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PRE-Market-Focus-Brisbane-report-may-2015_v1-preview2 (1)

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PRE-Market-Focus-Brisbane-report-may-2015_v1-preview2 (1)

  1. 1. to investing in Australia's foremost investment opportunity A COMPREHENSIVE GUIDE
  2. 2. Positive Real Estate 2 SUMMARY With many investors priced out of the Sydney and Melbourne property markets, the appeal of purchasing in a capital city at a meat-and-potatoes price point, while also promising capital growth, is becoming a mission not dissimilar to the quest for the holy grail. However, it’s not all doom and gloom for property investors just yet. Brisbane is offering punters the opportunity to invest in the next capital city forecast to boom, offering blue chip property just minutes from the CBD at an incredible entry price point. With high infrastructure spending in the local area, premium rental returns and promising forecasts of capital growth, this up-and-coming world city is finally getting some well-deserved time in the spotlight after almost a decade living in the shadows of Australia’s former heavyweights. This research report has collected data from RP Data, URBIS, Australian Bureau of Statistics, and the Queensland Government Statistician’s Office, as well as relying on our own analysis to provide you with a comprehensive report to complement your own investment due diligence.
  3. 3. Positive Real Estate 3 WHY BRISBANE IS THE “NEXT BIG THING” Queensland is Australia’s growth factory. Natural beauty, economic strength and the unbeatable lifestyle continue to attract more interstate migrants to Queensland than to any other state. Over the past century, Australia’s third
most populace state has evolved into a mature, robust economy built on agriculture, natural resources, construction and tourism. Today, services and tertiary industries are increasingly driving Queensland’s growth. The thriving services sector is primarily metropolitan based and is the driving force behind a cosmopolitan renaissance across Queensland’s major urban centres. Southeast Queensland has consistently been the fastest growing region within the fastest growing state in Australia. At the epicentre of this growth has been Queensland’s flourishing capital, Brisbane. Brisbane’s lush greenery is in stark contrast to its industrial heart. Complete with a
large seaport and one of Australia’s fastest growing airports, Brisbane is the gateway to the State’s mining, agricultural and gasindustries.BrisbanehostedtheprestigiousG20Summit in November 2014, completing the city’s emergence as a true world city. Nowhere are the rewards from Brisbane’s enormous public transport and cultural investment programs more evident than
the inner city. The five-kilometre radius surrounding Brisbane’s buzzing CBD boasts numerous residential suburbs, hallowed sporting grounds and award winning outdoor spaces. The following is our review of the current market drivers and how they are impacting Brisbane’s investment property potential.
  4. 4. Positive Real Estate 4 MACRO PERFORMANCE DRIVERS Population growth is the largest driver of real estate. Residential property relies on population trends for capital growth, as people need shelter, and with greater population comes greater demand. Sustainable population growth is essential for residential real estate markets to prosper. Queensland’s lifestyle and career opportunities have consistently ensured the state is one of the fastest growing in the nation. Brisbane is one of Australia’s fastest growing capital cities, forecast to grow by 247,537 people in the CBD alone within less than 20 years. POPULATION GROWTH POPULATION OF GREATER BRISBANE 2,238,394 (Source: ABS 3218.0, Regional Population Growth, Australia, 2012-13)
  5. 5. Positive Real Estate 5 (Source: URBIS & ABS 2013) The Australian Bureau of Statistics (ABS) predicts that within 40 years, Brisbane will reach Melbourne’s current population size of 4.3 million people. (Source: Commonwealth of Australia 2015)
  6. 6. Positive Real Estate 6 Employment growth is necessary to attract and maintain population and housing demand. Low unemployment and high-wages mean more disposable income and the capacity for tenants to endure rent increases and owner-occupiers to pay more for their homes. Where there is a wage growth, you will often find property price growth. Variety of industry is necessary, as you don’t want to be on the tipping point of a transient workforce departing the area or a major industry or employer shutting down. EMPLOYMENT GROWTH (Source: NIEIR, 2009) By 2031, Brisbane has a vision to be regarded as a top ten-lifestyle city and global hub for resource and related service industry businesses, with strong business and cultural links with Asia. The Brisbane CBD has the highest level of employment growth with inner city suburbs following close behind. Employment is an important driver as people want to be close to jobs. CURRENT JOBS 331,228 JOBS IN 2031 532,736 GROWTH 2.8% NEW JOBS 201,508 (Source: URBIS 2013)
  7. 7. Positive Real Estate 7 More jobs equates to higher rental demand and increased accommodation requirements. The large and growing working population creates a substantial captured rental market. TOP TEN INDUSTRIES BY EMPLOYMENT Health care and social assistance Retail trade Manufacturing Professional, scientific and technical services Construction Education and training Public administration and safety Accommodation and food services Transport, postal and warehousing 12% 10% 9% 8% 8% 8% 7% 6% 6% (Source: ABS, Census of population and Housing, 2011)
  8. 8. Positive Real Estate 8 The greatest gauge for a market is the consumer habits of the people that are in it. Multi-demographic pressures on inner city suburbs are a huge growth driver. Brisbane LGA is geographically constrained to see greater urban sprawl and as such will see much of this resident growth accommodated intoinfillandhigher densitydwellings. Brisbane now accounts for approximately half of Queensland’s population. At the current growth rate of 43,300 persons per annum, 16,000 new dwellings are required each year just to maintain equilibrium. DEMOGRAPHICS Over the past decade Brisbane has recorded excellent population growth of 3.6% (CoreLogic 2015). AVERAGE BRISBANE LGA RESIDENT 34 (Source: Census 2011) AUSTRALIAN AVERAGEVS 37 $1547 $1234 $350 $285 8% 4% 29% 19% 5.3% 5.6% 28.3% 27.7% Age Weekly household income Median weekly rent University attendance Bachelor or higher degree Unemployment Born overseas
  9. 9. Positive Real Estate 9 While overall immigration to Brisbane has slowed in the past few years, natural increase (birth and prolonged life expectancy) has been the largest contributor to population growth. Between 2013 to 2014, natural increase boosted Queensland’s population by 34,510 people (62,350 births minus 27,840 deaths). NUMBER OF RESIDENTS (MOVING ANNUAL AVERAGE) (Source: URBIS 2013) According to the Australian Bureau of Statistics (ABS) in 2014, natural increase accounts for 48.9% of Brisbane’s population growth, ahead of overseas migration (42.9%) and interstate migration (8.2%). While natural increase promotes an aging society, Brisbane’s large percentage of overseas migration keeps the overall population median age low. Close to 78% of overseas migrants in 2014 were aged between 0 and 29 years. Without this net migration, the median age of Queensland would be much older.
  10. 10. Positive Real Estate 10 Another key driver is the number of occupants living in each dwelling. This frequently forgotten statistic can contribute significantly to housing demand. With a change in living trends, single- person households are expected to increase by 2.2% per year across Australia. This will result in single-person households becoming a bulk 28% of households by 2031. The average number of people per household is expected to decrease from 2.6 in 2006 to 2.4 in 2031. This means that the number of dwellings needs to exceed population growth to keep up with demand. OVERSEAS MIGRATION ARRIVALS BY AGE (Source: URBIS 2013) BRISBANE CITY LGA (2013)
  11. 11. Positive Real Estate 11 Buyer demand is showing consistent growth, which is fuelling competition amongst buyers and driving price growth. u Brisbane home values increased by 4.8% over the twelve months to March 2014 u Home values increased by 2.9% in March 2014 and they are 1.5% higher over the past three months u Over the past twelve months, house values have increased by 5.1% compared to a 1.7% increase in unit values u 66% of Brisbane homes are owner-occupied versus 34% that are rented DEMAND PERCENTAGE CHANGE IN TOTAL HOUSE AND UNIT SALES (Source: RP DATA 2014) The largest improvements in buyer demand can be found in Brisbane, with sales jumping 24.2% in 2014. VENDOR DISCOUNTING (Source: RP DATA 2014) As of April 2014, vendor discounts sat at 5.4% in Brisbane compared with 5.6% across the combined capitals benchmark. Average selling time remains higher than average but has been consistently trending lower.
  12. 12. Positive Real Estate 12 COMBINED CAPITALS BENCHMARK (Source: RP DATA 2014) Brisbane is experiencing a reduction in listings, which adds pressure to property prices. In April 2014, there were just 19,000 homes for sale in Brisbane, 30% lower than the September 2012 peak. BRISBANE EFFECTIVE SUPPLY LEVELS (Source: RP DATA 2014) MEDIAN HOUSE PRICE VARIATION (FEBRUARY 2015) u Brisbane House $480K Unit $388K u Perth House $540K Unit $433K u Melbourne House $605K Unit $470K u Sydney House $850K Unit $630K (Source: Corelogic) The median house price shows that investors will be turning to Brisbane as there is room for capital growth, especially when compared to other capitals.
  13. 13. Positive Real Estate 13 MEDIAN HOUSE AND UNIT PRICES (Source: RP DATA 2014) Cities that have experienced excellent capital growth are becoming relatively unaffordable to the average investor and homebuyer. The typical Sydney house price is now $850,000, which is 14.8 times the Australian median salary ($57,400). Affordability barriers are likely to cause more buyers to consider more affordable housing markets, such as Brisbane. Rental yields have been severely compressed in Melbourne and Sydney as dwelling values have outpaced rents. Across Australia, investors are negative gearing as the average rental yield is 3.8% for houses and 4.6% for units. Brisbane’s average rental yield sits at a comfortable 4.6%, meaning Brisbane investors will have more cash flow and improved serviceability as a result. GROSS RENTAL YIELDS Houses Units (Source: RP DATA 2014)
  14. 14. Positive Real Estate 14 VACANCY RATES (Source: RP DATA 2014) Brisbane has lower vacancy rates than Melbourne and Perth, which puts more pressure on rents and increases rental yields. INNER BRISBANE IS ATTRACTING SUBSTANTIAL RENTAL PREMIUMS CHANGE IN WEEKLY UNIT RENTS (past five years) MEDIAN WEEKLY RENT INNER BRISBANE MEDIAN WEEKLY UNIT RENTS The majority rental demand is innercity as people are willing to pay a premium for apartment city living. (Source: RP DATA 2014)
  15. 15. Positive Real Estate 15 The Australian economy and housing market are broadly correlated Gross Domestic Product (GDP) is the most widely quoted measure of economic health. Whilst the relationship is far from perfect, in periods of stable economic growth, the Australian housing market generally outperforms. Australia has avoided recession since the early 1990s, a miraculous economic performance reflected in the housing market. The Queensland economy has consistently outperformed that of every other state including Western Australia since the 1980s. Queensland’s economic expansion has sustained above- trend population growth and been highly supportive of the residential property market. ECONOMICS
  16. 16. Positive Real Estate 16 The construction industry accounts for approximately 15% of the Queensland economy. The favourable construction outlook is linked
to population growth, the ongoing LNG boom, continued coal mining development and inner Brisbane’s urban renewal and continued process of gentrification. With LNG projects dispersed through out southeast and central Queensland, many companies have chosen to place their head offices in Brisbane. The resilience of Queensland’s economy is testament to its management and strong diversity. It is built on four pillars of strength: 1. CONSTRUCTION
  17. 17. Positive Real Estate 17 2. TOURISM Tourism pours $2.8 billion into the Queensland economy every year. Brisbane is the tourism hub of Queensland, with 992,000 international visitors in 2013. The city’s appeal to professional and leisure travellers alike is unquestionable, usurping that of both the Gold and Sunshine Coasts. Brisbane’s world-class facilities and international airport make the city an ideal staging point for travels within Queensland – especially as the destination is just one-hour from Gold Coast, Sunshine Coast, Moreton Bay Marine Park, five theme parks and two casinos. Queensland’s economy was built on agriculture. The industry remains an important pillar to this day. Queensland excels in the production of beef, sugar, cotton and wheat with the industry as a whole generating S14 billion per annum as of November 2014. 3. AGRICULTURE
  18. 18. Positive Real Estate 18 In line with Brisbane’s goals to be a leading world city, Queensland has committed to $134 billion to developing infrastructure projects to 2031. This is the largest public infrastructure spending in Australian history. The following infrastructure projects are currently under construction. 4.INFRASTRUCTURE ROAD & TRANSPORT Brisbane has the second lowest car usage of any Australian state capital. The city has an ongoing commitment to public transport, bikeways and effective urban planning. Brisbane has invested heavily in a highly efficient bus network to compliment the existing rail, CityCat and ferry infrastructure. u MORETON BAY RAIL LINK $1.15 BILLION Employment during construction: 8000 The Moreton Bay rail link will complete in 2017. The major project consists
of six new stations along 13 km of track linking Redcliffe to the existing Brisbane rail network. The project will provide the substantial Redcliffe commuter base with an alternative method of highly efficient transport into Brisbane City. u BRISBANE UNDERGROUND BUS AND TRAIN TUNNEL $5 BILLION The proposed Underground Bus and Rail project will provide Brisbane with a much-needed additional river crossing. This project includes a dual-purpose tunnel under the Brisbane CBD and Brisbane River. The new station on George St in the heart of the CBD will be the first underground station in the city. Construction is expected to commence in 2015 with completion scheduled for 2020. u GATEWAY UPGRADE NORTH $1 BILLION The Gateway Upgrade North project includes the upgrade of Gateway North between Nudgee Road and Barrett Street northbound, and Depot Road southbound. The improvements will include widening from four to six lanes and the installation of managed motorway treatments and cycle facilities. The Gateway Motorway is Brisbane’s primary economic road corridor, providing direct linkage to the Port of Brisbane and the Australia Trade Coast, and to the Bruce Highway. The project will alleviate severe congestion, enabling faster
  19. 19. Positive Real Estate 19 and more reliable movement of freight between ports and connecting production and distribution centres and markets, resulting in improved economic growth and reduced input costs for industry and businesses. u LEGACY WAY $2 BILLION Employment during construction: 5400 Legacy Way is a 4.6 kilometre road tunnel that will connect the Western Freeway at Toowong with the Inner City Bypass at Kelvin Grove. Legacy Way will reduce travel time between Brisbane CBD and the Western Suburbs by approximately fourteen minutes, helping commuters to avoid seven sets of round abouts and other traffic delays. u BRISBANE AIRPORT PARALLEL RUNWAY PROJECT $1.3 BILLION Employment during construction: 2700 Employment once operational: 7800 Brisbane Airport is predicted to be Australia’s fastest growing major airport over the coming 15 years. Passenger demand is currently growing at 11% per annum. A pipeline of major works is underway to prepare the facility for annual international and domestic passenger movements of over 50 million by 2030, double current capacity. Construction on the duplicate runway commenced in May 2014. Scheduled for completion in 2020, the project should create
2,700 jobs at its peak. The additional passenger capacity at the airport will act as a catalyst, facilitating the creation of 7,800 jobs in the region over the coming decades. Brisbane Airport has emerged as a major
FIFO hub servicing the coal, LNG and minerals industries. Doubling capacity will cement the airport’s position as the gateway to Queensland’s tourism and resources industries. HEALTHCARE Brisbane offers a world-class range of healthcare services. The city boasts an extensive list of public and private hospitals. Investment in these facilities and in educating Queensland’s best and brightest to work within them is ongoing. u LADY CILENTO CHILDREN’S HOSPITAL $1.5 BILLION Employment once operational: 1500 Construction of the Lady Cilento Children’s Hospital is one of the biggest infrastructure projects underway in Australia.
  20. 20. Positive Real Estate 20 Located in South Brisbane, the Lady Cilento Children’s Hospital will provide specialist paediatric care for children from birth to 16 years of age (up to 18 years for established patients). The new hospital will be the single specialist children’s hospital for the state, owned and operated by Children’s Health Queensland. CULTURE u 1 WILLIAM STREET $653 MILLION Employment during construction: 1000 1 William Street is a modern-style skyscraper office building located in the Brisbane CBD in close proximity to Parliament House. The building is part of the government’s plan for a renewed Government Administrative Precinct and to meet its accommodation demands. u KELVIN GROVE URBAN VILLAGE $1 BILLION The Kelvin Grove Urban Village is a partnership
between the State Government and Queensland’s largest university, the Queensland University
of Technology (QUT). The award- winning development continues to set new benchmarks for integrated urban development. Kelvin Grove village is the place where those who enjoy new experiences in the arts, culture and technology flock. u NEWSTEAD GASWORKS DEVELOPMENT $1 BILLION Newstead’s Gasworks development is a 17-hectare industrial rejuvenation project. The development includes 100,000 square metres of office space and 20,000 square metres of retail space in addition to a limited number of new apartments. Stage Two of the community is currently under construction. u NORTHSHORE HAMILTON $175 MILLION Employment once operational: 15000 Northshore is Brisbane’s largest and most exciting urban renewal project, covering an area larger than the Brisbane CBD. Northshore has already blossomed into a fully inclusive, self-contained community featuring dedicated riverfront space, cruise ship facilities, CityCat terminals, expansive parkland and community areas are outstanding residential, retail and commercial developments.
  21. 21. Positive Real Estate 21 u BRISBANE SHOWGROUNDS REDEVELOPMENT $3 BILLION Employment during construction: 8650 Employment once operational: 8650 The Brisbane Showgrounds Master Plan will combine the site’s rich history with its future potential. The regeneration will ensure the site becomes a destination synonymous with events, fashion, design, lifestyle and culture, hosting world- class events and shows all year round. CONCLUSION Overall, Brisbane has all the strong characteristics ofacapitalcitymarketsettoflourish.Withstrong industry, population growth and infrastructure investment, it’s a good time to get your money in the Brisbane market. While it hasn’t experienced the leaps and bounds of Melbourne and Sydney, it won’t be long before this marvelous city takes its rightful place on the world stage as a leading capital.

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