march

The month in

2011

review

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The month in review

Page Topic

3 Feature - SUPEr PrOPErTY!

“Long term investments for your future”

4 - 13 commercial – rETaIL

14 - 28 residential

29 contacts

30 - 35 rural

36 - 52 market Indicators

contents

Peace of mind for your property decisions.

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You know what would be fun? Getting a whole stack of hard earned dough-ray-me and splurging it on some top notch bricks and mortar with a foolproof 15 to 20 year investment horizon. If only there were a tax effective retirement scheme whereby you could take up such a sterling deal and splash out fearlessly on the big picture property buy. Ladies and gents – let me introduce you to your Self managed Superannuation Fund (SmSF). It’s just like spending someone else’s money – it’s just that the “someone else” is you in a couple of decades time all weathered but wise.

Self managed super funds have become an access all areas pass to those investors keen on locking away some real estate with the added advantage that you can’t knee jerk yourself into trouble by selling short when things look wobbly. Whilst the popular money may trade around the share market, more and more investors are seeing diversification as the new sensation. The key to keeping as many of your retirement dollars as possible, thus ensuring you sit at the pointy end of the plane, is to choose wisely now.

Long term investing does look easy I’ll admit. You park the money and it never gets fully tested until time comes to sell… and if the real estate market has gone backwards in the 20 odd years since you purchased, then one of two things have eventuated. Either you made a very unwise decision in buying that bridge from the guy in the overcoat on the high street, or the market has turned so appallingly dismal that we are all now living below ground on a steady diet of earthworms and bore water trying to stay one step ahead of the chimpanzees that have taken over the planet.

Until the valuers at herron Todd White get their veterinary degrees I’m afraid we can’t help you with the latter, but sourcing quality property at the right price will be far easier with our guidance.

This month, you’ll find pages of wisdom within. We have enquired of our experts on your behalf as to where the long term rainbows lay and what the pots of gold look like. With the steady hand of your local herron Todd White professional, you can be sure the Winnebago in your golden years almost certainly has the six seat Jacuzzi and in-house masseuse.

as usual our assistance is not just limited to the home front as herron Todd White’s commercial arm takes a swing at long term retail investment. Their sound knowledge of where every location’s cycle sits is a must read this month.

So enjoy the musings within but as always, call your local herron Todd White office and ensure there is an expert in your ear. We have the men and women with the big time knowledge to make certain you lock in a very very comfy retirement plan.

One final question. a blue rinse circa 2030… hot or not?

Kieran claircertified Practising Valuer1 march 2011

kieran.clair@htw.com.au

Super Property!Long Term Investments for your Future

FEaT

UrE

There are requirements for your SMSF to have their property assets assessed at market value for accounting and trading purposes. Herron

Todd White has the national coverage and broad property experience to address market value for almost every conceivable property type across Australia. If we can assist in determining the market value of your SMSF

property, then contact your nearest Herron Todd White office and speak to one of our professional staff.

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The month in review

It’s been observed that markets are designed to take money from the impatient and pass it on to the patient. Long term retail investment is a successful strategy for many property investors, but only when the right fundamentals are applied at the outset. This month, our retail experts take a look at their areas of interest and provide some inside knowledge on how and where to buy for the long term. Their take on each locality’s property cycle forms a must read for those considering a retail interest in their retirement plans.

Sydney

For the majority of self managed super funds, capital values within the retail property sector generally limit the investment pool to smaller strip based properties. The selection of the most appropriate property will be dependent on the investment strategy of the fund. For the purpose of this article we have assumed two basic strategies, one which seeks stable total returns to finance retirement in the future and one which seeks a higher income return to finance an existing or upcoming retirement.

Starting with the first strategy, an investor would be hard pressed to find a more stable retail investment within the greater Sydney region than a shop located within one of the prime retail strips. These strips which include Oxford Street, Paddington, King Street, newtown, Darling Street, Balmain, military road, mosman, campbell Parade, Bondi, manly corso and the Double Bay retail precinct attract higher quality tenants, record lower vacancy and achieve higher rental rates. representing the lower risk associated with properties within these locations, yields range between 5% and 7.5%, with capital values ranging between $9300 per sqm and $25,000 per sqm. recently a 320sqm retail property on Darling Street, Balmain sold at a rate of $13,000 per sqm fully leased at an initial yield of 6%.

Looking beyond the prime retail strips, a higher risk profile means properties in secondary strip locations trade on higher yields than their prime location counterparts. For investors, particularly self managed super fund managers, these properties offer high incomes in comparison to the entry costs. These properties do however; require more active management with lower quality tenants presenting a higher risk to the income stream.

Wollongong

For the retail market, we see good potential for properties located in the core commercial strips in the north Wollongong suburbs such as Thirroul, Woonona and Fairy meadow. For those still opting for safety, we see freestanding supermarkets as the place to be, if you can find product that is!

at present, there are limited alternatives in the northern suburbs of Wollongong to entice consumers into larger supermarket and/or department store anchored shopping centres. The two main ‘big centre’ developments planned in the broader area include Valad Property Group’s four-level supermarket and discount department store-anchored shopping centre in corrimal and Belmorgan’s ambience ambience is a partially completed mixed-use project in Fairy meadow that was recently sold by receivers. Even with the existence of Stockland’s corrimal and the potential for two larger centres in the area, we feel that local strip retail properties will continue to attract shoppers, formed by our view of an apparent trend where consumers are returning to local village shops to do basic shopping and visit numerous boutique stores, cafés and restaurants that established themselves in these communities.

....at present, there are limited alternatives in the northern suburbs of Wollongong to entice consumers into larger supermarket and/or department store anchored shopping centres....

commercial Overview

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a well located freestanding retail property in these areas should yield between 7.5% and 8.5%. One of the most recent sales in this area was for a mixed-use two-storey freestanding retail/office property at the northeast corner of Lawrence hargrave Drive and raymond Drive, Thirroul (303-307 Lawrence hargrave Drive). The September 2010 sale reflected a passing yield of 7.4%, however, based on rental information received we analysed the yield at 9.5%.

rents for well exposed space are viewed to range between $300 and $400 per square metre gross. Standard reviews at cPI are still seen as being the norm. although vacancies are relatively low and demand steady in these locations, we feel there will be little upward pressure on rents in the short term, particularly in light of the big centre space that is projected to come onto the market. however, in the longer term, if the economy stays on its current path of growth and retail sales improve, there should be pressure to increase rents beyond the rate of inflation.

canberra

The structure of the canberra retail market presents some difficulties for self managed super funds. Unlike other locations in australia, the canberra retail market is defined by a strict retail hierarchy comprising of the city centre, town centres, group centres and local centres. reflecting the broader trend throughout australia, consumers within the acT have shied away from localised based shopping, in favor of larger destination centres. In canberra, this trend has come at the detriment of group and local centres, with consumers favouring shopping in civic and larger town centres, such as Tuggeranong and Belconnen.

With the performance of these smaller centres waning, the opportunities for self managed super funds are limited. While opportunities exist at the upper end of the retail market ($15million-plus), for the majority of self managed super funds, these investments would be unobtainable. With this in mind, we would be hesitant to recommend a retail specific investment for a self managed super fund within the acT.

newcastle

The recent announcement from GPT to place their sites on the market for liquidation in the newcastle cBD, and the closure of the newcastle David Jones department store in January has continued to place the spotlight on

the newcastle cBD retailing precinct and the newcastle West area, which continues to have the appearance of a battleground. This will leave a vast hole in the centre of the strip and numbers of shoppers should inevitably fall.

aside from the GPT and David Jones issues, parking is seen as another major inhibitor to growth with a lack of convenient parking. major drawcards, Westfield and charlestown shopping centres have abundant onsite, undercover parking available and best of all is free, if only with a spend of a certain amount in the centre or the first three hours being free. Three hours however is generally longer than a standard movie, whereas the theatre in town only has access to two hour parking, which is an issue for them.

a recent article in the local paper indicates the general savior of all things newcastle and hunter, (mr nathan Tinkler) has expressed an interest in purchasing the hunter Street mall. It should be also noted that the herron Todd White offices are located in the centre of newcastle and over the recent summer period the mall has been alive with people traversing between the beach and the eateries of the mall. Details of the demise of the cBD may be greatly exaggerated judging by the number fake tans on parade. and that’s not just our own staff - we’re looking at you adam!

We have noticed a number of new shop fronts and fitouts in the centre mall in recent times and the general appearance of the shops seems to have lifted somewhat. Do not get us wrong - we are not yet ready to advise long term investment in the central cBD. Given the end of the school holidays, the impact of the David Jones departure will become more apparent as life returns to normal and sunburns from English tourist recedes. We have already noticed the lines smaller at Subway.

....parking is seen as another major inhibitor to growth with a lack of convenient parking....

a high level of new supply of retail space has just been finished with the charlestown Square expansion and Kotara Bulky Goods centre offering new retailing opportunities. Take up has been impressive and new retailers, along with some poached from other areas, have quickly taken up space.

We have said it before and we will say it again - areas like cooks hill with the popular Darby Street restaurant strip and hamilton centered on the Beaumont Street restaurant strip continue to perform well with limited turnover of tenants and minimal vacancies evident. These locations, which extend further to The Junction, Lambton and new Lambton perform exceedingly well from capital growth and rental returns perspectives. We would continue to target these areas from an investment standpoint. anywhere the supply is constrained by natural barriers like residential property, is a strong candidate for growth, assuming the demographics continue. all these suburbs mentioned above have good capital growth for residential properties and are generally of a higher socio economic standing.

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nSW Far north coast

The nSW Far north coast retail commercial property market has generally proven to have strong long term growth over the past 15 to 20 years. This has resulted in good long term investments that have benefited self managed super funds.

The commercial retail market on the nSW Far north coast has generally been slow over the past 12 months, with continued low sales volumes and stable to steadily increasing supply. current market conditions are more favourable to a buyer and now is considered to be an opportune time for a self managed super fund to enter into the market in order to obtain the benefits of a long term financial future.

as with most investors of commercial property, quality generally prevails with long term investments. Investors are unwilling to speculate on properties with inherent issues without strong returns and/or stable tenancies. Quality properties in good locations have continued to show reasonable interest in the current soft conditions and this interest will continue over the life of the investment.

....the NSW Far North Coast retail commercial property market has generally proven to have strong long term growth over the past 15 to 20 years....

most long term investors are looking to acquire properties with a strong national tenant combined with a long term lease. The north coast retail rental market on the regions of Lismore, Ballina and Byron Bay are summarised as follows:

• The Lismore retail market experienced a reasonably significant drop in retail rents over the 2009 calendar year. rents have stabilised over the past 12 months. This scenario of decreasing rents has been evidenced in some market review lease negotiations between landlord and tenant.

• The Ballina retail market has been generally well held over the past 12 months. While there has been some evidence of increased vacant space, landlords have still been able to achieve steady to slightly stronger rents.

• The Byron Bay retail market has continued to experience steady demand over the past 12 months. retail spaces in prime locations have seen stable rents. Secondary locations have experienced some vacancies and downward pressure on rents. Local retailers are reporting a fall in turnover due to a reduced number of visitors and increasing number of national brand outlets which are increasing competition and forcing down prices traditionally achieved by the Byron Bay retailers.

Yields for commercial retail investments have generally increased by 1% to-2% during the 2008 and 2009 calendar years. The past 12 months have shown yields in Lismore in the order of 9%, while Byron Bay which previously showed yields at or below 5%, is now 6.5% to 7.5%. Ballina yields are also in the order of 7% to 8%.

It should be noted that properties generally selling for under $500,000 or those which are purchased by owner occupiers are showing analysed yields ranging from 0.5% to 2% below the abovementioned commercial retail investments.

recent increasing yields for commercial property in Byron Bay are evidenced by two sales which were transacted prior to christmas. These sales are summarised as follows:

• The anZ Bank building, at 57 Jonson Street, sold for $4.425 million, with an analysed yield of 6.4%. The building is occupied by a national tenant with the lease to expire in 2017, with a further five-year option. The property was previously purchased in march 2000 with an analysed yield of 6.9%.89 Jonson Street sold for $3.5 million with an analysed yield of 6.81%. The building comprises two ground floor shops, two first floor offices and a one bedroom flat. The property was previously purchased in november 2006 with an analysed yield of 5.5%.

melbourne

The melbourne Prime retail market is traditionally low yielding, however generally provides good capital growth for investors. Prime retail property in melbourne continues to be tightly held and highly sought after. however these properties are still dependant on average disposable income, which affects the tenant’s ability to pay rent. nevertheless, investors continue to strongly compete resulting in record low yields and strong capital growth. The market is clearly dominated by private investors, prepared to pay a premium for prime locations.

When considering purchasing retail property some key considerations for investors should be:

• Exposure to passing pedestrian and vehicle traffic.

• Economic retail indicators such as retail spending/retail turnover trends by classification.

• Ease of access to property. Including proximity to parking and public transport.

• Proximity to major/anchor tenants such as coles, Safeway, and IGa.

• Length of lease and quality of tenant, such as bank, national or local business.

• any future development potential should be considered for freehold property. check zoning and planning overlays.

• condition of property and any anticipated future costs, including. air conditioning, structural issues, maintenance issues, and amenities.

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Some good examples of investment yields, net rents and vacancy rates throughout the melbourne retail market are:

• Burke road camberwell has net rents ranging from $800 to $1200 per sqm. This precinct has maintained an average vacancy rate of around 4% in recent times. a good example of an investment sale in the area was the august 2010 sale of 925 Burke road, camberwell, a two-level retail building leased to a hairdressing studio which sold for $1.555 million on a sharp yield of 4.18%.

• church Street, Brighton has net rents ranging from $400 to $800 per sqm. church Street has kept its vacancy rate around 2% in recent times. an investment sale of note in the precinct was the august 2010 sale of 58 church Street. The single level retail building leased to Buxton real Estate sold for $1.75 million on a sharp yield of 3.47%.

• chapel Street spans three suburbs namely Windsor, Prahran and South Yarra, with rents becoming more expensive moving north towards South Yarra. net rents in chapel Street range from $1000 to $1500 per sqm depending on the address. chapel Street has maintained an average vacancy rate of around 4% in recent times.

The Global Financial crisis (GFc) initially reduced economic activity by reducing consumers’ willingness to maintain current debt levels that were underpinning retail spending. although tenant’s turnovers may have softened over this time, investors have been relentless in competing for prime retail premises, keeping yields at historical lows.

We anticipate Prime retail yields, rents, and vacancy rates to remain stable throughout the remainder of 2011. These key performance indicators will be influenced by retail turnover figures, further interest rate pressure, and the lending cautions of the major banks.

regional Vic

EchUca

Local retail property has always performed strongly in a regional and even national context with yields for primary locations in Echuca being squeezed as low as 4% in the hare Street shopping strip. Though this is considered the premier retailing area of Echuca the port area in high Street also sees large volumes of pedestrian traffic from tourists passing through. The relative strength of these areas is reflected by rental rates of close to $350 per square metre for shops in and around the corner of hare Street and Pakenham Street through to $230 per square

metre. Ultimately returns hinge on attracting the right tenant and like many things, this can be as much about timing as anything else.

mILDUra

While the substantial growth in the numbers of Self managed Super Funds over the past 10 years has made it increasingly common for small family run businesses to purchase their premises within a super fund structure, this trend has been more noticeable within the office and industrial segment, rather than the retail sector.

retailers in mildura appear more inclined to rent their premises from third parties, possibly because the smaller family run businesses are often started by people with plenty of enthusiasm, but not much cash, while the larger chains need the capital to fund expansion.

This provides opportunities for investors, however our advice remains to concentrate on high traffic, cBD areas and look for tenants with a strong track record. There are presently a number of unoccupied retail premises in the city heart area, well up on previous years’ levels and whilst rental levels have remained static through the year there is now a supply – demand imbalance.

....the best performing retail sector would seem to be the supermarkets and bulk liquor outlets....

Securely leased prime location premises would be expected to sell at gross yields in the order of 7.25% to 7.75%. These returns are more attractive than would be obtained in larger centres, however reflect the expectation that rental and value growth may be slower. Investors need to base their investment decisions on the steady rental income, rather than expectations of future capital gain.

The best performing retail sector would seem to be the supermarkets and bulk liquor outlets, with the larger businesses continuing to record sales growth, which in most cases results in additional rent being paid.

Brisbane

Location and income security are the two essential items investors should be considering when purchasing retail property as a long term investment.

The location of a retail property is fundamental to its continuing performance in terms of rental and yield security and low vacancy rates. The super prime retail properties are located in the Queen Street mall precinct in the Brisbane cBD. These properties are extremely tightly held and historically have continued to transact for a premium even when the broader property market experiences a general softening of yields. at present, the Brisbane cBD prime retail sub-market is seeing very keen yields of between 5.5% and 7.5%. Outside of the cBD, retail investment properties to look for are those situated in established retail precincts with good exposure such as

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well located neighbourhood shopping centres, national fast food outlets and prime strip locations.

In terms of security, the property should have a strong tenancy mix and a high WaLE (weighted average lease expiry). In Brisbane, neighbourhood shopping centres with a major supermarket anchor such as Woolworths or coles and national specialties are considered to provide a secure investment and are achieving yields around 7.25% to 8.25%. national fast food properties are considered a safer investment and normally located on main arterial routes with very good exposure and access, high land values and a strong lease covenant. Generally they will fall within the sub-$5 million market and are in high demand from investors who will typically pay very keen yields for this type of asset in the vicinity of 6.5% to 7.5%. On the other hand, such properties with short term leases carry an inherent risk due to the specialised nature of the improvements and the resultant difficulty associated with securing a tenant should the property become vacant. Therefore these particular assets should be purchased with a long lease term in place and/or with redevelopment potential.

....neighbourhood shopping centres with a major supermarket anchor such as Woolworths or Coles and national specialties are considered to provide a secure investment....

One other issue which is also important to consider is the quality, age and condition of the improvements. Older buildings have greater repairs and maintenance requirements and have higher risk associated with near term capital expenditure requirements than recently constructed buildings, which will also have superior depreciation benefits.

Gold coast & Tweed coast

Ever since the first highrise was built in Surfers Paradise in 1959 (Kinkabool), the Gold coast has been a popular destination for investors to park their money in the hope of achieving a quick buck. as with any liquid market, some people will be lucky enough to make good capital gains as the market rises, although inevitably many have will be burnt by a sudden bust, such as those experienced in 2008/09.

With the current trough in the market, it is important for investors to get back to their core investment principles and understand the fundamentals which should drive their investment decisions.

The Gold coast retail market is particularly segmented. The vast majority of retail transactions over the past 12 months have occurred in the sub-$10 million price bracket to private individuals and self-managed superannuation funds. On the other hand there has been a surprisingly high degree of activity in the $10 million-plus price bracket, with a very limited pool of high wealth individuals competing for these big ticket items.

Post GFc, major retail sales include centro Southport, centro nerang, Bell central, Earle Plaza, The Forum and circle on cavill. as long term investments, all of these properties will be subject to a high degree of retail competition, resulting in limited potential for future rental and capital growth. as such, these properties are typically purchased on high returns that encapsulate their limited capital upside and weaker market demand.

a few rungs down the food chain are those retail properties in the sub-$10 million price bracket. This category can be further broken down into those properties in the beachside suburbs with perceived redevelopment potential and those in the suburbs that are heavily reliant on good rental returns.

as a long term investment, beachside retail properties rely heavily upon capital growth in order to achieve an acceptable long term Irr. Older style buildings in these localities typically achieve low returns on investment, but are underpinned by a high underlying land value with potential for amalgamation and/or redevelopment over the longer term. This is evidenced in areas such as central Southport, James Street Burleigh heads, Griffith Street coolangatta, Tedder avenue main Beach, chevron Island, central Surfers Paradise and all along the Gold coast highway.

Sales activity in these precincts over the past 12 months has reflected yield levels ranging from as low as 5.3% to around 7.5% which is not perceived as being an acceptable long term return without the prospect of capital growth.

moving away from the eastern retail pockets, investors will become increasingly reliant upon good rental returns and strong lease covenants to underpin their investments. The Gold coast has an extremely competitive retail market and those properties within fringe locations are particularly susceptible to increasing competition, generated by the numerous sub-regional, regional and major regional shopping centres. as such, these properties will reflect notably higher yields and have more limited capital growth prospects than those properties in beachside localities.

Due to the high degree of retail competition and general oversupply of retail floor space throughout the Gold coast, it becomes increasingly important for investors to ensure there are strong lease covenants in place to underpin the long term security of their investment. In the current environment where purchasers are being particularly shrewd in their purchase decisions, it is near impossible to achieve a good degree of market interest unless such lease covenants are in place.

The other form of retail property that has entered the market in massive proportions over the past decade are

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small strata title holdings that form part of mixed use high-rise developments. From a long term investment point of view, it is important for investors to realise that a strata titled property has no redevelopment prospects and its value will only ever be dictated by its rental potential and the market’s yield expectations. In essence, what you see is what you get, and owners should expect to achieve a solid return on investment that is reflective of the limited (if any) potential for appreciation in land value.

notwithstanding the comments above, the retail market is currently at its lowest point in many years, and 2011 appears to be an opportune point in time to purchase for the long term. We are of the opinion there will be no miraculous recovery in the immediate future, however, by applying fundamental investment strategy to any long term investment, one should be positioned to ride out the hangover left by the GFc.

Sunshine coast

If you were looking to invest in retail property on the Sunshine coast 20 years ago to sell today, where would have been the best area? Is that area also best to continue looking at today?

In terms of capital growth, the best area is likely to have been mooloolaba. The main reason for this is because of the regeneration of The Esplanade area that happened in that time. This saw a large increase in rental levels and a firming of yields as more people were drawn to the area.

The opposite of this was seen in areas such as the maroochydore cBD, with the opening of Sunshine Plaza in 1994 drawing tenants from areas such as Duporth avenue, Ocean Street and horton Parade. as a result the rental levels dropped away and yields increased slightly and many properties highest and best use changed to redevelopment sites.

So, where is this likely to happen next on the coast? From what we can see there are a number of potential development sites being pieced together in the Bulcock Street area of caloundra. however, Bulcock Street is still someway from the beach, which is the main draw for areas such as mooloolaba and hastings Street at noosa. So while there will be some regeneration, which has

started to happen over the past five years, it is unlikely to reach the levels of mooloolaba.

Perhaps we could see the original town centre of maroochydore reform, with the long overdue redevelopment of the Big Top site being the centre piece. We have noted with the redevelopment of Duporth avenue during the past five years, an increase in the rental levels in the area, however vacancy levels are still an issue, and until some clear office buildings are developed in the area to increase foot traffic, this area is likely to remain static.

....limited stand alone and strata titled retail properties are available in suburban locations, with most small shopping and convenience centres being held in one line....

If you are looking more for a good income stream over the next 10 years, there are numerous options. You may look to an area like nambour, with returns of up to 9.5% for multi tenanted properties. however, these properties usually have a higher vacancy level over the longer term with higher tenancy turnover. Though, if the Old mill site is redeveloped with a coles anchored centre, then parts of nambour may start to look attractive at these sorts of returns.

Southern Queensland

TOOWOOmBa

The Toowoomba retail market is diverse, with limited opportunities available at a wide range of price points and yields. most of the entry level sub-$1 million opportunities lie in the cBD area, which comprises mainly older style buildings with a mix of tenant quality and lease covenants. Properties with quality tenants such as banks or other national tenants are tightly held and attract firm yields. higher yields are achievable for secondary grade property, however these also attract a higher risk of tenant vacancy and obsolescence. The Toowoomba regional council recently released a cBD master plan to guide development of the cBD into the future. This strategic planning approach should underpin cBD property values in the future.

Some bulky goods retail properties are available in fringe cBD and suburban locations. These are generally in a high price point and attract firm yields. Limited stand alone and strata titled retail properties are available in suburban locations, with most small shopping and convenience centres being held in one line. These are generally tightly held and properties which are established with good tenancy mixes are at a high price point and attract firm yields if offered to the market. Similarly, fast food outlets that become available often have firm yields, with the benefit of national tenants on long leases.

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central Queensland

rOcKhamPTOn

The long term economic outlook for rockhampton over the next 15 to 20 years is good and the centre can no longer be considered simply a ‘cow town’. If the predicted growth materialises, there is capital growth to be had.

The commercial market has remained stagnant during 2009-10. however, we consider that there is room for escalation in rents across all facets of the commercial property market over the coming years. rockhampton is long way behind other regional centres including mackay and Townsville in terms of rents. Industrial properties in the newer industrial areas of rockhampton continue to sell between 8% to 9% yields. achieved rents range from $110 to $150 per sqm for this industrial stock yet mackay achieves $200 to $250 per sqm for similar industrial properties. If rockhampton manages to produce more industrial land and in turn secure major mining tenants, there is likely to be great expansion in the market as well as an increase in rents and returns in the long term.

There is also room for movement in some parts of the retail market, predominately bulky goods. rents for retail warehouses located on the Bruce highway are achieving rates ranging from $170 to $220 per sqm. at these rates, the gap is closing between the retail and industrial market. This suggests that there is perhaps room for growth in this sector also.

....we consider that there is room for escalation in rents across all facets of the commercial property market over the coming years....

Properties that attract national tenants will continue to produce good steady cash flow. In rockhampton, these properties are generally very tightly held and in most cases produce lower yields. however, as the mining boom continues there may be as much benefit in hedging bets on tenants associated with the mining industry. If a savvy investor does their homework they are likely to uncover that some of the smaller players are just as secure as some of the majors.

BUnDaBErGOne of the best performing retail property sectors in Bundaberg are smaller shops in the cBD between Barolin Street and Targo Street. Larger premises have a history of lower rentals and higher difficulty in finding tenants if they become vacant. Tenancies in the back of arcades also have a chequered history.

Other best performing properties are well located suburban and neighbourhood shopping centres where vacancy rates have also remained generally low.

The best value for money is considered to be in the higher price ranges (above $1.5 million) where the volume of buyers is significantly reduced and yield rates expand.

hErVEY BaY

Future growth in the hervey Bay retail market is likely to be linked very closely to our population growth. Over the past two years, hervey Bay’s population has been relatively stable however there are recent concerns of a decline in numbers as tradespersons leave in search of work in the flood and cyclone affected areas. a volatile tourism industry has also resulted in a number of retail businesses beginning to experience financial distress.

There is very little turnover of retail property in hervey Bay as most is situated within the major shopping centres. retail outlets situated along the Esplanade are generally older style buildings, whereby the site has possibly been identified for future redeveloped therefore limited money has been spent maintaining it.

rental rates appear to have stabilised after experiencing a fall in rates from late 2009 to mid 2010. national tenants would appear the most secure in this market however there is limited supply of such property and pricing is generally in excess of $2 million, being out of reach to the majority of ‘mum and dad’ investors.

a recent sale of the hungry Jacks realised a yield of 6.59% excluding land tax at a sale price of $2.035 million. The property was originally purchased in Oct 2008 for $2.16 million. additionally, Officeworks remains for sale after being purchased in may 2009 at a yield of 7.49%. Other multi tenanted buildings with a mixed tenancy profiles do not however achieve these yields which are more in the range of 8% to 9%. Until hervey Bay’s population begins to show signs of uplift, we consider rental and sales growth is likely to remain relatively flat.

cairns

The cairns retail market had been strengthening slowly but steadily for a number of years. however while this trend started fading out at the start of 2008 and has continued to fade since, we now perceive the cairns retail market to be at or near the bottom of the cycle. It must be also said that retail property sales in cairns are extremely sporadic, and no retail properties of significance have changed hands since 2008. The only sales involving retail property have been of mixed use retail/office buildings or tenant buyouts of single premises.

On the retail development front, Woolworths are planning to develop a shopping centre at Gordonvale West, to

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contain a supermarket, petrol station, 10 to 12 specialty store and two takeaway food outlets. The proposed centre is presently the subject of a development application with the cairns regional council.

Despite the economic downturn that has led to a reduction in consumer and tourism spending, vacancy levels in the prime retail sector have remained stable, with high exposure cBD space well occupied. however there are vacancies in lesser exposure locations and/or on the cBD fringe. rents as a general rule have been static, showing ranges of $600 to $1000 per sqm per annum for prime cBD space, and $1000 to $2500 per sqm per annum in key tourist precincts such as the cairns Esplanade.

Yields for commercial properties in general in cairns have eased back by about 10% from the record low levels observed at the start of 2008. Though true retail sales are rare in the cairns market, we believe yields for retail premises have been steady in the 7.5% to 8.5% range, compared to the 6.75% to 7.25% range that prevailed at the start of 2008.

Townsville

We have all been guilty of thinking ‘life is just so busy’ and ‘I couldn’t be bothered driving over there’. as consumers we are seeking more convenient retail facilities within close proximity to home, or on the way home from work that offer a one stop shop. So when considering long term investment options within the retail sector where should you look?

Over the past few years we have seen a number of new suburban retail centres being constructed, which could provide good long term investment potential as they are located in areas that have an expanding catchment population coupled with potential for increasing rental incomes. These new centres are providing a dynamic key tenancy mix offering a one stop facility with 24 hour convenience stores, take-away outlets, bottle-shops, video shops, butchers, etc.

a number of these modern centres are currently on the market with asking prices around the $5m mark. With this sector currently at a low point in the cycle, it provides a good time to look at this investment opportunity. There does however still seem to be a misalignment between vendor and purchaser expectations with vendors seeking

a sub 7.5% return, whilst purchasers are willing to pay in the 8.5% to 9.5% range.

Other areas for smaller scale investment within the retail sector include the Flinders Street West precinct and the arterial roads of ross river and charters Towers road. Flinders Street West has been a ‘sleeping giant’ for many years now and with the Flinders Street redevelopment and the continued development of the central precinct along the ross creek/Flinders Street corridor this area has a positive long term investment outlook. The arterial roads of ross river and charters Towers road provide high exposure with good passing traffic and a lower entry point then the newer suburban retail centres.

Darwin

I was talking to a property manager the other day about the eccentricities of Darwin’s retail property market. For example, that so much of it is concentrated in one place – casuarina Square – despite Darwin being very spread out for such a small community. Darwin also has a well above average supply of bulky goods outlets, but that could well be because it has a relatively young demographic, and is so well set up for raising youngsters.

We got talking about our shopping habits, and I said how we really don’t like walking from the car to the shop. he replied, ‘yes, Darwin has a hitching post mentality’.

he is so right. Darwinites don’t like to mosey much. We want to be like clint Eastwood; to be able to dismount, open the swing doors, and have the piano stop playing – all well within a minute. retailers requiring traffic jams and long queues are considered candidates for tarring and feathering at best, and for crocodile feed at worst.

....Darwin has a well above average supply of bulky goods outlets, but that could well be because it has a relatively young demographic....

There are good reasons for this. a recent example was a day when 340mm of rain fell in 24 hours. When you are clint Eastwood, such rain could well extinguish your cigar, and get you feeling right mean and ornery. On other days, even a medium mosey could get you wetter from your sweat than the 340mm of rain could. On others still, re-entering your car could cause serious burns, together with howling and jumping about, which is not the sort of performance we clint Eastwoods want to be seen doing.

consequently, anyone wanting to invest in Darwin retail property for their long term future would be well advised to consider that hitching post mentality as being a much more important factor here than down south. They should give the usual retail protocols their due – the anchor tenant, the tenancy mix, the local demographics, and so forth – but should consider these in the contexts of both present realities and future possibilities and plans. For example, government plans for a new satellite city of Weddell are gathering pace: where are the best locations for growth if that comes to fruition, and what

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sort of tenancies would best serve it? and what would be the right timing for such a development? The nT doesn’t have any land tax; are there retail development sites that could be held for land banking?

With tourism related retail, more and more cruise ship are arriving at Fort hill wharf, and there is an easy and pleasant walk from the wharf to the Smith Street mall (via glass-walled lifts which both keep the walk almost level, and provide fine views across the waterfront development). Yet sometimes when hundreds of people disembark - even over 1000 on occasion - the tourist shops along Smith Street mall aren’t even open. are there unexploited opportunities there?

....take some time to look around; only invest when you know both retail property and Darwin itself even better than the locals do....

The best general advice we can give, however, is not to consider that because Darwin is so small, and the economic pundits reckon it has such a good future, you can’t go wrong in retail here. You can. Get the advice of experienced locals, especially those who look and act like clint Eastwood. Take some time to look around; only invest when you know both retail property and Darwin itself even better than the locals do – because they may talk slow, but they can shoot the eye out of a retail investment property from a thousand yards. But look to where your prospective customers have to dismount, and ask ‘is it sheltered? Is it close? Is it free?’ Which, I guess, is another way of asking, ‘is it casuarinas Square?’

Failing to do that will have your investors itching for a lynching. But do that, and you can make every hitching post a winner.

Perth

The retail property asset encompasses a wide range of properties with values ranging any where from below $250,000 for a modest suburban strip shop to hundreds of millions for a major regional shopping centre. Over the course of the 2010 calendar year most activity in this sector focused at the premium end of the market, with the lower end languishing under low sale volumes, rising interest rates and subdued retail spending. Ownership and management of properties in this category of the property asset market is generally more complex relative to office or industrial properties. The complexity of management, in the main, correlates with the size of the asset holding. For example, a major regional shopping centre requires a team of professionals ranging from centre managers, tenant managers, leasing agents as well specialist financial managers.

Since the Federal Government modified rules associated with Self managed Superannuation Funds (SmSF) in late 2007 which, in broad terms, allowed the gearing of property assets held by SmSFs we have noted increased numbers of properties being acquired under these provisions,

particularly by owner occupiers purchasing premises for their business. In this article we are going to explore the fundamentals of acquiring retail property for such purposes. These types of acquisitions generally require complex structures which comply with the regulations set out in Section 67(4a) of the Superannuation Industry (Supervision) act 1993. The type of loan too is not your standard mortgage facility, with security of the loan being limited to the asset being acquired. Obviously there is a cost associated with forming the required instruments enabling acquisitions under these provisions, and this needs to be considered carefully. Furthermore such acquisitions are generally long term investments that will not generally show a positive return on investment in the short term.

The question being addressed in this article is whether there are suitable retail property investments which could form part of a SmSF. Essentially, this question depends upon the individual circumstances of investors considering such acquisitions. For wealthy investors willing to purchase premium properties there are good possibilities of securing retail property assets which offer a secure long term reasonable rate of return on investment. an example of such an asset was the Officeworks morley property, located at 137 russell Street, which sold for $5.9 million in September 2010, showing a passing yield of 7.4%, with two years remaining on the initial lease term, as well as two further five-year options. The lease also incorporated strong lease covenants such as annual cPI reviews with minimum 3% increases and market reviews at each option with a ratchet clause capped at 10%. Of course there are not many individuals with sufficient net worth who would be able to secure such an investment for their SmSF.

at the other end of the retail property sector are small suburban strata and non-strata titled strip shops. hTW recently valued a property in high Wycombe, which comprised a 1965 shop positioned on its own 150sqm lot, forming part of a strip shop complex anchored by a local IGa. This property was leased and valued at below $250,000 at a capitalisation rate of 7.25%. The lease term had approximately two years remaining with a further three-year option available. The complex was positioned nearby a primary school and medical centre, which we noted attracted a steady stream of shoppers that would undoubtedly increase after school. Such an asset would certainly fit well in an SmSF, requiring a small capital outlay, which offers some security of income based on its location attributes.

In any retail property acquisition, whether for SmSF or general investment purpose, buyers need to practice a higher degree of diligence taking into consideration many more factors than say an industrial or office property. The retail trading sector is broad and dependent upon

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shoppers’ spending money. recent data on shopping turnovers show that discretionary spending has declined while spending on essentials, such as food has increased. rising inflation and interest rates have been considered the causes of this change in consumer spending habits. Therefore investors need to consider what the likely future holds for the tenant business occupying the premises in question.

In the case of the Officeworks sale, the tenant sells goods which are dependent on both discretionary and non-discretionary spending. Their stock materials such as stationary are typically essential for any business, while other products such as computer sound systems are definitely non-essential and therefore dependent on discretionary spending.

Understanding location attributes of a retail property is vital in assessing its merit as an investment. For example the high Wycombe property is in the outer suburban market which has been a subdued property sector during 2010, however, in this instance the property benefited from being located near other services and infrastructure, guaranteeing good numbers of shoppers. another locational attribute worth considering are the socio-economic levels of the local population. For instance, retail stores located in Subiaco, nedlands or claremont have local populations that have in general higher disposable incomes. We noted during the height of the GFc that retailers in Subiaco indicated generally no decreases in trading, with many just saying that their shoppers were ‘not affected’ by the GFc.

Overall this is only a cursory glance of the possibility of acquiring a retail property to form part of a SmSF portfolio. The most important point though is the need to consider such purchases very carefully. These types of purchases should, under no circumstances, be made impulsively or on emotional grounds. many retail properties, particularly those located in nedlands, claremont and Subiaco are purchased as ‘trophies’. These types of motivations are inconsistent with the purposes of SmSFs and could potentially add unnecessary risk to the fund. Perth commercial property has in recent years been influenced significantly by speculative investors who acquired properties for no other reason other than anticipated capital gain over the short term. again this approach is completely inconsistent with the long term goals of an SmSF.

South Western Wa

Like most areas around the country, trading performances in all retail markets, excluding cafes, is currently considered to be poor. With the strong australian Dollar and the lure of cheap holidays overseas (such as Bali) the number of tourists visiting the south west has declined. as the region relies heavily on the tourist dollar, the retail

trading performances have been weak. as a consequence demand for retail development has stagnated.

most retail markets in the towns of the South West are very tightly held and there is very little available for sale. many of the retail premises are owner occupied and there tends to be little retail space available for rent. Vacancies are very low and demand for retail rental space is also considered low, however this is kept in check by the limited supply of retail space. There has been very little retail development across the region in general recently and very little on the horizon in the main cBDs.

If the retail investor is after high rentals then margaret river and Dunsborough appear to be the shining lights, with rentals in both towns ranging from $300 to $400 per sqm. Bunbury has average rentals of $250 to $350 per sqm, with lower rates again being achieved in Busselton with rentals ranging $150 to $210 per sqm for street front shops. higher rents are being achieved in the primary street front locations, such as in the Figtree Lane shopping complex and in the shopping centres.

There is considered to be the potential for increased rents in Busselton, margaret river and Dunsborough in the short to medium term, coming off a low base and due to the lack of supply of new retail shops.

The development of new shopping centres in the regions surrounding Bunbury is likely to increase supply of retail shops in the short to medium term and this could have a negative affect on retail rents in the cBD. The jury is still out, however, on whether the installation of parking meters in the Bunbury cBD in late 2010 has had any significant effect on cBD shops.

....if the retail investor is after high rentals then Margaret River and Dunsborough appear to be the shining lights, with rentals in both towns ranging from $300 to $400 per sqm....

For those investors with a longer term view, the population in the region is expected to achieve above average growth during the next 20 years. There are as number of projects in the region including the Worsley expansion, the new urea plant in collie, the desalination plant at Binningup and the Simcoa furnace expansion which are keeping employment prospects positive. The number of FIFO (fly in fly out) workers choosing to live in the area is also increasing as flights direct from Busselton to the north west of Wa have opened up. Furthermore, the proposed expansion of the Busselton airport into a domestic standard or perhaps even international standard airport will likely increase interest in the region. Therefore, strategically located retail premises will certainly grow in capital value as the population of the region expands. cap rates currently being achieved in margaret river are showing 5% to 6% with 6% to 7% in Dunsborough, Busselton and Bunbury.

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residential Overview

Long term property investment offers a solid and tangible asset to compliment your retirement portfolio. The goal should be to ensure you make the right decisions during the purchase phase so that when it comes time to realise the investment, you’ve given yourself every chance of an attractive outcome.

By looking at the nation’s real estate horizon locality by locality, property type by property type, the residential experts at herron Todd White have come up with some inside knowledge on where the best long term investments lay. adopting some of the principles contained within this month’s issue can help ensure more dollars in your SmSF come the end of your working years.

Sydney

Offloading 1� to �0 years for maximum return:

The age old equation of ‘higher the risk the higher the return’ certainly applies in the western Sydney market. If investors are willing to take the risk on some speculative purchases, higher returns are available within a relatively short period of time. With greenfield developments continuing to dominate the supply of new dwellings in Western Sydney, an opportunity exists to secure a large parcel of semi-rural land bordering an expanding residential development and benefit from the capital value uplift, following a re-zoning to more intensive residential uses. This has been taking place in areas such as riverstone and Schofields in the past few years but if you want to play catch up then target areas such as Box hill and Oakville. Of course there is a chance that re-zoning may not happen at all or may take many years to happen, but with continual population growth, securing large land holdings in metropolitan Sydney should never result in a loss.

Returns to keep you in retirement

The key to effective property investment is the duration which the property is held for, a fact often forgotten by many property investors. While historic performance provides no certainty on future returns, it should be noted that the median unit price within Sydney rose from 192 000 in 1997 to $453,000 in 2010 rising by an average of 6.8% a year, however the median price rose by only 4.1% per annum in the five years to 2010, barely beating inflation.

....with greenfield developments continuing to dominate the supply of new dwellings in Western Sydney, an opportunity exists to secure a large parcel of semi-rural land bordering an expanding residential development....

Units that are currently producing good returns have the potential for higher returns in future. Look for suburbs that have plans to increase infrastructure and density, or are already doing so e.g. Top ryde has recently completed a regional shopping centre, as well as the completion of a rail network through macquarie Park. areas such as Top ryde, meadowbank, hornsby and Waitara all provide good quality infrastructure with regard to shopping, transport and social facilities; and are still within reach of the city (approximately 25 - 30 minutes travel on the train). With increasing congestion issues and rising fuel prices, areas with strong public transport connections will continue to benefit from both capital growth and rental returns..

Darlinghurst & Potts Point

In Sydney’s east, Darlinghurst and neighboring Potts Point offer affordable, well positioned apartments with historically strong, consistent rental returns. The locations close proximity to the cBD, ensures that a unit without a car space will still perform well, with readily available public transport and other amenities servicing tenants needs.

a Darlinghurst studio can be purchased from around $280,000, with traditional 1 bedroom units fetching

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upwards of $400,000 depending on age, internal condition and views. a typical, updated studio worth around $300,000 can return a weekly rent of $400-plus. rental income for older, original style apartments can be easily increased with basic renovations to kitchen and bathroom facilities or the addition of laundry facilities and integrated storage.

however, it’s worth noting that some lenders impose lending restrictions on units with a total internal floor area below 50sqm. most studio apartments fall into this category, so thorough research of lending standards and credit restrictions is recommended.

Neutral Bay & Cremorne

north of the bridge, the neutral Bay and cremorne unit market presents sound, long term investment opportunities for investors shopping around the mid-point price range ($500,000 to $800,000). as with most inner-ring suburbs, proximity to the key employment centers of north Sydney and the Sydney cBD will ensure a strong demand for rental properties remains in perpetuity; a key fundamental for any long term property investment.

Specifically, renovated two bedroom units with car parking in older style complexes offer strong potential for both capital and rental growth, providing a robust investment for any SmSF diversifying into the property market. Such properties currently trade from around $550,000 for an updated two bedroom unit with parking towards $700,000 for renovated two bedroom units with views.

Defence Housing Authority (DHA)

an investment option worth considering for your SmSF is a Defence housing authority leasing agreement. The Defence housing authority offers long term lease agreements on selected investment properties, providing reliable, ‘low maintenance’ rental income, with annual rental reviews. Lease terms general include three, six or nine years, and include restoration provisions upon completion of the lease agreement (painting, re-carpeting etc.). Dha take over management of your property for this period, with Defence personnel occupying the property as tenants.

Dha will consider properties all over metropolitan Sydney but does have specific requirements such as car parking, and being ‘pet friendly’. Townhouses will generally best fit these requirements, with suburbs such as randwick and caringbah known for containing pockets of Dha leased properties. Proximity to public transport and

schools are considered by Dha, but investors should also consider the closeness of any military bases or Defence establishments, as this may strengthen your application.

Further information can be found at www.dha.gov.au

Wollongong

For self managed super funds looking for stable long term growth, properties in older established locations such as Fairy meadow, mount Pleasant, Balgownie, Towradgi and East corrimal offer some attractive investment potential. These areas benefit from consistent levels of demand, with buyers attracted to the suburbs close proximity to the cBD, beaches and Wollongong University’s Innovation centre. Furthermore, these suburbs benefit from strong transportation links, being located on or near the ‘Gong Shuttle’ route and the Sydney-Wollongong railway line. Following the rise in popularity of these suburbs, we are noticing a increase in the number of knock down and rebuilds, as wealthier families take advantage of lower land values to build their dream homes. house prices in these suburbs start at $380,000 and will likely benefit from strong capital value growth, as infrastructure development further increases the desirability of these suburbs.

Looking further out, older suburbs located nearby Wollongong University and the north Wollongong train station, present some opportunities for investors seeking capital value uplift in the medium term. In areas such Keiraville and Gwynneville, gentrification is expected to occur, as older residents relocate and are replaced by younger families seeking to renovate, or extend an existing dwelling. In comparison with other areas in Wollongong, the land is relatively flat, limiting building costs, compared to hillier suburbs near the escarpment, and as such redevelopment is already occurring.

....these areas benefit from consistent levels of demand, with buyers attracted to the suburbs close proximity to the CBD....

In the upper end of the market, the northern suburbs offer strong potential for long term capital value growth, with supply effectively constrained by a lack of developable land. Despite this, demand remains high in suburbs such as Thirroul, with buyers attracted to the beachside culture, local amenities and strong public transportation links to the Sydney cBD. The northern suburbs further benefit from the holiday home sub-market, which can drive property values higher in suburbs north of Bulli.

For self managed super funds seeking income returns to finance an existing or upcoming retirement, properties located in the north offer good rental returns, with these areas benefiting from a closer proximity to Sydney than the broader Wollongong market.

noticeably we have left out Wollongong apartments from our recommendation of investments for self managed super funds. Demand remains low for apartments within Wollongong, with apartments in several completed development projects remaining on the market.

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canberra

This issue is not about the quick buck. We want to introduce the readers to property that would sit well in their long term investments with particular appeal to those who can include property in their self managed super fund.

have some thought about your patch. Imagine you had the ready dollars to buy something which you were looking at either:

a) Off-loading in 15 to 20 years for maximum return.

b) reap ongoing returns to keep you in retirement.

The scope is not limited. Just adopt the position on what you think holds great long term investment potential and why, along with thoughts as to how it would work in a superannuation fund.

canberra is an ideal location to look for an investment property. The rental market has strong demand due to the transient population and properties close to the city and Universities can reap good rental returns year on year. Typically in canberra a rental return of 5% for a middle range property is achievable. With this level of return available residential property in canberra can provide both secure income streams, and capital growth in the longer term.

....traditionally centrally located property in the inner north and inner south areas will also always perform well....

canberra has experienced strong growth within the residential property sector over the past 10 years and with a long term perspective in mind this trend is expected to continue. Obviously timing is crucial in relation to off loading an asset at the right stage of the property cycle to gain maximum return. The fundamentals are important to look at to gain good returns and include, being in close proximity to local and major amenities like shopping centres, entertainment, schools, business areas and public transport.

Due to canberra’s smaller size in comparison to other capital cities, strong investment opportunities are available over various local regions including the newer northern Gungahlin suburbs and the southern more established suburbs in Tuggeranong. Traditionally centrally located property in the inner north and inner south areas will also always perform well. again the fundamental factors described above apply to achieve strong capital growth or good investment return.

a number of serviced apartment developments are located in and around the city, with units providing investors with almost guaranteed long term income that produces good returns. With the large number of fly-in, fly-out workers, the public service and general commercial traffic there is constant demand for this style of accommodation and as a result the returns are high and the vacancy rates are low.

another property type that provides guaranteed long term income is Defence housing. With Duntroon and a number of other defence related operations located in and around canberra, the Dha investment scheme provides opportunities mainly with standard residential style dwellings. Defence housing properties are leased on a long-term basis with options to renew or sell. These properties guarantee secure tenants with maintenance agreements within the lease.

With good rental returns, capital growth and stable market conditions that canberra has experienced over the past few years it comes as no surprise that it has become a haven for investment properties.

newcastle

Generally speaking the newcastle and hunter Valley residential rental market for the past year has been tight, with low vacancy rates and increasing rents. The latest data provided by the real Estate Institute of nSW shows a vacancy rate of 1.8% in December 2010 for the hunter region. There has generally been a 10% increase in achievable rents over the past year and this increase in potential yield has made property investment more attractive.

Where the yields remain high the investor market will continue to perform well. Investors chase yields. It has been observed that some properties remain on the market for extended periods as vendor expectations are frequently out of step with market realities. Investors rely on the potential yield in their purchasing decisions and are quick to rule out properties that will not bring the return they require. Inflated asking prices or the ‘my property is special’ mentality can quickly lower yields and therefore attractiveness to purchasers.

Usually property investors take into consideration the return, income stream and capital growth. There are a number of options which can be looked at as investment opportunities throughout newcastle and the hunter region. We will first look at areas which can provide a steady income stream with lower capital growth in the long term.

Defence housing provides an opportunity to investors to secure newer properties with long term leases and maintenance agreements in place. Usually these types of properties are located in raymond Terrace, medowie, Singleton and Fern Bay. This type of investment provides a secure income stream but historically lower capital growth in the long term.

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The suburbs surrounding newcastle University have also been a popular investment option.. These suburbs include Jesmond, Shortland and Birmingham Gardens. There is a mixture of units, villas, townhouses and detached houses (leased on a per room basis) available in these areas. This investment option provides a steady return to the investor with low to medium capital growth in the long term. a caution here is the discussion in local media regarding moving part of the campus into the newcastle cBD.

The well established suburbs such as adamstown, Lambton, new Lambton, Waratah and hamilton are well positioned only 10 to15 minutes drive from two major shopping centres (Westfield Kotara and charlestown Square), the cBD and surf beaches. These suburbs continue to show steady capital growth and increased rental returns. We do not anticipate this to change over coming years, short of unforeseen calamities.

The inner and beachside suburbs of cooks hill, The Junction and merewether, which offer a mixture of property types, have always provided steady capital growth and returns. These areas often appeal to investors who are looking at higher capital growth in the long term.

There are a number of options available in the newcastle and hunter region for property investors as outlined above. If the current rental market conditions continue with lower vacancy rates, limited supply of rental properties, increase in demand and rents achieved, and residential property is looking as an attractive option to investors.

nSW Far north coast

The nSW Far north coast comprises property located north of the clarence river, east of the Dividing range and south of the Tweed coast. Within this large expanse of area, there is a diversity of property type, quality and pricing. The north coast residential property market has generally proven to have strong long term growth over the past 15 to 20 years. This has resulted in good long term investments that have benefitted self managed super funds.

In order to provide evidence of long term growth in residential property values over the last 20 years, the median sale price for residential dwellings in the regions of Ballina, East Ballina, Byron Bay, Lennox head, Lismore and casino have been analysed for the calendar year of 1991 and 2010. The results of the analysis are displayed on the following graph:

The highest growth levels are attributed to those regions situated near the coastline such as Ballina, East Ballina, Byron Bay and Lennox head. The exceptional growth in value experienced in the these coastal regions is a direct result of the ‘sea change’ phenomena felt throughout most coastal areas of australia over the four years to 2008, particularly the eastern seaboard. The more inland regions of Lismore and casino have also experienced growth, but at a more reduced level.

It is interesting to note that the market conditions in 1991 were generally slow following on from the 1989 financial market crash and a period of record high interest rates. Similar slow conditions have been experienced in the residential market over the past two to three years. current market conditions are expected to remain generally slow over the next six months, with continuing uncertainty in the world financial markets, expectations of future interest rate rises, reduced market confidence and the follow on affects related to recent natural disasters.

Due to the diversity of property, type and quality on the nSW north coast, there are considered to be numerous options available for the long term investor. Based on historical data, the strongest potential for capital gain is still expected to be related to residential property located within coastal areas. however, it is unknown whether the exceptional growth experienced over the past 20 years will be repeated without the added ‘sea change’ phenomena previously discussed. Long term growth will also continue in regional areas. The more affordable pricing levels within regions such as Lismore and casino will appeal to certain self managed super funds. however, investors have recently been affected by continuing slow rental markets in these regions.

....the more inland regions of Lismore and Casino have also experienced growth, but at a more reduced level....

Property values on the nSW north coast are expected to remain stable; however, the possibility of future interest rate rises will see further pressures placed on debt levels and resultant weakening in property values. The lower end of the market is considered to remain stable with the mid to upper end of the market considered to be vulnerable, together with a softening in prestige sectors demand. In summary, the current conditions have resulted in a ‘buyer’s market’. This current ‘buyer’s market’ is considered to be an optimum time for a self managed

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super fund to enter into a residential investment, with the view to a long term 15 to 20 year investment.

nSW mid north coast

In 2009, the nSW State Government – Department of Planning released the mid north coast regional Strategy. With the region’s population set to significantly increase, particularly in the major regional centres, this document identifies the strategic direction of urban growth to the year 2031. anyone seeking a long term property investment based on speculative future higher density housing sites would do well to review this mnc regional Strategy document.

In looking at where would make a good long term investment and off-loading in 15-20 years from now, its important to firstly look at what lessons have been learned over the past two decades.

The largest capital gains here on the mid north coast of nSW up to around 2004 were at: Pacific Palms where prices significantly boomed at this popular coastal holiday destination largely a result of its good two to three hour proximity to Sydney/newcastle; inner town development sites of Port macquarie and Forster; and periphery rural farms within 10km of Port macquarie and Forster where residential sub-divisions have been permitted in order to meet the demands of a growing population.

....focus should be on buying freehold title, close to the established main town centres and on good size blocks of land....

The largest losses made by developers/investors have centred around large scale semi-remote land releases such as harrington Waters, Tallwoods Village, and the hallidays Point region; and for modern high-rise units (particularly in Forster) where the creation of too significant an oversupply was caught out by weakened demand following the market peak in 2004.

It is likely the same principles will apply to the next two decades. Profiting from on-selling periphery rural farms for sub-division is likely to be out of reach for most investors – this purchasing game is now in the hands of large scale developers. Outside of the main towns, investors buying in holiday areas should obviously avoid purchasing at the peak of market, but mostly be prepared to ride out any market downturn as has been experienced in recent times. Those purchasing non-rental holiday houses should consider the possibility of avoiding capital gains if it were one day to become the principal place of residence.

For the majority of investors out there (sub $500,000), that old adage ‘location, location, location’ should ring true. Focus should be on buying freehold title, close to the established main town centres and on good size blocks of land. Those with pre-1980s style houses will probably best as the dwellings used by date will have come by 2030 and hence prime for re-development.

In Forster/Tuncurry, areas we consider warrant investor attention include land north of Forster golf course, land

zoned medium to high density residential between Little and macintosh Streets, Forster, and land between Beach Street and Stewart Parade, Tuncurry.

In Port macquarie, houses featuring good views atop Transit hill, around clifton Drive are now becoming dated, as are dwellings within the residential 2T Tourist zone near Flynns Beach, and also around church Street.

Lastly, intending retirees to the mid north coast may achieve potential savings by acquiring a centrally located villa now rather than in 15 to 20 years.

nSW central coast

When thinking of the likely events that will shape the central coast real estate market and its investors over the next 15 to 20 years, it is easier to remain short sighted and avoid looking this far into the future - such is the nature of the real estate market.

When thinking of the market patterns over the past several years, the mind races at this question, stalls and then goes blank.

The central coast region is as diverse as its big cousin to the south, that of course being the Sydney metropolitan area. We are less than an hour’s drive to Sydney, however some argue that we are some years behind in our progress.

This has its benefits though, for we are able to see and judge the good, not so good and downright disastrous things that our big cousin does and hopefully mimic and improve on the good things.

Being a real estate investor on the central coast is easy at present with the low vacancy levels, comparable rates of return and capital growth being offered.

We see no reason for this to change as we move into the future. But where would the wise investor buy now to really make the most of what the future holds and reap the rewards in another 15 to 20 years?

Pure speculation is the answer and to this end, we must consider the dynamics present on the central coast in terms of infrastructure, social policy and demographics, accessibility, politics and who is most vocal.

already, we know that greenfield sites are available, but uneconomical to develop due to the high development

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costs. This is a problem that governmental policy shift can change and as we move forward, it must surely happen as land availability becomes more of an issue than it already is. The smart investor with the means to ‘land bank’ will do well in this sector by looking at greenfield sites along the transport corridors.

In line with much of the market across australia, it is reasonable to assume that the established residential market is set for future growth across all sectors.

....provided the beach and waterfront areas avoid the predicted sea level rise over the next 50 years, then growth in values and investment is almost guaranteed....

We see the future for the Gosford cBD as a bright one. It has all the right attributes with its waterfront areas, hospitals, shops etc, but with the level of disharmony between the decision makers, various agitators and other interest groups within the city, it may very well take 15 years to achieve anything. Despite this somewhat grim outlook, we live in hope and recommend those with time on their side look at investing in the Gosford cBD.

We also see the residential market at Ourimbah as an area of opportunity. This is the home of the local campus of newcastle University and as it expands to keep up with demand there should be a rise in demand for student housing. already, some strategic purchases have been made in the area and when the time is right, this area will blossom.

Likewise, the Warnervale, hamlyn Terrace and Woongarrah areas saw significant growth in the late 1990s and early 2000s, but the domestic economic situation brought a halt to this. This is an area which is destined to become a mini city in time and good, solid investment is predicted. The proximity of the F3 Freeway, main northern rail line, business/industrial parks and most importantly land which can be developed should ensure this.

Lastly, provided the beach and waterfront areas avoid the predicted sea level rise over the next 50 years, then growth in values and investment is almost guaranteed. We should not dismiss the effects of sea level rise and the smart investor may probably look at buying one street away from the waterfront just in case. Who knows, they might be getting a bargain future waterfront now.

Southern nSW & northern Vic

aLBUrY

When planning for retirement it is important to outline the financial goals needed in order to retire into a desired lifestyle. a portfolio of investments should intuitively achieve the greatest return, whilst at the same time minimising the risk investments are exposed to. real estate not only offers the necessary diversification away from shares and bonds to minimise risk in any portfolio, it also offers a hedge to inflation. When contemplating a

portfolio designed to support a post-work lifestyle, many individuals are choosing to run their own. Self-managed super funds (SmSFs) are one of the largest and fastest growing segments of the superannuation industry.

For trustees of SmSFs, managing their own fund, it is important to adhere to the rules and regulations in the various laws that govern super, which are designed to protect investors’ retirement income. This includes a sole purpose test which dictates investments are to be used solely for retirement purposes. residential real estate is an ideal investment in this regard, with the income from the property being reinvested back into the fund and any capital gains realised upon release of the property after retirement. With the residential market currently in a holding pattern, capital gains are more likely to be realised over a long term investment period.

Within the albury-Wodonga region, Defence housing australia (Dha) is ever present and offers a secure long term investment. a typical lease for the Dha runs between nine and 12 years, during which time the lessor is guaranteed rent for the duration. This guarantee is backed by the commonwealth Government. moreover, upon the completion of the lease, the Dha will restore the dwelling to its original condition, this includes repainting and recarpeting. a final benefit includes the property being managed by the Dha during the lease period, therefore providing a hands-free investment.

Because of its diversification effect, and its protection against inflation, residential real estate is an ideal investment for any super fund portfolio.

WaGGa WaGGa

Long term investment opportunities in Wagga Wagga with future potential are not limited in the city. Investment in the residential market however needs to be examined thoroughly. Older homes that require ongoing maintenance to the improvements are not really ideal.

In Wagga Wagga suburbs with modern homes that achieve gross rental of between 5.5% and 6% are good investments. The suburb of Tatton is a developing suburb that attracts the owner occupier also a mixture of long term rentals. The long term rentals are mainly Defence housing australia tenants that lease from seven to 12 years and have a variety of lease terms. houses in this suburb can range from $400,000 to anywhere over $600,000, so the initial outlay of purchasing a home is not cheap and values will increase to a certain point where they can’t grow too much more.

Estella is a suburb approximately 10 years old. The houses range from $300,000 to $400,000 and receive gross rental of 5.5% to 6%. Estella is the pick of the suburbs for long

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term investment as it is in close proximity to charles Sturt University. Students looking for accommodation look at Estella due to its location and affordability. a new shopping centre to be built in the suburb which will supply the basic needs to the people living in the suburb and will mean they don’t have to come into the city as often. Estella is a good option as houses are a lot cheaper than the suburb of Tatton and gross rental is about the same, while the return is not as high the affordability is attractive. Estella also provides the option of capital growth over a 15 year period the value of the home will increase, thus meaning if rental figures remain constant the rental income will also increase, making it an attractive option.

melbourne

much of the current interest in residential property portfolios emanates from the growing interest in Self managed Superannuation Funds (SmSF). Over a longer investment period of say 15 to 20 years, the argument for shares being more liquid than real estate loses some validity. residential property investment not only carries with it relatively good gross returns of (typically) 4% to 5.3 % in melbourne, but significant tax benefits when held by a superannuation fund. Furthermore this type of investment shows relatively stable capital growth over the long term.

The introduction of self managed super funds has ultimately given the ‘mums and dads’ more control over how they direct their funds. many are excited about investing in property although there are many rules and regulations that need to be adhered to, which are designed to protect their retirement income.

residential property in some of melbourne’s outer lying suburbs offers both higher returns and the opportunity to receive an ongoing income for many who are asset rich but cash poor.

currently well serviced suburbs such as Boronia, Bayswater, croydon and ringwood on the outer eastern fringe and suburbs with well planned infrastructure such as mill Park, South morang , Epping to the north meet this criteria.

Self managed Super funds are now the fastest growing segment of the superannuation industry. While they perform the same role as many of the traditional super funds, the members of these funds are also the trustees. Ultimately, trustees can make quick investment decisions on a small scale where timing is crucial. Self interest generally results in a well managed residential portfolio.

The stock market has traditionally shown high returns but has also in recent years shown extremes in volatility. Shareholders who were expecting to retire in the next few years would have had their investment returns heavily discounted. In many cases yields have diminished to a point where additional sources of income would be needed to meet the basic living standard.

Buying a property, whether it be for a SmSF or private investment, is a long term strategy, potentially up to 20 years is needed to provide peace of mind and hopefully a stable return.

housing investment opportunities on a smaller scale, in many of the outer lying suburbs additionally offer the potential for further subdivision and development leading to expediential capital growth which may not be available to the majority of their more expensive inner city counterparts.

regional Vic

EchUca

Taking a longer term view of the world when it comes to property can be a difficult task given the current rate of change in everyone’s lives. From a local perspective the constants historically have been population growth (notwithstanding some decline in some rural and remote areas) and a desire to live close to the most attractive local feature. For Echuca/moama this is likely to include being near/on the river or central to town which by definition is likely to see one close to either the campaspe or murray rivers. On this basis it would be reasonable to assume that properties in this class are likely to achieve the greatest capital growth. On the flip side rental vacancies are at their lowest levels for years, which is considered to reflect the small numbers of investors entering the market following the GFc. consequently rental levels (and hence yields) are currently being forced up by a lack of supply. From a long term perspective this is unlikely to be sustained and market dynamics would suggest that more investors will enter the market in response to the demand and this pressure will subside. Ultimately a trade off between the two is likely to provide the best returns in the longer term.

....rental levels (and hence yields) are currently being forced up by a lack of supply....

mILDUra

The investment residential market in mildura has been based predominantly on reasonable rental return rather than solid capital appreciation.

We have seen reduced investment buyer activity during the past year, which is hurting prices for the bottom end of the market. In most cases first home buyers can afford to by-pass this sector, and so there is a solid volume of available property for sale in the under $200,000 bracket.

a tight rental market now exists. Where previously a rough rule of thumb was the weekly rent was equivalent to the

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capital value (i.e. $200 per week for a $200,000 house), recently rents have lifted by around $20 per week with no equivalent increase in capital value. This can now see a gross return of over 5.5%, which may encourage greater investor activity at this end of the market.

Of concern however is the lack of capital growth in the region over the past four years as a result of drought, the water crisis, the GFc and slowing population growth. median house statistics for mildura show a 32% increase between 2002 and 2009, compared to regional Victoria’s 69% and melbourne’s over 100% for the same period.

an advantage of mildura is the lower entry point for investors into the market, allowing self managed super funds to buy in to new houses and townhouses for under $250,000.

adelaide

Properties located within the inner eastern and inner southern suburbs less than 5km’s from the city and along the metropolitan coast line are more than likely going to be the top performers when considering long term investment in residential property for both ongoing rental returns and capital growth returns. Growth in these suburbs has been steady in recent times even with the currently soft market and in the long term these areas have been consistently very strong performers with detached housing with some character tending to hold the edge over other property types.

Proximity to the city, prestigious schools, trendy shopping/café strips (norwood Parade and King William rd in particular) and the general attractiveness of these relatively green and leafy suburbs all appeal to the more affluent tenant market, whilst also attracting good rental returns, traditionally around 3-5% on acquisition cost. however if we add the rental return to capital growth the combined growth over the longer term can be a return more in the order of between 5 and 10%.

Investors have been very active in these areas so competition, whilst not being as strong as it was two years ago, is still evident. areas such as Unley, Parkside, norwood and Beulah Park are within the districts to watch.

....of concern is the lack of capital growth in the region over the past four years as a result of drought, the water crisis, the GFC and slowing population growth....

an alternate strategy may be to buy multiple properties in the mortgage belt areas located in the outer southern and northern suburbs of adelaide. Whilst these properties should provide quite reasonable rental returns, there are greater associated risks involved including tenancy turnover and ongoing maintenance costs. In the long term capital growth should be reasonable but the costs to get there may dampen the enthusiasm of some investors.

Brisbane

Self managed super funds are a great way to get into the property game with enviable long term gains and generally secure cash flows. The most obvious approach when tackling the idea of making your super fund a super landlord is to stick with the fundamentals. I realize we labor this point time and time again but there really is no other long term strategy with quite the kudos of location, location, location and quality. There is one important caveat however, but you’ll have to read through to the end of this submission to find out.

In Bris it means check your pricepoints, shore up your rental base and see if you can value add. One sector that achieves all three is near city second hand units. These little treasure chests are normally in a three storey walk up design with a couple of bedrooms and a garage or two. This is all within an easy stroll of the really desirable stuff like shops and restaurants. Think Paddington, auchenflower, ascot, new Farm, West End and so on. In fact, draw a line around the cBD at about the 5km mark and start hunting. If you can feed off demand from a nearby university or hospital, all the better. If you can also get close to the café centres then you’re on a winner. It is still possible to land yourself in one of these gems for sub $400,000 and it’s amazing what a lick of paint and some new carpets can do for such little cost. If your dollar is a bit tighter try the same sector further out but close to shops and transport. all in all these units give you plenty of long term upside with capital growth and rental return pretty much a sure thing.

If you’ve found yourself with a little more moolah in the bank balance then try to grab some dirt with a modest little dwelling that would, once again, appeal to the renters. You don’t need a palace but it should be liveable. apply the same principles and look for something you can both add to and feed with tenants from nearby services. Sure a 3 bed, 2 bath workers cottage in Toowong is likely to set you back somewhere in the late $600,000’s to early $700,000’s but you’ll probably get $175 per room per week and the upside for something in this location and nOT in a secondary position (i.e. no main roads please) looks pretty strong.

With our city’s changing face of infrastructure, it is well worth your time considering those spots set to become transport epicentres. In previous month In review editions we have talked up the prospects for areas such as Kedron. This locale is set to move “virtually” closer to the

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cBD as transport woes are eased via the busway. as more infrastructure develops throughout Bris and surrounds, you can be sure that there will be boosts for the suburbs concerned.

The other possibility for your long term dollar is flats. These structures are becoming rarer as small scale developers snap them up for a strata title and quick flick. It should be remembered however that we are looking at long term set and forget property and with that mindset, we have often seen the self managed super fund buyer become the last one standing when contract negotiations are completed. If you can land a block in the right spot and on a decent size parcel you will probably find yourself with a winner.

....no one knows exactly when the market is going to improve, however one thing is for sure, the best time to buy is now....

and now, the caveat. We are witnessing a few eager beavers leaping onto flood affected property in the hopes of landing a bargain. We at herron Todd White Brisbane have been considering discount rates of approximately 10% to 20% for the new wetlands but it must be remembered that there is now a whole heap of potential purchasers who will take years (if ever) to come back to flood effected property. If the 1974 example is set to repeat, there may need to be a generational change in buyers before the market returns to former glories relative to the non flood bricks and mortar. make your investment a wise one when you start to consider the long term grow.

Gold coast & Tweed coast

GOLD cOaST

There’s no questioning that the Gold coast property market is still underperforming. The Gold coast residential market showed good early signs in 2010, however, a combination of internal and external factors (interest rate hikes, federal election etc) dented buyer confidence and subsequently impacted value levels over the 2nd half of 2010.

2011 hasn’t started any differently from where we left off in 2010, sluggish! The much anticipated January “super auctions” performed well below expectations and as a result, have left vendors and buyers questioning when will the market bottom out and start to improve.

The big questions going around at the moment is when will property prices start improving and when will it be a good time to buy? no one knows exactly when the market is going to improve, however one thing is for sure, the best time to buy is now – long term that is! The days of a quick buck on the Gold coast are most certainly gone, however, the potential long term growth is promising.

So what is a good solid, long term property that would provide maximum capital growth and provide strong

rental returns? I would have to say a freestanding dwelling located in an established, centralised area. In the northern end of the Gold coast Two suburbs that come to mind would be Southport and Parkwood, two established, affordable suburbs being located within 10 kilometres of Surfers Paradise and will be within close proximity to the new rapid transit system and the new Gold coast Griffith hospital.

The rapid Transit Project has recently started construction of stage 1, which will deliver a 13 kilometre light rail corridor from Griffith University to Broadbeach south. This stage is to be completed in 2014/15. also the new Gold coast hospital is also under construction and is due for completion in late 2012/13. Whilst these projects aren’t due for completion for a couple more years, inquiry and sale levels have improved within these areas as a result.

Artist impression of the Rapid Transit System

Prudent buyers are seeking out prime beachside locations and purchasing both units and dwellings at prices up to 50% discount from there peak in late 2007.

The ‘Buyers market’ which has been created by and oversupply properties has seen a steady decline in value levels throughout late 2010 and into 2011 with Iocal agents reporting buyers are willing to purchase if they feel a large enough discount has been given. This is very evident with local agents advising cash contracts being offered at open homes which are not subject to finance.

The limited supply of beachside land in mermaid Beach, miami and main Beach are hotspots when market conditions are strong with buyers purchasing today ensuring a positive upswing when market conditions improve. These properties rent well, but prices achieved are stronger coming into summer, so try and get a lease that is up for negotiation in September each year.

TWEED hEaDS

In considering long term investment growth for any asset it is important to understand the fundamentals in that market. For property the general rhetoric which is constantly re-iterated is location, location, location. however, we consider it is more than simply location that matters for long term property growth, its understanding the fundamentals of the market in that locality.

For the Tweed region, which is characterised by a strong retiree and family base, it’s important to consider proximity public transport, local and regional shopping, hospitals and schools in addition to the style of housing which is best suited to the typical resident in this region. We would suggest that a strong investment in the Tweed

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region would be a property which goes back to basics, a modest design, lowset dwelling on a near level, standard freehold 600sqm, to 1,000sqm allotment, offering 3 to 4 bedrooms with 2 bathrooms and double lock-up garage in or surrounding Banora Point or Kingscliff.

Banora Point is situated along the northern shore of the Tweed river offering a mixture of low density residential houses duplexes, townhouses and retirement villages. Banora Point is also home to club Banora Point which offers restaurants, bars and leisure activities (golf, tennis, swimming). Banora Point is central to local shopping at Banora Village, regional shopping at Tweed city, bus transport and local primary and secondary schools. Detached housing with these characteristics, depending on quality, views and age, generally varies between $400,000 and $550,000 and is considered to offer a good long term investment for a superannuation portfolio.

Kingscliff is a beachside community which relies on local industry and tourism. There are numerous trendy cafes, bowls clubs, two beachfront caravan parks plus major resorts in nearby Salt and casuarina. a large proportion of the residents commute to southern Gold coast and Tweed heads for work. Prices range from $230,000 for a small unit to $450,000 for a basic house to $1.6m for a new house in salt or casuarina.

But be aware of land tax issues in nSW for investment property.

Sunshine coast

The question of income return versus capital gains over say a 15 to 20 year hold on the Sunshine coast points to two different property types.

clearly the best capital gains prospects lie in buying well initially in whichever investment type you choose.

There is actually no real hurry to buy at the moment, with the market typically drifting sidewise to easing. There is a lot of stock to choose from and some sellers are motivated for various reasons. This is likely to remain the case throughout 2011.

You should be able to buy well into locations that don’t typically offer much choice during normal periods. and you should be buying well below replacement cost.

There’s no secret that the best performers for capital growth over the long term have been and will be beach and waterfront properties. Sure they have declined from the peak, but even at current values they are significantly above values of 15 to 20 years ago, and they will be the star performers again. Of course they don’t give you comparable rental returns to more typical rental stock, but you will be in front overall.

Unfortunately these investments, even now, are for the well heeled. For the less wealthy the close- to- beach locations offer a more affordable compromise with a lesser capital gain prospect but a typically better rental return profile. Take your pick here – there are numerous price points from $400,000 to more than $1 million, depending on where you look, whether it’s the Kawana strip or Sunshine Beach.

You probably have to be more careful in the sub-$400,000 price points. You might be looking for those areas where future infrastructure will provide uplift like near to the proposed hospital at Kawana. These investments are more typical rental stock with better relative rental returns and less exciting capital growth.

....you should be able to buy well into locations that don’t typically offer much choice during normal periods. And you should be buying well below replacement cost....

So there is plenty of opportunity to buy into the Sunshine coast if you have a long term investment horizon. Good advice will help you to buy as well as you can now. Talk to us – the cost will be saved many times over.

We actually don’t believe that there would be many owners who purchased into the Sunshine coast 15 to 20 years ago who don’t have a smug smile on their faces in their reflective moments.

Southern Queensland

TOOWOOmBa

The number one long term investment property for the Toowoomba region would have to be land with future development or subdivision potential. There are several reasons why including;

• a growing annual population of 1.9%,

• an increasing employment growth of 0.5%,

• an estimated average annual household increase of 2.0%,

• major regional projects including;

- Surat Basin Energy Precinct.

- melbourne to Brisbane inland rail.

- Surat Basin rail.

- charlton Wellcamp Enterprise area.

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- Toowoomba airport upgrade.

- Proposed Toowoomba Bypass.

all of these factors require land for expansion and development. Geographically, because of the Great Dividing range, the most suitable land for development is generally to the west.

Given a time frame of 15 to 20 years growth and opportunity appears to be good for all commercial, industrial and residential future zonings. The Toowoomba regional council (Trc) Planning Scheme project proposes to establish a single Planning Scheme for the entire Trc area. The new single planning scheme will mean more efficient and effective administration of planning and development in the region which effectively will provide some assurance for investors.

central Queensland

rOcKhamPTOn

The nearby Bowen Basin coal mining remains a major influence on rental property in the city of rockhampton. rental returns in the region are solid and vacancy rates have remained low over recent years. We expect this trend to continue in future years.

Long term investment opportunities realising a maximum return may be available in the form of sites with redevelopment potential, as a consequence of proposed new major infrastructure. This may change future development patterns in the area.

a major influence on maximum returns and ongoing returns is position. Property which has a limited supply such as river/beach front may well hold value/increase value more easily over the long term, than the standard residential property.

....rental returns in the region are solid and vacancy rates have remained low over recent years. We expect this trend to continue in future years....

an easy question to answer may be ‘what wouldn’t an investor look at for long term returns’? Property located in known flood areas usually reflects a higher gross return in the short term, however there is also a higher risk of maintenance/repair and lower capital growth. This fact is most obvious after a major flood event, such as rockhampton has experienced during January 2011.

BUnDaBErG

This month we are looking at the prospect of having the ready dollars to buy some good residential property investments in the area.

at the moment we feel that buying older residential property in the res B zones would be a good start as

rental vacancies are around the 2% mark. although there may be maintenance issues that come with older houses, rental returns are quite good on a percentage basis.

The res B land also has its advantages of development further down the track when the house is past its use by date.

If the prospect of maintenance issues are too much too worry about, perhaps a couple of newly constructed houses would suit you better. The rental return on a percentage basis will not be quite as good as the older houses, but the newly constructed houses will benefit from having Tax Depreciation Schedules completed by your local herron Todd White Valuer that maximise the taxation benefits of an income producing property.

macKaY

Investors historically only play a small part in the overall mackay residential market. median residential values in mackay are one of the highest in regional Queensland and have often been seen as a deterrent to residential investment. however, on the flip side, rentals within mackay are also toward the upper limits for regional Queensland. returns on residential dwellings are similar to other centres and run at around the 5% mark. The strength to the mackay residential market is that vacancy rates are also one of the lowest in regional Queensland hovering just below the 2% mark. The mackay market is heavily reliant on the fortunes of the Bowen Basin mining areas. With proposed mining expansion coupled with infrastructure projects, as well as private and government development in mackay earmarked over the next 12 months, the rental market doesn’t look like slowing any time soon.

So while the short term looks bright in regards to residential rental market, what about long term? Based on historical data, mackay’s rental market has been strong over a number of years, and while the Bowen Basin and associated coal mines continue to flourish, there is no foreseeable reason why rental market shouldn’t continue to be strong. risks include affordability issue relating to the already high house prices and potential for good capital growth over the long term compared to other areas, and the fly-in-fly-out workforces proposed for the new mines in the Bowen Basin. This may present a significant risk to rental market and vacancy rates should a large scale fly-in–fly-out workforce be approved at some future point.

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cairns

Our herron Todd White analysis indicates that over the 35 years from 1974-75 to 2009-10 the median house price in cairns grew at an average rate of 8.4% per annum, which is 3.1 percentage points above the average rate of the cPI. Due to the nature of its economic base, property cycles in cairns are significantly more pronounced than other australian cities. This is evidenced by median prices in individual years varying by up to 30% either side of the long term trajectory. median price growth in individual years has ranged from -6% to +44%, an extremely wide range of variation.

although volatility breeds opportunity, you would have to be better than Einstein to pick the turning points in the cairns market cycles. With cairns now at the bottom of the property cycle, and likely to remain so for most of this year, now is not the time for a quick killing in the cairns market. cairns is the long term opportunity.

Townsville

√ Strong population growth and projections for continued strong growth

√ Broad based regional economy

√ Largest regional city outside of the South East corner of Queensland

√ home to large Defence Force

With these positive fundamentals and the property market in the start of recovery cycle, now is as good a time as any to look for long term investments.

Over the past five to 10 years, urban sprawl has seen the northern beaches corridor of Townsville experience significant population growth, with many new residential land estates commencing. This corridor has a good supply of vacant residential land, with the rocky Springs residential development also to open a significant new land estate within the southern corridor of Townsville.

Properties located within a 5km to 10km radius of Townsville’s city centre should provide some of the best long term investment potential. These suburbs have limited land availability past the medium term and as the city continues to grow, potential expansions in employment within the inner city precincts should see stronger demand in these areas.

The central business district is currently in the process of a $56 million redevelopment of the Flinders mall, which includes opening up the existing pedestrian mall to vehicles. There are a number of new office buildings earmarked for the cBD, which are yet to commence construction and will ultimately result in more workers in the inner city.

....over the past five to 10 years, urban sprawl has seen the northern beaches corridor of Townsville experience significant population growth, with many new residential land estates commencing....

The inner city unit market currently provides some good opportunities. The market for units remains soft and we have seen reductions in asking prices and this, coupled with strong completed unit stock available, has created a buyers market. Inner city units are therefore considered to offer good long term investment potential with prices at a low and completed stock readily available.

Overall properties located within a 5km to 10km radius of the city centre are considered good long term investment opportunities. Projected population growth coupled with the flow on effect of potential expansions in the inner city employment precincts should see demand for these properties increase over the long term.

Tasmania

hOBarT

There are always difficult decisions to make for long term residential investments. One of the most challenging is exactly where to buy. We believe the best opportunities lie within the inner city and fringe cBD locations.

Suburbs we have investigated include hobart, Sandy Bay, South hobart, West hobart and new Town and also next to the fringe, moonah. We have also analysed Bellerive on the eastern shore.

The inner city residential area of hobart itself has seen some of the best returns over the past 10 years. In 1998

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the median price was a mere $125,000. 2008 saw the median price increase to $480,000. That represents a 284% increase in 10 years. The convenience of surrounding amenities is a huge draw card to the area plus the bonus of cBD locale. Surely hobart must be seen as one on the best places for long term investment.

Sandy Bay is also an area to consider. The University of Tasmania is located within the suburb and good shopping and transport facilities exist. Good rental returns can be achieved for properties let to students which can be an advantage long term. In 1998 the median price was $195,000 while it grew to $595,000 in 2008. This represents a 205% increase.

another inner city/fringe suburb is South hobart. Its close proximity to the cBD is advantageous and it also provides good services. many people choose to live in this area and walk to work, due to its slightly less hilly terrain. During the past 10 years South hobart has seen a 222% increase in the median price from $115,000 to $370,000.

West hobart offers good facilities and also provides close proximity to the cBD. The median price in 2008 was $412,000 up from $130,000 in the decade prior, showing a 217% increase.

Valuers and accountants can be crucial to the overall success and performance of the investment

The north western fringe suburb of new Town has seen a 10-year increase in the median price of 231%. Up from $112,000 to $370,000. This area provides a more affordable fringe city investment opportunity.

Further to the north west we have analysed the performance of moonah. This area provides good local services and is considered to be more of a suburban locale outside of the cBD and fringe. With a current median price of $285,000 the suburb offers a very affordable entry level investment chance. Over the past 10 years moonah has seen just over a 277% increase in the median price, which has increased from $75,000.

Without ignoring the eastern shore of the city, Bellerive provides excellent investment opportunities. For the September quarter of 2010, Bellerive was the third most expensive suburb with a median price of $550,000, and the price is on the rise. as at the start of 2010, Bellerive saw a 265% increase in the median price up from $137,000 to $500,000 over the past decade. recent local upgrades include lights to the cricket Oval, upgrades to the foreshore walking tracks and yacht club and a greater commercial presence. Bellerive Bluff offers a unique character for a residential locale. Other nearby facilities include Eastlands shopping centre, a cinema, new doctor super clinic (under construction) and the rosny commercial precinct.

any long term investment needs close scrutiny over its life. We would recommend the services and advice of professionals. Valuers and accountants can be crucial to the overall success and performance of the investment and don’t forget to speak to hTW about maximising your depreciation benefits.

LaUncESTOn

The impact of the Global Financial crisis and continuing economic uncertainty in the Tasmanian market has only further reinforced the age old saying in property ‘location, location, location’. maintaining steady capital growth and good rental returns is obviously the key considerations of investors when looking at including property in a superannuation fund. current market movements are demonstrating the impact market pressures can have upon property values, and unsurprisingly it is the stronger located, well presented and low maintenance dwellings which continue to perform. In the north and north west these stronger locations are generally found around the three major regional centres of Launceston, Burnie and Devonport.

Burnie still represents affordability with a median price in 2010 of approximately $230,000. Despite enduring some difficult times of late, with the closure of local major employers, the long term future growth should remain steady. This area still operates the major shipping port for the north west/west coast, schools, Burnie hospital, the proposed (not yet built) super clinic and a significant number of industrial and retail centres. Key suburbs to direct your attention to would be Park Grove and romaine which offer some well priced homes in the more favoured areas, generating steady rental returns, with a good prospect for capital growth over the long term. more affordable lower socio economic suburbs with former housing commission properties are considerably more affordable, however are stigmatised by the local market.

a slightly higher median price of approximately $240,000 places Devonport in a similar position as Burnie for affordability. Devonport also has similar features such as schools, hospital, active port (dock for Spirit of Tasmania), industrial as well as major retail, including the soon to be developed bulky goods centre. Outside of the appropriately located Devonport properties investors should also consider the Port Sorell/Shearwater area. Within commuter distance of Devonport this area has seen significant development in recent years as the popularity of the area has increased, and continued growth is expected.

The Launceston area offers a number of areas that could be considered steady growth options. The obvious areas which consistently demand strong rental with low vacancies are Invermay/mowbray/newnham for their student focused accommodation surrounding the UTaS and maritime college. alternatively the residential streets of South Launceston, within walking distance to the Launceston General hospital and cBD, are never

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vacant for long and demand good rentals. renters are also attracted to East and West Launceston for their ease of access to the city. Outside of the cBD focused suburbs dwellings in the suburbs of Prospect, Summerhill, norwood, newstead, Kings meadows, Trevallyn and riverside are all considered to be steady growth areas. as mentioned earlier, low maintenance, well located properties within these suburbs will continue to perform better and be more resilient to any future down turns. Investors should be wary to remain within the median price bracket for the relevant suburb and consider the proximity of schools, public transport and local shopping facilities when selecting a potential purchase. Once again considerably more affordable options do exist in the lower socio economic suburbs of rocherlea, mayfield and ravenswood, however these do carry with them associated risks and stigma.

a more long term and generalised consideration is the impact of flooding and climate change upon your property investment. as always hTW offers a number of services including pre purchase valuations to assist you in making the correct decision and depreciation schedules to assist investors in maximizing investment returns.

Darwin

The Darwin residential market is currently in a phase of uncertainty and stagnation. Whilst some market segments remain buoyant, many segments that experienced the highest growth over the past few years have seriously weakened. We consider that entering the market now as a speculator would be very risky, as the market still appears to be in a stabilisation process of finding new price points. however, the current market phase has served to highlight the relative stability of certain market segments which present good long term growth opportunities.

One market segment that we consider suitable for long term investment is entry level properties situated in prestige areas. many of the older established inner Darwin suburbs, such as Larrakeyah, Parap and Stuart Park, still contain significant amounts of older improvements, especially pre-cyclone (early 1970s) elevated dwellings. Site areas within these established Darwin suburbs are often around or above 1000sqm and both Stuart Park and Parap have notable precedents of successful rezoning applications for sites from single to multiple dwelling. The entry level into these markets (assuming a single dwelling zoned allotment) currently sits around the mid-$600,000s and a typical yield might sit in the range of 4% to 5%. high maintenance costs associated with the older improvements will be a significant and ongoing

capital expenditure in this market. capital growth is expected in these areas due to the size of sites, proximity to services and quality of surrounding improvements. We consider that these established, desired areas hold minimal long term risk and have huge upside potential as Darwin increases in size. We note that an investment in this market sector is suitable for purchasers wishing to carry some negative gearing now and receive capital growth upon resale, such as somebody nearing the end of their working life. We have also seen the resale of elevated improvements, which can be removed from the site and restumped in another location (often in the rural residential areas). This has become quite common, primarily due to the very high cost of construction within Darwin.

....one market segment that we consider suitable for long term investment is entry level properties situated in prestige areas....

Unfortunately for the same reasons we like these suburbs, others do too. Turnover is comparatively low and properties selling significantly outside of expected market parameters are rare.

alternatively, for purchasers wishing to receive investment stability, or who may rely on rental income for mortgage repayments, the Defence housing australia (Dha) submarket remains active within Darwin. Dha constructs dwellings, which are primarily sold to private investors and then leased back on long term lease agreements. a typical Dha lease agreement would be 12 years with two three-year options. During this lease Dha guarantees that rental income will be received and agree to restore the property to a certain condition upon termination of the lease agreement. rental rates are established independently by market review annually. These properties will ideally experience rental and capital growth over the time of the lease and are completely passive – the purchaser must pay a management fee to Dha. currently we have seen Dha properties transacting with yields ranging from 5% to 5.5%. When purchasing Dha properties some consideration should be given to the direction of the rental market in the area and how this may affect the subject property. For example, some prestige detached stock may experience a slight drop in rents this year. The property should subsequently have a higher yield until the new rent is established, in order to compensate the purchaser for the excess risk and uncertainty.

Perth

Investors have traditionally flirted with residential property as a safe, long term investment with the prospect of consistent capital growth. however, the post dot com era saw the birth of the idea to merge property into the intricacies of global financial markets as an investment vehicle . This was on sold to various markets, with keen interest received from superannuation funds.

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retail investors, speculators and mum and dad investors soon poured in as returns appeared to multiply with pace. This as we now know, eventually gave birth to the Global Financial crisis (GFc). as property markets continue to correct themselves in the wake of the GFc, investment in standard residential property has returned to attractive levels. a lesson from the past few years is that investors need to return to the key fundamentals when identifying potential investments location, location, location.

continued expansion of the city fuelled by record migration levels will eventually propel a demand for well located properties within close proximity to the city. The recent launch of the $440 million Perth Waterfront Project is widely expected to spark a push to embrace inner city living, following the example of other capital cities around the country. The increased density of the city will likely benefit surrounding suburbs such as Subiaco, West Perth, South Perth, como and Victoria Park within the medium to long term both in capital and rental appreciation. Such expansions often herald potential zoning changes and as such further research is important when making any purchase decisions.

Larger land holdings with character homes within near city suburbs such as mount Lawley and Wembley have always held a charm among investors. historical and locational virtues have combined to provide investors with steady increases in rental and capital values. With an eye on population expansion, these suburbs should provide good long term prospects.

Proximity to major public amenities is another key when identifying a long term investment. These include major regional hospitals under construction such as the Fiona Stanley hospital in murdoch and the proposed Queen Elizabeth II hospital in nedlands. Similarly suburbs surrounding major universities such as curtin University, murdoch University and University of Western australia have enjoyed above average returns as a result of their popularity among local and international students. a lack of capacity for adequate student accommodation by these institution means demand for rental properties within the area should remain steady within the medium term.

Suburbs located along the Southern/northern rail link such as Bull creek and Bateman in the south and carine and Duncraig in the north are generally expected to achieve steady capital and rental growth within the medium to long term. Whilst rentals are dictated largely by distance from the city or major amenities, demand will be subject to additional local pressures which may encompass additional volatility.

Depending on one’s investment strategy, these suburbs have relatively lower barriers of entry in comparison to near city suburbs.

as we enter into what currently seems to be a buyer’s market, investors will still require clearly defined investment objectives to ensure their investments are truly maximised. Whilst opportunities abound, the property market still poses some serious pitfalls. It is for this reason that we always recommend engaging a professional to provide specific property advice.

South Western Wa

as I creep up on my 50th birthday the thoughts of superannuation start to come more to the forefront. Therefore the question of what to invest in is very relevant to me on a personal level. Unfortunately, when I get asked what will happen to the property market in the next couple of years I can only make an educated guess. If I knew for sure I would probably not be working but already retired.

So, what is my advice in terms of investing in the residential market - well it all comes back to the locality as far as I am concerned. Looking historically, the well located areas, near to the cBD, by the beach or with an attractive outlook, have consistently out-performed those properties in more run-of–the-mill locations. Over the long term the beachside area of Bunbury looks very cheap as it has traditionally been a lower value area than say Busselton or Dunsborough. But the reality is that the beach is as good and the town is evolving past its working town roots, particularly with the large immigration to the region and the increase of fly-in–fly-out workers.

....as we enter into what currently seems to be a buyer’s market, investors will still require clearly defined investment objectives to ensure their investments are truly maximised....

The market at present is offering some very good opportunities for the discerning buyer and with a slow down in new houses and increasing rents there are some sound investment property options available.

as with most investments and particularly with those to do with superannuation, a long term approach is generally needed. To pick the quick ups and downs is extremely difficult and to do so would mean we all could retire a lot earlier.

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Office Phone Email

abu Dhabi, UaE +971 02 4173581 admin.abudhabi@htwmena.comadelaide, Sa 08 8231 6818 admin.sa@htw.com.aualbury/Wodonga, nSW/VIc 02 6041 1333 admin.albury@htw.com.au Bairnsdale, VIc 03 5152 6909 admin.bairnsdale@htw.com.auBathurst, nSW 02 6334 4650 admin.regionalnsw@htw.com.au Bendigo, VIc 03 5480 2601 admin.bendigo@htw.com.auBrisbane commercial, QLD 07 3002 0900 bris.admin@htw.com.au Brisbane residential Offices, QLD 07 3353 7500 brisbaneresidential@htw.com.au Brisbane – rural Queensland, QLD 0417 753 446 david.hyne@htw.com.auBunbury, Wa 08 9791 6204 admin.bunbury@htw.com.auBundaberg/Wide Bay, QLD 07 4154 3355 admin.bundaberg@htw.com.au Busselton, Wa 08 9754 2982 admin.busselton@htw.com.aucairns, QLD 07 4057 0200 admin.cairns@htw.com.au canberra, acT 02 6273 9888 admin.canberra@htw.com.au Darwin, nT 08 8941 4833 admin.darwin@htw.com.au Deniliquin, nSW 03 5881 4947 admin.deniliquin@htw.com.auDubbo, nSW 02 6884 2999 admin.regionalnsw@htw.com.au Echuca, nSW 03 5480 2601 admin.echuca@htw.com.auEmerald, QLD 07 4980 7738 admin.emerald@htw.com.au Gladstone, QLD 07 4972 3833 admin.gladstone@htw.com.au Gold coast, QLD 07 5584 1600 admin.gc@htw.com.au Goondiwindi, QLD 07 4671 5300 admin.goondiwindi@htw.com.au Gosford, nSW 1300 489 825 admin.gosford@htw.com.au Griffith, nSW 02 6964 4222 admin.griffith@htw.com.auhervey Bay, QLD 07 4124 0047 admin.bundaberg@htw.com.auhobart, TaS 03 6244 6795 admin.hobart@htw.com.auIpswich, QLD 07 3282 9522 admin.ipswich@htw.com.au Launceston, TaS 03 6334 4997 admin.launceston@htw.com.auLeeton, nSW 02 6953 8007 admin.leeton@htw.com.aumackay, QLD 07 4957 7348 admin.mackay@htw.com.au melbourne, VIc 03 9642 2000 admin.melbourne@htw.com.au mildura, VIc 03 5021 0455 admin.mildura@htw.com.aumudgee, nSW 02 6372 7733 admin.regionalnsw@htw.com.au newcastle, nSW 02 4929 3800 admin.newcastle@htw.com.aunorwest, nSW 02 8882 7100 admin.norwest@htw.com.auPerth, Wa 08 9388 9288 admin.perth@htw.com.au Port macquarie, nSW 1300 489 825 admin.portmacquarie@htw.com.aurockhampton, QLD 07 4927 4655 admin.rockhampton@htw.com.au roma, QLD 07 4622 6200 admin.roma@htw.com.au Sale, VIc 03 5143 1880 admin.sale@htw.com.auSunshine coast (mooloolaba), QLD 07 5444 7277 admin.ssc@htw.com.au Sydney, nSW 02 9221 8911 admin.sydney@htw.com.au Tamworth, nSW 02 6766 9898 admin.regionalnsw@htw.com.au Toowoomba, QLD 07 4639 7600 admin.toowoomba@htw.com.au Townsville, QLD 07 4724 2000 admin.townsville@htw.com.au Tralagon, VIc 03 5176 4300 admin.tralagon@htw.com.auTweed heads, nSW 07 5523 2211 admin.nc@htw.com.au Wagga Wagga, nSW 02 6921 9303 admin.wagga@htw.com.auWhitsunday, QLD 07 4948 2157 admin.mackay@htw.com.auWollongong, nSW 02 4221 0205 admin.wollongong@htw.com.auYoung, nSW 02 6382 5921 admin.regionalnsw@htw.com.au

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contacts

The information contained in this report is provided in good faith and has been derived from sources believed to be reliable and accurate. however, the report is not intended to be comprehensive or render advice and neither herron Todd White nor any persons involved in the preparation of this report, accepts any form of liability for its contents.

This report is copyright, and cannot be reproduced without written permission of herron Todd White.

© herron Todd White copyright 2010

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• In many districts, progressive farmers are improving the productive capacity of their existing landholdings, through pasture/water improvements, irrigation water efficiency projects etc, at a significantly lower cost per unit of production, compared to expansion by land acquisition.

• The dramatic failure of several rural mIS projects has meant that they are no longer buyers of rural land (they had been bidding up land prices) and in fact additional large tracts of their rural land have been placed on the market.

• Ongoing uncertainty in relation to water policy continues to make investment decisions in the irrigation sector in the murray Darling Basin problematic.

• Extreme weather events, from savage drought to widespread flooding, have paid havoc with on-farm management and production and has had serious psychological and financial implications

• city-based high wealth individuals have been focused on rebuilding their traditional asset base rather than investing in rural land.

• many prospective buyers remain unsure as to how much property values may have moved over the past two years, due to a scarcity of sales evidence; and some hold the view that they should hold off buying as values may be lower in six months.

....a few market influences have changed over the past 18 months, however in most markets across Australia one thing has not changed ‘reticent buyers....

The ‘burning’ question we are constantly asked is when will the buyers return and the property market turn the corner? There is no easy answer to this. In previous rural property market downturns, there was a significant increase in the volume of forced sales by mortgagees, which effectively set new (lower) value levels and the market (vendors, agents, buyers, financiers, accountants and valuers etc) could then act with more certainty. To their credit, most financiers in the current market have not actively forced the mortgagee sale option, but as a result we have far fewer sales, more so for the smaller to moderate sized traditional family farm, which has created the heightened level of uncertainty which in turn means

Eighteen months ago I wrote: “most of our offices around australia generally report a ‘subdued’ market for rural property and this appears likely to continue in the months ahead. a strengthening aussie Dollar, a softening of many rural commodity prices, tighter credit, variable seasons (from drought to floods), changing government policy (e.g.: vegetation law in Queensland and the recent Federal Budget), together with the well publicised problems in the rural mIS sector and of course the multi layered impact of the global financial crisis, are all combining to dampen investor confidence’.

a few market influences have changed over the past 18 months, however in most markets across australia one thing has not changed ‘reticent buyers’. Seasonal conditions across most districts are good to excellent, and wheat, sugar, lamb/sheep meat; wool and cotton prices are stronger and strengthening, but so too is the australian Dollar. One wonders where commodity prices would be if the aussie Dollar was back to US80cents?

Why is it therefore that most of our offices report that their local property market remains subdued and sales activity continues to be low? There is no singular reason for this but combinations of the following factors are in play:

• The fall out of the GFc has resulted in an ongoing lower appetite for debt.

• The indebtedness of the australian farm sector generally, escalated dramatically over the past 10 to 15 years and will take several good production years to be reduced to more sustainable/serviceable levels.

• The major lenders to the farm sector have, quite responsibly in my view, recalibrated the weighting they give to equity versus debt serviceability. This has resulted in a reduction in the available funds for property investment.

• It appears anecdotally (it is difficult to get accurate data to support this) that farm equity levels have been under downward pressure due to increased debt levels and declining asset values, in some markets, thus reducing their capacity to expand.

rural – market Directions

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fewer transactions and somewhat of a “stand-off” between buyers and sellers. Sellers are hoping, and they may be right, that if commodity prices and cash flows remain strong for another year, than they are justified in asking the prices they are for their property. much depends on the circumstances of the vendor and the timeframe in which they expect to achieve a sale. This scenario raises another question which valuers are grappling with ‘what is a reasonable time in which to achieve a sale in the current market’? I will leave that question to another time. In the meantime there appears to be emerging some attractive buying opportunities.

robin Gardiner Ph: (02) 6766 9898

1 march 2011

nOrThErn nSW

With summer drawing to a close, it must go down as one of the best seasons (apart from a wet harvest) in more than 30 years. not only did most northern inland districts receive well above average rainfall over spring and summer, the timing and spacing of the rainfall events meant its effectiveness was optimised.

With such an excellent season, good moisture profiles and strong commodity prices, it would be reasonable to assume that the rural property market would also be rebounding from its lulls of the past 18 months. But alas, most agents report that willing buyers with cash are still scarce on the ground and the market remains tough, with few sales over the past two months to report. In this region, the influence on the market of cashed up landholders courtesy of acquisitions by the expanding coal mining sector, has been very significant. We suspect that much of this cash windfall has now been re invested and the influence of ‘coal mine money’ in the local market may subside over the next 12 months, to the detriment of the marketplace.

The cotton industry is now experiencing the long awaited ‘double’ of excellent cotton prices for the next two years and good water allocations/reserves. Obviously there is a fair amount of lost ground to recover after several poor water/price years; however we expect that cotton properties will become easier to sell on the back of the strong price and water outlook. In some cases vendors may choose to withdraw their properties from sale in order to capitalise on the positive outlook.

announced water allocations and storage levels for the major northern irrigation valleys are as follows:

Valley Dam Dam Level AnnouncedAllocation

Gwydir copeton 53 %(727,000 megs)

80%

Lower naomi

Keepit 96%(408,000 megs)

110%

Split rock 21%(85,000 megs)

contact:

robin Gardiner Ph: (02) 6766 9898

SOUThErn nSW

WaGGa WaGGa

It seems not long ago we were complaining about no rain, and now it just keeps coming. The rain has seen large amounts of summer feed on properties. This has resulted in most properties being under stocked. The catch here is that it is very hard to get stock numbers up as the demand for stock has resulted in very strong prices. The demand for rural properties remains fairly quiet with a large amount of stock still on the market and while there has been the odd sale transaction numbers are down significantly on 2008 and 2009. here’s hoping that things pick up during 2011.

LEETOn

Good continued summer rainfall has seen full irrigation allocations across the region. This has prompted the planting of the largest rice crop in a number of years as well as a myriad of other summer crops. across the region the landscape is either green or under water. This will provide an excellent start for the coming winter season. The murray Darling Basin Plan is continuing to lose ground through the region with a senate inquiry being called in the past few weeks. This has put some shine back into the future of the region.

....it is very hard to get stock numbers up as the demand for stock has resulted in very strong prices....

all the good news on the climate front has done little to buoy the ailing property markets in the region. The markets remain quiet with very few, if any, transactions taking place. There will be little spare cash in the market place until most farmers have at least one good year behind them, so we do not see the market improving substantially for perhaps another 12 to 18 months.

contact:

David Shuter Ph: (02) 6041 1333

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hot humid but significant drier seasonal conditions have prevailed during February.

Sugar Cane

Drier conditions will promote some late growth. Grower confidence remains subdued with the continued uncertainty surrounding the renewable energy co-generation plants.

Soya Bean

a surge of late planting of soya beans but yields are expected to be significantly reduced. Ironically despite the recent wet, some soya beans were sown into hot dry soil resulting in poor germination.

Tea Tree

myrtle rust, a disease which originated in South america, has been found in various coastal locations, particularly in nurseries including Byron Bay and Lismore.

There are significant concerns for the nSW tea tree industry as a result. It is understood that new, more productive varieties of tea tree are the most susceptible because they are constantly ‘growing in flush’.

control measures at present are not completely certain. Fungicide may be an option subject to testing. Oil quality is critical, so any use of any chemicals will need to be carefully implemented and monitored.

conditions have been placed on many tea tree plantations under considerable grass/weed and insect pressure.

Yields for 2011 are expected to be reduced. This is disappointing as tea tree prices had recovered to a broad range of $35 to $42 per kilogram.

Cattle Grazing

Great Southern Plantation australia properties have been purchased by a canadian Pension Fund. Great Southern was a relatively small landowner in this locality compared to Forest Enterprises australia (FEa) and Wilmotts. Despite this, local expectations were that all of these properties could be placed on the market individually. The concern was that the local cattle grazing market may have been

significantly impacted. If FEa and Wilmotts (both in receivership) are also sold in-one-line it may give firmer certainty to the local cattle grazing market.

not withstanding this, local graziers would certainly welcome the opportunity to purchase these properties on an individual basis.

regional Vic

mUrraY rIVErIna

The market for broad acre irrigation holdings remains static with little enquiry, although the odd sale occurring is indicating value levels remain static. however, the general outlook is much more positive on the back of excellent seasonal conditions and generally improved commodity prices. Whilst the harvest has been weather affected, the quality of the grain has been reasonable allowing farmers to take advantage of good prices.

The market for dry grazing country has been static, however agents are reporting offers well in excess of recent levels of value, as buyers try to take advantage of the large body of feed available and the strong sheep prices.

The lack of market activity is very unusual given the very good seasonal conditions and commodity prices. however if seasonal conditions and commodity prices remain positive then it could well be the precursor to rising value levels for both land and water.

In my opinion it is an excellent time to buy rural real estate and water as the market is soft, but there could be a significant rise in the near future.

The market for general security class water is currently hovering around $700 per unit (down from a high of $1200 per unit as a result of government buybacks), while the market for murray Irrigation Limited Water and Delivery entitlements (general security class water) is around $550 per unit. The water market remains soft with little enquiry and generally only small parcels selling. This inactivity is largely as a result of the uncertainty created by the murray Darling Basin commission’s proposed sustainable diversion limits.

....the market for dry grazing country has been static, however agents are reporting offers well in excess of recent levels of value....

agents have reported that some parcels of water have been sold in the latest government tender (January 2011) at levels of around $850 per megalitre for general security water, however due to the ad hoc nature of the buybacks and tender process, these buybacks have little influence on the general water market.

contact:

John henderson Ph: (03) 5881 4947

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EchUca

most notably the rural sector has been heavily affected by floods in recent times with extensive flooding being experienced on the campaspe, Loddon and avoca rivers providing huge challenges for primary producers in the affected regions. Some areas particularly Benjeroop and surrounds remain heavily affected at the time of writing. This has changed a key dynamic in the rural sector following extended dry conditions and that is water in storages. at the time of writing Dartmouth (59.51% full), hume (96.91%), Eildon (80.57%) & Lake Eppalock (100%) are all significantly higher than for the same time last year or for the past five years. This is likely to translate into an increase in sentiment for most producers notwithstanding levels of fatigue are relatively high (given ongoing dry capped off with devastating floods for those affected). Water prices, including permanent and temporary transfer, are all significantly lower in response to the increase in availability and reduced demand.

contact:

David Leeds Ph: (03) 5480 2601

mILDUra/SUnraYSIa

Fire, rain, Floods, cyclones – what an extraordinary couple of months we have experienced in australia.

Such astonishing events tend to have short term devastating effects on rural australia, rural communities and rural families, and for many of us it is the worst experienced in our lifetime.

....table grape, stone fruit and almond growers have experienced heavy losses due to the rain....

In the Sunraysia region of north west Victoria and southern new South Wales the horticultural industry has been the hardest hit by the heavy rains and flash flooding which has resulted in large quantities of fruit being rejected by the wineries because of poor quality. It is highly likely that for many growers, the events of recent weeks, culminating with the rejection of fruit, will be the last straw that may see many wine grape growers walk away from the industry.

Table grape, stone fruit and almond growers have also experienced heavy losses due to the rain, and a clearer picture of the extent of these losses likely to be more apparent over the next month.

While devastating, fortunately life does go on and amidst all of the gloom of the past six weeks are the positive headlines recently seen in various sections of the media such as the following:

• ‘Wool prices at 23 year high’.

• ‘Wheat prices nearing record levels’.

• ‘Water storages at full capacity’.

• ‘Western Division nSW pastoral country the best it’s been for decades’.

• ‘Lamb and sheep prices remain at record levels’.

• ‘commonwealth Water Tender good news for irrigators’.

The above sample of ‘quotes’ provide some positive news and a much needed boost to confidence levels in some sections of the rural sector.

The December permanent water buyback tender by the commonwealth Government provided some heartening news for irrigators. The tender had a $200 million budget for the Southern Basin with price levels halting the previous downward trend in water values.

a summary of tender prices accepted by the Government are as follows:

• Victoria high reliability - average price: $1833 per megalitre with up to $2000 per megalitre accepted.

• nSW General Security - average price: $915 per megalitre with up to $1000 per megalitre accepted.

• nSW high Security - average price: $2072 per megalitre with up to $2200 per megalitre accepted.

There have been no significant sales in the horticultural or pastoral sector over the past month, however there have been three recent sales of good dry land cropping country in the millewa district to the west of mildura. The sales show that value levels have remained unchanged to slightly firmer from sales of similar country in the preceding 18 months.

contact:

Shane noonan Ph: (03) 5021 0455

SOUThErn QLD

The Southern Queensland rural Property market continues with a low volume of sales and a high number of listings on the market. One of the factors that may be contributing to this situation is the resistance of vendors to accept the current tight market conditions and an adjustment in rural property values. The flow on effect of this is that it is now a buyers market and potential purchasers are able to wait and compare similar properties.

The recovery effort from the floods in Southern Queensland has started with ‘one off’ repair and maintenance costs to be borne by property owners. This is likely to suppress interest in the short term as primary producers look after their current assets before expanding further. On a recent

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trip to the St George district, we saw first hand how high the floods reached and the impact this is still having on transport and access.

That being said, there are some early signs of improved demand, especially for quality land. certainly the medium to long term economic outlook, particularly for sheep and beef, is positive, being driven by both domestic and worldwide need for food and fibre products in the face of short supply. For example, the roma markets have opened very strongly and the wool market is at an all time high, despite the strength of the australian dollar.

contact:

Doug Knight Ph: (07) 4339 2119

nOrThErn QLD

Last month cyclone Yasi vented its fury on northern Queensland, demolishing towns, homes, businesses and infrastructure, flattening landscapes and wrecking crops. major cities were spared serious damage and the region was left breathing a collective sign of relief that the official death toll was only one. The cleanup will continue for many months – even years for some – and we now wait for the cyclone season to finish for the year. now for the February summary:

Horticulture: The Ingham, Burdekin and Bowen areas have had large amounts of rain and now have soil profiles that will give any future plantings a good start. Flood damage may have occurred on some farms but hopefully a good season combined with good prices will follow through this year.

Sugar: With wind speeds up around 150km-plus for many hours, much of the cane has decided to ‘lay over’ and take things easy. The cane that is over and alive is capable of being harvested. Some cane did get twisted by the winds and as a result stalk was snapped or screwed off leaving a short stem to sucker out. It certainly will be an interesting harvesting season just to see how well growers did fare from the cyclone. most growers would be hoping for an early end to the wet to allow maximum growing time for the crop that has survived.

Prices for the 2011 crop continue to look quite good despite the international volatility of the market. There is a world wide shortage in stocks of sugar and as such 2011 prices should return the grower a very healthy return. 2010 did demonstrate that you can’t count on the return

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until the crop actually gets to the mill and is not left in the field as stand over cane.

Land values within both regions do appear to be stable with a small volume of sales only over the past six to 12 months.

Grazing Industry: Still plodding along providing the grazier with a reasonable return. charters Towers’ saleyards have again commenced selling after the christmas break with their major bull sale on in mid-February. The sale provided a good clearance rate though prices for some sectors of the stud market being down on last year. This sale had been cancelled twice because of the ‘big wet’. also some buyers were missing as they stayed home to clean up after cyclone Yasi. There are a lot of trees over fence lines, trees lying over dead cattle and in general there are areas of devastation. The north Queensland register has a good pictorial spread of some of the aftermath of the cyclone on some northern grazing areas.

....with wind speeds up around 150km-plus for many hours, much of the cane has decided to ‘lay over’ and take things easy....

Over the past eight weeks, hTW Townsville has been asked by several of the agri-business Banking Units to present market overviews for the grazing and cane industry to their staff. as a result we have compiled a nice little slide show that fully addresses the trends over the past decade, addresses the sale and resale of rural properties to support the increases and decreases of that market over time, and shows where the present market would appear to sit. We are only too happy to keep this material updated and present it to any client should they require it.

Agri-Business: Interest is around for agribusiness investment with charters Towers/Dalrymple lobbying hard to get a new meatworks established in the area. Several sites within the general township area have been identified and some locals are confident that this time things will proceed well beyond a good thought - whispers only at the moment, but behind the scenes there are some people working very hard to put this project together.

There is also something firming in the Burdekin area and this time not the cox co-gen plant, but a new major international investment being attracted to the region because of the presence and availability of water and land. This appears to be a serious effort with many financial benefits to the region and we should know within a month if this investment/project is going to proceed. Keep an eye on the Burdekin.

contact:

Denis SchyPh: (07) 4724 2000

��

The month in review

rUra

L

cEnTraL QLD

central Queensland rural property markets have remained fairly quiet throughout the beginning of 2011. although demand has generally been scarce, supply has also been limited, with few offerings tendered to the market.

resource companies are providing some market activity with several purchases late last year and several more planned in the coming months, with further growth forecast in the coal and cSG industries.

corporate investment in the cQ area could provide some stability to the market over the next 12 months with a number of parties showing interest in some higher end rural properties. a number of these pending sales will be under leaseback agreements to the vendor, a requirement of the purchasing party.

contact:

Will mcLay Ph: (07) 4927 4655

nOrThErn TErrITOrY

There has been relatively little activity in the nT pastoral property market over the christmas/new Year period, with the wet season now in full swing.

Pastoral conditions remain especially favourable in central australia where the aftermath of cyclone Yasi was beneficial. The extraordinary run of good seasonal conditions in the alice Springs area looks set to continue through the upcoming winter.

Pastoralists in this area also have the benefit of access to domestic markets which are far less profitable for their northern neighbours due to the distances involved.

There has been strong interest expressed in the sale of a number of pastoral properties in the alice Springs area as a result, which we hope to report on in imminent issues.

Similarly in the Top End, the new Year has resulted in interest in the sale of pastoral property however at this

stage with no transactions formally completed we are unable to report on any finalised market activity.

another property officially on the market is the aggregation of Killarney and Birrimba in the VrD region. These two adjoining properties comprise 5414sqm straddling the Buntine highway about 220km southwest of Katherine. The property is being advertised with 48,000 head of good quality Brahman cattle. Killarney is well-improved with good economies of scale and is located in the favoured pastoral area of the VrD. There has reportedly been good interest from prospective purchasers.

contact:

Terry roth Ph: (08) 8941 4833

��

The month in review

ma

rKET

InD

IcaT

OrS

Comparative Property Market Indicators - February 2010

Comparative Analysis of Capital City Property Markets

To discuss the applicability of the capital city indicators to individual properties or situations, contact your local herron Todd White office:

Sydney (02) 9221 8911melbourne (03) 9642 2000Brisbane commercial (07) 3002 0900Brisbane residential (07) 3353 7500adelaide (08) 8231 6818Perth (08) 9388 9288hobart (03) 6244 6795Darwin (08) 8941 4833canberra (02) 6273 9888

Comparative Analysis of New South Wales/ACT Property Markets

To discuss the applicability of the nSW/acT indicators to individual proper-ties or situations, contact your local herron Todd White office:

albury (02) 6041 1333Bathurst (02) 6334 4650canberra/Queanbeyan (02) 6273 9888Dubbo (02) 6884 2999Gosford 1300 489 825Griffith (02) 6964 4222Leeton (02) 6953 8007mudgee (02) 6372 7733newcastle/central coast (02) 4929 3800norwest (02) 8882 7100Sydney (02) 9221 8911Port macquarie 1300 489 825Tamworth (02) 6766 9898Tweed coast (02) 5523 2211Wagga Wagga (02) 6921 9303Wollongong (02) 4221 0205Young (02) 6382 5921

Comparative Analysis of Victorian/Tasmanian Markets

To discuss the applicability of the Victorian/Tasmanian indicators to individual properties or situations, contact your local herron Todd White office:

Gippsland (Sale/Traralgon/Bairnsdale) (03) 5143 1880/ 03 5176 4300/ (03) 5152 6909Bendigo (03) 5480 2601melbourne (03) 9642 2000murray mallee (Swan hill) (03) 5032 1620murray Outback (mildura) (03) 5021 0455murray riverina (Echuca/Deniliquin) (03) 5480 2601/ (03) 5881 4947Wodonga (02) 6041 1333hobart (03) 6244 6795Launceston (03) 6334 4997

The following pages present a generalised overview of the state of property markets in capital city, new South Wales/acT, Victoria/Tasmania, Queensland, South australia/northern Territory/Western australia & mEna locations using financing risk-rating scales. They are not a guide to individual property assessments.

For further information contact richard Jenkins, research Director, herron Todd White, on (03) 9642 2000, or by email on richard.jenkins@htw.com.au

��

The month in review

ma

rKET

InD

IcaT

OrS

Comparative Analysis of Queensland Property Markets

To discuss the applicability of the Queensland indicators to individual properties or situations, contact your local herron Todd White office:

Brisbane commercial (07) 3002 0900Brisbane residential (07) 3353 7500Bundaberg/Wide Bay (07) 4154 3355cairns (07) 4057 0200Emerald (07) 4980 7738Gladstone (07) 4972 3833Gold coast (07) 5584 1600hervey Bay (07) 4124 0047Ipswich (07) 3282 9522mackay (07) 4957 7348rockhampton (07) 4927 4655Sunshine coast (mooloolaba) (07) 5444 7277Toowoomba (07) 4639 7600Townsville (07) 4724 2000Whitsunday (07) 4948 2157

Comparative Property Market Indicators - February 2010

Comparative Analysis of South Australia/Northern Territory/Western Australian Property Markets

To discuss the applicability of the South australian/northern Territory and Western australian indicators to individual properties or situations, contact your local herron Todd White office:

adelaide (08) 8231 6818South West Wa (Bunbury/Busselton) (08) 9791 6204/ (08) 9754 2982Perth (08) 9388 9288Darwin (08) 8941 4833

The following pages present a generalised overview of the state of property markets in capital city, new South Wales/acT, Victoria/Tasmania, Queensland, South australia/northern Territory/Western australia & mEna locations using financing risk-rating scales. They are not a guide to individual property assessments.

For further information contact rick carr, research Director, herron Todd White, on (07) 4057 0200, or by email on rick.carr@htw.com.au

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Capital City Property Market Indicators as at February 2011 – Houses

38

Capital City Property Market Indicators as at February 2011 – Houses Factor Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra

Rental Vacancy Situation Shortage of available property relative to demand

Shortage of available property relative to demand - Balanced market

Balanced market Shortage of available property relative to demand

Balanced market Shortage of available property relative to demand

Balanced market Shortage of available property relative to demand

Rental Vacancy Trend Steady Steady Tightening Steady Tightening Steady Steady Tightening

Demand for New Houses Fair Fair Fair Fair Fair Soft Fair Fair

Trend in New House Construction Steady Declining Steady Steady Steady Declining Steady Steady

Volume of House Sales Steady Steady - Declining Steady Steady Declining Steady Steady Declining

Stage of Property Cycle Peak of market Peak of market - Declining market

Bottom of market Peak of market Declining market Declining market Peak of market - Declining market

Declining market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Occasionally Occasionally Occasionally Occasionally Occasionally Occasionally Occasionally Almost never

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Sydne

y

Melbou

rne

Brisba

ne

Adelaid

ePert

hHob

art

Darwin

Canberr

a

Increasing Sharply

Increasing

Steady

Tightening

Tightening Sharply

Stage of Property Cycle

0

1

2

3

4

5

6

Sydney

Melbourne

Brisbane

Ade laidePerth

Hobart

Darwin

Canberra

Declining M arket

Peak of M arket

Rising M arket

Bottom of M arket

Start o f Recovery

Demand for New Houses

0

1

2

3

4

5

6

Sydney

Melbourne

Brisbane

Ade laidePerth

Hobart

Darwin

Canberra

Very Soft

Soft

Fair

Strong

Very Strong

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Capital City Property Market Indicators as at February 2011 – Units

39

Capital City Property Market Indicators as at February 2011 – Units Factor Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra

Rental Vacancy Situation Shortage of available property relative to demand

Balanced market Balanced market Shortage of available property relative to demand

Balanced market Shortage of available property relative to demand

Over-supply of available property relative to demand

Shortage of available property relative to demand

Rental Vacancy Trend Steady Steady Tightening Steady Tightening Steady Steady Tightening

Demand for New Units Fair Soft - Fair Fair Fair Fair Soft Fair Fair

Trend in New Unit Construction Steady Declining - Steady Steady Steady Steady Declining Steady Steady

Volume of Unit Sales Steady Steady - Declining Steady Steady Declining Steady Steady Declining

Stage of Property Cycle Peak of market Peak of market - Declining market

Bottom of market Peak of market Declining market Declining market Declining market Declining market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Frequently Occasionally Occasionally Occasionally Occasionally Occasionally Occasionally Almost never

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Sydne

y

Melbou

rne

Brisba

ne

Adelai

dePert

hHob

art

Darwin

Canbe

rra

Increasing Sharply

Increasing

Steady

Tightening

Tightening Sharply

Stage of Property Cycle

0

1

2

3

4

5

6

Sydne

y

Melbou

rne

Brisba

ne

Adelaid

ePert

hHob

art

Darwin

Canbe

rra

Declining M arket

Peak o f M arket

Rising M arket

Bottom of M arket

Start o f Recovery

Demand for New Units

0

1

2

3

4

5

6

Sydney

Melbourne

Brisbane

Ade laidePerth

Hobart

Darwin

Canberra

Very Soft

Soft

Fair

Strong

Very Strong

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

1

Capital City Property Market Indicators as at February 2011 – Retail

40

Capital City Property Market Indicators as at February 2011 – RetailFactor Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra

Rental Vacancy Situation Balanced market Balanced market Balanced market Balanced market Balanced market Balanced market Balanced market Balanced market

Rental Vacancy Trend Increasing Steady Steady Steady Steady Steady Tightening Increasing

Rental Rate Trend Declining Stable Stable Stable Stable Stable Increasing Declining

Volume of Property Sales Declining Steady Steady Declining Steady Declining Steady Steady

Stage of Property Cycle Rising market Rising market Rising market Peak of market Peak of market Declining market Rising market Rising market

Local Economic Situation Flat Flat Flat Flat Steady growth Contraction Flat Contraction

Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants

Large Significant Significant Significant Significant Small Significant Large

Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Sydney

Melbourne

Brisbane

AdelaidePerth

Hobart

Darwin

Canberra

Increasing

Sharply

Increasing

Steady

Tightening

Tightening

Sharply

Stage of Property Cycle

0

1

2

3

4

5

6

Sydney

Melbourne

Brisbane

Ade laidePerth

Hobart

Darwin

Canberra

Declining M arket

Peak o f M arket

Rising M arket

Bottom of

M arket

Start o f Recovery

Local Economic Situation

0

1

2

3

4

5

6

Sydney

Melbourne

Brisbane

AdelaidePerth

Hobart

Darwin

Canberra

Severe Contraction

Contraction

Flat

Steady Growth

High Growth

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

New South Wales Property Market Indicators as at February 2011 – Houses

41

New South Wales Property Market Indicators as at February 2011 – Houses Factor Albury Bathurst

Can-berra/Q’beyan

Central Coast Dubbo Griffith Mudge

eNew-castle Orange Sydney Tam-

worth NSW Far Nth Coast

Wagga Wagga

Wollon-gong

Rental Vacancy Situation Shortage of available property relative to demand

Severe shortage of available property relative to demand

Shortage ofavailable property relative to demand

Shortage of available property relative to demand - Balanced market

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage ofavailable property relative todemand

Severe shortage of available property relative to demand

Severe shortage ofavailable property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage ofavailable property relative to demand - Balanced market

Balanced market

Shortage ofavailable property relative to demand

Rental Vacancy Trend Tightening

Tightening Tightening Steady Tightening Tightening Steady Steady Tightening Steady Tightening Steady Steady Tightening

Demand for New Houses Fair Strong Fair Fair - Strong

Fair Soft Fair Soft Strong Fair Fair Fair - Strong

Fair Fair

Trend in New House Construction Declining - Steady

Steady - Increasing

Steady Steady Declining significantly

Steady Steady Declining Steady - Increasing

Steady Declining - Steady

Declining - Steady

Steady Steady

Volume of House Sales Declining Steady Declining Steady Steady Steady Steady Declining Steady Steady Increasing Steady - Declining

Increasing Increasing strongly

Stage of Property Cycle Declining market

Rising market

Declining market

Bottom of market - Rising market

Rising market

Bottom of market

Rising market

Declining market

Risingmarket

Peak of market

Rising market - Peak of market

Bottom of market

Rising market

Rising market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Occasion-ally

Occasion-ally

Almost never

Occasion-ally

Almost never

Occasionally Almost never

Almost never

Occasion-ally

Occasion-ally

Occasion-ally

Frequently Frequently Occasion-ally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Albury

Bathurst

C'berra/ Q'beya

n

Central Coa

st

DubboGriff

ith

Mudgee

Newcastle

Orange

Sydney

Tamworth

NSWFar Nth

Coast

Wagga Wagga

Illawarra

Increasing Sharply

Increasing

Steady

Tightening

Tightening Sharply

Stage of Property Cycle

0

1

2

3

4

5

6

Albury

Bathurst

C'berra/ Q

'beyan

Central Coast

DubboGriff

ith

Mudgee

NewcastleOrange

Sydney

Tamworth

NSW Far Nth

Coast

Wagga Wagga

Illawarra

Declining M arket

Peak of M arket

Rising M arket

Bottom of M arket

Start o f Recovery

Demand for New Houses

0

1

2

3

4

5

6

Albury

Bathurst

C'berra/ Q

'beyan

Central C

oastDubbo

Griffith

Mudgee

NewcastleOrange

Sydney

Tamworth

NSW Far Nth

Coast

Wagga Wagga

Illawarra

Very Soft

Soft

Fair

Strong

Very Strong

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

New South Wales Property Market Indicators as at February 2011 – Units

42

New South Wales Property Market Indicators as at February 2011 – Units Factor Albury Bathurst

Can-berra/Q’beyan

Central Coast Dubbo Griffith Mudgee New-

castle Orange Sydney Tam-worth

NSW Far Nth Coast

Wagga Wagga

Wollon-gong

Rental Vacancy Situation Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage ofavailable property relative to demand

Shortage of available property relative to demand - Balanced market

Shortage of available property relative to demand

Balanced market

Shortage ofavailable property relative to demand

Balanced market

Shortage ofavailable property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand - Balanced market

Balanced market

Shortage ofavailable property relative to demand

Rental Vacancy Trend Tightening Tightening Tightening Steady Tightening Steady Steady Steady Tightening Steady Tightening Steady Steady Tightening

Demand for New Units Fair Fair Fair Soft Fair Soft Fair Soft Fair Fair Fair Soft - Fair Soft Fair

Trend in New Unit Construction Declining - Steady

Steady Steady Declining Declining Declining Steady Declining Steady Steady Declining Declining - Steady

Declining Declining - Steady

Volume of Unit Sales Declining Steady Declining Steady Steady Declining Steady Declining Steady Steady Increasing Steady - Declining

Steady Increasing

Stage of Property Cycle Declining market

Rising market

Declining market

Bottom of market

Rising market

Bottom of market

Rising market

Declining market

Risingmarket

Peak of market

Rising market - Peak of market

Declining market

Rising market

Start of recovery

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Occasion-ally

Occasion-ally

Almost never

Occasion-ally

Almost never

Occasion-ally

Almost never

Almost never

Occasion-ally

Frequently Occasion-ally

Frequently Frequently

Occasion-ally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Albury

Bathurs

t

C'berra

/ Q'be

yan

Centra

l Coa

st

Dubbo

Griffith

Mudgee

Newca

stle

Orange

Sydne

y

Tamwort

h

NSWFa

r Nth

Coast

Wagga Wag

ga

Illawarr

a

Increasing Sharply

Increasing

Steady

Tightening

Tightening Sharply

Stage of Property Cycle

0

1

2

3

4

5

6

Albury

Bathurst

C'berra/

Q'beya

n

Centra

l Coast

DubboGriff

ith

Mudgee

Newca

stle

Orange

Sydney

Tamworth

NSW Far Nth Coast

Wagga W

agga

Illawarra

Declining M arket

Peak of M arket

Rising M arket

Bottom of M arket

Start o f Recovery

Demand for New Units

0

1

2

3

4

5

6

Albury

Bathurst

C'berra/ Q

'beyan

Central C

oast

DubboGriff

ith

Mudgee

Newcastle

Orange

Sydney

Tamworth

NSW Far Nth Coast

Wagga Wagga

Illawarra

Very Soft

Soft

Fair

Strong

Very Strong

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

New South Wales Property Market Indicators as at February 2011 – Retail

43

New South Wales Property Market Indicators as at February 2011 – Retail Factor Albury Bathurst

Can-berra/Q’beyan

Central Coast Dubbo Griffith Mudgee New-

castle Orange Sydney Tam-worth

NSW Far NthCoast

Wagga Wagga

Wollon-gong

Rental Vacancy Situation Balanced market

Over-supply of available property relative to demand

Balanced market

Over-supply of available property relative to demand - Large over-supply of available property relative to demand

Over-supply of available property relative to demand

Over-supply of available property relative to demand

Over-supply of available property relative to demand

Over-supply of available property relative to demand

Shortage ofavailable property relative to demand

Balanced market

Balanced market - Over-supply of available property relative to demand

Balanced market

Over-supply of available property relative to demand

Balanced market

Rental Vacancy Trend Steady Increasing Increasing Steady Increasing Steady Steady Increasing Tightening Increasing Steady - Increasing

Steady Increasing Steady

Rental Rate Trend Stable Stable Declining Stable Declining Stable Stable Declining Stable Declining Declining - Stable

Stable Stable Stable

Volume of Property Sales Steady Steady Steady Steady Steady Declining Steady Declining Steady Declining Declining Steady Declining Steady

Stage of Property Cycle Start of recovery

Rising market

Rising market

Bottom of market

Start of recovery

Bottom of market

Bottom of market

Declining market

Risingmarket

Rising market

Rising market - Peak of market

Bottom of market

Declining market

Start of recovery - Bottom of market

Local Economic Situation Flat Flat Contrac-tion

Flat Flat Flat Flat Flat Steady growth

Flat Steady growth

Flat Flat Flat

Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants

Significant Small - Significant

Large Small Significant Large Significant

Significant Small Large Significant Significant Significant Significant

Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Albury

Bathurst

C'berra/Q'beyan

Central C

oast

DubboLeeton

Mudgee

NewcastleOrange

Sydney

Tamworth

NSW Far Nth Coast

Wagga Wagga

Illawarra

Increasing Sharply

Increasing

Steady

Tightening

Tightening Sharply

Stage of Property Cycle

0

1

2

3

4

5

6

Albury

Bathurst

C'berra/Q'beyan

Central Coast

DubboLeeton

Mudgee

NewcastleOrange

Sydney

Tamworth

NSW Far Nth

Coast

Wagga Wagga

Illawarra

Declining M arket

Peak of M arket

Rising M arket

Bottom of M arket

vStart o f Recovery

Local Economic Situation

0

1

2

3

4

5

6

Albury

Bathurst

C'berra/Q'beyan

Central C

oastDubbo

Leeton

Mudgee

NewcastleOrange

Sydney

Tamworth

NSW Far Nth Coast

Wagga Wagga

Illawarra

Severe Contractiont

Contraction

Flat

Steady Growth

High Growth

The month in review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

Victoria/Tasmania Property Market Indicators as at February 2011 – Houses

44

Victorian and Tasmanian Property Market Indicators as at February 2011 – Houses Factor Bendigo Echuca Gippsland Melbourne Mildura Wangaratta Warrnam-

boolWodonga Burnie -

Devonport Hobart Launceston

Rental Vacancy Situation Severe shortage of available property relative to demand

Severe shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand - Balanced market

Shortage of available property relative to demand

Balanced market

Shortage of available property relative to demand - Balanced market

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Rental Vacancy Trend Tightening sharply

Tightening sharply

Steady Steady Tightening Steady Tightening Tightening Steady Steady Steady

Demand for New Houses Fair Fair Strong Fair Fair Fair Fair - Strong Fair - Strong Soft Soft Soft

Trend in New House Construction Steady Steady Steady Declining Steady Steady Steady Steady - Increasing

Declining Declining Declining

Volume of House Sales Steady Steady Steady Steady - Declining

Steady Declining Steady Steady - Declining

Steady Steady Steady

Stage of Property Cycle Rising market Rising market Peak of market Peak of market - Declining market

Bottom of market

Declining market

Rising market Declining market

Declining market

Declining market

Declining market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Almost never Almost never Occasionally Occasionally Almost never Occasionally Almost never Occasionally Occasionally Occasionally Occasionally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Bendig

o

Echuc

a

Gippsla

nd

Melbou

rne

Mildura

Wangara

tta

Warrnam

bool

Wodong

a

Burnie-

Devonp

ort

Hobart

Laun

cesto

n

Increasing Sharply

Increasing

Steady

Tightening

Tightening Sharply

Stage of Property Cycle

0

1

2

3

4

5

6

Bendig

o

Echuc

a

Gippsla

nd

Melbou

rne

Mildura

Wangara

tta

Warrnam

bool

Wodong

a

Burnie-

Devonp

ort

Hobart

Laun

cesto

n

Declining M arket

Peak o f M arket

Rising M arket

Bottom of M arket

Start o f Recovery

Demand for New Houses

0

1

2

3

4

5

6

Bendig

o

Echuc

a

Gippsla

nd

Melbou

rne

Mildura

Wangara

tta

Warrnam

bool

Wodong

a

Burnie-

Devonp

ort

Hobart

Laun

cesto

n

Very Soft

Soft

Fair

Strong

Very Strong

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Victoria/Tasmania Property Market Indicators as at February 2011 – Units

45

Victorian and Tasmanian Property Market Indicators as at February 2011 – Units Factor Bendigo Echuca Gippsland Melbourne Mildura Wangaratta Warrnam-

boolWodonga Burnie -

Devon-port Hobart Laun-ceston

Rental Vacancy Situation Severe shortage of available property relative to demand

Severe shortage of available property relative to demand

Shortage of available property relative to demand

Balanced market

Shortage of available property relative to demand

Balanced market

Shortage of available property relative to demand - Balanced market

Balanced market

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Rental Vacancy Trend Tightening sharply

Tightening sharply

Steady Steady Tightening Steady Tightening Tightening Steady Steady Steady

Demand for New Units Fair Fair Strong Soft - Fair Fair Fair Fair - Strong Fair - Strong Soft Soft Soft

Trend in New Unit Construction Steady Steady Steady Declining - Steady

Steady Steady Steady Steady - Increasing

Declining Declining Declining

Volume of Unit Sales Steady Steady Steady Steady - Declining

Steady Declining Steady Steady - Declining

Steady Steady Steady

Stage of Property Cycle Rising market Rising market Peak of market

Peak of market - Declining market

Bottom of market

Declining market

Rising market Declining market

Declining market

Declining market

Declining market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Almost never Almost never Occasionally Occasionally Almost never Occasionally Almost never Occasionally Occasionally Occasionally Occasionally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Bendig

o

Echuc

a

Gippsla

nd

Melbou

rne

Mildura

Wangara

tta

Warrnam

bool

Wodong

a

Burnie-

Devonp

ort

Hobart

Laun

cesto

n

Increasing Sharply

Increasing

Steady

Tightening

Tightening Sharply

Stage of Property Cycle

0

1

2

3

4

5

6

Bendig

o

Echuc

a

Gippsla

nd

Melbou

rne

Mildura

Wangara

tta

Warrnam

bool

Wodong

a

Burnie-

Devonp

ort

Hobart

Laun

cesto

n

Declining M arket

Peak of M arket

Rising M arket

Bottom of M arket

Start o f Recovery

Demand for New Units

0

1

2

3

4

5

6

Bendig

o

Echuc

a

Gippsla

nd

Melbou

rne

Mildura

Wangara

tta

Warrnam

bool

Wodong

a

Burnie-

Devonpo

rt

Hobart

Laun

cesto

n

Very Soft

Soft

Fair

Strong

Very Strong

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Victoria/Tasmania Property Market Indicators as at February 2011 – Retail

46

Victorian and Tasmanian Property Market Indicators as at February 2011 – Retail

Factor Bendigo Echuca Gippsland Melbourne Mildura Wangaratta Warrnam-bool

Wodonga Burnie -Devon-port Hobart Laun-

ceston Rental Vacancy Situation Balanced

market Balanced market

Balanced market

Balanced market

Over-supply of available property relative to demand

Balanced market

Shortage of available property relative to demand

Balanced market

Balanced market

Balanced market

Balanced market

Rental Vacancy Trend Steady Steady Steady Steady Steady Steady Steady Steady Steady Steady Steady

Rental Rate Trend Stable Stable Stable Stable Stable Stable Stable Stable Stable Stable Stable

Volume of Property Sales Steady Steady Declining Steady Declining Steady Declining Steady Declining Declining Declining

Stage of Property Cycle Rising market Rising market Start of recovery

Rising market Bottom of market

Start of recovery

Bottom of market

Start of recovery

Declining market

Declining market

Declining market

Local Economic Situation Flat Flat Contraction Flat Contraction Flat Flat Flat Contraction Contraction Contraction

Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants

Small Small Nil Significant Significant Significant Significant Significant Small Small Small

Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Bendigo

Echuca

Gippsland

Melbourne

Mildura

Wangaratta

Warrnambool

Wodonga

Burnie-DevonportHobart

Increasing Sharply

Increasing

Steady

Tightening

Tightening Sharply

Local Economic Situation

0

1

2

3

4

5

6

Bendigo

Echuca

Gippsland

Melbourne

Mildura

Wangaratta

Warrnambool

Wodonga

Burnie-DevonportHobart

Severe Contraction

Contraction

Flat

Steady Growth

High Growth

Stage of Property Cycle

0

1

2

3

4

5

6

Bendigo

Echuca

Gippsland

Melbourne

Mildura

Wangaratta

Warrnambool

Wodonga

Burnie-DevonportHobart

Declining M arket

Peak o f M arket

Rising M arket

Bottom o f M arket

Start o f Recovery

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Queensland Property Market Indicators as at February 2011 – Houses

47

Queensland Property Market Indicators as at February 2011 – Houses Factor Cairns Towns-

ville Whit-sunday Mackay Rock-

hampton Emerald Glad–stone

Bunda-berg

Hervey Bay

Sun-shine Coast

Brisbane GoldCoast Ipswich Too-

woomba Rental Vacancy Situation Balanced

market Balanced market

Shortage of available property relative to demand

Shortage of available property relative to demand

Balanced market

Severe shortage of available property relative to demand

Balanced market

Balanced market

Shortage of available property relative to demand

Over-supply of available property relative to demand

Balanced market

Over-supply of available property relative to demand

Shortage of available property relative to demand

Severe shortage - Shortage of available property relative to demand

Rental Vacancy Trend Tightening Steady Tightening Tightening Steady Tightening sharply

Tightening sharply

Steady Tightening Steady Tightening Increasing Tightening Tightening sharply - Tightening

Demand for New Houses Soft Fair Fair Fair Fair Fair Strong Soft - Fair Fair Soft Fair Soft Soft Fair

Trend in New House Construction

Declining Steady - Increasing

Increasing Steady Declining Steady Increasing Steady Declining - Steady

Declining Steady Declining Declining Steady

Volume of House Sales Steady Steady Steady Steady Declining Steady Increasing Steady - Declining

Steady Declining Steady Declining Declining Steady

Stage of Property Cycle Bottom of market

Start of recovery

Bottom of market

Rising market

Bottom of market

Rising market

Rising market

Bottom of market

Start of recovery - Bottom of market

Bottom of market

Bottom of market

Declining market

Declining market

Rising market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Occasion-ally

Occasion-ally

Almost never

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Frequently Occasion-ally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Cairns

Townsville

Whitsunday

Mackay

Rockhampton

Emerald

Gladstone

Bundaberg

Hervey Bay

Sunshine Coast

Brisbane

Gold Coast

Ipswich

Toowoomba

Increasing SharplyIncreasing

Steady

Tightening

Tightening Sharply

Stage of Property Cycle

0

1

2

3

4

5

6

Cairns

Townsville

Wh itsundayMackay

RockhamptonEmerald

G ladstone

Bundaberg

Hervey Bay

Sunshine Coast

Brisbane

Gold Coast

Ipswich

Toowoomba

Declining M arket

Peak of M arket

Rising M arket

Bottom of M arket

Start o f Recovery

Demand for New Houses

0

1

2

3

4

5

6

Cairns

Townsvil le

Wh itsundayMackay

Rockham ptonEm erald

Gladstone

Bundaberg

Hervey Bay

Sunshine CoastBrisbane

Gold CoastIpswich

Toowoomba

Very Soft

Soft

Fair

Strong

Very Strong

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Queensland Property Market Indicators as at February 2011 – Units

48

Queensland Property Market Indicators as at February 2011 – Units Factor Cairns Towns-

ville Whit-sunday Mackay Rock-

hampton Emerald Glad-stone

Bunda-berg

Hervey Bay

Sun-shine Coast

Brisbane GoldCoast Ipswich Too-

woomba Rental Vacancy Situation Balanced

market Balanced market

Over-supply of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Severe shortage of available property relative to demand

Balanced market

Balanced market

Balanced market

Over-supply of available property relative to demand

Balanced market

Over-supply of available property relative to demand

Shortage of available property relative to demand

Severe shortage - Shortage of available property relative to demand

Rental Vacancy Trend Tightening Steady Steady Tightening Steady Tightening sharply

Tightening sharply

Steady Steady Steady Tightening Increasing Tightening Tightening sharply - Tightening

Demand for New Units Very soft - Soft

Fair Soft Fair Fair Fair Fair Soft Very soft Soft Fair Very soft Soft Fair

Trend in New Unit Construction

Declining Steady - Increasing

Declining significantly

Steady Steady Steady Steady Steady Declining significantly

Declining significantly

Steady Declining Declining Steady

Volume of Unit Sales Steady Steady Steady Steady Steady Steady Increasing Declining Increasing - Steady

Declining Steady Declining Declining Steady

Stage of Property Cycle Bottom of market

Start of recovery

Bottom of market

Rising market

Bottom of market

Rising market

Rising market

Bottom of market

Bottom of market

Bottom of market

Bottom of market

Declining market

Declining market

Rising market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Occasion-ally

Occasion-ally

Almost never

Occasion-ally

Almost never

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Frequently Frequently Occasion-ally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Cairns

Townsv

ille

Whitsund

ay

Mackay

Rockha

mpton

Emerald

Gladsto

ne

Bunda

berg

Hervey

Bay

Sunshi

ne C

oast

Brisba

ne

GoldCoa

st

Ipswich

Toowoo

mba

Increasing Sharply

Increasing

Steady

Tightening

Tightening Sharply

Stage of Property Cycle

0

1

2

3

4

5

6

Cairns

Townsville

Wh itsunday

Mackay

Rockhampton

Emerald

Gladstone

Bundaberg

Hervey Bay

Sunshine Coast

Brisbane

Gold Coast

Ipswich

Toowoomba

Declining M arket

Peak of M arket

Rising M arket

Bottom of M arket

Start o f Recovery

Demand for New Units

0

1

2

3

4

5

6

Cairns

Townsville

Wh itsunday

Mackay

Rockhampton

Emerald

Gladstone

Bundaberg

Hervey Bay

Sunshine Coast

Brisbane

Gold Coast

Ipswich

Toowoomba

Very Soft

Soft

Fair

Strong

Very Strong v

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Queensland Property Market Indicators as at February 2011 – Retail

49

Queensland Property Market Indicators as at February 2010 – Retail Factor Cairns Townsville Mackay Rock-

hampton Gladstone Bundaberg Hervey Bay

Sunshine Coast Brisbane Gold Coast Too-

woomba Rental Vacancy Situation Balanced

market - Over-supply of available property relative to demand

Balanced market

Shortage of available property relative to demand

Balanced market

Balanced market

Balanced market - Over-supply of available property relative to demand

Balanced market

Balanced market - Over-supply of available property relative to demand

Balanced market

Over-supply of available property relative to demand

Balanced market - Over-supply of available property relative to demand

Rental Vacancy Trend Steady Steady Steady Steady Steady Increasing Steady Increasing Steady Increasing - Increasing sharply

Steady - Increasing

Rental Rate Trend Stable Stable Stable Stable Stable Declining - Stable

Stable Declining Stable Declining - Stable

Stable

Volume of Property Sales Steady - Declining

Steady Steady Steady Steady Declining Steady Steady Steady Declining Steady

Stage of Property Cycle Bottom of market

Bottom of market

Stable Rising market Bottom of market

Declining market

Declining market

Declining market

Rising market Bottom of market

Declining market

Local Economic Situation Flat Flat Steady growth Flat Flat Steady growth - Flat

Flat Contraction Flat Contraction - Severe contraction

Steady growth - Flat

Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants

Small Significant Small Small Small Significant Significant Significant Significant Significant - Large

Significant

Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Cairns

Townsville

Mackay

Rockhampton

Gladstone

Bundaberg

Hervey Bay

Sunshine Coast

Brisbane

Gold Coast

Toowoomba

Increasing Sharply

Increasing

Steady

Tightening

Tightening Sharply

Stage of Property Cycle

0

1

2

3

4

5

6

Cairns

Townsville

Mackay

Rockhampton

Gladstone

Bundaberg

Hervey Bay

Sunshine Coast

Brisbane

Gold Coast

Toowoomba

Declining M arket

Peak o f M arket

Rising M arket

Bottom of M arket

Start o f Recovery

Local Economic Situation

0

1

2

3

4

5

6

Cairns

Townsville

Mackay

Rockhampton

Gladstone

Bundaberg

Hervey Bay

Sunshine Coast

Brisbane

Gold Coast

Toowoomba

Severe Contraction

Contraction

Flat

Steady Growth

High Growth

The month in review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

Northern Territory, South Australia & Western Australia Property Market Indicators as at February 2011 – Houses

50

SA, NT and WA Property Market Indicators as at February 2011 – Houses Factor Adelaide Adelaide

Hills Barossa Valley Iron Triangle Alice Springs Darwin South West

WA Perth

Rental Vacancy Situation Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Over-supply of available property relative to demand

Balanced market Balanced market Shortage of available property relative to demand

Balanced market

Rental Vacancy Trend Steady Tightening Tightening Increasing sharply

Steady Steady Tightening Tightening

Demand for New Houses Fair Fair Strong Soft Fair Fair Soft Fair

Trend in New House Construction Steady Steady Increasing Increasing Steady Steady Declining Steady

Volume of House Sales Steady Steady Declining Declining Steady Steady Steady Declining

Stage of Property Cycle Peak of market Peak of market Peak of market Peak of market Peak of market - Declining market

Peak of market - Declining market

Bottom of market Declining market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Occasionally Occasionally Occasionally Almost never Occasionally Occasionally Almost never Occasionally

Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Ade laide

Ade laide Hills

Barossa Valley

Iron Triangle

Alice Springs

Darwin

Sou th West WA

Perth

Increasing Sharply

Increasing

Steady

Tightening

Tightening Sharply

Demand for New Houses

0

1

2

3

4

5

6

Ade laide

Ade laide Hills

BarossaValley

Iron Triangle

Alice Springs

Darwin

Sou th West WA Perth

Very Soft

Soft

Fair

Strong

Very Strong

Stage of Property Cycle

0

1

2

3

4

5

6

Ade laide

Ade laide Hills

Barossa Valley

Iron Triangle

Alice Springs

Darwin

Sou th West W

A Perth

Declining M arket

Peak of M arket

Rising M arket

Bottom of M arket

Start o f Recovery

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Northern Territory, South Australia & Western Australia Property Market Indicators as at February 2011 – Units

51

SA, NT and WA Property Market Indicators as at February 2011 – Units Factor Adelaide Adelaide

Hills Barossa Valley Iron Triangle Alice Springs Darwin South West

WA Perth

Rental Vacancy Situation Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Over-supply of available property relative to demand

Over-supply of available property relative to demand

Over-supply of available property relative to demand

Shortage of available property relative to demand

Balanced market

Rental Vacancy Trend Steady Tightening Tightening Increasing sharply

Steady Steady Tightening Tightening

Demand for New Units Fair Fair Strong Soft Fair Fair Soft Fair

Trend in New Unit Construction Steady Steady Increasing Increasing Steady Steady Declining Steady

Volume of Unit Sales Steady Steady Declining Declining Steady Steady Steady Declining

Stage of Property Cycle Peak of market Peak of market Peak of market Peak of market Declining market Declining market Bottom of market Declining market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Occasionally Occasionally Occasionally Almost never Occasionally Occasionally Almost never Occasionally

Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Ade laide

Adelaide Hills

Barossa Valley

Iron Tria

ngle

Alice Springs

Darwin

South West W

APerth

Increasing SharplyIncreasing

SteadyTightening

Tightening Sharply

Stage of Property Cycle

0

1

2

3

4

5

6

Ade laide

Ade laide Hil ls

Barossa Valley

Iron Triangle

Alice Springs

Darwin

Sou th West W

A Perth

Declining M arketPeak of M arket

Rising M arketBottom of M arketStart of Recovery

Demand for New Units

0

1

2

3

4

5

6

Ade laide

Ade laide Hil ls

Barossa V alley

Iron Triangle

Al ice Sprin gsDarwin

Sou th West WA Perth

Very SoftSoftFair

StrongVery

Strong

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Northern Territory, South Australia & Western Australia Property Market Indicators as at February 2011 – Retail

52

SA, NT and WA Property Market Indicators as at February 2011 – Retail Factor Adelaide Adelaide Hills Barossa

Valley Iron Triangle Alice Springs Darwin South West WA Perth

Rental Vacancy Situation Balanced market Balanced market Over-supply of available property relative to demand

Over-supply of available property relative to demand

Balanced market Balanced market Balanced market Balanced market

Rental Vacancy Trend Steady Steady Steady Increasing Tightening Tightening Steady Steady

Rental Rate Trend Stable Stable Stable Stable Increasing Increasing Stable Stable

Volume of Property Sales Declining Steady Steady Declining Steady Steady Declining Steady

Stage of Property Cycle Peak of market Peak of market Peak of market Peak of market Rising market Rising market Bottom of market Peak of market

Local Economic Situation Flat Flat Flat Flat Flat Flat Contraction Steady growth

Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants

Significant Small Small Small Significant Significant Small Significant

Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating

Rental Vacancy Trend

0

1

2

3

4

5

6

Ade laide

Ade laide Hills

Barossa Valley

Iron Triangle

Alice Springs

Darwin

Sou th West W

APerth

Increasing SharplyIncreasing

SteadyTightening

Tightening Sharply

Stage of Property Cycle

0

1

2

3

4

5

6

Ade laide

Ade laide Hills

Barossa Valley

Iron Triangle

Alice Springs

Darwin

Sou th West W

APerth

Declining M arketPeak o f M arket

Rising M arketBottom o f M arketStart o f Recovery

Local Economic Situation

0

1

2

3

4

5

6

Ade laide

Ade laide Hills

Barossa Valley

Iron Triangle

Alice Springs

Darwin

Sou th West W

APerth

Severe ContractionContraction

FlatSteady Growth

High Growth