be targeted by hungry tenants looking to snap up increasingly sought-after commercial space in popular Chatswood.

Lisa Treble, Colliers International Manager of Office Leasing, has secured a new tenant for the Centuria Property Funds-owned building at 9 Help Street, amidst keen interest for office space in the precinct.

Ezypay has signed up to occupy 396 square metres on Level 3 for five years, at a rate of $460/sq m. The majority of the building was previously occupied by CSR.

Ms Treble said the building has been refurbished, with improvements made to the ground level foyer, all floors and suites, and the building services.

“Located within the commercial core, the whole building presents extremely well, making it highly desirable as a preferred option for all tenants who are looking to move into, or relocate within the area,” she said.

“There are new bathrooms, showers on each floor, a ground floor café and ample parking within the basement.”

“The refurbishment and the heightened interest for office space in Chatswood, has been highlighted by the 212 square metres left vacant in the 8-level building.”

Ms Treble said the Chatswood office market had performed well over the past 12 months with vacancy rates tightening to 8.9% from 13.7% in July 2012.

“The market has certainly benefited from the recent Victoria Avenue and retail precinct upgrades, particularly the Council’s investment in the new civic centre (The Concourse), and the Government’s investment in the new transport interchange” she said.

Jason Huljich, CEO of Centuria Property Funds said: “Centuria took the opportunity to reposition the building for the long term by undertaking significant refurbishments when the building was vacated. This counter-cyclical investment in 9 Help Street has been rewarded with solid tenant demand for affordable, quality office space.”

Foreign investment on the rise in Queensland

Wed, 03 Apr 2013 09:56:00 +1100

Foreign investment in the Queensland residential property market has increased for the first time in four years, according to the latest research from Colliers International.

Spending by foreign buyers on Queensland homes amounted to $443,532,548 during the 2011/12 financial year, which was an increase of around 33 per cent on the previous year and significantly higher than the 10-year average of $411 million per annum.

After reaching a record high in the 2007/08 financial year, spending by foreign investors fell sharply in the 2008/09 financial year and continued to fall in the years after, though much more steadily.

Darrell Irwin, Colliers International Residential Special Projects Director, said the catalyst for the rise in spending on Queensland residential property in the 2011/12 financial year was its relative affordability

“Foreign buyers are seeing real value in the Queensland residential property market,” he said.

“During the 2011/12 financial year we were probably at the bottom of the property cycle, and at that stage Asian investors – and the Chinese in particular - whose markets were then still very strong, saw South East Queensland as particularly affordable.”

While the Colliers International research found that foreign buyers in Queensland came from 61 different countries, for the third consecutive year China was the largest overseas buyer of residential property in the state.

Chinese buyers spent a total of $184.9 million across 315 transactions, which was a 73 per cent increase on the previous year and equated to 42 per cent of the total spending by foreign investors in the 2011/12 financial year.

Lynda Campbell, Colliers International Research Manager, said this was most Chinese investors had ever spent on Queensland property in a single year.

“One third of the total spend by Chinese buyers over the past 10 years occurred during the 2011/12 financial year,” she said.

The Colliers International research found Singaporean buyers came in a distant second, spending a total of $29.2 million on residential property in Australia over the 2011/12 financial year, which was an increase of almost 150 per cent on their spending levels the previous year.

Buyers from the United Kingdom came in third, spending a total of $23.6 million on Queensland residential property.

The Gold Coast continues to be the favoured locality for foreign investors – there was a 43 per cent increase in spending in this region over the 2011/12 financial year, resulting in more than half of all spending ($237.1 million) being concentrated in this area.

Ms Campbell said both Chinese and Singaporean buyers preferred the Gold Coast, spending $110.7 million and $20.4 million respectively, but buyers from the UK preferred the big smoke, with more than one third of their total spend being on property in the Brisbane City local government area.

“Chinese investors, however, were still the most prolific foreign buyers in Brisbane, spending a total of $62.6 million over 121 transactions,” she said.

“The level of spending by Chinese buyers within the Brisbane City local government area over the 2011/12 financial year is more than double that of the previous year.”

Mr Irwin said the foreign investment figures reflected what property professionals have been noticing anecdotally for some time.

“Interest from wealthy Chinese investors in the Queensland, and particularly the Gold Coast, property market is very strong and has been increasing,” he said.

“As well as the Chinese, we are noticing interest and fielding enquiries from other Asian investors, often more so than local investors and developers.”

Mr Irwin said in addition to the fact that foreign investors were seeing great value in the Queensland residential property market, and especially the Gold Coast, there were two other key factors encouraging the Chinese in particular to invest in Queensland property.

“First and foremost, Australia is seen as a safe haven from the economic uncertainty and instability in their own volatile markets,” he said.

“Immigration is also a key factor - having property investments in Australia makes it easier for foreigners to live here and that is something many want to do given the educational opportunities that exist in Australia for their children.”

Mr Irwin said he expected the level of foreign investment in Queensland going forward to continue to be high, with Asian investors likely to continue being the prevalent buyers.

“Anecdotally we know that interest in Gold Coast residential property from the Chinese and indeed Asian investors in general has gathered pace over the past 12 months, and I would expect this to show up in the figures when this financial year is completed,” he said.

“In addition, the Gold Coast is a focus for Asian investors largely because it has long been a favoured tourist spot for them, and this will only be increasingly so in the future. The Gold Coast Airport is continuing to grow to provide for increased passenger numbers and many of these tourists will come from China, with more flights running to and from the southern part of the country.

“Certainly I see no reason for the current level of foreign investment to diminish, and in fact if the Aussie dollar falls further, foreign investment would likely increase, potentially dramatically.”

Mr Irwin added that even though the Gold Coast, and Queensland as a whole, looked to be past the bottom of the property cycle, the residential recovery would be measured, and hence foreign investors would continue to see the value in the market.

Lynda Campbell, Colliers International Research Manager, said that while Asian buyers had come to the fore in recent years when it came to buying residential property in Queensland, buyers originating from the UK had been the most prolific purchasers over the past 10 years.

“Buyers from the UK have spent the largest amount on residential property, investing a total of $687.5 million over the past decade,” she said.

“Until this year, New Zealanders were in second place, but have now been surpassed by the Chinese, who spent a total of $548.3 million over the past 10 years, 83 per cent of which has occurred within the past five years.”

In line with the increased level of foreign investment in Queensland’s residential market in the 2011/12 financial year, there was a lift in the number of transactions - the 2011/12 financial year recorded a total of 936 separate transactions, which was a 28 per cent increase of the previous year’s total of 733.

Ms Campbell said the majority of property purchased in Queensland by foreign buyers was for investment purposes.

“Of the 936 property transactions across Queensland, 67 per cent were for investment purposes while the remaining 33 per cent were for owner-occupation,” she said.

Following the Gold Coast and Brisbane, where a total of $237.1 million and $135.9 million spent respectively, the Colliers International research found Cairns was the third favoured locality for foreign buyers, with $11.82 million being spent in 49 transactions.

“Brisbane City local government area recorded an increase in spending by foreigners of 58 per cent and an increase in the number of separate transactions of 66 per cent,” Ms Campbell said.

“The level of spending on residential property by foreign buyers in this area is now at the highest level it has been over the past 10 years.”

Coolum shop changes hands for more than $1m

Thu, 28 Mar 2013 15:23:00 +1100

A shop in Coolum Beach leased to 7-Eleven on a long-term basis has sold under the hammer for $1.2 million.

Brad Moore and Nick Wilson of Colliers International took the 102sq m property, shop five in the Sea Coolum complex at 1796 David Low Way, to auction on behalf of Coolum Property Development Pty Ltd.

Mr Moore said there were a number of buyers interested in the shop, but in the end it was purchased by a private investor for his self-managed super fund.

“This property had a long-term lease in place, with 7-Eleven signing a seven year lease at the end of 2011 and having the option to exercise two five-year options at the end of that time,” he said.

“The long-term lease secures the income of the investment, which is currently $97,760 net plus GST, for around another six years and that was the most attractive thing for potential buyers.

“We have a great deal of enquiry at the moment from buyers wanting to purchase an investment property with a secure income stream, particularly for their self-managed super funds – they are looking to put it into their superannuation.

“In fact, that is where the main enquiry for these smaller investments is coming from.”

Mr Moore said the he and Mr Wilson had recently sold another two shops in the Sea Coolum complex, both of which were also bought by investors wanting the properties for their super funds.

Mr Wilson said one of the shops was leased to Domino’s and sold for $912,500 and the other, leased to Red Rooster, sold for $1.3 million.

Other tenants in the Sea Coolum complex include Baskin Robbins and adjoining the development are McDonald’s and The Coffee Club.

Mr Wilson said that the Sunny Coast was experiencing renewed interest after softened conditions over the past few years.

“People are feeling more comfortable and confident with the Sunshine Coast,” he said.

“It has been put back into the spotlight largely due to the new infrastructure planned for the area – particularly the new medical facilities at Kawana, including the Sunshine Coast University Hospital, which is attracting both local and overseas interest.

“The main industry backbone on the Coast is construction and tourism, but now we have got another string to our bow with the medical industry. We are also still experiencing population growth, which is another big plus for the region.”

Shop 5 in Sea Coolum was auctioned as part of Colliers International’s National Auction Portfolio for 2013, which saw 16 properties worth around $27 million go under the hammer nationally this week.

Six properties were auctioned in New South Wales, six in Victoria, two in Queensland, one in Canberra and one in Adelaide.

Matthew Meynell, Colliers International National Director – Investment Sales, said the 2013 National Auction Portfolio (www.colliers.com.au/auctionportfolio) comprised a wide range of properties across various sectors. The popular initiative was now in its tenth year.

“Colliers International has developed an unrivalled national presence within the auction market, offering customers a diversity of property investments across varied commercial, retail and industrial sectors,” Mr Meynell said.

“This portfolio presents excellent opportunities for investors and occupiers to secure prime quality assets on the eastern seaboard.

“All market indicators are pointing to a buoyant 2013, with positive sentiment resonating across almost all buyer profiles.

“With the cash rate at a historic low of 3 per cent, and therefore the returns on fixed term deposits looking more and more unattractive, buyers again have property at the forefront of their investment strategy.”

Victorian property professionals raise over $90k for disadvantaged kids

Thu, 28 Mar 2013 11:41:00 +1100

Property and construction industry professionals in Victoria have raised more than $90,000 for homeless and disadvantaged children at the 2013 PIF Charity Sailing Challenge.

On Friday March 22, the Property Industry Foundation of Victoria (PIF) held its third annual Melbourne Charity Sailing Challenge to raise funds for Open Family Australia.

Held at the Royal Brighton Yacht Club, the event raised over $90,000 for homeless and disadvantaged youth for the Wyndham Project – an increase on the $75,000 raised at last year’s event.

The event’s principal sponsor was Colliers International. It was co-sponsored by Brookfield and supported by the Australian Property Institute.

450 participants turned out to support the worthy cause, taking to the water in a 40-strong fleet of yachts.

America’s Cup hero John Bertrand again served as race patron, and Olympic silver medallist Olivia Price also took part. Guests were treated to an Italian Riviera-themed post-race party complete with an awards ceremony and live entertainment.

John Marasco, Colliers International Chief Executive – Victoria, said Colliers International was thrilled to have teamed up with PIF and Brookfield for a third consecutive Sailing Challenge.

“Partnering with PIF for the Charity Sailing Challenge is a great fit to our company values of client engagement, community and fun,” Mr Marasco said. “It is very important to give back to the communities in which we live and work, which is part of our ongoing commitment to corporate social responsibility.

“We recognize the importance of PIF’s work and are privileged to have been the major partner of the Sailing Challenge since its inception three years ago.”

The annual event is associated with PIF’s long-running and hugely successful Charity Yachting Regatta in Sydney, a premier event on the property and construction calendar which is also sponsored by Colliers International. The Sydney event is in its 13th year, raising $400,000 and attracting more than 1,500 participants this year.

Money raised from the 2013 Charity Sailing Challenge will help fund PIF’s commitment to Open Family Australia’s Chatterbox Bus and youth workers who service the CBD and Wyndham areas.

Kew office building exceeds expectations to sell for more than $10million

Tue, 26 Mar 2013 17:04:00 +1100

A four-level office building in the affluent Melbourne suburb of Kew has exceeded agents’ expectations to sell under the hammer for $10.25million.

Colliers International’s Jeremy Gruzewski and Peter Bremner, in conjunction with Robert Kelly and Sandro Peluso of Gorman Kelly, have sold 17-27 Cotham Road in Kew at auction on behalf of Ross Blakeley of Taylor Woodings (acting as Agent for the Mortgagee in Possession).

A lively 100-strong crowd watched on as four bidders battled it out, before the property was finally knocked down to a local private investor. The $10.25million sale price represented a yield of 8.4 per cent based on the estimated fully leased net income, and a capital value rate of $3,766/sq m.

“The sale price not only exceeded our expectations but was also well above the reserve price,” Mr Gruzewski said.

The property – a contemporary, standalone office building with generous on-site parking – was expected to sell for about $9.5million.

“This was an absolute prime opportunity to secure a hassle-free office investment in an unbeatable busy Kew location, and as expected, it enticed buyers out of the woodwork,” Mr Gruzewski said.

Mr Kelly said demand for high quality office space within the inner eastern suburbs had improved over the past quarter, with the supply of space to lease and purchase in decline.

“Despite current economic conditions, the direct effect of this lack of supply should mean office rents will remain firm. The underlying fundamentals supporting the office market remain solid,” he said.

17-27 Cotham Road has a net lettable area of 2,721sq m and a gross building area of 2,961sq m, includes secure on-site parking for 91 cars and offers a fully leased income of approximately $860,000 per annum (plus outgoings and GST).

The building was constructed in 1984, with various tenancies undergoing upgrades in 2005, including the foyer and upper level lobbies. In December 2010, the air-conditioning was upgraded.

Qanstruct sells prime industrial Target facility

Tue, 26 Mar 2013 15:37:00 +1100

A blue-chip industrial asset fully leased to Target Australia has been sold by Colliers International for $12. 325 million .

The sale of the property to Harmony Property Syndication was negotiated off-market by Andrew Gerlach, Director of Industrial at Colliers International and reflects a yield of 8.2 per cent.

Colliers International was appointed to sell the building by industrial design and construct builder Qanstruct, a Melbourne based company specialising in the development of industrial warehouses.

The 8,200sq m facility is located at 27-30 Sharp Court in Cavan, a popular inner northern Adelaide industrial precinct approximately 10 kilometres north of Adelaide’s CBD.

Mr Gerlach said the Qanstruct developed the facility in 2009 and was purpose-built for Target Australia who signed a long term lease for the property.

“At the time, it was one of the largest leasing pre-commitment transactions in Adelaide,” says Mr Gerlach.

“Target has nine years remaining on the lease and has further rights of renewal.”

Mr Gerlach said the sale highlights the growing demand for high quality industrial assets with strong investment features such as a long lease, full occupancy and a national or blue-chip tenant.

“Investors are very interested in industrial assets and are looking beyond any weaknesses in the global markets to invest for long term performance.”

He said Charter Hall’s recent acquisition of Electrolux Distribution Centre from Australand for $27.14 million is another example, further demonstrating the underlying demand for high quality assets.

“With the majority of investors now targeting local markets, Adelaide is well positioned to meet demand with institutional grade core assets that deliver competitive yields and long WALES.”

Andrew Cain, Executive Director of Harmony Property Syndication said investors remain interested in good quality assets and there continues to be an appetite for securely leased property that is well located.

“The response from Harmony’s investors was outstanding, with the offer being oversubscribed by investors within 48 hours of release.”

“Interest in good quality well located industrial assets in Adelaide remains high with good assets generally being very tightly held.”

Managing Director, Mark Ruff of Qanstruct , believes that the industrial market is showing signs of recovery nationally.

“We are seeing an increase in the number of pre-lease enquiries in the market which is encouraging, and any pre-lease or existing asset like Target, is attracting significant interest”.

Mr Ruff added it is not state specific either, we are receiving design and construct build enquiries across a number of states which augers well for the market.

Matthew Gibb of specialist industrial asset manager Gibb Group who managed the asset and divestment on behalf of Qanstruct said that they too were seeing heightened levels of enquiry and activity across the industrial sector.

“Aside from user enquiries we are regularly receiving calls from investors seeking industrial assets, whether existing or new with long term leases.”

“We think the market is on improving and we share Colliers view on a positive outlook,” Mr Gibb added.

“We are pleased that Harmony has retained Gibb Group as Asset Manager.”

“It gives us an opportunity to build on our existing strong relationship with the tenant while at the same time welcome a new client to our asset management business.”

Colliers International continues to grow Corporate Solutions team

Tue, 26 Mar 2013 12:53:00 +1100

Colliers International has made another key appointment as part of the ongoing growth and investment of the company’s industry-leading Corporate Solutions team.

Astra Ellis has joined the company’s Queensland business as Project Director | Project Services in the Corporate Solutions team, based in the company’s Brisbane CBD office.

Nationally, the Colliers International Project Services team is a leading provider of design, technology and project management services in the corporate office, base building, industrial and technology sectors.

Ms Ellis is a well-known and respected property industry identity and will be a valuable addition to the team. She formerly owned and operated her own project management consultancy, GO Projects, and prior to that held roles at CBRE, BHP Billiton Mitsubishi Alliance and Ergon Energy.

Ms Ellis will work with another recent recruit to the Colliers International Corporate Solutions team in Queensland - Chris Orr.

Mr Orr joined the team last year as Director of Tenant Representation and is a seasoned operator, having previously worked for Seymour Group and Graystone in development director positions, along with having previous experience in industrial and corporate roles with other major commercial real estate agencies.

The appointment of Ms Ellis and Mr Orr follows the recruitment of four other high profile senior members to the national Corporate Solutions team last year, with the following coming onboard:

· Andrew Peak – Manager | Tenant Representation (Melbourne office)

· Simon Hill – National Director | Corporate Solutions (Sydney office)

· Michaela Dunworth – National Director| Project Services (Sydney office)

· Andy Richards – Projects Director | Project Services (Sydney office)

The Colliers International Corporate Solutions team has now achieved 30 per cent people growth in the past 18 months.

“The development and expansion of this business is in direct response to the increased demand we have been experiencing from corporate clients, who, for various reasons, many linked with global financial conditions, are looking for more assistance with their real estate needs, whether it be consolidating or re-designing their offices or increasing efficiencies,” Colliers International Head of Corporate Solutions, Doug Henry, said.

“We are now the only real estate firm to offer a complete end-to-end Activity-Based Working offering to our clients and have a dedicated technology group specialising in cutting edge workplace technology, mission critical environments and data centres.”