AFRGA1 A038

FOR SALE – THE NEW BASECOLLECTION – 5 YEAR WALE +

DEVELOPMENT LAND

» Three new industrial facilities + development land» Combined GFA 7,710m2* with building approvals for up to

11,310m2*» 20,478m2 of general industry land across four lots» Existing WALE 5.9* years» Diversified income with staggered lease expiries» Current net income $1,100,000*» Strong annual fixed reviews» Located within northern Brisbane's successful New Base

Industrial Estate» Offered individually or in one line

For Sale via Expressions of InterestClosing Thursday 2 April 2020 at 4pm (AEST)

Gary Hyland0413 288 933

Dillon Murphy0418 959 776

Nick Bandiera0421 881 093Ed Bull0438 619 692

38 KINGSBURY STREET, 5 GRIFFIN CRESCENT,2 & 10 MAXWELL STREET, BRENDALE QLD

*Approx

AFRThursday 5 March 2020The Australian Financial Review | www.afr.com

commercialrealestate.com.au

38 Property ><

Melbourne land upswing under way● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

Exclusive● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

Larry Schlesinger RICHLIST

Rich lister Nigel Satterley.

Financial ReviewRich Lister andhousing developerNigel Satterleyexpects Melbourne lot prices will fallby 3 to 5 per cent over the next 12months, but says the recovery in thecountry’s biggest house and land mar-ket is well under way.

Mr Satterley also said he did notexpect the coronavirus to dent any ofthe renewed appetite from families forhousing lots, given strong populationgrowth and the attractive home loandeals on offer. Nor did he expect it tohave a great impact on house building.

‘‘It’s terrific. The home loan market isvery competitive. Any credit-worthyfamily can get a home loan. The bankswill lend on low deposits,’’ he said.

Equally competitive are developers.Mr Satterley said that in some pocketsof the market, lot prices had fallen by asmuch as $60,000.

‘‘I predict that the lot prices will dropa further 3 to 5 per cent ($10,000 to$15,000) as we work through the over-supply of stock and high cancellationsthis year,’’ he said.

On the other hand, he said salesactivity was picking up strongly afterfalling to just 500 lots a month last yearfrom a peak of 2000 a month about twoyears ago.

‘‘We’re now at 800 net lot sales permonth, building to 1000 lots per month

by the end of this year. By mid 2021 themarket will be running at 1250 permonth,’’ Mr Satterley said.

Despite the lift in sales, he saiddevelopers and builders were still deal-ing with a high cancellation rate, mostlyfrom speculators who could not settle.

‘‘Don’t listen to what anyone else tellsyou, the cancellation rate in Melbourneis still at 20 per cent. But that’s mainlydue to speculators who can’t settle,’’ saidthe 40-year veteran of the land market.

But he said his often-quoted tale ofan Uber driver borrowing money tospeculate on land (as reported in theAustralian Financial Review) hadscared off most speculators.

He said the biggest price falls for astandard 400sq m block were onDonnybrook Road in the north (down$60,000), Deanside Plumpton in thenorth-west (down $50,000) and Cran-bourne and Clyde in the south-east(down $30,000).

‘‘It’s been a price correction, not abust,’’ he said.

While he said the virus was a ‘‘realissue’’ and backed the Reserve Bank’s

rate cut this week, Mr Satterley did notexpect any drop-off in homebuyerdemand, given the strength of the Mel-bourne economy, strong populationgrowth and the $120 billion to be spenton infrastructure projects in the stateover the next four years.

‘‘On Saturday we opened the displayvillage at our Botanical Estate [in thenorth]. We had 27 homes, a degusta-tion food hall and a creche. Two hun-dred families came along and ourbuilders reported good sales and goodleads,’’ he said.

‘‘The coronavirus won’t be an issue[for lot sales]. There is so much work inMelbourne from the new tunnels,bridges, roads, rail and airport infra-structure,’’ he said.

‘‘We’ve not heard anyone say to us:‘We’re not buying because of the coron-avirus’.’’

Mr Satterley said obtaining materialswas not an issue as most were locallymade. Satterley Property Group’s othermain market, Perth, was also pickingup, though at a much slower pace, MrSatterley said.

Strategy rejig: Quest toput hotels next to malls

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Larry Schlesinger

An artist’simpression ofthe QuestWatergardensin Melbourne.

Serviced apartment giant Quest hasrejigged its development strategy witha focus on developing and operatingsuburban hotels next to large shoppingcentres.

The 170-strong franchise group hasstruck a deal to open a new 86-roomhotel at the Queensland InvestmentCorporation’s (QIC) Watergardensshopping centre and town centre inMelbourne’s north-western suburbs.

Its the second hotel deal at a QIC-owned mall, following the opening of aQuest Apartment Hotel at the PacificEpping Shopping Centre in 2018. QICjointly owns the mall with FinancialReview Rich Lister, the Alter family.

Construction will soon kick off on thenew Quest Watergardens hotel as partof the expansion of the mall and towncentre. Quest will lease the new hotel

from QIC and appoint an existing fran-chisee to run it.

Quest founder and executive chair-man Paul Constantinou said the firstmall hotel at Epping Plaza had worked‘‘magnificently’’ and it intended to rep-licate this strategy in more deals withmall landlords, including QIC.

‘‘Its great for us as our hotels havevery little amenity,’’ he said. ‘‘If you arenext to a mall then you can go to thefood court for a meal, shop at Chanel,go to the movies or just be among otherpeople.

‘‘Being a corporate traveller [Quest’score market] can be a lonely job.’’

The Quest strategy follows a similarpath trodden by a number of hotelgroups and mall landlords.

These include QIC, which partneredwith Singapore’s Silverneedle (nowcalled Next Story Group) to open a120-room Sage Hotel above the East-

land Mall in Ringwood in Melbourne’seastern suburbs.

Also getting in on the act has beenASX-listed Vicinity Centres, which hasopened an Accor-operated McGalleryhotel at its flagship Chadstone Shop-ping Centre in Melbourne.

‘‘We’re currently in talks with a num-ber of shopping centre owners,’’ MrConstantinou said.

‘‘We respect our partnership withQIC, but will also deal with other land-lords, be they REITS or unlisted trusts.’’

Asked how Quest was being affected

by the coronavirus, Mr Constantinousaid he expected business would drop,but not to the extent felt by traditionalhotels.

‘‘We have not seen a lot of pullback.Our core market is the domestic cor-porate traveller. We are not focused onthe Chinese market, which is where thechallenges are for the accommodationindustry.

‘‘The corporate market is still travel-ling because they have to. We deliber-ately built the business around thismarket because it’s not discretionary.’’

Wingateseeks moreexposure

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Larry Schlesinger

Melbourne-based investment houseWingate has snapped up a suburbanoffice building from Financial ReviewRich Lister Larry Kestelman as part ofits plans to boost exposure to the com-mercial property market.

Amid a trend of suburban officeinvestment, Wingate has partneredwith real estate investment firm AlignProperty Partners to buy 1001 NepeanHighway, a five-level office building inMoorabbin, in the city’s south-east, for$16.65 million, with plans to do a majorrefurbishment and upgrade.

Once complete, the partners hope tohave an asset worth about $40 million,delivering a yield of about 5 per cent.They have already leased three of thefive levels – a total of 3077sq m – to SPAlliance, the Lendlease-led consortiumundertaking the Victorian govern-ment’s level crossing removal project.

Align Property Partners was foun-ded last year by Guy French-Wrightand Jack Mahoney, whose experiencespans roles at Mirvac, QuintessentialEquity and ISPT.

The pair has office space in Wingate’spremises at 101 Collins Street, with plansto collaborate with the prominent fin-ance house on other projects.

Ryan Levin, joint managing directorof property at Wingate, indicated thejoint venture partners would be likely tosell the asset in the short to mediumterm. ‘‘We’ve never been a core buy, holdand generate income investor,’’ Mr Levintold The Australian Financial Review.

‘‘We’re looking for acquisitions withupside potential through developmentor a change of use or strategy.’’

Mr Mahoney said Wingate wouldprovide the capital and Align the com-mercial development expertise. ‘‘Ourfocus is on value-add opportunities inthe fringe and suburban office marketsof Melbourne, where there is a pool ofinvestment opportunities,’’ he said.

Mr Levin and fellow joint managingdirector of property at Wingate, MarkHarrison, said plans to increase thefirm’s exposure to commercial assetswere not in response to last year’s$500 million collapse of Sydneydeveloper Ralan. Wingate was Ralan’sprimary lender.