Property News

Source:   CRE. 13 January 2025 By Kirstan Ross 

After years of economic uncertainty, Australia’s commercial property sector is poised for significant transformation in 2025, fuelled by cautious optimism that inflation will ease and the Reserve Bank of Australia (RBA) will cut interest rates, experts predict. 

Return-to-office policies will accelerate demand in the high-end office sector while investors look set to re-enter the commercial real estate (CRE) market after a long hiatus. Retail is experiencing a long-awaited comeback, and changes to the way we live and work are fuelling different demands in the industrial sector. 

Leading industry players – including Knight Frank, Ray White, JLL, Deloitte, and Cushman & Wakefield – have unveiled their forecast reports, highlighting key trends and opportunities for the year ahead.

Here are the emerging trends to keep an eye on in 2025.

According to Ray White’s Property Outlook Report 2025, the rising cost of living is putting pressure on the RBA to provide some relief to mortgage borrowers through lower rates.

“Financial markets think they will cut interest rates twice in the second half of the year, but this prediction could change depending on how things play out,” says Ray White chief economist Nerida Conisbee.

Several factors will influence when and by how much the RBA cuts rates.

“Their timing and size will depend on how inflation behaves, what happens in the global economy – especially in the US – and how well the Australian economy holds up through the year.”

According to Cushman & Wakefield’s 2024 EOY Market Commentary & 2025 Forecast, the Australian economy is expected to recover as inflation eases and the RBA slashes interest rates.

The national outlook reflects cautious optimism, with signs of recovery across key sectors and long-term growth potential.

“While 2024 has not progressed as many expected, the Australian economy is expected to recover through 2025 as inflationary pressures subside and allow the Reserve Bank to pivot and begin its rate-cutting cycle,” says Cushman & Wakefield ANZ chief executive Noral Wild.

Knight Frank’s Australian Horizon 2025 report says well-located core assets have now largely repriced and are poised to start recovering in 2025, with pricing, if not yet formal valuations, now at a cyclical low.

“Investors acquiring assets now – after values have adjusted down but not yet commenced the recovery – will be well-placed to see strong returns in years to come,” says the report’s author, Knight Frank chief economist Ben Burston.

“Core industrial and CBD office assets in Sydney will lead the way before the recovery extends to other cities.”

Wild says commercial real estate capital markets are rebounding, with 2024 investment volumes surpassing the total for 2023 by $1 billion within the first nine months, with the growth trend expected to continue.

Investment volumes for office, retail and industrial properties exceeded 2023 levels late last year, while alternative assets are on track to match last year’s performance. 

“Commercial real estate valuations are expected to stabilise in 2025, accompanied by a gradual recovery in transaction volumes,” Wild says.

“Cushman & Wakefield projects an overall eight per cent adjustment in CRE pricing during this cycle, with a rebound of 20 per cent anticipated by 2030, beginning in late 2025. The pace and extent of this recovery will differ across asset classes, as the RBA shifts its stance and the economy emerges from a cyclical slowdown, paving the way for renewed market momentum.”

After nearly three years with markets in a state of flux, many investors have reset their expectations and are ready to hone in on their preferred investment opportunities.

“This will drive broader interest and higher liquidity across all asset classes in 2025,” Burston says.  

“Many investors are now attracted by lower pricing in the office market, while other groups are more focused on living sectors and have taken time over the past two years to better understand the feasibility constraints and are now better placed to execute on new developments.

“Meanwhile, retail markets are set to benefit from significantly higher demand as investors re-engage with the sector.”

According to JLL research, commercial real estate investments have a long track record of outperforming on returns. Some of the highest five-year returns were achieved with investments transacted between 2009 and 2011, in the immediate aftermath of the global financial crisis (GFC).

JLL’s Global Real Estate Outlook 2025 report notes that “investors deploying capital in 2025 are likely to see an early-mover advantage in terms of returns that will diminish as the cycle matures”. 

Intensifying supply shortages as completions slow in 2025 will amplify competition for quality existing assets as more investors re-enter the market.

Ray White head of research Vanessa Rader says private investors will look for both defensive income streams and clear repositioning potential, driving renewed competition for quality assets. 

“The ability to execute active management strategies and identify emerging sector opportunities will be key differentiators for successful private investors in the year ahead,” she says.

The retail sector will see private investors strategically target metropolitan assets underpinned by strong trade-area demographics and essential service offerings. 

“Neighbourhood centres anchored by supermarkets, combined with healthcare services and daily needs retail, will likely remain highly sought after,” she says. 

Rader expects the industrial sector to benefit from structural undersupply in key markets. Investors will target industrial units and last-mile logistics facilities, particularly those with value-add potential. 

Rader predicts a turning point for the office sector as the market finally adjusts to hybrid working patterns. 

“Metropolitan assets with strong tenant covenants and modern amenities are attracting renewed interest, particularly buildings that have already undergone ESG [environmental, social and governance] upgrades,” she says. 

Childcare centres and service centres are highly sought after due to annual rental hikes and long-term leases. These assets offer compelling income security through structured rental growth. 

Deloitte’s Perspective: 2025 Commercial Real Estate Outlook report names “high-growth property sectors such as industrial and manufacturing, multifamily, and hotel and lodging assets” as the top investment opportunities.

High office vacancy rates in most markets and elevated incentives continue to point to the need for caution in bringing forward new office developments, and many markets appear oversupplied at the aggregate level, the Knight Frank report says.

“This, however, obscures the prospect of a tightening of supply at the top end of the market, owing to a slowdown in new development while many tenants still need to adapt and upgrade their workplace experience,” Burston says.

“The slowdown in commencements is now clearly impacting the pipeline, particularly in Sydney and Brisbane, which will act to drive up face rents on new developments and aid the Sydney market recovery.”

 After several years of reducing office space requirements, portfolio expansion is back on the cards, with office attendance policies to shift towards an average of four days a week, the JLL report predicts.

“Recent announcements from high-profile global businesses indicate a trend toward mandating increased office presence, with some requiring up to five days a week and implementing attendance tracking measures,” the report reads.

In the short term, the focus will be on transforming spaces into fit-for-purpose workplaces, with a degree of built-in flexibility to allow for future expansion in years to come. More spending on office design, employee experiences and hospitality services is expected.

“For now at least, many organisations have some degree of certainty around the hybrid/in-workplace split and are in a position to make real estate decisions,” JLL says. “As a result, we expect more CRE leaders to start executing on their strategies after a period of hiatus.

“CBD locations, vibrant mixed-use neighbourhoods, buildings with leading sustainability and green credentials and ‘destination workplaces’ that can help attract and retain talent will be in highest demand.”

 As the pivot to premium accelerates across Australia’s major office markets, Ray White head of research Vanessa Rader says the secondary office market faces a critical crossroad due to evolving tenant demands and greater ESG pressures. 

“Corporate Australia’s focus on workplace experience and sustainability credentials has transformed from a ‘nice-to-have’ into a non-negotiable requirement,” Rader says. 

“Major tenants are increasingly bound by corporate ESG commitments and reporting obligations, forcing their hand in relocating to buildings with superior environmental ratings.” 

The issue is further compounded by the capital expenditure needed to bring older assets up to modern standards, and lenders are increasingly cautious. 

“Basic refurbishments no longer suffice – tenants demand end-of-trip facilities, sophisticated air conditioning systems, smart building technology and high NABERS ratings,” Rader says. “Given the high cost of upgrades in the current market, this cost may not be recoverable through rental uplift in the current market.

“Buildings unable to meet rising environmental standards and tenant expectations risk becoming stranded assets. The market is likely to see an increase in opportunistic investors targeting these assets for conversion or redevelopment, particularly in locations where alternative uses can unlock greater value.”

Due to the rise in artificial intelligence, data centres are experiencing critical supply shortages in many markets around the world, with extremely high demand exceeding robust supply growth. 

JLL’s report notes that completions in 2025 are forecast to be above their 2021-24 peak, with growth in markets in the US, Europe, the Middle East and Asia Pacific. 

“And yet shortages will still exist,” it says. “Such is the growing demand for data centres, boosted by AI requirements, that even this increase in supply will be only a fraction of what the market needs.”

National logistics and industrial leasing demand is anticipated to strengthen further, driven by an uptick in economic growth and further improvements in consumer spending. 

“We are forecasting take-up levels to jump to around 3.6 million square metres in 2025, representing an almost 20 per cent increase from current levels,” says David Hall, national director and head of brokerage logistics & industrial – ANZ at Cushman & Wakefield.

“Supply will also thin as developers hold back some projects, which could result in the market tightening further as demand picks up.”

Macro headwinds in the retail sector are now dissipating and shopping centre performance is benefitting from extended efforts to enhance the number of visits and the customer experience, according to Knight Frank’s research.

“Improving asset performance has been noticed by a broader range of investors, and the outlook for income growth is increasingly supportive off the back of rising real incomes and sustained population growth,” Burston says.

“As a result, we think that investor demand for retail assets in 2025 will be the strongest for at least a decade.

“With investor sentiment having shifted, a lack of available stock relative to the level of demand will tilt the balance toward a recovery in capital values.”

Ray White’s Rader says brick-and-mortar retail property looks to be the standout performer for 2025, marking a significant shift from recent years where industrial assets led the way. 

“This rebound in retail property is particularly evident in transaction volumes, with retail now representing 41.1 per cent of all commercial transaction numbers in late 2024; a remarkable increase from its long-term average of 28 per cent,” she says.

“This surge comes as industrial sales, which dominated at 60 per cent of deals in 2023, have moderated to 50 per cent.”

Rader says physical retail stores – particularly in metro markets – reflected “remarkable resilience” despite the threat of online shopping, which accounts for just 11.4 per cent of total retail transactions, largely down to clothing and homewares purchases.

Entertainment offerings and online integration are likely to emerge as a key component of successful shopping centres, creating lifestyle destinations rather than pure shopping venues.

However, Rader says the sector faces some challenges. 

“The growing influence of social media marketplaces – with Facebook Marketplace activity growing 3.6 per cent annually – and Australia’s ageing demographic could reshape retail demands over the next two decades,” she says. “These changes suggest successful retail assets will need to adapt to changing consumer preferences and needs.”

This year will be a critical one for the build-to-rent (BTR) sector, with potential for meaningful policy changes – including to the withholding tax rate applying under the managed investment trust (MIT) regime – that would trigger the accelerated roll-out of new schemes.

The perception of where BTR sits within the overall housing mix is linked to these debates and potentially other policy changes to support development, according to Burston.

“The perceived success of schemes targeting the middle of the rental range will be important in widening awareness and understanding of BTR and winning broad community support for policy changes,” he says.

“On the other hand, if BTR is perceived to be exclusively a premium product, this reduces the likelihood that policymakers will adjust planning and taxation frameworks to encourage a faster roll-out.”

ESG disclosure will be high on the corporate agenda this year, with new rules taking effect.

The new Australian Sustainability Reporting Standards (ASRS) took effect on January 1 for the first portion of organisations captured by the standard after the mandatory climate reporting bill was passed in federal parliament last year.

The rollout is staged over two years, with the largest emitters and corporations being the first cab off the rank. This affects those with more than 500 employees, with at least $1 billion in consolidated gross assets, and revenue of at least $500 million.

In this new realm of corporate transparency, as part of their annual reports, each year organisations must provide a separate sustainability report detailing their climate-related risks and opportunities, plans and strategies.

“The ASRS requirements represent the most significant step forward in climate and sustainability performance disclosure in Australia for a number of years and will compel organisations to disclose their scope 1, 2 and 3 emissions, as well as provide information on how they are assessing and responding to climate risks facing their organisation,” says Cushman & Wakefield head of sustainability, ANZ, Gehan Palipana.

“For the property industry, the spotlight on scope 3 or supply chain emissions will be particularly relevant as the focus of sustainability programs expand from running buildings efficiently to minimising emissions across the entire property lifecycle and embedding circular economy and zero-waste principles to reach organisational net-zero goals”. 

Decarbonisation efforts are increasingly being integrated into broader real estate strategies as a form of achieving operational excellence. 

“This is because the capex invested in optimising energy use and reducing emissions in buildings results in lower operational costs, secure energy, regulatory resilience and improved employee attraction,” the JLL report says. “This evolution will transform the concept of decarbonisation from solely an ESG consideration to a critical component of operational – and risk – management, as well as a strategic economic opportunity.”

Electricity demand is projected to rise in 2025 at its fastest pace for two decades, according to the International Energy Agency, in part due to AI technologies, electric vehicles (EVs) and the electrification of buildings, raising concerns about electricity costs and security of supply. 

“Energy use is the single largest operating expense in office buildings, representing approximately one-third of typical operating costs,” JLL says. “Light to medium retrofits can unlock between 10 per cent and 40 per cent in energy savings.”

There is much greater focus now on the scale of potentially obsolete assets across the real estate spectrum, as a result of shifting preferences for how space is used, changing patterns of urban development and tightening sustainability requirements, JLL says.

Building age and design, location and ESG considerations are the key factors commercial real estate owners should take into account when making strategic decisions about their assets, particularly as new sustainability legislation is implemented in 2025 and as 2030-35 city and national net-zero targets approach.

The continued reshuffling of office users into top-quality spaces will begin to open up ample repositioning and retrofitting opportunities for real estate owners now and into 2026.

“At the same time, housing and accommodation shortfalls will further push city authorities to accelerate construction and revise land use policies, which will enable more conversion of aging office assets to residential and hotel use,” JLL says.

“We expect this process will accelerate in 2025 but still take time to play out over the next several years due to the complexity of navigating the physical, capital and regulatory challenges.”

Source:   AFR. 27 February 2023 By Nila Sweeney 

Apartment supply is forecast to shrink by 73 per cent nationwide over the next two years, worsening the current rental shortage and potentially triggering price increases in some projects, new report shows.

Consultancy firm Charter Keck Kramer estimates that there are 41,200 apartments under construction and being marketed across the capital cities in 2023, but these are expected to fall to 27,300 in 2024 and down to 11,100 in 2025 – a 30,100 unit shortfall over two years.

In Sydney, apartment supply is set to slump by 14,500 units or 83.5 per cent by 2025, while Melbourne is expected to contract by 7900 units or 65.3 per cent.

The number of apartments under construction and being marketed is estimated to fall by 87.8 per cent in Brisbane, by 78.3 per cent in Canberra and by 65.2 per cent in Perth.

Richard Temlett, Charter Keck Kramer director of research and strategy, said the sharp decline in apartment supply would put a floor on prices and even spark increases in some projects.

“For established apartments that have been built, I think the supply shortage and strong demand will limit the price declines,” Mr Temlett told The Australian Financial Review.

“For new products, prices are going to have to increase, and it’ll start increasing over the course of 2023 across most projects. Some developers of projects aimed at downsizers who don’t need a mortgage to buy have already started to raise their prices.

“Prices will have to rise. Otherwise, developers won’t build it because of the heightened risk they are taking.”

The apartment sector is currently facing a number of substantial challenges that will ultimately stifle supply according to Mr Temlett.

“Rising rates are increasing project costs and also diminishing purchaser capacity and buyer demand, which is leading to slow presales in many projects,” he said.

“Alarmingly, but not surprisingly, construction costs continue to increase and the residual supply constraints have resulted in many projects not being financially feasible. This will lead to certain projects being deferred or even abandoned.”

Mr Temlett said the apartment supply shortage was likely to worsen the current rental crisis as immigration ramped up.

“I think the government might have underestimated the extra demand for housing as a result of increased immigration,” he said.

“Looking at lead indicators such as student visa applications, or actual overseas arrivals, they’re much higher than what the government had forecast and particularly in Melbourne, I think it’s going to be even stronger than what they’re forecasting.”

CoreLogic head of research Eliza Owen said there were 1.3 million returning overseas arrivals in 2022 that needed housing.

“Long-term overseas migrants largely rent when they first come to Australia, adding to demand and short-term visitor arrivals will also require accommodation,” Ms Owen said.

Mr Temlett said the supply crunch was likely to persist until interest rates stabilised and investors started flowing back into the market.

“The supply situation is going to tighten and potentially even get worse,” he said.

“So there’s an opportunity for the government to actually help the build-to-sell sector right now by encouraging local and foreign investors back into the market.”

Among these would be to introduce some incentives for investors to buy off-the-plan and to lower the barrier for foreign investors to buy apartments.

“We’re urging the government to reintroduce incentives such as off-the-plan stamp duty concessions to foreign and local investors. This is one avenue to stimulate the build-to-sell apartment market and mobilise the much-needed supply of rental stock,” Mr Temlett said.

“I can tell you that there’s a large number of foreign buyers from Singapore to Malaysia to Hong Kong and now the Middle East that are keen to buy apartments in Australia because of the strong fundamentals.”

Foreign investor buyers were needed to jumpstart apartment supply as they were more prepared to purchase off-the-plan, Mr Temlett said.

“Local and foreign investors typically make up around 75 per cent of sales of an apartment project, so they can substantially increase supply of rental homes in the near to medium term,” he said.

“We don’t really see how much of supply is going to get mobilised, unless those changes are made. It’s going to get worse because developers right now are not launching stock and pre-sales are very slow, so fewer apartments are getting built.”

Source:   The Urban Developer. 16 January 2023 By Ralph Nicholson 

The Blackwattle Bay Precinct, a Sydney Harbour foreshore project which over the next decade will create 1200 new apartments and about 100,000sq m of commercial space, has moved a step closer to fruition with final re-zoning approval.

Located less than a kilometre from central Sydney, the urban renewal covers about 10.4ha of harbour-front land between Anzac Bridge and the Sydney Secondary College on Bridge Road, Glebe. 

Some 1200 units in residential towers of between six and 35 storeys will be built on the old Sydney Fish Markets at Blackwattle Bay under revised plans by the New South Wales government’s development arm, Infrastructure NSW.

The rezoning was finalised in late December, however, not before 2400 submissions forced Infrastructure NSW to lower the five towers by as much as 21.5m, which meant nearly 380 fewer apartments.

 The revised plans also increase the width of the precinct’s proposed waterfront promenade to 30 metres—a demand by Sydney City Council.  When finished the promenade will fill in the missing link along the 15km foreshore walk from Rozelle Bay to Woolloomooloo.

Revitalisation of the inner-city precinct— historically an industrial area—includes the relocation of the Sydney fish market to new $10-million facilities, designed to become a major tourist attraction while supporting the NSW seafood industry.

 In June of 2020 the minister for planning and public spaces approved the relocation of the market to the head of the bay, which then freed up about 10.4ha of harbourside land for the new state significant precinct.

The new planning controls enable about 100,000sq m of commercial space, which the government says will lead to 5600 new jobs. The new apartments, expected to house about 2400, will be close to existing and proposed public transport, including the planned Pyrmont metro station.

More than 3ha of interconnected parks and public space will be created, including a new waterside park, ferry wharf, cafés, restaurants and retail.

 Speaking of the re-zoning finalisation, NSW Premier Dominic Perrottet said the government was unlocking yet another section of under-utilised harbor foreshore.
“Sydney is home to one of the most spectacular harbours in the world but for so long, much of the foreshore, such as Blackwattle Bay, has been neglected and left underutilised,” Perrottet said.

“This is all set to change with Blackwattle Bay to be transformed into an exciting new foreshore precinct and tourism drawcard.

“After more than five years of careful planning and engagement we now have the green light to breathe new life into the precinct, returning it back to the community as an iconic waterfront destination.”

The original Fish Market was established in 1871 at Woolloomooloo, the-then mooring site of the local Sydney fishing fleet.

Source:   Property Council Of Australia. 11 January 2023 By Aidan Green

  The Property Council of Australia has commended the NSW Labor Party on their commitment to deliver extra rental stock in the South Coast through their $30 million Build-to-Rent pilot program, if elected in March.

Property Council’s Acting NSW Executive Director Adina Cirson said New South Wales was in the midst of a rental crisis with record low vacancies and fast rising rental prices.

“Delivering more housing supply is the best chance we have of easing the regional rental squeeze across NSW,” Ms Cirson said.

“NSW Labor’s plan to use surplus government land and purchase new land for BTR developments is exactly the sort of government intervention we need to tackle the housing crisis head on.

“This welcomed announcement mirrors our recommendation in our election platform and encourage the Opposition to expand the pilot to provide subsidies to the private sector to also deliver all BTR projects, improve tax concessions and develop a BTR design guide.

“The Federal Government’s Housing Accord showed big capital is lining up to invest in the housing market and we shouldn’t stand in their way, which is why we also encourage the next NSW Government to lobby the Federal Government to reduce the 30 per cent withholding tax on foreign investment in BTR developments.”

Ms Cirson said offering a long-term rental subsidy to BTR providers to deliver affordable housing within BTR developments would ultimately deliver more housing supply to the regions.

“Under the program, a set percentage of dwellings could be provided at discounted rent via a 10-15 year subsidy to providers to meet the growing demand for secure long-term rental properties.”

Source:   realestate.com.au 7 June 2022 By Megan Neil Senior Journalist

 The Reserve Bank of Australia has hiked interest rates by a super-sized amount as Australians face increasing cost-of-living pressures, including soaring energy prices. 

The RBA board on Tuesday raised the official cash rate by a huge 50 basis points to 0.85%, after lifting rates last month for the first time since November 2010. 

RBA Governor Philip Lowe said inflation in Australia has increased significantly and is expected to rise further. 

"Given the current inflation pressures in the economy, and the still very low level of interest rates, the board decided to move by 50 basis points today," Mr Lowe said in a statement after Tuesday's board meeting.  

"Higher prices for electricity and gas and recent increases in petrol prices mean that, in the near term, inflation is likely to be higher than was expected a month ago.

" Mr Lowe noted global factors, including COVID-related disruptions to supply chains and the war in Ukraine, account for much of the significant increase in inflation. "But domestic factors are playing a role too, with capacity constraints in some sectors and the tight labour market contributing to the upward pressure on prices." He said the floods in New South Wales and Queensland earlier this year have also affected some prices. 

"Today's increase in interest rates by the board is a further step in the withdrawal of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic. "The resilience of the economy and the higher inflation mean that this extraordinary support is no longer needed." 

The decision to hike rates by 50 basis points came as a surprise, with most economists predicting a 25 or 40 point rise. PropTrack economist Paul Ryan said the move advances the pace of normalising interest rates after the period of exceptionally low rates following the outbreak of the COVID-19 pandemic. 

"A 50 basis point hike is an exceptional move that signals the RBA is looking to move faster than they expected last month," Mr Ryan said. 

"This larger than 'business-as-usual' hike indicates the RBA is increasingly concerned about domestic inflationary pressures, and has assessed that they need to increase rates quickly to get them under control." 

Mr Lowe said inflation is expected to increase further before declining back towards the 2% to 3% range next year. 

Treasurer Jim Chalmers warned inflation has accelerated from the 5.1% rise over the year to the March quarter, adding it will be significantly higher than it is now. 

Dr Chalmers on Monday wrote to the Australian Competition and Consumer Commission expressing his "deep concern" about skyrocketing electricity and gas prices. Mr Ryan said the emerging energy crisis will push up prices significantly, leading the RBA to reassess its inflation forecasts. 

The RBA in May forecast headline inflation rate to rise to 6% in 2022 before moderating to about 3% by mid-2024. Mr Ryan said as the RBA has noted, there is still a lot of uncertainty about when the supply-shock factors influencing inflation, such as the war in Ukraine and supply chain disruptions in China, will abate. 

The RBA in May lifted the cash rate by 25 basis points to 0.35%, from a record low 0.1%. But the board also considered a 40 basis points increase given the upside risks to inflation and current very low level of interest rates. 

The RBA has made it clear there will be further rate rises and forecasts by economists at the four major banks put the cash rate at between 1.35% to 1.75% at the end of 2022. After last month's rate hike, Mr Lowe said it was not unreasonable to expect the cash rate would get back to "a more normal level" of 2.5% at some point. 

The 50 basis point increase in the cash rate will mean the average homeowner with a $600,000 loan will pay an extra $159 on their monthly repayments, according to RateCity. How high rates go will impact housing market Australia's housing market has already started slowing down in anticipation of the series of hikes in official interest rates, Mr Ryan noted. 

"Higher interest rate expectations have weighed on housing price growth across the country in 2022," he said. "Housing price growth has slowed significantly, with annual price growth falling from 24% six months ago to only 14% in the year to May. 

"This slowdown has particularly affected the most expensive capital city markets of Sydney, Melbourne and the ACT, which recorded price falls in May.

The PropTrack Home Price Index showed national price growth fell in May for the first time since the start of the pandemic. 

"More interest rate increases are expected in 2022, as inflation has been higher than anticipated by the RBA," Mr Ryan said. "But just how high interest rates will be at the end of the year is a key source of uncertainty for the housing market.

" Mr Ryan said financial markets have priced in a cash rate that is two percentage points higher at the end of the year, which would raise mortgage repayments by another 24%. "Major bank forecasters, however, do not view it likely the RBA will increase rates this quickly, predicting rate rises closer to half that much. 

"This 50 basis point increase by the RBA may lead bank forecasters to move closer to financial market estimates." 

Source:   Financial Review 3 May 2022 By Larry Schlesinger

 An industrial site in Sydney’s inner west that could yield more than 1000 apartments and a shopping precinct once rezoned is expected to sell for more than $300 million after being listed for sale by two prominent local families. 

The 3.12 hectare Five Dock property at 129 – 153 Parramatta Road and 53-75 Queens Road – about 11 kilometres west of the Sydney city centre – has already attracted the attention of major build-to-rent and build-to-sell developers both locally based and offshore. 

To be marketed as Kings Bay Village, the site has been amalgamated over more than 20 years by the Dodaro and Drivas families, headed respectively by commercial lawyer and Raine & Horne franchisee Robert Dodaro and developers George and Dimitri Drivas. 

It is home to more than 22,000 square metres of leased industrial buildings but is expected to be rezoned for mixed-use purposes this year as part of a proposal led by the City of Canada Bay Council aimed at transforming a portion of the Parramatta Road corridor running through Five Dock into more community-friendly infrastructure. 

Once rezoned, the site could support more than 90,000 square metres of gross floor area, including multiple residential towers as high as 20 storeys. 

With the median apartment price in Five Dock about $1 million, a future development could yield well over $1 billion of residential and retail end value in an area facing an undersupply of apartment stock, according to selling agents James Cowan, Matthew Meynell and Trent Gallagher from Colliers. 

“The site is difficult to price given the rarity of the offering. However, interest before the launch of the official sales campaign has been north of $300 million from both build-to-rent and build-to-sell groups,” Mr Cowan said. 

Its prime inner-city location, a 10-minute walk from both the Burwood North and Five Dock Metro Stations that are to be built as part of Sydney Metro West, is expected to draw in competing bids from major developers. 

The Australian Financial Review understands that those showing interest in the site include global BTR specialists Greystar and Sentinel as well as the likes of Sydney-based developers Meriton, JQZ and Deicorp. 

“Our recent experience in marketing significant, generational, assets such as Kings Bay Village has demonstrated the vast depth of capital seeking bulk and scale,” said Mr Gallagher. 

Source:  ABC News Australia   3 May 2022  by Business Reporters Michael Janda and Emilia Terzon

The Reserve Bank has increased interest rates for the first time in more than 11 years, with a 25-basis-point hike taking the cash rate target to 0.35 per cent. 

Key points: 

• The Reserve Bank's 25-basis-point increase to the cash rate target takes it to 0.35 per cent 

• The RBA governor warns that getting inflation under control "will require a further lift in interest rates" 

• Financial markets and economists expect the next official rate rise to occur in June.

If passed on in full by banks, the rate rise will add $65 a month to repayments on a $500,000 mortgage, and double that on a million-dollar loan. 

The Commonwealth Bank was the first major bank to respond, raising its standard variable mortgage rates by 25 basis points across the board from May 20, while ANZ will lift rates by the same amount from May 13. 

The move came as little surprise to financial traders, who had priced in around a two-thirds probability of the RBA raising rates this month. 

Reserve Bank governor Philip Lowe said the combination of recent very high inflation numbers and evidence that workers were starting to get bigger wage increases meant the time was right for "normalising" interest rates away from emergency lows. 

"The board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time," he noted in his post-meeting statement. "This will require a further lift in interest rates over the period ahead." 

Mr Lowe told reporters that the cash rate still had a long way to go to get back to more normal levels where it at least matched the rate of inflation. 

"Over time it is not unreasonable to expect interest rates would get to 2.5 per cent. 

"How quickly we get there, and if we do get there, will be determined by how events unfold."

Economists at the major banks remain deeply divided about how high interest rates would rise — from a 1.6 per cent forecast at the Commonwealth Bank up to more than 3 per cent tipped by ANZ. 

Westpac was somewhere in the middle, tipping a 2 per cent cash rate sometime next year. 

RateCity estimates that would add $512 a month to a $500,000 mortgage, and double that — $1,025 a month — to a million-dollar loan.  

Source:  Business Australia   3 May 2022  by (Staff Writer)

During a meeting on Tuesday, 3 May, the RBA board decided to increase the cash rate target by 25 basis points to 35 basis points. It also increased the interest rate on Exchange Settlement balances from 0% to 25 basis points. 

“The board judged that now was the right time to begin withdrawing some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic,” the RBA said.  

“The economy has proven to be resilient and inflation has picked up more quickly, and to a higher level, than was expected. There is also evidence that wage growth is picking up. Given this, and the very low level of interest rates, it is appropriate to start the process of normalising monetary conditions.” 

The RBA said its central forecast was for Australian GDP to grow by 4.25% over 2022 and 2% over 2023. “Household and business balance sheets are generally in good shape, an upswing in business investment is underway and there is a large pipeline of construction work to be completed,” the central bank said.  

“Macroeconomic policy settings remain supportive of growth and national income is being boosted by higher commodity prices.” 

The RBA observed that inflation has picked up significantly and by more than expected, although it remains lower than in most other advanced economies. Over the year to the March quarter, headline inflation was 5.1% and in underlying terms inflation was 3.7%.  

The Australian Chamber of Commerce and Industry (ACCI) warned of rising prices back in December 2021, when it released its latest ACCI-Westpac Survey of Industrial Trends.  

In the December quarter, input cost pressures remained elevated, with a net 38% of firms reporting higher input costs. The sustained period of cost pressures over the past previous three quarters, at a net 39%, was the highest average level since December 2008 

“Cost inflation has been a significant issue throughout the COVID pandemic and recovery, with supply chain disruptions globally and domestically, border closures, and a tight labour market all viewed as contributing factors,” the ACCI said.  

Following Tuesday’s rate hike, the RBA stated that it was committed to doing what was necessary to ensure the inflation in Australia returned to target over time.  

“This will require a further lift in interest rates over the period ahead. The board will continue to closely monitor the incoming information and evolving balance of risks as it determines the timing and extent of future interest rate increases,” the bank concluded. 

Source:  SMH   14 April 2022  by By Kate Burke and Melissa Heagney

Sydneysiders are paying $50 more a week to rent a house, with the median rental asking price rising at the fastest annual rate in 13 years. 

Despite holding steady at a record median $600 for the March quarter, Domain’s latest Rent Report showed house rents in Greater Sydney were up 9.1 per cent for the year. (Source: Domain Rent Report Q1 2022) 

Unit rents climbed $30 over the year, or 6.4 per cent, to a median of $500 – the sharpest annual increase in eight years. Rents lifted 2 per cent in the past three months alone, doubling the previous quarterly growth and outpacing houses for the first time since the pandemic began. 

Sydney’s rental market is now the third most expensive for houses, after Canberra and Darwin, with respective medians of $700 and $610. 

Domain’s chief of research and economics, Dr Nicola Powell, said Sydney’s rental market had seen a swift recovery after demand dropped off earlier in the pandemic, particularly in the inner-city. 

Renter demand had spiked as domestic and international borders reopened, while high purchasing prices left more aspiring homeowners renting for longer. 

“We may also be seeing the homecoming of city escapees from lifestyle and coastal locations, further driving demand,” Powell said. 

Increased competition for rentals, and lower supply, saw the city’s rental vacancy rate drop to 1.4 per cent in March, the lowest point since Domain vacancy records began in 2017 and down from a peak of 3.8 per cent in April 2020. 

“Vacancy rates are dropping like a stone in both Sydney and Melbourne and that’s driving rental growth,” ANZ senior economist Felicity Emmett said. 

Sydney’s previously elevated vacancy rate had quickly turned around as borders reopened, boosting demand – particularly in inner-city areas popular with international students – which had driven stronger rent hikes for the apartment market.

Meanwhile, rental stock had reduced, with some landlords opting to sell investment properties earlier in the pandemic. Properties were also being returned to the short-term holiday market now that tourism had resumed. 

Rental supply issues largely seen for houses in outer areas in recent years, as tenants flocked to bigger homes and outer suburbs amid lockdowns and remote working, were now shifting to inner areas, putting upward pressure on rents. 

The city and inner south recorded some of the sharpest rent hikes over the quarter, with house and unit rents both jumping more than 5 per cent. House rents held at record highs on the northern beaches, the outer west, the Blue Mountains, Baulkham Hills and Hawkesbury regions. 

The northern beaches was the only area to record a decline in apartment rents over the quarter, falling from a record high of $650 to $630. (Source: Domain Rent Report, March quarter 2022) 

“We talk about that ceiling price in the sales market … and I think a similar thing may be happening in the rental market,” Powell said. 

“Budgets can only stretch so far, people will compromise on property type and then compromise on location. Other areas are offering much better bang for buck for tenants.” 

Northern beaches local Heidi Malligan said it was “near impossible” to secure a rental, with tenants facing strong competition and high prices, with the median asking rent for houses up 9.5 per cent over the year to $1150 a week. 

Malligan’s family moved into a four-bedroom house in Frenchs Forest this week, paying $20 above the advertised rate of $1700 to secure the keys. 

“We had to adjust our expectations and be willing to offer more to secure a place,” Malligan said, adding she offered up to $80 above the advertised rate and to pay rent up to 12 months in advance, on other properties she missed out on. 

Renting short-term, between selling and buying a home, she said she felt for long-term tenants and noted an undersupply of affordable housing meant poor quality properties were commanding high prices. 

Demand was back to pre-pandemic levels, and now even stronger for some properties, with homes typically seeing five applications after a single viewing. 

“Even smalls studios that weren’t all that popular [last year] because people wanted to have more space ... are now finding tenants relatively quickly,” she said. 

Those hoping the cooling conditions seen in the sales market would flow through to the rental market may be left disappointed, with independent economist Saul Eslake saying while prices were predicted to soften this year, as interest rates rise, it would not affect rising rents. 

“There is not much connection in my view between property prices and rents,” Eslake said. 

“If you look back at late 2017 to mid-2019, prices went down in Sydney and Melbourne but that had no impact because there were no falls in rents during that period.” 

Rents would rise when demand was high and supply low, he said.