Post on 14-Aug-2020
GRANT THORNTON BANKERS
BOOTCAMP 2019
Proper ty Market Overv iewMelbourne
ECONOMY
E C O N O M I C G R O W T H S L O W I N G A C R O S S A U S T R A L I A
STATE F INAL DEMAND OVER THE PAST 12 MONTHS
Source: ABS (12 months ending Jun 2019)
1.3%
1.9%
0.4%
-0.1%
0.4%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
NSW VIC QLD WA SA
An
nu
al ch
an
ge (
%)
V I C T O R I A I S S E E I N G T H E S T R O N G E S T P O P U L A T I O N G R O W T H
HISTORIC POPU LAT ION GROW TH BY STATE
Source: ABS y-o-y to March
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Po
pula
tio
n G
row
th
NSW VIC QLD SA WA
V I C T O R I A H A S A Y O U N G , W O R K I N G A G E P O P U L A T I O N
POPU LAT ION BREAKDOW N BY STATE
Source: ABS
0
50
100
150
200
250
300
350
0-10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91+
‘000 P
op
ula
tio
n w
ith
in a
ge b
rack
et
VIC NSW
RESIDENTIALStability Emerging
Source: Real Estate Institute of Australia
M E L B O U R N E R E S I D E N T I A L M A R K E TN E G A T I V E P R I C E M O V E M E N T L O O K S T O B E S L O W I N G
$785,000Median house price (June quarter 2019).
down 6.7% y-o-y but just 1.1%
lower in the quarter.
$590,000Median unit price (June quarter 2019).
down 0.9% y-o-y but 0.6% higher
in the quarter.$200
$300
$400
$500
$600
$700
$800
$900
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Median price ($'000)
Melbourne Median House and Apartment Prices (quarterly)
Median house price ($) Median unit price ($)
Source: Corelogic
30%
40%
50%
60%
70%
80%
90%
Jun
-15
Sep
-15
Dec-
15
Mar-
16
Jun
-16
Sep
-16
Dec-
16
Mar-
17
Jun
-17
Sep
-17
Dec-
17
Mar-
18
Jun
-18
Sep
-18
Dec-
18
Mar-
19
Jun
-19
Clearance Rate
Sydney Melbourne Combined Capitals
M O R E B U Y E R S E N T E R I N G T H E M A R K E TQ U A R T E R L Y A U C T I O N C L E A R A N C E R A T E S
Source: Australian Bureau of Statistics; CBRE Research
M E L B O U R N E R E S I D E N T I A L M A R K E TM E D I U M / H I G H D E N S I T Y A P P R O V A L S H A V E D I P P E D F U R T H E R
-37%Medium/high density approvals are 36.9%
lower y-oy.
Large dip from November 2018 after a
strong 12 months.
21,981Medium/high density approvals over the
year to June 2019.
25,074Annual detached dwelling approvals.
Also dipping after spending most of 2018
above 28,000 (for the first time).
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Rolling 12-month approvals
Greater Melbourne Annual Residential Approvals
Greater Melbourne Houses Greater Melbourne Other
Source: Australian Bureau of Statistics; CBRE ResearchNote: Data covers approximately a 5km radius of the GPO
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
2015
-16
2016
-17
2017
-18
2018
-19
Number of approvals
Melbourne Inner City Building Approvals
Houses Units
49.4%
45.7%
31.4%
38.9%
39.3%
33.7%
31.7%
32.6%
17.2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
2015
-16
2016
-17
2017
-18
2018
-19
% of metropolitan ‘other’ approvals
Melbourne Building Approvals - Inner Share (Units)
M E L B O U R N E R E S I D E N T I A L M A R K E TI N N E R C I T Y A P P R O V A L S V O L U M E A N D S H A R E H A S C R A S H E D .
OFFICESupply cycle ramping up
S T R O N G N E T A B S O R P T I O N E X P E C T E D T O C O N T A I N V A C A N C Y
A M I D S T H I G H L E V E L S O F N E W S U P P L Y
N E T S U P P LY, A B S O R P T I O N A N D VA C A N C Y I N T H E M E L B O U R N E C B D
Source: PCA Office Market Report Jan-19, CBRE Research
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
-50,000
0
50,000
100,000
150,000
200,000
250,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
sqm
Net Absorption Net Supply Vacancy (RHS)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Sydney CBD Melbourne CBD Brisbane CBD Perth CBD Adelaide CBD Canberra
Spread Ten-year low Ten-year High Current
L O W V A C A N C Y I L L U S T R A T E S C O N F I D E N C E I N M E L B O U R N E ’ S
E C O N O M Y
Source: CBRE Research
Source: CBRE Research/PCA 2019
N E T T E N A N T M O V E M E N T S L O W I N G I N M E L B O U R N E C B D
N E T T E N A N T M O V E M E N T
-30000
-20000
-10000
0
10000
20000
30000
40000
50000
60000
70000
East Melbourne Melbourne CBD Southbank St Kilda Road
Net
Ten
an
t D
em
an
d (
sqm
)
H1 2018 H2 2018 H1 2019
O F F I C E Y I E L D S H AV E C O N V E R G E D
P R I M E A N D S E C O N D A R Y Y I E L D S I N T H E M E L B O U R N E C B D
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
2013 2014 2015 2016 2017 2018 2019
Prime Yield Secondary Yield
RETAILConditions remain challenging
Source: ABS, CBRE Research
R E T A I L C L I M A T E C H A L L E N G I N GA N N U A L ( R E A L ) R E T A I L G R O W T H P E R C A P I T A
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018
Gro
wth
(%
)
Annual Change Average
Source: CBRE Research
C A S U A L T I E S O F T H E R E T A I L C L I M A T ER E T A I L E R I N S O L V E N C I E S A N D E X I T S
0
5
10
15
20
25
2015 2016 2017 2018 2019
Other retailing Household goods retailing
Food retailing Clothing, footwear and personal accessory retailing
Cafes, restaurants and takeaway food services
Source: Euromonitor, CBRE Research
M I D - R A N G E A P P A R E L B E A R I N G T H E B R U N TI N S O L V E N T R E T A I L E R S B Y T Y P E 2 0 1 5 - 1 8
MID-RANGE APPAREL
47%
BAGS,
JEWELLERY &
ACCESSORIES
8%
HOMEWARES
8%
HIGH-END
APPAREL
9%
FOOD & BEVERAGE
11%
HARDWARE /
HOUSEHOLD
GOODS
9%ELECTRONICS
4%
DISCOUNT/VALUE
4%
Source: CBRE Research, company accounts
K - M A R T O U T P E R F O R M SS T O R E C O U N T A N D S A L E S P E R S T O R E
0
50
100
150
200
250
300
350
$0
$10
$20
$30
$40
$50
2012
2013
2014
2015
2016
2017
2018
2019
2012
2013
2014
2015
2016
2017
2018
2019
2012
2013
2014
2015
2016
2017
2018
2019
2012
2013
2014
2015
2016
2017
2018
2019
2012
2013
2014
2015
2016
2017
2018
Kmart Target Big W David Jones Myer
($m
)
Store count (RHS) Sales/store (LHS)
Source: REIT report and accounts, CBRE Research
C A P R A T E S S O F T E N I N G I N S U B - R E G I O N A L SC A P R A T E C O M P R E S S I O N A N D C U M U L A T I V E I M P A C T O N V A L U E
0%
2%
4%
6%
8%
10%
12%
14%
16%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
Jun-2015 Jun-2016 Jun-2017 Jun-2018 Jun-2019
Neighbourhood Sub-regional Regional Neighbourhood Sub-regional Regional
Impact on v
alu
e
LOGISTICSConditions softening
A U S T R A L I A N I N D U S T R I A L A N D L O G I S T I C S G V AC O N T R I B U T I O N T O I N D U S T R I A L I N D U S T R I E S G V A G R O W T H
Source: Australian Bureau of Staistics
-4
-3
-2
-1
0
1
2
3
4
An
nu
al C
on
trib
utio
n (
%)
Manufacturing Utilities Construction Transport & warehousing Wholesale GVA - Industrial
0
100
200
300
400
500
600
700
800
900
1,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Lan
d V
alu
e (
$p
sqm
)
Greater Adelaide Greater Brisbane Greater Canberra
Greater Melbourne Greater Perth Greater Sydney
S Y D N E Y H A S S E E N S I G N I F I C A N T G R O W T H I N L A N D V A L U E S1 . 6 H A L O T L A N D V A L U E S B Y C I T Y
Source: CBRE Research
60
70
80
90
100
110
120
130
140
150
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Net
Ind
icative
Ren
t ($
/sq
m)
Greater Adelaide Greater Brisbane Greater Canberra Greater Melbourne Greater Perth Greater Sydney
L I M I T E D S U P P L Y H A S D R I V E N M E L B O U R N E A N D S Y D N E Y ’ S R E N T A L G R O W T H I N R E C E N T Y E A R S
S U P E R P R I M E N E T F A C E R E N T S
Source: CBRE Research
SUPER PR IME INDUSTR IAL RE -RATED
B E S T I N C L A S S N A T I O N A L P R O P E R T Y Y I E L D S
Source: CBRE Research
4%
5%
6%
7%
8%
9%
10%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Office Super Prime Industrial Regional Shopping Centres
O V E R S E A S I N V E S T O R S H E L P I N G D R I V E D O W N Y I E L D SI N D U S T R I A L T R A N S A C T I O N S B U Y E R O R I G I N
Source: CBRE Research
Domestic
81%
Offshore
19%
2 0 1 3 - 1 8
Domestic
97%
Offshore
3%
2 0 0 0 - 1 2
CAPITAL MARKETSMore yield compression to come
Source: CBRE Research
AUSTRAL IAN COMMERC IAL PROPERTY INVESTMENT
2 0 1 9 S H A P I N G T O B E A N O T H E R Y E A R O F H I G H V O L U M E S
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Sale
s V
olu
me (
$m
)
Industrial Office Retail
AUSTRAL IAN BANKS LOS ING MARKET SHARE TO AS IAN BANKS
A U S T R A L I A N C O M M E R C I A L R E A L E S T A T E D E B T
Source: APRANote: Covers major domestic banks and all foreign banks
11%
22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
50,000
100,000
150,000
200,000
250,000
300,000
% m
ark
et
share
$000s
Australian Commercial Real Estate Debt Market
Major Domestic Bank Actual Exposure Offshore Bank Actual Exposure Major Domestic Bank Share Offshore Bank Share
F ORE IGN BANKS HAVE NOW ALSO CHANGED TACK
R E D U C T I O N I N R E S I D E N T I A L E X P O S U R E S A F T E R S T R O N G G R O W T H
Source: APRA
36.2%
27.2%
39.5%
-10.7%
18.2%
-17.5%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
2014-2017 2018-2019% change in actual exposure
Three Main Sectors Other residential Land development/subdivisions
Source: CBRE Research
THE CASE F OR Y I E LD COMPRESS ION
Y I E L D S P R E A D S – P R O P E R T Y O V E R B O N D S
0
50
100
150
200
250
300
350
400
450
500
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
Spread (basis points, RHS) 10-year Australian Government Bond Yield Australian CBD average prime office yield
Source: RBA, CBRE Research
PROPERTY Y I E LDS TAKE T IME TO AD JUST
Y I E L D S : A U S T R A L I A P R I M E C B D O F F I C E A N D 1 0 - Y E A R B O N D S
0%
1%
2%
3%
4%
5%
6%
7%
8%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Australia Prime CBD Office Aus. Govt. 10-year bond yield Trend bond yield (24 mma) lagged 12 months
r = 0.61
r = 0.82
Forecast
T H A N K Y O U