Projects Review Edition 11. 2017
Women in developments
The BADS — Limiting unique living experiences
5 Minutes With...
Townhouses — back to the future
Funding market for residential developers
Contents
Projects
1
Adapt Or Die
3
Bloom
2
Spotlight
3
The Royal
Women In Developments
4
Walpole
4
Viola
4
George & Stone
5
Eastbridge
5
Ashton Park
5
The Davis
6
10 B etter Apartments Design Standards 12 5 Minutes With... 16 When Considering Rental Guarantees 20 Townhouses — Back To The Future 22 Changes To Foreign Investment Review Board Tax 23 F unding Market For Residential Developers 24 A Strong Confident Market In 2017 26 B ox Hill To Become Melbourne's New CBD?
Past Project Profiles 14 William 14 Broadleaf 15 McKinley 15 Jackson St
Contributors 6
Women In Developments — Sophie Whittakers, Development Manager of Lucent Capital (PH) 0426 245 757
7
Women In Developments — Linda Simons, Director of LSA Architects (PH) 03 9533 8633
8
Women In Developments — Sally Martin, Project Manager of Nash Management Group (PH) 0413 724 998
9
Women In Developments — Jess White, Director of Cassette (PH) 0477 641 660
10 Better Apartments Design Standards — Stuart Telha, Director of Telha Clarke (PH) 0412 142 717 20 Townhouses — Paul Conrad, Director of Conrad Architects (PH) 03 9421 6103 23 Funding market — Adrian Blake of PGF Australia (PH) 0421 618 724
Adapt Or Die By Marshall White Projects There’s been comprehensive media coverage and informed comment regarding the Government’s imposed changes to the off the plan market, looming as of July 1st this year, but what does this really mean for the industry? From this date and beyond there will be a significant impost on investors no longer being able to claim the off the plan stamp duty benefits, as well as first home buyers receiving a substantial stamp duty benefit for off the plan purchases up to $750,000. This will have (if it hasn’t already) a dramatic impact on certain areas within Melbourne and certain product types in the high density development arena. With project marketers who currently focus on the CBD already swinging their developer clients away from investor towers by recutting and redesigning buildings to appeal to a veracious empty nester or downsizer, it’s become a matter of “adapt or die” for a number of experienced property developers. Another truism within our business is that “boutique is best”. The planning laws applicable throughout the wealth belt of Melbourne, namely Boorondara, Stonnington and Bayside, were predicated to cater to a young couple and empty nester who typically want a quality building of fifty apartments or less. As a reflection of the stability within the residential market and the substantial increase in the median house price shown within those three zones, the local empty nester is taking the opportunity “en masse” to translate their tax free capital growth from their principal place of residence into a substantial off the plan purchase.
This was recently demonstrated in a development named “McKinley” at 171 Wattletree Road, Malvern, which upon launching, saw over 300 people register, which then translated into 61 appointments. The project of only eighteen apartments, proceeded to sell out in just 48 hours over the course of a single launch weekend, at an average price recorded in excess of $11,000 per square meter. During the 2015-2016 financial year, 17% of the off the plan purchasers transacted by Marshall White Projects were for purchases in excess of $1.25 million. For the 2016-2017 financial year, that number will close out at more than double (38% to be precise). Developers have and always will need to cater to emerging markets. The underlying depth of demand for “McKinley” style projects, however, will depend on the strength of the residential market. Whilst demand continues to exceed supply for quality established family homes within these coveted locations, the empty nester will continue to either sell and scale down or alternatively buy first and then sell during the construction period, with a significant degree of certainty. We regularly meet with large CBD developers whom see the writing on the wall. They are now keenly looking to diversify from their decades of developing within the inner city by shifting their focus and resources out to areas where returns have greater certainty, reduced risk, and less days on market and cost per sale. The pending government changes will only assist in these trends continuing.
24 A Strong Confident Market — Tony Bevacqua, General Manager of Creation Homes (PH) 03 9867 3781 26 Box Hill — Paul McAleer, Associate Director of Meinhardt (PH) 03 8676 1200 Cover Photo: FOUNDRY 185 Rosslyn Street West Melbourne Every effort is made to provide accurate and complete information in Marshall White’s (trading as Marshall White Projects) technical and regulatory newsletters. However, Marshall White cannot guarantee that there will be no errors. Marshall White and its contributors to the newsletter make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the contents of the newsletters and expressly disclaims liability for errors and omissions in the contents of this newsletters. Neither does Marshall White and its contributors to the newsletter assume any legal liability for any direct, indirect or any other loss or damage of any kind for the accuracy, completeness, or usefulness of any information, product, or process disclosed herein, and do not represent that use of such information, product, or process would not infringe on privately owned rights.
+ 61 3 9822 9999 1111 High Street, Armadale VIC 3143
Leonard Teplin Director
Mark Dayman Director
T: 03 9832 1191 M: 0402 431 657 leonard.teplin@marshallwhite.com.au
T: 03 9832 1193 M: 0409 342 462 mark.dayman@marshallwhite.com.au
Disclaimer: Information provided is believed to be accurate as at the date of printing, no responsibility is taken for any errors or omissions. It is your responsibility to obtain independent, professional advice.
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Spotlight
Kierra Hagedorn
Cheryl Fraser
Zara Singh
A driven and compassionate sales executive, Kierra has grown a stellar reputation for outstanding results and exceptional customer service.
An unrivalled commitment to her clients coupled with a drive for reaching and exceeding targets makes Cheryl a vital part of the Marshall White Projects team. Specialising in helping first home buyers and empty nesters to open a new chapter in their lives, her exceptional care and integrity ensure that her clients enjoy a smooth experience every time.
An accomplished, enthusiastic and organised operator, Zara has gained a reputation for outstanding customer service among her colleagues and clients alike. Tertiary studies in project management and more than a decade’s experience in the real estate field provide Zara with a keen edge in her role as Department Coordinator for the Marshall White Projects team.
Having owned and then sold her own accounting practice, Cheryl’s move into real estate came naturally. Shortly after her career transition, Cheryl found herself winning platinum sales achievement awards two years in a row selling prestige properties on the Gold Coast in Queensland. An innate understanding of the reward that comes with effort gives Cheryl a unique perspective on her work,
Zara’s effervescent personality and fascination with property development makes her well-positioned to guiding a team that achieves exceptional results. A true champion of Marshall White’s team culture, she credits the remarkable professionalism, team interaction and fast-paced environment to their ongoing success.
Kierra’s process-driven approach and excellent communication skills complement an innate attention to detail and genuine care for each person she encounters. A firm believer in spending as much time as necessary to gain a comprehensive understanding of what her clients seek in a new home, she is well-positioned to achieve tailored outcomes. Kierra relishes the opportunity to forge strong relationships and connections with clients and colleagues alike. Having spent several years of her career as an integral part of Australia’s top performing real estate team helping with over 800 sales and settlements, Kierra has an enviable depth of knowledge of the real estate industry. Kierra has an appreciation for property, architecture and the ability to change someone’s life that her chosen career entails. Kierra is an empathetic individual and an active contributor to the Marshall White Foundation charity committee. Outside work, Kierra embraces every available opportunity to travel abroad and engage with different cultures.
and her previous results speak for themselves. With two adult daughters and a beloved dog, Max, Cheryl enjoys cooking and gardening at home, while riding, walking and swimming keep her fit when she is out and about. She loves the diversity, the buzz and the people of Melbourne.
Bloom 1240-1248 Glen Huntly Road Carnegie
At the weekend, Zara enjoys nothing more than the company of her closest friends over some of Melbourne’s famous cuisine. Zara’s desire to keep her mind busy also means that she can often be found with her nose in a good book.
The Royal 670-672 Glen Huntly Road Caulfield South
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3
The Year Of The Townhouse Walpole
Eastbridge
The Davis
40 Walpole Street Kew
833 High Street Kew East
1A Davis Avenue Camberwell
Ashton Park 338 Burwood Highway Burwood
Viola 390 Upper Heidelberg Road Ivanhoe
George & Stone 48 Emu Road Maidstone
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Women In Developments
Shaping the industry since day one Sophie Whittakers Development Manager, Lucent Capital lucentcapital.com.au
Although unconventional, Sophie Whittakers’ journey to Development Manager at Lucent Capital isn’t surprising, with her passion for the property industry presenting itself early on. “Ever since I was a little kid, I was one of those children that used to build houses out of Lego and would be the type to plan out all the rooms” said Sophie. This affinity for development and design continued through high school, where she created floor plans in graphic design class, and later in university where she studied interior design. Having successfully launched her interior design career with a role at Adele Bates Design, Sophie quickly realised her interest extended beyond building interiors to the buildings themselves. “My core interest has always been how people live, and how we can improve that. I came to notice that interior design was just a small component of the greater picture,” said Sophie. While working two jobs, Sophie returned to university to study construction management, graduating with first class honours and setting her sights on making her mark on the industry. As Development Manager for Lucent Capital, a role she’s been in for over three years, Sophie is focused on reversing the often negative public perception of property developers.
“In my experience, when you tell someone you work in property development, the instant reaction isn’t usually a good one.” The general rhetoric of property developers as companies that prioritise profits over the environment and local community is prevalent, however Sophie is confident developers can actively reverse this perception, and she’s leading by example. “The development industry has a bad name, but we as an organisation are focused on improving that and doing better.” Looking to the future and further development opportunities, Lucent Capital is focused on creating environmentally sustainable projects that enhance the lives of residents through careful design, and a focus on community-building. “I think that if via our projects we can change the attitude people have of developers, that’s a really good outcome for the industry in general.” For their latest project, the company has recently teamed up with not-for-profit company Nightingale Housing, a social enterprise that supports and promotes high quality buildings that are ecologically, financially and socially sustainable. “It’s a project I’m really proud of, it’ll be a landmark building for us as a developer, and hopefully it will inspire others to follow in our direction.” Taking on these challenges and continuing to grow and evolve within her role is Sophie’s favourite part of the job. As for her least favourite? The not-so-creative process of reporting. While Sophie remains one of few women in her position in the property industry, she doesn’t take much notice of being part of a notoriously male-dominated sector. “There are moments when you realise, yes I’m the only woman sitting in the room, but I never look at myself as being different just because I’m a woman. I think what sets people apart is their skills, their knowledge and their capabilities.”
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Making work-life balance work Linda Simons Director, LSA Architects ls-architects.com.au
Linda Simons has wanted to be an architect for as long as she can remember. As a child watching her parents renovate the homes they lived in, she was drawn to the intricate mix of science and art involved in the process. Even at this young age, she knew a career in design was in her future.
Linda is undoubtedly passionate, struggling to think of any aspect of her role she doesn’t like.
Flash forward to university and Linda was sketching interiors for local clients in between study sessions. She quickly developed a good reputation and a strong customer base, launching LSA Architects in 1996 just after graduation.
“The mix of men and women was pretty even in university, however, I’ve noticed that as you go up the chain, there are very few female directors in the property industry.”
She’s since passed on her love of design to her two young daughters who, like Linda, have grown up watching their mother renovate. “They’ve got quite a good eye for colour, and they love being involved whenever I’m decorating or redesigning a room,” said Linda. “Because I redesign the house so much, they’re used to the idea that things are always changing. I like to think I’ve taught them that it’s essential in life to keep your environment fresh and new.” This adaptability and capacity to see things from a new perspective are traits that have served Linda well throughout her 20+ year career. Since launching, Linda has grown her team to 11 people and specialist departments’, which focus on residential, luxury residential, commercial and public projects.
“Even when I’m faced with challenges and a project seems hard to achieve, those end up being the projects I’m most proud of,” said Linda. “At the time I’ll get frustrated, but those projects push you to think outside the square and ultimately you end up with a better result.” Raising a family while being the Director of her own company is no easy feat, however it’s not something Linda takes for granted. Many women, she notes, find it hard to re-enter the work force after having children.
“The nature of the industry is that it’s ever-changing, so you need to stay up to date. If you take a year or two off, it can be very hard to get back into the swing of it,” said Linda. “Family commitments, I think, are the main obstacle keeping women out of these high-level positions. It’s why I employ people on a very flexible basis, so they can do both and not feel like they have to choose.” Providing flexible working options for staff is something Linda believes more companies should embrace. “It’s actually been very beneficial for me, because I have a loyal workforce that’s been with me for more than seven years. We work around their life, rather than them trying to fit their life around work.” “I think that’s how companies need to start looking at the situation, and seeing that having women in the workforce, and giving them the flexibility they need, can be of great value to their business.”
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Women In Developments
Anything but typical
Looking beyond the ‘male-dominated’ label
Sally Martin
Jess White
Project Manager, Nash Management Group nashmanagement.com.au
Director, Cassette cassette.com.au
Sally Martin realised her passion for property development whiling away summer days as a lifeguard at her local pool. With her spare time, she started sketching neighbours’ houses and backyards. This hobby eventually evolved into a full time role at a drafting company.
Quickly realising she wanted to see her drawings come to life, Sally spent years in the industry working her way up to her current role as Project Manager for Nash Management. Having been at Nash for almost three years, Sally plays a pivotal role in getting developments off the ground. “As a full end to end service company, we guide clients through all stages of development from planning and building permits, right through assisting with creation of a sales and marketing strategy and managing the project through final settlement stages” “Collaborating with a range of consulting firms to see a project brought to life is really rewarding.” A typical day doesn’t exist for Sally, who says her favourite part of the job is that she’s always dealing with new challenges that allow her to grow and evolve, both professionally and personally. “I love my job and how varied it is, one minute I’m in a client meeting and the next I might be needed out on site. This usually requires more than a few shoe changes, and the ability to switch gears quickly, which keeps things interesting.” As one of a few women in the predominantly male-dominated property industry, Sally says overcoming any challenge comes down to knowing your worth. “Yes it’s a male dominated industry, but believing in yourself and your skills is the key to not letting that affect you.”
Whilst industry figures back the perception that the property sector is male-dominated, Jessica White sees things a little differently. As Director and Partner of Cassette, a communications and creative agency that services a variety of property clients, Jessica is exposed to the full breadth of an industry that is far more diverse than it appears. “Property as a sector reaches far beyond the developers and sales agents – there are so many different teams and consultants that come together to get a project off the ground.”
“In my experience, women have carved out an important place in this industry and are valued for the different perspective and creativity we bring to the table.” With over a decade of marketing experience working across a diverse range of clients, Jessica brings a lot to the table. From her first role in the property industry as a Marketing Assistant for Mirvac, to her move into the retail and commercial side of property with The GPT Group, Jessica has always had an affinity for this sector. This passion has continued at Cassette, where she has spent the last six years growing the team to over 40 staff, and launching offices in Sydney and Hong Kong. Showing no signs of slowing down, Jessica says the fast-paced nature of her role is what motivates her.
“On the surface, the property industry may appear to be maledominated. However, when you start delving into the various subsectors of the industry, such as marketing, architecture and interior design, you’ll actually find a better gender balance.”
“I love the pace and dynamic nature of what we do. This financial year alone, we are on track to deliver over 20 projects within our property division across residential, retail, commercial and mixed-use.”
“I would say over 80 percent of Cassette’s property team and 70 percent of our property clients are in fact women.”
Although she oversees a diverse client portfolio including tourism and retail, the property industry’s transformative nature inspires her the most. “I’m compelled by the legacy property leaves on places and people. It’s a humbling experience knowing the projects we are involved in now will be here for generations to come.”
“Your gender doesn’t dictate whether or not you can make it in a particular industry, regardless of the statistics you might read.”because I’m a woman. I think what sets people apart is their skills, their knowledge and their capabilities.”
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Better Apartments Design Standards The Better Apartment Design Standards, which creates the unfortunate acronym “BADS” was implemented into the Planning Provisions in April this year. The BADS is a 40-page document which specifies criteria a new apartment building should achieve through 16 standards. These standards specify requirements for natural ventilation, open space, accessibility, landscaping and minimum room sizes, to name a few. Co-authored by the Department of Environment, Land, Water and Planning and the Office of the Victorian Government Architect the standards were introduced to “improve the livability and sustainability of apartments across Victoria.”
Are the BADS mandatory?
We suspect all previous Multi Housing Award winning projects would fail to fully comply with the BADS, raising the question of what is a suitable benchmark and what appropriate criteria for assessment should be? As discretionary guidelines, the BADS encourage good design, improve occupant wellbeing, and provide tools for authority assessment. We would agree that this is the correct direction for apartment design, however as mandatory conditions the BADS will place limitations on innovation and design excellence. If the built benchmarks of apartment design do not comply with BADS, it would suggest a more discretionary approach be employed to prevent compliance with the BADS leading to poor repetitive architectural outcomes. Strict design conditions would be a loss to great design and unique living experiences.
The big unknown is how rigorously the standards will be enforced, will they be used as guidelines in a more discretionary manner or be prescriptive like mandatory controls? The advice from town planning experts is that at first the BADS will be assessed like mandatory controls with little flexibility. In time, they may act more as guidelines with performance based objectives welcomed. This would be similar to the way Rescode, introduced in 2001, was handled. The truth is until many projects are approved or rejected at VCAT we won’t know for sure. This is likely to be towards the end of this year at the earliest. To give a guide as to how the industry has been reacting; in the 6 months leading to April apartment buildings were being designed to comply with as many of the standards as reasonably possible and the latest trend is towards full compliance.
TELHA CLARKE is an architecture and design practice formed by Stuart Telha and Tim Clarke following 17 years’ experience across various project types and scales, worth a combined value of greater than $1 billion. Our passion is residential living. We provide a boutique level of service and a hands-on approach. With experience covering a range of residential building types from high-end luxury homes and retirement living through to multi-residential communities, our architectural vision is based on three key beliefs; HEALTHY LIVING • DESIGN INTEGRITY • INNOVATION
For further information please call Tim Clarke, Director of TELHA CLARKE on 03 8672 5999 or visit: telhaclarke.com.au
Opinion For architects the standards contain some ambiguity and the performance based objectives offer little flexibility thus adding risk and complexity to planning applications. Bound by standards enforced strictly the design team will take a conservative approach and creative thinking will be discouraged.
A summary from DEWLP can be found here: planning.vic.gov.au/policy-and-strategy/planning-reform/betterapartments The standards in full can be found here: planning.vic.gov.au/_ _data/assets/pdf_file/0024/9582/BetterApartments-Design-Standards.pdf Stuart Telha Telha Clarke, Director
Why were standards created? In May 2015, Melbourne had seen substantial growth in the apartment market. Industry leaders and the media began discussing the quality of apartment buildings following concerns that apartments were delivering poor amenity to occupants. These concerns and reports of an oversupply of apartments led the government to introduce a discussion paper, which in turn led to the creation of the standards. Simply, the BADS are a tool for Councils and the Victorian Civil & Administration Tribunal(VCAT) to assess and enforce better apartment design.
Tim Clarke Telha Clarke, Director
What effect will they have? Early reports by the media conveyed that developers will need to “radically lift their standards under Victoria’s new apartment design regime” however these reports were inflated. There is no doubt that construction costs will rise but generally the market was already demanding higher levels of amenity. The owner occupier market will be less affected due to a typically higher standard demanded by purchasers. The projects primarily affected by the BADS are those that appeal to the investor market. The smaller apartment product with tighter internal constraints and with affordability as a concern to purchasers. No matter what part of the market an apartment building is targeting, ensuring BADS compliance is still a detailed process for the design team to undertake. We have already experienced developers challenging architects and the supporting consultants to find new ways to make projects more viable. The solution is detailed design team collaboration, focusing on building efficiency, adding diversity to the apartment mix, and finding other areas to add value. Architects and consultants will need to accept that planning applications will take longer to produce. Developers will need to realise that what could be done in the past is no longer possible.
Upper House by Jackson Cements Burrows would fail full BADS assessment, the 2015 Multiple Housing – National Architecture Awards winner. Photo: John Gollings Source: architectureanddesign.com.au/News/Upper-House-byJackson-Clements-Burrows-Architects South Yarra Residences by Telha Clarke; BADS Compliant
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5 Minutes With... At Marshall White Projects we’re privileged to work with a selection of some of the best people in the project space, both locally and offshore.
The comments below are a response to our most pressing questions; namely:
Our quarterly newsletters contain a snapshot of their first hand view of the market place and importantly what direction we’re all heading towards for the new financial year.
2. What would you do differently today?
David Steele General Manager Metro Property Development
Dean Pask CEO Pask Group
Elias Jreissati Chairman Bensons Property Group
Lachlan Thompson CEO Goldfields Group
1.
1.
1.
Renovation of a weatherboard house in Brunswick. To work hard, aim high and, shoot for the stars.
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2.
It would take multiple pages to cover that. Suffice to say, that even after a quarter of a century, I still learn new things, almost every day.
My first residential project was 76 apartments in Heatherton, prior to that I had been mainly focused on Commercial and Industrial developments. Since I started out in this industry I’ve learned that one of the most important factors of being a good developer is great communication is extremely important to the overall outcome of the project.
3.
Some fantastic land banking opportunities are starting to present themselves. Always within 15 minutes travel to the CBD, universities, hospitals and major freeways.
2.
Retrospectively you can always do things differently and/or better. If I was to do the same development today I would take into consideration a few of the consistent purchaser concerns and adapt the building to accommodate the preferred outcomes. We assess so many aspects of a development and rigorously review plans/marketing/campaign that sometimes the simplest things are missed.
3.
18 months ago we consciously decided to focus on luxury, boutique style developments. You can design and develop the best building in the world in a terrible area so above all the most important aspect for us right now is location (location, location!). We have strategically selected pockets within Bluechip suburbs of Melbourne and Sydney (Armadale, Malvern, Kooyong, Double Bay, Bellevue Hill) that will offer our purchasers the level of amenity we’d like to provide and are aggressively trying to buy sites within these areas.
2.
3.
My first project was on Mirvac’s Cutters Landing project in New Farm, Brisbane. The scale of this project (comprising land, houses, apartments, and heritage refurbishment) drove home the importance of getting the best people on a project, and ensuring that all work together as a team effectively. Hindsight is a wonderful thing – but investing in one of the early stage homes would have been a very good idea! We are looking to continue to build our portfolio in the inner west – continuing on from our recent successes in West Footscray and Maidstone. There is an insatiable demand from owner occupiers in this area for well-designed townhouses. We are also looking at building off the success of The Lincoln Apartments in South Yarra, which recently settled. (PH) 03 9804 5049 metroprop.com.au
1.
What was your first project and what did you learn from it?
3. What areas are you looking at and what are you looking for at the moment?
Our first project in Melbourne was in Rowville in the late 90’s. We have always valued surrounding ourselves with the best people and consulting teams as well as developing strong working relationships with councils and government authorities, who we value as important stakeholders in any project.
2.
The project was successful and we were fortunate in the market timing, so there is probably nothing that we would have changed.
3.
We are always assessing opportunities in growth areas for greenfield residential/retail development as well as prime infill locations for townhouse or boutique apartment projects, such as the Millswyn. (PH) 03 9605 2999 nevpask.com.au
(PH) 03 8602 0800 bensonsgroup.com.au
(PH) 03 9863 7886 goldfieldsgroup.com.au
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Past Project Profile
Past Project Profile
William 90-94 Mimosa Road Carnegie WILLIAMCARNEGIE.COM.AU
Price Range $399,500 – $909,500
Broadleaf 1528-1530 Malvern Road Glen Iris BROADLEAFGLENIRIS.COM.AU
Price Range $442,500 – $1,135,000
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Apartment Type
% of Total
Average Size per m2
Average Price per m2
Average Price
1 Bed, 1 Bath
10
51
$8,176
$409,375
1 Bed + Flexi
2
50
$8,850
$442,500
2 Bed, 1 Bath
12
63
$8,443
$535,500
2 Bed, 2 Bath
34
66
$8,350
$553,500
2 Bed + Flexi, 2 Bath
15
70
$8,620
$600,500
3 Bed, 2 Bath
27
95
$9,045
$855,000
Apartment Type
% of Total
Average Size per m2
Average Price per m2
Average Price
1 Bed, 1 Bath
6
47.4
$9,335
$442,500
2 Bed, 1 Bath
6
56.8
$9,498
$539,500
2 Bed, 2 Bath
50
88.6
$9,497
$841,688
3 Bed, 2 Bath
38
105.2
$9,834
$1,034,583
McKinley
Apartment Type
% of Total
Average Size per m2
Average Price per m2
Average Price
1 Bed, 1 Bath
7
53.0
$10,481
$555,500
2 Bed, 2 Bath
29
70.8
$11,125
$786,875
Price Range $555,500 – $2,995,000
3 Bed, 2 Bath
57
120.3
$11,117
$1,335,082
4 Bed, 4 Bath + PR
7
236.0
$12,691
$2,995,000
Jackson St
Apartment Type
% of Total
Average Size per m2
Average Price per m2
Average Price
2 Bed, 1 Bath
25
64.8
$10,261
$663,333
2 Bed, 2 Bath
33
72.5
$10,466
$758,750
3 Bed, 2 Bath
42
118.1
$11,591
$1,368,500
171 Wattletree Road Malvern MCKINLEYRESIDENCES.COM.AU
11–13 Jackson Street St Kilda JACKSONST.COM.AU Price Range $650,000 – $1,970,000
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When Considering Rental Guarantees This report takes a look at how rents for inner Melbourne apartments have performed over the past 5 years. Unlike houses and townhouses, apartment rents have remained relatively stable in recent years. Over 1,500 apartments leased between February 2012 and May 2017 were included in the study sample. This includes 600 one bedroom, 840 two bedroom, 80 three bedroom and 4 four bedroom apartments. Overall results Over the past 5 years (Table 1), both median weekly rent and sale prices have increased marginally: both are up just over 1% per annum. Since 2012/13, the median for weekly apartment rents in inner Melbourne has only increased by $30. Similarly, median prices have swung between $500,000 and $550,000, settling at just under $540,000 over the past year. This means that median yields, which are dependent on both rental income and price paid for the property, have remained nearly the same each year. In 2016/17, median yield was 4.63%, which is only 0.05% higher than the 2012/13 figure, but more than 0.3% higher than last year. Part of this increase in yield is due to a fall in median prices.
Results by location Figure 1 reveals that the inner city (Melbourne, Southbank and Docklands) currently has the highest yields in inner Melbourne, returning between 5.3% and 4.8%. This is followed by Carlton and Collingwood in the inner North, with yields of 4.8% and 4.7% respectively. Apartment investors have also fared well in the inner West, with Flemington and Kensington both returning yields just under 4.7%. Achieving this was possible due to the relatively low median prices in these areas; only $330,000 in Flemington in 2016/17. In general, as median prices increase, yields tend to decrease. This is clear when looking at Table 2, where four of the bottom five suburbs (East Melbourne, Albert Park, Middle Park and Carlton North) all had median prices well above $550,000. Among the top ten, only Docklands had an apartment median price above this level. This is similar to our findings in the housing market, where the most expensive suburbs were also those with the lowest yields. When making comparisons between each suburb, prices tend to fluctuate much more than rents. Median rents in the CBD and East Melbourne differed by only $10 in 2016/17, while apartments cost investors about $245,000 more in East Melbourne.
Inner Melbourne houses median rent, price and yield 2016/17 by suburb
SUBURB
SOUTHBANK CARLTON DOCKLANDS COLLINGWOOD KENSINGTON FLEMINGTON FAIRFIELD NORTH MELBOURNE SOUTH MELBOURNE ST KILDA
Inner Melbourne apartments median yield 2017
PORT MELBOURNE MEDIAN WEEKLY RENT
MEDIAN PRICE (INC. STAMP DUTY)
The premium paid for more bedrooms is likely due to these more spacious apartments still being undersupplied in the market. In 2016/17, three bedroom apartments sold for nearly twice the median price of apartments with only two bedrooms. Since 2013, one bedroom apartment yields have remained at similar levels, returning about 4.8% to 5% annually. The statistics for all apartment rents and yields include fully furnished rentals, which means that actual returns are likely to be slightly lower, due to the expense incurred from having to furnish the apartment. This affects one bedroom apartments the most, as these had the greatest number of fully furnished apartments in the sample. Two bedroom apartment median yields, while dropping about 0.5% from 2013 to 2015, have been improving in recent years. Yields for three bedroom apartments have been decreasing each year over the past 5 years, from 4.5% in 2012/13 to just over 3.8% in 2016/17. Conclusion
FITZROY NORTH
MEDIAN YIELD
MEDIAN PRICE
RICHMOND
Inner Melbourne apartments and units median rent, price and yield by year
YEAR
MEDIAN YIELD MEDIAN WEEKLY RENT
When breaking down the analysis by number of bedrooms, a similar trend emerges: median yields tend to decrease as the apartment gets bigger. It may seem that renters can get more value from larger apartments.
WEST MELBOURNE
Figure 1
Table 1
Results by number of bedrooms
Table 2
FITZROY BALACLAVA
Compared to houses, apartments in inner Melbourne have returned higher yields nearly across the board. On the other hand, apartments have also seen much lower capital gains, only growing in median price by about 5% over the past 5 years. The risk of an asset is often correlated with its yield. While apartments offer stronger yields than houses, they are more at risk when it comes to oversupply and any future correction.
ABBOTSFORD RIPPONLEA
Yield Calculation
PARKVILLE
In order to determine the expected yield of each property lease, the following formula was applied:
ALPHINGTON ST KILDA EAST
Annual Yield =
52 * Weekly Rent Sale Price + Stamp Duty
CHANGE
SOUTH YARRA ST KILDA WEST CLIFTON HILL CARLTON NORTH
Obviously, this measurement does not take into account the additional costs faced by landlords, such as maintenance or advertising. It serves only as a measure to compare how sale prices and rents have changed over the last few years. Yield was calculated for those properties where a sale was followed by a lease within the first six months after the sale date.
MIDDLE PARK ELWOOD ALBERT PARK EAST MELBOURNE
16
Source: Secret Agent 292 Rathdowne Street, Carlton North Paul Osborne (PH) 03 9349 4333 secretagent.com.au
17
Budget 2017: Property Winners & Losers
When Considering Rental Guarantees (continued)
TYPE
MEDIAN YIELD
MEDIAN WEEKLY RENT
MEDIAN PRICE
WINNERS
LOSERS
First Home Buyers
Developers
First home buyers will be able to use voluntary contributions to their superannuation to save for a house deposit. Withdrawals will be taxed at a lower rate, but the amount you can contribute is capped at $15,000 a year and $30,000 all up. Both members of a couple can take advantage of the scheme.
The Budget outlines that foreign ownership of new developments will be capped at 50%. To fund a development project, banks normally require more than 50% of stock to be presold. Given that many new developments, especially high-rise apartments, have traditionally been marketed to overseas buyers, limiting foreign ownership to 50% will put the feasibility of many projects at risk. This effect is compounded when combined with the recent state tax changes, such as the increase in stamp duty on off-the-plan purchases in Victoria. The number of construction jobs available will also decrease.
In Victoria, the state government will abolish stamp duty for first time buyers of homes valued up to $600,000, make cuts to stamp duty on homes valued up to $750,000, and also double the First Home Owner Grant to $20,000 in regional Victoria.
Table 4 Inner Melbourne annual median yield – 1 bedroom apartments
5%
With the first home super saver scheme, we may see increased demand for property below $600,000. This will push up the prices of houses and townhouses in outer suburbs such as Cranbourne. Inner city suburbs will be less affected, as average prices are typically above $600,000. Developers will also have to compete more agressively for development sites that allow sub-$600,000 townhouses to be built and sold in these outer suburbs.
4% 3% 2% 1%
Downsizers
0 2013
2014
2015
2016
2017
Table 4 Inner Melbourne annual median yield – 2 bedroom apartments
A person aged 65 or over will be permitted to make a nonconcessional contribution to superannuation of up to $300,000 from the proceeds of selling a principal residence owned for the past ten or more years from 1 July 2018. This is good news for real estate agencies operating in areas popular among downsizers, such as the inner city, as there is more incentive for elderly property owners to sell their home. Developers can also benefit from creating stock in these areas.
5% 4%
Resident Investors
3%
There will be new tax incentives for investing in affordable housing; specific incentives for Managed Investment Trust (MIT) vehicles, as well as a CGT concession for resident investors who invest in these schemes.
2% 1%
Renters
0 2013
2014
2015
2016
2017
Table 5 Inner Melbourne annual median yield – 3 bedroom apartments
5%
Foreign investors are being slugged with an extra charge for properties left vacant —the Budget proposes an annual levy of at least $5,000 and there will be an increase in their application fees. Combined with the state government vacant tax, these additional costs may bring some rent relief and increase stock available for renters.
One silver lining is that, together with the new apartment design standards, we may finally see new stock designed to a higher quality to capture the interest of local buyers, who are now equally important to the success of a development project. Foreign Investors Foreign tax residents and temporary tax residents will no longer be able to access the CGT main residence exemption. Grandfathering will be available until 30 June 2019 for properties held prior to 7.30 pm (AEST) on Budget night. The loss of CGT exemption could push foreign investors to sell their property as most of these investments are negatively geared already. This may eventually lead to disposal of the investment since it is no longer profitable. Investors The Government has introduced two new measures to restrict the availability of deductions with respect to depreciation deduction and travel expenses, expecting to save $800 million over the forward estimates. The restrictions on residential investment property deductions will reduce incentives for buyers to make new investments. The implications are more severe for high income earners, who can no longer claim as many deductions on tax. As there will be less demand for depreciation reports, qualified quantity surveyors may also be affected. Banks The introduction of a major bank levy from 1 July 2017 could increase cost of funding for larger banks, which may seek to be compensated by increasing mortgage interest rates.
4% Source: Secret Agent 292 Rathdowne Street, Carlton North Paul Osborne (PH) 03 9349 4333 secretagent.com.au
3% 2% 1% 0 2013
18
2014
2015
2016
2017
19
Townhouses — Back To The Future Over the last two decades there has been a well-documented resurgence of medium density living in Melbourne, and while apartments have made up the majority of this growth we have also seen a significant increase in the demand for townhouses. This shift has been driven on a number of fronts concurrently – population and demographic change, a shift in government policy, changing lifestyles, and economic factors. We have seen these drivers grow in strength over the last decade, and so undoubtedly this shift ‘back’ to townhouses will only grow further. Our practice specialises in the design of luxury apartments and townhouses and we are seeing that well designed examples of these housing typologies are not only providing alternative living options, but better living options. While the townhouse typology is very well known in Melbourne – think of the hugely desirable Victorian and Edwardian terrace housing of Carlton and South Melbourne – it has definitely taken a back seat to detached housing over the last 50 years or so. The last boom in Melbourne’s population growth in the 1960’s and 70’s was concentrated in the middle and outer suburbs and was focused on the great Aussie dream of a detached house on a quarter acre block. Australia rose to the top the world ranking for new dwelling size and the suburbs in our major cities expanded further and further. However the current boom in population growth is characterised by a flow of people back to the city centre, close to jobs and services and as a result of different lifestyle choices. The growth in the popularity of townhouses has been influenced by a number of factors. Demographic change is projected to significantly increase the proportion of people aged over 50,
while changes in household structures are increasing the proportion of single- person and couple-only households; these are all segments of the community that are attracted to townhouse living as they offer lower maintenance, lower cost, generally increased security, a better location (against a similarly priced house), and more efficient use of space. The boom in property prices is also encouraging the baby-boomer generation to capitalise on the value of the family home and ‘downsize’ to a more compact and convenient home. The options are either an apartment or townhouse, and for some purchasers the shift from a large house to an apartment is too large an adjustment, so townhouse living provides a preferable alternative.
The majority of our townhouse developments are in the inner
always receive a preferable run through planning over apartments.
eastern suburbs and while they appeal to a range of purchaser
Townhouses can achieve financial returns comparable to
profiles, the primary market is ‘down-sizing’ or ‘empty-nester’
apartments without having to push height limits and site coverage
couples; this market segment requires a particularly thorough and
as hard, and they generally have a high level of internal amenity so
detailed approach to design as they are generally well educated
haven’t attracted the level of negative attention that apartments
and discerning when it comes to property, they have most likely
have lately. While specific areas within our established suburbs
owned a number of houses and may even see this purchase as
have been targeted for apartment developments the majority
their final home. They demand quality contemporary design that
of land still has relatively restrictive planning controls that make
exhibits elegance and sophistication and are not easily swayed by
apartment developments high risk or unfeasible; however with a
the latest design fad; a strong focus on the interior is also critical
quality design response townhouses can sit comfortably
– quality of the floorplan, functionality of the spaces, quality of
in these areas and navigate the planning process with less risk.
the fixtures & fittings and materials, etc. Features that enable purchasers to ‘age in place’ and not need to move are also more
There is undoubtedly a strong need for well-designed low rise
and more common, such as individual lifts.
apartment buildings in Melbourne – as much of the work in our practice attests – but in parallel townhouses are an alternative
Townhouse developments bring with them a unique set of design
form of housing that are better meeting the needs and wants
challenges that must be considered at the site acquisition stage
of a growing proportion of the population, while also satisfying
as often the ‘devil is in the detail’. The design constraints related to single detached dwellings are very well understood; and the understanding relating to apartment buildings is maturing after the last 2 decades of strong apartment growth; however, the level of understanding of the design considerations relating to multi-townhouse developments is generally much lower.
Government policy is also directing a shift towards mediumdensity living; The most recent planning strategy “Plan Melbourne 2017-2051” includes clear policy directives to increase housing choice – away from detached dwellings – and to create higherdensity neighbourhoods to leverage social, economic, transport and environmental advantages. Of all new dwellings required up to 2051, 65-70% will be constructed in established areas; this equates to over 1 million new homes. Unfortunately there is an opposing pressure, driven by the successful ‘Save Our Suburbs’ campaign to resist increases in density and maintain the statusquo; however this provides a great opportunity for the townhouse typology as, with skilful design solutions, townhouse developments can achieve both aims of increasing housing density while still respecting existing neighbourhood characters – streetscapes, building interfaces, landscape treatments and heritage values can be maintained.
specific government policy directives. The definition of ‘townhouse’ is broadening beyond that of a very compact workers cottage – we are currently designing townhouses with internal areas up to 500m2 that incorporate features such as 4-car garages, swimming pools, and very high levels of finish, and these can sell for upwards of $6m. Much of the most highly desired real
Larger townhouse developments (10+) are effectively creating
estate in our global cities are townhouses – a terrace house in the
new micro-suburbs and so their design requires a deep
Borough of Kensington and Chelsea or a New York Brownstone.
understanding of urban design and the interface between built-
Our practice understands the specific design considerations
form and the public realm. We recently completed the design of
required for townhouses and has forged a reputation for creating
39 townhouses in Malvern East and a significant part of the design
contemporary, elegant and sophisticated designs that combine
process focused on critical aspects such as the sense of address
market appeal and town planning acumen with a deep financial and
to each dwelling, building orientation, vehicle and pedestrian
construction understanding. Our rigorous design processes focus
circulation, and particularly façade expression in order to achieve
on the enduring qualities of architecture to create finely crafted
an elegant and refined design that avoided monotony on one
and timeless buildings. With a specific emphasis on the disciplines
hand and a visual cacophony on the other. Smaller townhouse
of urban and interior design, and a deep appreciation of landscape
developments present slightly different challenges, primarily that
architecture, we ensure that our buildings are recognised as
of coordinating vehicle and pedestrian access and maintaining
exemplary residences.
vertical connectivity between levels, while ensuring design quality and yield is maintained.
Paul Conrad DIRECTOR
Our practice has developed a high level of expertise in designing
(PH) 03 9421 6103
apartment and townhouse developments that combine design
conradarchitects.com
quality and maximum yield, but can also navigate the planning process smoothly, and we commonly find that townhouse projects
Economic and lifestyle factors are also encouraging the shift to townhouse living. As property prices rise people are unwilling to forego the lifestyle benefits of living close to services, amenities, schools and work so they are choosing more compact and affordable housing options. In the past it has often been seen as a compromise to live in a townhouse, but we believe that well designed townhouses can actually offer a significant improvement in quality of living over many detached dwellings, and it is this fact that our practice is focused on exploring and emphasising. Our townhouses offer more efficient building layouts that far better respond to contemporary living with aspects such as light-filled living spaces directly connected to useable courtyards, cross-ventilated rooms, secure basement carparking, cellars, theatre rooms, generous kitchens and butler’s pantries and even swimming pools and roof terraces; all in a modern, secure and low-maintenance format.
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Changes to Foreign Investment Review Board Tax
Funding Market For Residential Developers
Purchasers of Australian property worth $750,000 or more may now be required to withhold 12.5 per cent of purchase price at settlement.
Adrian Blake from PGF Australia, a boutique real estate credit provider, has kindly provided his thoughts on the current funding market for residential developers and what his thoughts are on what the future of development funding could look like…
If you are a vendor or purchaser of an Australian property with a market value of $750,000 or more, the Government’s recent reforms to improve housing affordability may directly affect you. The Government announced, as part of the 2017-18 Budget, that purchasers of certain taxable Australian properties from foreign resident vendors will be required to withhold 12.5 per cent of, generally, the purchase price and pay it to the ATO. Vendors who are not foreign residents will be deemed to be a foreign resident unless a valid clearance certificate has been obtained from the ATO and has been given to the purchaser prior to settlement. This withholding obligation now applies to all contracts entered into on or after 1 July 2017 for the acquisition of Australian property that has a market value of $750,000 or more. The changes The original foreign resident capital gains tax (CGT) regime came into effect on 1 July 2016 to assist in the collection of CGT liabilities from foreign residents or those deemed to be foreign residents. It required that purchasers of property with a market value of $2 million or more withhold 10 per cent of the purchase price from the foreign resident vendor. Current taxation law now requires a purchaser to pay 12.5 per cent of the purchase price to the ATO if a foreign resident capital gains withholding payments obligation arises. The obligation will arise in relation to a capital gains tax asset if the market value of the asset is $750,000 or more and the asset is a “taxable Australian real property or the holding of an indirect taxable Australian real property interest causes a company title interest to arise”.
Why This change to the foreign resident capital gains tax is part of the Government’s range of reforms to improve housing affordability and crack down on tax avoidance. MP Michael Sukkar stated that “by clamping down on tax avoidance by foreign investors in real estate, the government is ensuing home ownership is more achievable for ordinary Australians, and that they have access to secure and affordable housing”. To further implement the Government’s reforms to improve housing affordability, foreign and temporary residents are also now denied access to the CGT main residence exemption. However, if you held the property prior to 7:30pm (AEST) 9 May 2017 you will be able to access the main residence exemption until 30 June 2019. Impact These changes to the withholding obligation will impact both the purchaser and vendor of the property. If you are the purchaser, you will need to ensure that the contract of sale gives you a contractual right to withhold the money from the vendor at settlement. Even though the withholding obligation is a statutory requirement, you may be in breach of the contract of sale if there is no such clause. If you are a foreign resident vendor or deemed to be a foreign resident vendor the impact of the withholding obligation may create cash flow issues if not managed properly. Written by Ted Vlahos (Director) and Jessica Tomlinson (Graduate) of Pointon Partners Lawyers (PH) 9614 7707. pointonpartners.com.au
It’s no surprise to most that half way into 2017 the commercial property lending market in Australia remains challenging for the majority of residential property developers. Tighter capital requirements from the Australian Prudential Regulation Authority (APRA) has led to banks, the traditional sources of construction finance tightening availability, terms and reducing the quantum on loans for commercial real estate development sector.
So where to from here? As more capital enters the market real estate owners, developers and investors will be the winners as the supply of debt capital moves closer to equilibrium and non-bank lenders become more sophisticated, offer more flexible financing structures, higher quantum and more competitive pricing structures. Despite this I do not expect pricing to return to pre-2015 levels for some time. For further information contact Adrian Blake of PGF Australia (PH) 0421 618 724 pfgaustralia.com.au
The continued tightening from the banks has led to a surge in non-bank offerings entering the market to meet the shortfall of credit. These funds are being utilised to assist developers settling development sites, fund pre-development activity, fund the completion of projects and finance unsold stock (predominantly in the residential development space). Non-bank lenders typically operate as an intermediary between the property developer and the large pools of capital, such as US pension funds who are seeking higher yield in the current low interest rate environment. So what has changed this year? Historically non-bank capital has been most prominent in the higher yielding mezzanine debt, preferred equity and lower credit quality space. We are now seeing an influx of capital into the higher credit quality senior debt space, an area that has previously been dominated by the big 4 trading banks (with the exclusion of pre-GFC when the international banks were prevalent in the Australian market). The investors targeting this type of capital investment are focused on the Melbourne and Sydney markets, with Brisbane to a lesser extent and typically institutional in nature. The capital originates from both within Australia and offshore. We have also witnessed an increase in the size of the capital pools, with single institutional investors allocating hundreds of millions of dollars to the sector, with the larger pools of capital originating from the broader Asian region and North America. Asian capital is being deployed by sovereign wealth and pension funds, Australian capital via superannuation funds and the North American capital sourced from pension and insurance funds. The key object for these investors is to increase their limited exposure to the real estate lending sector in Australia. Real estate lending provides investors with an opportunity to generate attractive returns for secured first mortgage transactions where key risks are well mitigated in a stable and transparent economy like Australia. The investment teams managing and deploying this capital are highly sophisticated and experienced in real estate lending across a number of different markets.
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A Strong Confident Market In 2017 It’s no secret that Australian’s love to talk about the housing market. At the kids' Auskick or basketball, dinner parties, family BBQ’s, work functions, and in meetings we all have something to say about housing prices, auction clearance rates, construction standards, and which are the fastest growing suburbs in Melbourne. This means that the state of play in the housing market is an important barometer for our economy and for consumer confidence. Members of the property industry typically have a more balanced perspective as they are able to relate a broader base of personal professional experience to what is reported in the news. The common theme among the property industry is that the market is continuing its strong run from 2016 into 2017. Tony Bevacqua, General Manager — Business Development, Sales & Marketing, for Creation Homes Victoria confirmed this: “Overall, sales rates on all projects have continued their run from 2016, and the people I speak with in the industry are positive about the state of the market. From a building perspective, we are very busy at Creation Homes and we have a number of exciting new developments in the pipeline for a wide variety of projects and products. These include single & double storey homes in the growth corridors through to architect designed triple-story townhouses in the inner suburbs. Across all housing types and in all the areas we operate we’ve seen continuing strong demand and full order books from both new home-buyers and investors. In the broad-acre market in the growth corridors, land releases in good estates are selling out fast and we’ve had the same response to our house and land packages and townhouse product in new communities.
What Are People Buying in Growth Corridors?
What Drives Buyers & Investors in Inner City Developments?
The Importance of Quality
While demand is strong, there are typically segments or housing types that outperform the others. This is typically suburb dependent — depending on the demographic of the area — and it can be driven by other factors such as what is available or basic affordability.
It’s no secret that Melbourne’s blue-chip suburbs have experienced quite spectacular growth and demand seems to be perpetually strong. To help meet demand, subdivisions, infill sites, and urban redevelopment have been popular. In recent years, a growing area of the market has been boutique developments in inner city and inner suburban locations.
There are a number of factors that contribute to quality such as design, construction, and location. In an established area the locations have been proven over decades and buyers choose based on established amenity such as the reputation of the local school, proximity to transport, the ease of commuting to work, and the nearby recreational facilities. In new land developments, the same principles apply and buyers and investors flock to the estates that include parks, schools, shopping, transport links and a strong local community — all the elements that add up to family friendly living.
Tony Bevacqua commented: “The product that has been most in demand varies across the different projects — but we’ve been keeping a close eye on this. When demand is strong it's easy to get carried away with the market but we make sure we focus on the housing types that are really in demand so that we do the right thing by our customers. In the new growth suburbs, the common theme is that buyers and investors are looking for large family homes with plenty of space and extra features such as cinema rooms and outdoor/alfresco entertaining areas. However, affordability and value for money is important and land prices have increased so this puts pressure on people's budgets. This means that to stay ahead of the market it’s important to think of what the situation will be like in 6 or 12 months or even a few years ahead and develop the sort of homes that will tick all the boxes. This is one of the reasons that we’ve been focused on continually developing and refining our homes to make sure that we can give the sort of open-plan modern living that buyers are looking for but find ways to make these larger homes work on smaller lot sizes. We’ve achieved this with some key changes to the layouts and by really working on the flow of the homes and the interaction between the spaces as well as ensuring lots of natural light. Interestingly, those same principles have applied to our townhouse product. Townhouses have really come a long way over the last few years and our 3 and 4 bedroom townhouses are really full sized family homes but carefully packaged to give them a smaller footprint and therefore make the package more affordable. This is great for say first home buyers as they can get a family sized home that meets their budget. It’s also really good for investors."
These projects are designed by some of Melbourne’s best architects with the backing of local or international investors and reflect the rising demand for modern, architect-designed homes and townhouses on in-fill sites. Speaking from experience, Tony Bevacqua said: “Creation Homes have really seen an increase in this area and we have successfully delivered a number of these projects. These projects are designed by some of Melbourne’s best architects with the backing of local or international investors and reflect the rising demand for modern, architect-designed homes and townhouses on in-fill sites. Given that the Architect designs the homes, the key here is offering customers the full suite of design and construction services and taking responsibility for delivering the project true to the original vision of the architect. We’ve found that architects are delighted with our ability to address complex design and engineering problems and come up with cost effective build solutions. They also appreciate that we commit to a firm construction timeline.
Tony Bevacqua commented: “Buyers and investors are looking for quality homes and townhouses in blue chip suburbs and quality land estates. The underlying factors are the same and people choose based on both their spending power and the lifestyle that they are looking for. At the end of the day real underlying quality is what gives value for money — people are savvy — they can pick a good home and they know what to look for — quality homes in quality locations — that is always the underlying X factor.” For more information on Creation Homes or to discuss your project, please visit creationhomes.com.au or call Tony Bevacqua on (03) 9867 3781.
The flow on effect for buyers is very positive — they get their new home or investment finished on time and they can count on it being built and finished to the high standard that they expect. These are discerning buyers and they have the right to demand quality.”
The pattern is the same in the inner suburbs — quality properties are in demand and we are seeing strong pre-sales on new developments. We’ve been engaged to construct some particularly high-end developments in some of Melbourne’s best suburbs and they’ve all sold well. On that basis, I can see the momentum of 2016 continuing through 2017 — no problem.”
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Box Hill to Become Melbourne’s New CBD? Paul McAleer, Associate Director Planning | Infrastructure
The perfect storm that is seeing this leading metropolitan activity centre realise its true development potential. Recognised as the gateway to the eastern suburbs, Box Hill has come a long way from its initial suburban identity. With a number of major urban redevelopment projects underway and many more set to define the city skyline, Box Hill has become the fastest growing city centre outside of the Melbourne CBD and is now offering a genuine alternative to the Melbourne CBD for investment, employment, entertainment and a place to stay. It is somewhat the perfect storm that has been created that makes Box Hill an attractive proposition for a range of key industry players. The town centre is well served in terms of infrastructure. Box Hill benefits from a well-located and established activity centre and shopping centre (Box Hill Central) with a diverse range of retail, commercial, food and beverage and entertainment offerings. The town centre is a major public transport hub, well supported by rail, tram and bus routes with both the Belgrave and Lilydale railway lines converging deep below the shopping centre, major tram routes located along Whitehorse Road and a regional bus interchange located above the shopping centre. In terms of employment generation Box Hill also boasts the highest office floor area outside the Melbourne CBD and has been a long time home for some major health (Box Hill Hospital and Epworth Hospital) and education facilities (Box Hill Institute and Box Hill TAFE). Unlocking the potential in Box Hill has been the strategic work that has been carried out by Whitehorse City Council with support given to this vision by State Government for decentralisation. The Box Hill Transit City Activity Centre Structure Plan was introduced in 2006. The structure plan provides a framework for city development and identifies areas for growth with an emphasis on contribution to employment generation, housing supply and the 24 hour city. Of note is Precinct F where there are no height limits and higher rise development is encouraged. This area is otherwise known as the development ‘’go zone’’ in Box Hill.
Momentum has been gathering since the adoption of the structure plan though it has only been over the last few years that the development industry has sat up, taken notice and tapped into Box Hill’s true potential. Investment in Box Hill has skyrocketed in the last few years with much of this coming from Asian investors, and more specifically from China. It is worth noting that a significant proportion of the Box Hill population comes from Chinese descent and Box Hill host one of the biggest Chinese New Year’s parties in the country. There has still been a great deal of interest and investment from local investors too. The potential for uplift in value in properties has been a huge drawcard with single dwelling lots being converted into high rise multi dwelling mixed use developments. The sheer scale of potential development, encouraged in the Box Hill MAC, makes it an attractive prospect. Another key factor is that property values have grown considerably more in Box Hill than in any other suburb in Melbourne. Property values have increased by a whopping 927% in Box Hill over the last 20 years. The adoption of the Box Hill Transit City Activity Centre Structure Plan all of 10 years ago has been a key catalyst for this. What has set Box Hill apart from other satellite centres such as Dandenong, Ringwood and Footscray is that the investment to date has largely been pouring in from the private sector. Whereas other centres have relied on State Government funding to a degree to kick start investment interest. Box Hill is now experiencing a building boom with a series of major projects underway or complete. And with up to 50 major developments with planning approval yet to commence construction and many more currently in the pipeline, at the planning and pre-planning application stage, we will soon be seeing considerably more tower cranes in the Box Hill skyline over the next couple of years.
“There will be an unprecedented growth in population and jobs as a result of these projects.”
This though is only the tip of the iceberg with many more redevelopment opportunities still yet to be realised in Box Hill. Some recent key landmark developments in Box Hill of note are: the Box Hill Hospital redevelopment (completed), the new ATO at 20 storeys with 20,000sqm of leasable floor area (completed and occupied), the Whitehorse Towers at 36 and 26 storeys, which includes 511 apartments and an Art Series Hotel (currently under construction), Sky One at 36 storeys, which includes 450 apartments and a food and beverage entertainment hub at street level, and the Spotlight development comprising three towers at 37, 30 and 17 storeys with a hotel and 450 apartments (currently under construction). Other key major development projects recently approved by Whitehorse Council include mixed use and apartment developments at: 820 Whitehorse Road at 30 storeys, 9-11 Prospect Street at 26 storeys and 5-9 Wellington Road at 16 storeys. The keen interest from prospective buyers is also worthy of note. The Whitehorse Towers development (Asia Pacific the developer) is one example where development interest has been vindicated. It is understood that most of the 511 apartments sold off the plan within 6 weeks. Apartments have also flown off the plan at Sky One (Golden Age, the developer). Success with rapid conversion with these projects has built more confidence in investors and developers and the like. Opportunities »» Land to be rezoned. »» Mix of uses and new uses. »» Clear strategy and guidelines as to where growth will/will not be supported. »» Rare political appetite supporting growth (unparalleled in Melbourne’s east). »» Opportunity for growth in spite of new height restrictions in the Melbourne CBD and indecision over Melbourne’s major urban renewal projects. Box Hill is well and truly booming and it has all the right ingredients for this to continue for some time. Whether you are coming to invest, work, live or play Box Hill is fast becoming the place to be. Paul McAleer was former Planning Manager at the City of Whitehorse where a key focus was guiding major development projects in the Box Hill MAC. Paul joined Meinhardt as Associate Director — Planning. For more information contact Paul McAleer on 03 8676 1200 or visit: meinhardt.com.au
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