australian real estate market - deloitte · pdf fileover 3,000 property assets ... gold coast...

Why Invest in Australia 1© 2017 Deloitte Touche Tohmatsu. All rights reserved.

Australian Real Estate Market

Will it continue to boom?

5 June 2017


Advisory & Consulting

Highest and Best Use

Asset optimization

Feasibility modelling

Stakeholder advisory

Portfolio & options analysis

Provided strategic advice on

over 3,000 property assets

Occupier Advisory

Creation of a corporate real estate strategy

Tenant representation

Operating model enhancements & cost savings in real estate platform

Re-alignment of Real estate platform to suit business need

Advised on over 3 million

square metres of space

Construction & Project Assurance

Development Management

Construction & Project Management

Superintendent Services

Overseen 100+ projects from

concept to completion

Transactions Services

Connect major capital providers and developers

Structuring Joint Ventures

Procurement of primary debt, equity or mezzanine funds

Buy & Sell side mandates

Lead transaction advisor on

over $3 billion of capital

raised or assets transacted

ConsultingAudit Tax Financial Advisory Risk Private Clients

Deloitte Real Estate – Where we fit and what we do


Perspectives on Australian economy and property market


The core drivers of Australia’s property fundamentals

• A strong and growing economy

• A place where people want to live and work

• A safe and transparent place to do business

• An established destination for foreign investment

A robust property market with

additional upside potential


A strong and growing economy

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Australia Canada United States United Kingdom Euro Area Japan

Comparative GDP Growth Rates of selected advanced economies

2000 - 2015 2016 - 2021

Source: IMF

Australia currently holds the world record for

the longest period without a recession

GD

P G

row

th p

er

annum


0.0

1000.0

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7000.0

8000.0

9000.0

10000.0

Dec-2000 Dec-2002 Dec-2004 Dec-2006 Dec-2008 Dec-2010 Dec-2012 Dec-2014 Dec-2016

Australia Household Net Worth (A$ Billions)

A strong and growing economy

Source: Australian Bureau of Statistics (ABS)


A place that people want to live and work (1/2)

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1980

1982

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1994

1996

1998

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2004

2006

2008

2010

2012

2014

2016

Australia Population (millions)

95

100

105

110

115

Population Growth Projections Index 2015-2021 (2015 Population = 100) - Select

Advanced Economies

Source: International Monetary Fund

Source: International Monetary Fund


0

500,000

1,000,000

1,500,000

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2,500,000Ja

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2

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8

Jan-0

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Jan-0

7

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3

Jan-1

6

Overseas Arrivals into Australia


A place that people want to live and work.. and play! (2/2)

0

20,000

40,000

60,000

80,000

100,000

120,000

Jan-9

1

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Mar-

94

Oct-

95

May-9

7

Dec-9

8

Jul-

00

Feb-0

2

Sep-0

3

Apr-

05

Nov-0

6

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8

Jan-1

0

Aug-1

1

Mar-

13

Oct-

14

May-1

6

Monthly Arrivals into Australia – Chinese

Tourists


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12

Str

ength

of

Legal Rig

hts

Index

A safe and transparent place to do business

Transparent Property Market

Higher Scores = Greater Strength of Legal Rights

Source: Transparency International Corruption Perception Index

Source: World Bank Doing Business Survey

91 9086 85

81 8179

75 75

37

29

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Respected Regulatory Environment

Weak

Str

ong


Resulting inflow of foreign capital into property market

Source: Australian Bureau of Statistics (RBS), RCA; Colliers International, Courier Mail


Property market perspectives


Residential Market – a tale of two cities

60

80

100

120

140

160

Residential Property Price Index

Sydney Melbourne Brisbane Weighted Average of eight capital cities



CBD Office: Weighted Average Yields by grade

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q2017

Secondary Prime


Recent Transactions: CBD Office

Location Asset Sale Date Sale Price (Million AUD)

$/m² Lettable Area

Approx. Yield

Origin of Capital

PREMIUM GRADE ASSETS

BrisbaneGreen Square Jan-17

$205.5M $11,664 6.3% South Korea

Brisbane 324 Queen St Oct-16 $132M $6,642 7.14% Australia

Melbourne World Trade Centre, Docklands Jan-17 $267.5M $5,350 6.5% Australia

Melbourne Southgate Complex, Docklands Nov-16 $578M $7,584 6.4% Singapore

Sydney 1 Shelley St Apr-16 $525M $15,916 5.48% Australia

Sydney 420 George St Apr-16 $442.5M $15,565 5.3% Australia

SECONDARY GRADE ASSETS

Brisbane Mineral House Feb-16 $159.8M $5,424 8.70% Australia

Melbourne 120 Spencer St Apr-16 $165.2M $5,128 6.92% Australia

Sydney 15 Castlereagh St Mar-16 $120M $9,335 6.0% Foreign


Recent Transactions: Large Format Retail

Location Building Name GrossLettable

Area (m²)

Sale Date Sale Price (Millions

AUD)

$/m² Lettable Area

Approx. Yield

Origin of Capital

Melbourne Casey Central Shopping Centre 28,699 Dec-16 $220M $7,666 5.3% London

Melbourne DFO Southwharf 56,281 Feb-17 $565M $10,039 7.0% Australia

Sydney Mid City, Pitt Street Mall 9,426 May-16 $320M $45,265 4.6% Hong Kong

Sydney Campbelltown Mall 42,199 Aug-16 $197M $4,668 6.0% Australia

Brisbane Toombul Shopping Centre 46,754 Jun-16 $228.1M $4,879 6.5% Australia

Gold Coast Runaway Bay Shopping Village 37,990 May-16 $320M $8,423 5.9% Australia


Recent Transactions: Industrial and Subdivisions

Location Building Name Use Sale Date

Sale Price (Million AUD)

$/m² GLA Yield Origin of Capital

QLD Curlew St, Port of Brisbane Logistics Dec-16 $35.1 $1,301 7.1% China

VIC 1 Hume Road, Laverton North Cold Storage Feb-16 $205.88 $1,673 6.8% China

NSW 274 Victoria Rd, Rydalmere Manufacturing Jul-16 $47.6 $2,094 6.03% Australia

Location Address Sales Price

(AUD)

Land Area (Ha)

Rate/ m² Sale Date Origin of Capital

QLD Teviot Downs Estate, Greenbank $50m 153 $33 Sep-16 Australia

QLD Eden’s Crossing, Redbank Plains $30.3m 33 $90 Jul-16 Australia & Thailand

VIC 1030 Dohertys Rd, Tarneit $70m 62 $113 Mar-17 Australia

VIC Sayers Rd, Tarneit $180m 184 $98 Mar-17 Australia

VIC 50a Hacketts Road, Point Cook $190m 103 $185 Dec-16 China

NSW 64 Mackillop Drive, Baulkham Hills $87m 12.5 $696 Dec-16 China

NSW Richmond Road, Blacktown $290m 95 $305 Jun-16 Australia

Land Subdivisions

Industrial


An unprecedented funding opportunity


An unprecedented funding opportunity (1/3): Background

The Australian Prudential Regulatory Authority (APRA) has tightened lending regulations for Australian banks, particularly in relation to property exposures

By way of example, where banks previously lent up to 80% of costs to develop a residential apartment project, very few developers are securing loans to fund over 60% of costs

As a result, many experienced local developers with high quality, de-risked projects with strong pre-sales in place are awaiting funding to proceed

An opportunity exists to lend on terms previously offered by the banks, including first mortgage security, while securing internal rates of return between 10% and 15%

A number of experienced international investors are pursuing this opportunity, including:


An unprecedented funding opportunity (2/3): Bank Pullback

Source: ABS; APRA

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Annual Growth in Commercial Lending Limits to Residential

Developments

Land development/subdivisions Other residential


Location • Gold Coast, South East Queensland

Project

• Iconic residential project led by highly

experienced sponsor

• c. US$100m Total Development Costs

Facility Description

• c. US$70m senior construction facility

• 75% Loan to Cost

• 65% Loan to Net Realisable Value

Indicative Returns • Net yield of c. 13% IRR (in US$)

Security

• First Mortgage

• Personal Guarantee from sponsors with

US$75m+ net worth

• 120% Pre-sale coverage

An unprecedented funding opportunity (3/3): Case Study


Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

About Deloitte

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte's approximately 200,000 professionals are committed to becoming the standard of excellence.

About Deloitte Australia

In Australia, the member firm is the Australian partnership of Deloitte Touche Tohmatsu. As one of Australia’s leading professional services firms. Deloitte Touche Tohmatsu and its affiliates provide audit, tax, consulting, and financial advisory services through approximately 6000 people across the country. Focused on the creation of value and growth, and known as an employer of choice for innovative human resources programs, we are dedicated to helping our clients and our people excel. For more information, please visit our web site at www.deloitte.com.au.

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Member of Deloitte Touche Tohmatsu Limited

© 2017 Deloitte Touche Tohmatsu

australian real estate market - deloitte · pdf fileover 3,000 property assets ... gold coast...

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