OutlookOpteon Newsletter July 2011 The Victorian Perspective Spotlight on Alexandra King Page 2 Independent valuations give buyers and sellers an edge Page 2 Regional Updates Page 3 Rural and agribusiness Page 6 Welcome to the winter edition of Outlook. Test your knowledge Page 7 The new financial year is an exciting time for An important message for investment property owners Page 8 us because it signals the launch of the company’s Presentation for Geelong business community Page 8 re-branding to Opteon. Andrew NosedaNew brand, same values Chief Executive OfficerThe beginning of July not only signals the start of the new financial year but also the As we move toward a newculmination of a process that began in 2005; the creation of Opteon Property Group era I’d like to take this(Opteon). Six independent valuation companies from around Australia saw the need opportunity to thank ourfor a national network in order to discuss ideas, industry changes and share data. The valued clients most sincerelymember companies, including Landlink and Market Line, showed further commitment for their past support andto the Opteon vision in 2009 by co-branding with Opteon and in doing so took another also reinforce Opteon’sstep towards the future goal. The merger of Landlink-Opteon and Market Line-Opteon commitment to delivering ato form Opteon Victoria was paramount in creating the largest property valuation and superior range of valuationadvisory firm in Victoria and to better service our clients over a larger geographic and property advisory serviceslocation, providing a professional balance of local expertise and national reach. In under the new banner. Yourecent years the valuation industry has evolved at an increased rate and a number have my assurance that weof clients who were significant users of valuation services started to look for larger, place enormous value on eachnational service providers. These demands drove a rationalisation within the industry client relationship and willand as a result, Opteon pursued a strategy of growing its membership. Today, Opteon leave no stone unturned tocomprises 25 of the most respected and established valuation firms in Australia, is provide even better servicewholly Australian owned and, uniquely, services all populated areas across all states. and communication in the months and years ahead.Continued page 2 Our national presence was expanded in May with the opening of the Opteon office in Darwin headed by experienced valuer Johanna Baldwin who is committed to delivering the exemplary standard of service the company has become renowned for. Finally, as we’re now heading into tax time I’d like to remind anyone with investment property that Opteon can assist with depreciation schedules to help you obtain the maximum legitimate taxation advantage. Until the next edition, good reading and best wishes.T: 1300 786 022 F: +61 3 5223 2309 E: firstname.lastname@example.org W: www.opteonproperty.com.au Value made visible
Outlook Opteon Newsletter July 2011 Page 2New brand, same values ContinuedOpteon is evolving to meet the expectations of our customers – lenders, owners andbuyers of all types of property – by providing added value through size, coverage andmarket knowledge, and a partnership solution to deliver the best outcomes.With this we are pleased to announce that, along with all the other shareholdingfirms in Opteon, we have adopted the use of the single trading name; Opteon.Thisis the continuation of a very exciting journey for us and our staff. The decision tojoin Opteon reflects our commitment to being part of a leading National PropertyValuation and Advisory business.“A leader in its field, Opteon will operate in a structured and well managed manner Alexandra King, joinedto deliver a range of consistently high quality property services based on local the team at Opteonknowledge in each geographical region it operates in,” said Opteon Victoria CEO Victoria in January 2011Andrew Noseda, “We share this vision and are committed to being a part of the as a Leading Valuer inOpteon group. “ The new entity will bring its clients the best of both worlds; on one the Residential Division,hand they will be the beneficiaries of superior service, extended geographic coverage was Australian Propertyacross Australia, shared knowledge and expertise, and state-of-the-art systems. On Institute (Victoria) Achiever of the Year inthe other, these expert services will still be based on local knowledge (our knowledge) 2009.by professional staff who live and work within the regions they service. All of ourcustomers will be able to contact the same people in the same way, no change for the A Certified Practising Valuersake of change; just new options and enhanced services; more ‘business as usual’ but with a Bachelor of Businessbetter. To mark this exciting change Opteon will have a new look; the distinctive new (Property) degree from RMITbranding of Opteon symbolises an exciting new era in national valuation and property University and an REIV Agentsadvisory services which encapsulates wider resources, superior systems and processes, Representative Certificate,reduced risk, greater transparency and improved communication, and increased focus Alexandra commenced heron quality assurance programs. Although the Opteon branding is new to the market, career with Lethlean Propertythe companies remain the same. Twenty-five Opteon member companies with 61 Consultants in 2003. Afteroffices and more than 350 qualified valuers around Australia have been meeting the completing her Supervisedproperty-related needs of thousands of clients for years and will continue to do so. Professional Practice sheOpteon has the ‘raw materials’ to lead in this new market environment, and our remained with the firm andre-brand is a further critical step in the journey towards our vision to be ‘Australia’s gained experience in a varietyProperty Advisors’ who stand for innovation, change and progress. We see that taking of specialised valuations such as businesses, golf courses, hotelson our new brand, Opteon, is ‘Value Made Visible’. and motels. In 2007, Alexandra moved to Hay PropertyIndependent valuations give buyers and Consultants where she workedsellers an edge predominantly in the residential field but was also exposed to aKnowing the true market value of a property puts vendors and potential purchasers mix of industrial and other non-in a much stronger position to negotiate. Vendors have a starting point on which to residential valuations includingmake comparisons with the sale of other properties in the area and set their selling acquisitions. In her role withprice or auction reserve while purchasers are far less likely to pay over the market Opteon Victoria Alexandravalue for the property they have set their heart on. A valuation is vastly different specialises in residentialfrom a market estimate which is an opinion – provided by a real estate agent – based valuations in Melbourne’s CBDprimarily on recent sales in the area. In contrast, a valuation is an independent written and inner suburbs. “As wellassessment of a property’s current worth by a Certified Practising Valuer who takes as carrying out valuations onmany factors into consideration. Valuers assess a property by making a comparison a daily basis I manage querieswith other properties that have sold in the immediate area and making adjustments and peer review reports, attendfor size, quality, additional improvements, aesthetic appeal and location, among monthly leading valuer meetings and ensure my team is keptother factors. A separate calculation, which involves assessing the underlying land fully updated on all aspects ofvalue and adding the value of improvements to the dwelling, is then undertaken. market activity, company policyImprovements such as motor vehicle accommodation, pergolas, garden setting and and procedures.” Commentingsheds are taken into consideration. This is normally conducted on a value per square- on Alexandra’s appointment,metre basis for each different improvement. Because Opteon Victoria’s valuers have Opteon Victoria CEO, Andrewextensive experience analysing current building approvals and contracts, they have Noseda, said, “A real assetcomprehensive knowledge of cost for the different styles and quality of improvements. to our team, Alexandra is notOpteon Victoria’s inexpensive pre-sale and pre-purchase valuations eliminate much of only a highly qualified andthe stress associated with buying and selling property, and significantly enhance the competent valuer but alsoprospect of a satisfactory outcome. Valuations can also be provided for matters such as dedicated to maintaining thefamily law, taxation, deceased estate and mortgage. An impartial and non-motivated exemplary standards our clientsopinion of value incorporating full disclosure in reporting helps the client to get the have come to expect fromfull picture. Opteon Victoria.”T: 1300 786 022 F: +61 3 5223 2309 E: email@example.com W: www.opteonproperty.com.au Value made visible
Outlook Opteon Newsletter July 2011 Page 3Regional UpdatesThe real estate industry had been hopeful that the early months of 2011 would see an improvement to the somewhatsuppressed market conditions experienced during the second half of 2010. But while at times there have been localisedindications that the market was ready to take off, overall activity has remained weaker than hoped for.Properties not priced correctly have remained on the market for longer periods and there have been instances ofadvertised price reductions as vendors endeavour to entice buyers to act. Properties that represent the upper valuerange in their market segment have been – and remain – more difficult to move. It is inevitable that the market willimprove and prospective purchasers who do not act now could find they miss out on the opportunities that are availablein what is currently a buyer’s market.Bayside and inner suburbsThe broader market in Bayside is trending towards a slight correction in values; however, local agents report a moderateupswing in activity over recent weeks. Demand from investors and first home buyers continues, especially in betterregarded areas. Prices in secondary residential areas, particularly those not adequately serviced by transport and/orshopping precincts, are expected to remain unsettled. There appears to be a lack of buyer demand above $1 million.Buyers seem prepared to pay market price for a property that meets their requirements in most respects but those thatdon’t are attracting little interest. Agents report healthy supply, but slower numbers of sales in the family home andprestige brackets. Off-the-plan projects appear to be well subscribed, however, there are fewer projects commencingthan two years ago, indicating a possible future shortage in new property. The overall expectation is for prices to remainstatic for some months with the rider that softening demand in lesser areas will likely see continued minor correction.Eastern suburbsThe 2011 residential market has experienced a very subdued start in comparison with last year. Auction clearancerates have generally reduced to between 60 and 70 percent compared with between 80 and 90 percent in 2010. Therehas been a significant swing in consumer sentiment and buyer behaviour with purchasers becoming more cautious intheir decision-making, consequently vendors need to adjust their price expectations. The situation provides a furtherindication of the more subdued market conditions this year. Entry-level properties – suitable for investors, those down-sizing, the elderly and first home buyers – in prime locations close to services are in demand while the medium to upperprice brackets have stabilised. Overall, expectations are for a subdued market, which favours purchasers rather thanvendors, but affordability remains an issue.Mornington PeninsulaHouse values on the Peninsula are expected to remain flat over the next twelve months but keenly priced qualityproperties are expected to continue to attract interest. The lower end of the market has cooled as a result of thereduction in the number of first home buyers although summer saw good prices and volumes, including the lower end.Upper end properties continue to be selectively traded, however, quality homes with extensive views of the coast, thebay and city skyline have been bringing good prices. The Peninsula Link project, which is due for completion in 2013,will significantly reduce travel times and is expected to be a driver of property values on the Peninsula. Frankston andCarrum Downs continue to be dominated by sales of new units with developers on the lookout for larger establishedproperties suitable for subdivision and redevelopment. The final stages of the Sandhurst Estate, a lifestyle precinct withcommunity and golfing facilities, have been released with small allotments starting at $300,000 and larger ones with golfcourse views priced up to $480,000.T: 1300 786 022 F: +61 3 5223 2309 E: firstname.lastname@example.org W: www.opteonproperty.com.au Value made visible
Outlook Opteon Newsletter July 2011 Page 4Regional Updates ContinuedNorthern suburbsAgents have continued to report mixed results and say “properties that tick all the boxes” are still selling well althoughif a property is not finished, lacks presentation, or has an unusual feature buyers are showing resistance. Evidencesuggests there is still healthy competition among buyers but there appears to be a balance between supply and demand.In general, the outer metropolitan suburbs remain steady. The established dwelling market appears consistent at presentwith agents reporting a cooling in the top end of the market. Vacant land continues to be buoyant with good demandreported in outer northern areas such as Wallan and Kilmore where land prices are continuing to rise. Sales results aremixed in the Macedon Ranges. Established townships such as Gisborne, Woodend and Kyneton, which have witnessedstrong growth over the previous 12 months, are exhibiting signs of slowing enquiry at the upper end. Conversely, vacantland prices continue to escalate with selling agents reporting good demand and limited supply in these areas.South-eastern suburbsThe median price of an established home in Cranbourne Central decreased during December, rose slightly in Februarythen declined to a 12 month-low of $289,500 (rpdata.com). Allotments of 400m² are selling for around $195,000 in TheGrove, a new estate located off the C404 motorway. Prices in Cranbourne North increased in December, before decliningthe following month. Eve, a highly regarded estate, has seen a rise in values with 600m² lots selling for as much as$295,500. Cranbourne East continues to be popular with home buyers in the area. Vacant land in the final stages of theHunt Club appears to be selling well while blocks in Cascades on Clyde are also in demand. Land in Lyndhurst with waterviews is bringing top prices while activity in Clyde North has been limited mainly to Selandra. Prices in Officer have risensignificantly: one lot of approximately 535m² sold for $173,950 in November and another of 519m² brought $218,000 inJanuary. In Caversham Waters vacant land sold in May last year for around $165,000 but slightly larger allotments havesince been selling for close to $228,000.Western suburbsThe frenetic buying that characterised the land market from mid-2009 through to late 2010 has softened slightly andvalues appear to have peaked. Developers seem less keen to test the market, however, values are holding firm as a resultof demand for vacant land. Compared with the greater metropolitan area, land in the west remains relatively affordable.Demand for homes under $450,000 is firm although agents report that buyers are more selective and selling periodsextended. There is interest from first home buyers and investors in this range as well as owner-occupiers but homesabove this range are susceptible to fluctuating demand. Properties priced at more than $1 million are thinly traded andare showing signs of easing. There is no indication of a correction at present: some sectors are under pressure but overalllevels appear to be holding due to reasonable demand. Developer activity appears to be gaining momentum in the urbangrowth corridor but holdings of less than 20 hectares are difficult to move.BallaratThe Ballarat market was slow but steady in the first quarter. Demand is easing across all sectors, reducing activity.Market sentiment is echoed in the overall economy but has not affected prices which are firming albeit at a steadierrate than previously. Supply of land remains an issue, as does the shortage of rental properties, both of which continueto support underlying values. Rural lifestyle and township sales have remained steady with demand in the popular touristtowns easing as increased fuel prices have started to impact. Overall, the outlook for the region appears sound withsteady but slower growth expected.T: 1300 786 022 F: +61 3 5223 2309 E: email@example.com W: www.opteonproperty.com.au Value made visible
Outlook Opteon Newsletter July 2011 Page 5Regional Updates ContinuedBendigoThe Bendigo market has plateaued over the last three months consolidating the strong growth of previous quarters. Themain increase in the Central Victorian area has been in the townships BendigoThe Bendigo market has plateaued over the last three months consolidating the strong growth of previous quarters.The main increase in the Central Victorian area has been in the townships along the Calder rail and freeway corridors.Kyneton and Castlemaine are appreciating strongly in value with growth of up to 20 per cent in the last six months.Sales volume has also remained strong as demand from Melbourne and interstate buyers continues to drive the market.Commercial markets are emerging from hibernation with good quality stock becoming available and yields remainingstrongGeelongThere appear to be no dark clouds on the horizon and activity around the region is expected to sustain the market duringthe cooler months. The Armstrong Creek development between Geelong and Torquay, which contains 10 years of regionalland supply, has now commenced with substantial infrastructure works currently underway and in excess of 300 blockssold. Construction of the first homes will commence within six months and the area is expected to develop quickly. Ataround $200,000 a block land is affordable. Along with other regional centres, Geelong is performing well with greateraffordability and a more relaxed lifestyle continuing to attract Melburnians. With a steady market and healthy butmoderate growth, Colac, the Surfcoast and Bellarine Peninsula are likely to experience continuing activity.MilduraSupply and demand have remained steady with the residential market relatively static. Rental returns have increased inthe past 12 months and higher yields are attracting investors. Since the first home buyers grant was reduced the volumeof valuations for construction loans has decreased dramatically. Market conditions can be attributed to the ongoingdifficulties the horticultural industry is experiencing in the Sunraysia region. The surrounding agricultural sectors ofdry land and pastoral farming have had a relatively good 12 months and the outlook appears positive. Last year’s grainharvest produced above average yields of low grade cereal while the livestock market – particularly sheep – has producedrecord prices.WarrnamboolDemand from first and second home buyers for homes under $350,000 continues to be solid but there has been minimalincrease in value. Sales of suburban stock above $350,000 decreased during the last quarter of 2010 with no improvementso far this year although values appear to be holding. This sector has moved little over the past couple of years. Severalsales of coastal properties during the past six months have set new value levels for this category. Central property hasbeen tightly held with the few properties offered producing solid results. Vacant allotments continue to trade stronglywith increased values for popular estates in the mid to low price range. Estates priced at a higher-than-average level inrelation to location continue to trade moderately.T: 1300 786 022 F: +61 3 5223 2309 E: firstname.lastname@example.org W: www.opteonproperty.com.au Value made visible
Outlook Opteon Newsletter July 2011 Page 6Rural and agribusinessThe rural market has experienced a 360-degree change in some areas due to the devastating unseasonal weather conditionsover summer. This has caused significant crop losses after what was promising to be a major recovery year for so manyprimary producers. As a result, demand for rural holdings remains subdued despite most agricultural commodities achievingrecord prices, particularly in the livestock sector. There are still some major hurdles for the agricultural sector to resolveas a result of the extended drought including high debt levels, the strong Australian dollar, market manipulation by thesupermarket duopoly, low cost imports and tight lending. However, the outlook appears more positive with strong returns inthe livestock sector, recovering markets for wool and dairy sector are healthy – although volatile – prices for cereal. Waterstorages are at an all time high and soil moisture is indicating the best start to a season in 15 years. Recent developmentsin the main property markets covered by the Opteon Victoria Rural Agribusiness Division have been:Irrigation WaterMitchell Rowe FAPI AAPI CPV API Accredited Specialist Water ValuerMarket Outlook: volatile Most irrigators are expecting 100 per cent allocation as all systems have experienced stronginflows. In the northern part of the state – particularly the deliverable irrigation districts – as the rain has fallen, so toohas the price of both permanent transferable water and temporary water. The volatility of water as an asset illustrateswhy lenders are cautious when using water assets as a security. In the southern part of the state where the majority ofthe irrigation water comes from groundwater, the price is still around the $1,000 to $1,500 per mega litre of an irrigation“take and use” water licence. This is an interesting trend as the authority actually owns the water, not the farmer, and thiswater asset cannot be mortgaged. We recommend that, if you have an irrigation water issue, you contact one of OpteonVictoria’s Australian Property Institute Accredited Specialist Water Valuers for advice.Agro ForestryAndrew Bray AAPI CPV API Accredited Specialist Water ValuerMarket Outlook: over supplied News in the agro forestry industry still centres around the Bluegum industry despite themarket offering of South Australian Government-owned softwood plantations as the now defunct Managed InvestmentSchemes are being progressively wound up. Large-scale sell downs of the Environinvest and Great Southern estates haveattracted private consortium investment. In essence, this sector has two markets with large scale estates selling to mainlyoverseas private forestry interests while smaller plantations are offered to the market. The results are much the samewith a significant discount to grazing and arable farm values. There remains the sale of many smaller hardwood forestryassets in Victoria by overseas interests and receivers which continue to cause much conjecture in the marketplace with fewinterested parties prepared to reclaim the land and a slight oversupply emerging in some districts. Recent sales activityis showing some volatility and is dependent on the value of the standing timber, if any. Demand fluctuations are causedby demand for pulp timber, mainly by the Japanese market, export capabilities and recent announcements regarding thecarbon market. This market is still emerging and will remain volatile until the demand for pulp timber firms, all the MISstructures are liquidated and government policy on carbon trading and sequestration is finalised.T: 1300 786 022 F: +61 3 5223 2309 E: email@example.com W: www.opteonproperty.com.au Value made visible
Outlook Opteon Newsletter July 2011 Page 7Rural and agribusiness ContinuedSunraysia Horticultural / Viticultural MarketNigel Gibbins AAPI CPV API Accredited Specialist Water ValuerMarket Outlook: weak In recent years Sunraysia’s horticultural and viticulturalindustries have experienced issues with water allocation plus a continuing easing inprices. Unseasonal rainfall in early 2011 has caused downy mildew problems withthe wine grape harvest, culminating in major losses. In contrast, the table grapeindustry has had varying results but could be described as receiving average prices.The citrus sector experienced relatively good prices last season but yields were Testreduced. Next season is expected to see an improvement for citrus yields; however,returns are expected to be subdued due to a fruit fly problem, the strong Australian Yourdollar impacting on the large US export market and competition from other largemarkets such as Chile. Of significant importance in this market is the pricing effect Knowledgeof irrigation water. As allocations return to maximum levels the trading of water haseased significantly with prices substantially reduced. Recent trades of high security 1. What do the letters SBSwater are in the vicinity of $1,600 per mega litre with little interest for water on the in the TV channel’s calltemporary market. sign stand for? 2. What is Big Ben?Market Garden Industry in the South EastWayne Walden AAPI CPV API Accredited Specialist Water Valuer 3. Which country is ranked number two in terms ofMarket Outlook: good The market garden industry south east of Melbourne, centred its land content?around Cranbourne South, Clyde, Pearcedale, Devon Meadows and Boneo, has beengrowing strongly in recent years. There has been some expansion onto the Koo-Wee- 4. What is the surgical termRup Swamp but this has been somewhat limited due to the heavy soils restricting crop used in Australia fortypes and the growing season. Expansion has been driven by the increasing popularity removal of the appendix?of salad vegetables and the increasing availability of “A” class recycled water withaccess to the main Melbourne markets also a key factor. Urban development around 5. In which year wasCranbourne South and Clyde is reducing the land available. Values vary considerably Facebook launched?with undeveloped land with sandy soils making $50-$70,000 per ha and fully developedland (drained and with sprinklers) with a source of water making in the vicinity of 6. What was the name of$70,000 per ha. A large sale at Boneo of fully developed land with water made about the USA space shuttle$120,000 per ha. On the Koo-Wee-Rup Swamp values are generally between $20- that lifted-off on 16 May$30,000 per ha with prime asparagus land with water bringing up to $45,000 per ha. 2011 on its final flight? 7. What is the name of the island situated in Western Port Bay? 8. Which grape varieties are used in the manufacture of Penfolds Grange? 9. What is the name of Melbourne’s largest reservoir? 10. Australia is home to the most venomous snakes in the world, what is its name?T: 1300 786 022 F: +61 3 5223 2309 E: firstname.lastname@example.org W: www.opteonproperty.com.au Value made visible
Outlook Opteon Newsletter July 2011 Page 8An important message for investmentproperty ownersExperience has revealed that 70 per cent of property investors are paying more taxthan they need to. If you are one of thousands of investors who has not yet receivedthe benefits associated with a depreciation schedule, or have valued clients in thisposition; read on. Owners of income-earning investment property are permitted tooffset some of the tax they pay through the depreciation of assets. Opteon Victoria’stax depreciation schedules, which are prepared by fully qualified quantity surveyorswho are registered tax agents, provide investors with up to 20 years of claims.(Quantity surveyors are the only people approved by the Australian Taxation Office to Answers -complete depreciation schedules).You will be pleasantly surprised at the size of the first year’s benefit: it will certainly Test yourbe significantly greater than our fully taxdeductible fee. Call 1300 786 022 or email email@example.com to knowledgearrange an obligation-free quote. 1. Special Broadcasting Service 2. The hour bell of the clock in the British Houses of Parliament, not the clock itself 3. Canada 4. Appendicectomy, not appendectomy as commonly thought 5. 2004 6. Endeavour 7. French IslandPresentation for Geelong business 8. Shiraz and Cabernetcommunity Sauvignon 9. The Thomson 10. The Inland Taipan or Fierce SnakeOpteon Victoria’s Research Manager Richard Jenkins and Director of CommercialServices Todd Devine were official guest presenters at the Geelong Chamber ofCommerce President’s luncheon held at The Pier on the waterfront on Friday 15 Opteon (Victoria) Pty LtdApril. The purpose of the event, which was attended by state and local government trading as Opteonrepresentatives, industry groups, developers, landlords, tenants, consultants and ACN 140 547 600Opteon Victoria’s major banking clients, was to provide an independent assessment 222a/757 Bourke st,of the status of the Geelong CBD in the wake of intense media scrutiny. In his Docklands, Vic 3008presentation Richard Jenkins provided an overview of the economic conditions in T 1300 786 022Australia and then followed with an analysis of the tenancy mix in the Geelong CBD,vacancy statistics and rents and yields as well as the outlook for the remainder of F 03 5223 23092011 and beyond. If you’d like a complimentary copy of Richard’s report please email: E firstname.lastname@example.org@opteonvictoria.com.au W www.opteonproperty.com.auDisclaimer: The information contained in this report is provided in good faith and has been derived from sources believed to bereliable and accurate. However, the report is not intended to be comprehensive or render advice and therefore Opteon Pty Ltd Value made visibledoes not accept liability for its contents.