9 posts tagged “investment”
"Australia's top institutional and private investors believe the nation is well and truly past the bottom of the property cycle and now heading towards upswing, according to new survey findings released by Colliers International.
The second Colliers International Investor Sentiment Survey,
conducted late last month, has shown investors around the country
believe that if the property cycle were a clock, with the top of the
market at 12 o'clock and the bottom at 6 o'clock, Australia moved
upwards to 7 o'clock in Q3-09, after the majority of investors believed
the same clock sat at 5 o'clock when they were first surveyed in May
for Q2-09. ...
The majority of investors, at 52 per cent,
believe Australia is not only past the bottom of the property cycle,
but 64% also believe the upswing will occur earlier than indicated in
the first survey - by Q2/Q3 2010 or even earlier, instead of in Q4 2010. ...
When asked how they would describe their property investment strategy over the next 12 months, the majority of investors, almost half at 49 per cent, identified they were heading into growth mode, with 43 per cent in defend mode or holding steady. Only 8 per cent were expecting to contract holdings.
Investors also signalled the green light to purchase property is now definitely on. 69 per cent now expect to buy property in Australia over the next 12 months, up from 63 per cent in May. Investors also expect it will become easier to buy property with 47 per cent believing access to debt capital will become easier in the next 12 months, versus just 20 per cent in the May survey.
Most
investors, at 45 per cent, are looking to buy office property, with the
top 5 buy markets identified as Sydney Office (20 per cent), Melbourne
Office (15 per cent), Sydney Residential (7 per cent), Melbourne
Residential (6 per cent) and Sydney Industrial (6 per cent). ...
Residential was again the standout property sector with the majority of investors believing values had only declined by 1 to 10 per cent since the peak of the market, while 16 per cent believed residential values hadn't changed at all, or even witnessed some growth. The majority of investors believe there will be no further softening to residential values and 8 per cent believe there will now be growth."
"Yesterday, the Australian Bureau of Statistics' figures on the country's national GDP expenditure for fiscal 2009 revealed dwelling investment slumped a seasonally adjusted 10.9 per cent. In the June quarter it dived 5.5 per cent."
"Colliers International’s Investor Sentiment Survey reveals bottom of property cycle now imminent with upswing
predicted to be well underway by 2010. Property investors around the country believe Australia is now approaching the upswing point of the property cycle with the majority of investors believing the industry is currently between 4:00 and 6:00 on the property cycle clock (where 6:00 is considered bottom). This was the major finding of the inaugural National Investor Sentiment Survey conducted by Colliers International. Colliers International surveyed institutional and private clients across Australia to attain their sentiment on the current climate of Australia’s property market, and their views on the next 12 months. The investment calibre of respondents was exceptionally high with 42 percent stating the value of their portfolio was greater than $AUD1 billion. Felice Spark, Director of Commercial Research at Colliers International says the majority of investors believe we are now fast approaching, if not already at the bottom of the cycle, poised for upswing. “36 percent of investors surveyed believe Australia is currently at 5:00 on the property clock with a further 36 percent identifying either 4:00 or 6:00.”
Summary of key findings:
• 72% of investors believe we are between 4:00 and 6:00 on the Property Cycle Clock, poised for upswing
• Residential sector is the standout with values holding steady or possibly growing
• 63% said they were looking to buy property in Australia within the next 12 months"
Source: Colliers
So based on this survey, more than 60% of property investors think that things are going to get worse before they get better.
"Instead, many prefer the cheaper priced units and apartments, which
also often are closer to the CBD. The affordability is especially a
growing factor this year, as that section of the market has become the
dominant force in the property market. ... With the growing market
share, units have also shown a stronger capital growth than houses in
nearly every capital of the country. In Sydney, Brisbane and Canberra,
units showed positive 12 month growth in median value up to February
this year, compared to negative growth for house median values. ...
Another
key is to make sure there is a parking spot included, something that
can make a huge difference in demand, especially if the unit is in an
area with few street parking opportunities. “No matter where you buy an
apartment, never ever buy it without allocated parking,” says Wakelin.
What not to buy
There are, however, areas where demand is not so strong. For one, stay away from high-rise apartments, particularly in areas of overdevelopment such as the Gold Coast, the Sydney CBD or the Docklands in Melbourne, say experts.
“We find for investment purposes, high-rise apartments do not work,” says Wakelin. “They are very generic, so there’s little scarcity value with them.” Ryder agrees, saying investors should not be swayed by the magnificent views from atop beachfront high-rises in the Gold Coast. Investors should remember they won’t be living in these properties, and in the long run, they don’t show as much capital growth.
“There’s a lot of glamour in buying a high rise, but history shows it’s generally a poor investment,” says Ryder. “Put aside the emotions, and just look at the sums. You’re better off not buying something with an ocean view like in Surfer’s Paradise.”
He also says buying a used apartment is better than buying a brand new one.
“There’s a huge price differential with a new product and equivalent second-hand product,” says Ryder. “That’s simply because the cost of development is so high. The research shows there’s commonly a price difference between 30-40% between new and old apartments.”
That ultimately means for an investor that it’s harder to get capital growth out of a newer product. It might look nicer, but it will cost you in the long run. There’s also little scarcity in some areas for new product, such as the Gold Coast, where new apartments have been built without abandon. And once its no longer new, you actually lose that tag and that value.
“There’s a lot of risk in committing to buy something now and paying two years later, whereas the market can go in the wrong direction in that time,” says Ryder. “Plus developers tend to build that (expected value growth) into today’s prices these days.”
List of real estate investing books (that can be shipped to Australia) from The Real Estate Book Store
What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures
After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade
Complete list click here
"Australian residential property markets are in much better shape than residential markets in Britain and the US. Higher lending standards in Australia mean there are fewer defaults forcing house prices down. There is a housing shortage and immigration, despite a cut, still remains strong."
"Increases in rents have seen yields for Brisbane houses and units (at 4.4% and 4.9% respectively) increase, and
yields for houses are now back to levels last seen in 2002. This together with lower interest rates is starting to make
a more compelling case for investors, and counter cyclical investors are starting to return to the market."
"Prices did not peak until early 2008 and have only come back 5% since then. Whilst there is potentially further downside in the short term, the market is likely to stabilise and the high levels of demand are expected to see growth return once the economy starts to pick up. Brisbane has generally had high demand for apartments and units, and this means that the fall in prices for other dwellings has not been as much as for houses.
MLG Property Report - March 2009
"Depending where you live, property values in your state would have grown a few percent or dropped a few percent overall. Of course we all know that the value of certain properties fell much, much more than that, some by more than 20%. And some segments of the market, in particular the higher priced properties, holiday properties and rural properties, markedly dropped in value. "
See Property Update for full report.
"Property vendors experienced jubilant times during 2007. Properties typically sold within a month of being listed, there was minimal negotiation on their asking price and the competition amongst buyers pushed real estate values into double digit growth. It was a sellers market.
Market conditions are different now. Properties are taking longer to sell, there is more movement on the asking price of properties in the market and stock levels are mounting due to decreased levels of buyer activity. It is now a buyers market.
A quote from Warren Buffet, the worlds richest man and renowned investor, sums up the buyers market perfectly: “Be wary when others are greedy, and greedy when others are wary”. I think we can safely say that the market is quite wary at the moment; investment levels in the Australian real estate market haven’t been this low since the end of 2006."
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