Last week, we reflected on the South East Queensland markets too see what has passed and what may come to be. Thanks to the commentary and insights from Colliers International’s SEQ experts, we were able to provide an overview of 2016 and a forecast for 2017 in the SEQ capital and metro markets.
However, there’s more to the SEQ, and so Colliers International in Brisbane and the Gold Coast have provided more commentary on The South East Queensland’s office and retail leasing, hotels and healthcare and retirement living.
By Mark McCann, National Director of Office Leasing
Brisbane office leasing market outperformed many expectations in 2016. We experienced positive absorption and return of general business sentiment and confidence in the macro economy. Significant volume of leasing transactions from the Queensland State Government in the CBD and Metro regions provided much needed relief and stabilisation of the vacancy rates in both markets.
This was also a year for completion of three major CBD projects: 180 Ann Street, 480 Queen St and the Qld State Government office tower at 1 William Street – a combined total in excess of 185,000 square metres.
In 2017 we are expecting a positive absorption of space to continue across all asset grades. Corporate businesses will continue to leverage off the favourable commercial market in order to reduce their corporate footprint by way of smarter and more efficient fit-out design.
The emergence of ‘co working’ operators and growth of the education sector will continue to stabilise and positively impact on the overall vacancy in the market.
The new supply pipeline in the CBD will be constrained from 2017 to 2019. Apart from existing additions such as 310 Ann Street, there is only one development in the CBD which will be completed around the beginning of 2019. This cap on new development supply and limited existing additions, will help in reducing the overall vacancy from record levels to more historic 10 year averages.
Healthcare & Retirement Living
By Chris O’Driscoll, Associate Director of Healthcare & Retirement Living Transactions
In 2016 we have witnessed an increase in volume of ventures between sports and services clubs and retirement and aged care groups. Such ventures are likely to continue in 2017 as there are a range of benefits for both the club and the operator, some including:
- cash injection to the club
- ability for operator to leverage off existing infrastructure and amenities
- both club and operator benefit from existing members and incoming residents, and
- improved club facilities.
Brisbane City Council is currently offering incentives for these type of developments, with a particular focus toward clubs. Incentives include 33 per cent reduction to infrastructure charges and an additional two storeys allowance for medium to high density locations.
Land in South East Queensland is in high demand for all property asset types across the healthcare sector including: retirement villages, manufactured housing estates/land leased estates, aged care, private hospitals and medical precincts.
We are seeing sharpening discount rates and yields for operating retirement and manufactured housing estates following the deregulation of homecare.
By Neil Scanlan, National Director of Hotel Transactions
In 2016 strong leisure markets lead to an increase in purchaser interest in Cairns and the Gold Coast. Brisbane market transactions were very quiet as the market understands the effect of new supply additions.
In 2017 the leisure markets will continue to strengthen, however they will still be below replacement value ensuring no new addition to supply occurs. Brisbane is to remain tightly held as supply/demand curve stabilises. We are likely to see demand from existing hotel investors, with hot spots being the Gold Coast and Tropical North Queensland.
By Kym Thrift, Director, Retail Leasing
In 2016 we have seen a pickup in activity in Brisbane from big restaurateurs, such as Fink Group who opened Otto at 480 Queen Street. General feedback from these sophisticated restaurant groups is their confidence about Brisbane’s growth and changing culture. They are changing their mindsets about our demographics due to the planned development and strong tourism numbers.
Majority of the leasing deals done by Colliers this year were around casual dining and quick service food. Food sector is very much on the increase and there is very little activity from fast fashion groups. However the market is responding very well to international fashion brands such as H&M and Zara.
In 2017 many more entrants and brands will be announced on the back of continued development surge within the inner city ring. This rapid growth, more than the state’s average, is creating more demand which is directly impacting the retailers’ performance.
Total estimated expenditure for the CBD is $3.85 billion per annum for main trade area and it is growing. Brisbane has also experienced three per cent tourism growth year on year.
We see demand coming from well-established local operators and sophisticated restaurants from Sydney and Melbourne looking to take advantage of our urban renewal and growth. The hotspots will continue to be Fortitude Valley and Newstead due to the level of development that is happening in the area, with potentially 11,980 new apartments coming online over the next 3 years.
The population growth in this inner city region is at 8.5 per cent per annum, almost five times the growth of the Brisbane average at 1.8 per cent. Retail spending is also growing by 9 per cent annually, with casual dining spend levels at 88 per cent higher than the Brisbane average.
Ideal retail leasing opportunities in these locations are TC Beirne building refurbishment and Gasworks Stage three, which is currently under construction.
Originally Published: https://www.theurbandeveloper.com/
Negative gearing changes will affect us all, mostly for the better
Don’t have a negatively geared investment property? You’re in good company.
Despite all the talk about negatively geared nurses and property baron police officers, 90 per cent of taxpayers do not use it.
But federal Labor’s policy will still affect you through changes in the housing market and the budget. Here’s what you should know.
Labor’s negative gearing policy will prevent investors from writing off the losses from their property investments against the tax they pay on their wages. This will affect investors buying properties where the rent isn’t enough to cover the cost of operating the property, including any interest payments on the investment loan.
Doesn’t sound like a good investment? Exactly right: negatively gearing a property only makes sense as an investment strategy if you expect that the house will rise significantly in value so you’ll make a decent capital gain when you sell.
The negatively geared investor gets a good deal on tax – they write off their losses in full as they occur but they are only taxed on 50 per cent of their gains when they sell.
Labor’s policy makes the tax deal a little less sweet – losses can only be written off against other investment income, including the proceeds from the property when it is sold. And investors will pay tax on 75 per cent of their gains, at their marginal tax rate.
Future property speculators are unlikely to be popping the champagne corks for Labor’s plan. But other Australians should know that there are a lot of potential upsides from winding back these concessions.
Limiting negative gearing and reducing the capital gains tax discount will substantially boost the budget bottom line. The independent Parliamentary Budget Office estimates Labor’s policy will raise about $32.1 billion over a decade.
Ultimately, the winners from the change are the 89 per cent of nurses, 87 per cent of teachers and all the other hard-working taxpayers who don’t negatively gear. Winding back tax concessions that do not have a strong economic justification means the government can reduce other taxes, provide more services or improve the budget bottom line.
Labor’s plan will reduce house prices, a little. By reducing investor tax breaks, it will reduce investor demand for existing houses.
Assuming the value of the $6.6 trillion property market falls by the entire value of the future stream of tax benefits, there would be price falls in the range of 1 per cent to 2 per cent. Any reduction in competition from investors is a win for first home buyers.
Existing home-owners may be less pleased, especially in light of recent price falls in Sydney and Melbourne. But if they bought their house more than a couple of years ago, chances are they are still comfortably ahead.
And renters need not fear Labor’s policy. Fewer investors does mean fewer rental properties, but those properties don’t disappear – home buyers move in, and so there are also fewer renters.
Negative gearing would affect rents only if it reduced new housing supply. Any effects will be small: around 90 per cent of investment lending is for existing housing, and Labor’s policy leaves in place negative gearing tax write-offs for new homes.
All Australians will benefit from greater stability in the housing market from the proposed change. The existing tax breaks magnify volatility. Negative gearing is most attractive as a tax minimisation strategy when asset prices are rising strongly. So in boom times it feeds investor demand for housing. The opposite is true when prices are stable or falling.
The Reserve Bank, the Productivity Commission and the Murray financial system inquiry have all raised concerns about the effects of the current tax arrangements on financial stability.
Negative gearing would affect rents only if it reduced new housing supply.
And for those worried about equity? Negative gearing and capital gains are both skewed towards the better off. Almost 70 per cent of capital gains accrue to those with taxable incomes of more than $130,000, putting them in the top 10 per cent of income earners.
For negative gearing, 38 per cent of the tax benefits flow to this group. But people who negatively gear have lower taxable incomes because they are negatively gearing. If we look at people’s taxable incomes before rental deductions, the top 10 per cent of income earners receive almost 50 per cent of the tax benefit from negative gearing.
So you shouldn’t be surprised to learn that the share of anaesthetists negatively gearing is almost triple that for nurses, and the average tax benefits they receive are around 11 times higher.
Treasurer Josh Frydenberg says aspirational voters should fear Labor’s proposed changes to negative gearing and the capital gains tax.
But for those of us who aspire to a better budget bottom line, a more stable housing market and better opportunities for first home buyers, the policies have plenty to find favour.
Revealed: The top 10 suburbs to buy a bargain home and reap long-term capital growth returns – but experts warn there’s a catch
The top 10 suburbs for buying a bargain home have been revealed.
The top two on the list were Norlane and Lovely Banks, two northern suburbs in Geelong, Victoria, while the remaining eight all come from Queensland.
Hollywell in the Gold Coast was named as the best Queensland suburb for an affordable home with long-term capital gain, according to property researcher RiskWise.
The Gold Coast suburb, located 70km south of Brisbane’s CBD, is close to shopping centres, good schools and the beach.
Experts have warned buyers not to confuse a ‘bargain’ property with a ‘cheap’ one.
The coastal suburb also has many older properties which will have plenty of potential after renovation, according to realestate.com.au.
It has a median house price of $786,614, according to property data researcher CoreLogic.
Mount Ommaney, Sinnamon Park and Gordon Park in Brisbane also make the list, followed by Gaven on the Gold Coast and Doonan in the Sunshine Coast.
Mount Ommaney, an outer suburb located 14 kilometres south-west of Brisbane’s CBD, has a median house price of $852,729.
Sinnamon Park, also located south-west of the Brisbane CBD, has a slightly lower median house price of $747,272.
RiskWise’s list ends with Gordon Park, Stafford Heights and Twin Waters in Queensland.
All the suburbs listed had a median house price of $300,000 to $870,000, with Norlane having the lowest price at $370,931 and Doonan with the highest at $871,189.
RiskWise chief executive Doron Peleg warns the public that a ‘bargain’ house does not necessarily mean buying a ‘cheap’ one.
RiskWise listed down suburbs where capital growth was expected to increase steadily over the years.
‘It’s more about knowing where to buy for long-term capital gain,’ Mr Peleg said.
‘Sure, there are a lot of well-priced houses out there, but if they are not expected to grow in value down the track, then they really aren’t the best buy.
‘These (Queensland) suburbs, which all enjoyed capital growth of 13 per cent of the past 12 months, are expected to continue to do well as they have a number of things going for them.
‘For starters, they are relatively affordable and all within 100km of Brisbane which means, provided there is a good public transport and road infrastructure, commuting to work is not too much of an issue’.
Property Experts Reveal Surprising Areas Investors Are Snapping Up
We all know Sydney’s property market has taken hit after hit recently — but there are other lesser-known areas that are experiencing a sudden property boom.
That’s according to Australian real estate experts, who claim that while investors may have deserted Sydney and Melbourne, their attention has turned to other regions across the country.
According to Daniel Walsh of investment buyer’s agency Your Property Your Wealth, investment activity has now firmly shifted to Queensland.
“Net migration has now overtaken Melbourne due to the affordability that Brisbane has to offer,” he explained.
“We’re also seeing rising demand particularly in the housing sector in southeast Queensland where yields are high and jobs are increasing due to the amount of government expenditure around infrastructure which is attracting families to the Sunshine State.
“With Brisbane’s population growth at 1.6 per cent and surrounding areas like Moreton Bay at 2.2 per cent, the Sunshine Coast at 2.7 per cent and Ipswich at 3.7 per cent, we are forecasting that Brisbane will be the standout performer over the next three to five years.”
Realestate.com.au chief economist Nerida Conisbee agreed, saying Sydney investors especially had started to turn their attention north.
“Interest is strong in the Gold Coast across the board although there’s more action on the south side in places like Tugun and Burleigh Heads,” she said, adding there was also a notable trend towards Tasmania, Adelaide and pockets of NSW.
“In Tasmania, most activity is definitely taking place in Hobart, but it has shifted — a lot of the action was in the inner city, but it’s now happening in the middle and outer ring suburbs, as well as in Launceston.
“Tweed Heads and Byron Bay (in NSW) have also had strong price growth at the moment,” she said, adding that in Sydney, trendy inner-city suburbs like Paddington, the premium end of town and areas like Winston Hills in the city’s west were defying the downward trend.
Ms Conisbee said long-neglected Adelaide was also finally booming after recently hitting the highest median house price ever recorded, largely driven by jobs and economic growth off the back of defence contracts, the announcement of the new Australian Space Agency and other investment in the area.
“Inner Adelaide, beachside and the Adelaide Hills tend to have the most activity but there’s also quite a lot of rental demand in low-cost suburbs so we’re expecting to see a bit more investment there in those really cheap suburbs over the next 12 months,” she said.
“There you can get houses for $250,000 so for an investor, it’s a relatively low cost in terms of outlay and the area is seeing really strong rental demand which means you’re more than likely to get tenants, so for investors it’s a really attractive area.”
Mr Walsh said Sydney still remained a solid investment option in the long term — but stressed it was just not the right time to buy in the city due to its market cycle as well as lending constraints.
“While property prices in Sydney have softened by about 9 per cent this year, they are still high, which means it’s not an affordable option for many investors,” he said, noting the city’s high buy-in prices coupled with relatively low rents made the yields quite unattractive.
“At this point in time, the high costs of entry as well as holding costs make it a location that should be avoided — but not forever,” he said.
“The thing is, Sydney is still Sydney, which means that it will always be in demand.
“Its population is forecast to grow by some three million people in the decades ahead, plus it remains our nation’s economic engine room.”
He said the entire NSW economy remained “robust” with unemployment falling to 4.4 per cent last year, with Sydney’s major infrastructure program also proving there was “much to be positive about” in Sydney.
“Sydney homeowners and investors who bought a number of years ago are still well ahead because they chose the optimal time to buy and they remain focused on the future,” he said, adding the optimal time to re-enter the market probably wouldn’t be for at least another year or two.
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