AP-REALTY RESIDENTIAL PROPERTY MAILER 4015 GRANNY FLATS, REGIONAL MARKETS SURGE & BRISBANE MARKET UPDATE

AP-REALTY
RESIDENTIAL PROPERTY MAILER 4015

GRANNY FLATS, REGIONAL MARKETS SURGE &
BRISBANE MARKET UPDATE

BIBLIOGRAPHY

In compiling this presentation we have sourced material and data from a wide variety of sources.
 Where possible, acknowledgement has been given to these groups or individuals in the body of
                                        the presentation.

Many State Governments have relaxed the building approval rules for Granny
                           Flats making it easier for you to earn an income from the family home or in fact
                           increasing your yield on your investment property.
                           Rental yields of up to 15% are being achieved on backyard “granny flats” or
                           “Fonzie” flats built over garages in the nation’s hottest property markets
                           (Sydney in particular) according to property tax specialists BMT.
Chris Hayter - Principal   Increasing property and rental prices have forced many Australians to start
                           looking for alternative living arrangements. This has caused a surge in demand
                           for secondary dwellings or granny flats.
                           In response to this demand, data collected from thousands of BMT Tax
                           Depreciation Schedules suggests construction of granny flats has increased by
                           24.1% in Western Sydney suburbs and 9.3% across Australia over the last two
                           financial years.
                           This dramatic increase in construction can be attributed to state-level
                           legislative changes regarding secondary dwellings, aiming to boost housing
                           affordability in capital city areas.
                           2009 saw the Affordable Rental Housing – State Environmental Planning Policy
                           (SEPP) come into force in NSW. In August 2013, WA followed suit with its State
                           Planning Policy 3.1 Residential Design Codes. With these legislative changes,
   Granny Flats            NSW and WA join the NT, ACT and TAS in allowing property owners to rent a
                           secondary dwelling to those other than family members or friends.

GOLDMINE IN THE BACKYARD?

NSW, which has the strongest rental demand, is
leading the pack by allowing granny flats to be used
for income-producing secondary dwellings. It is also
allowing Fonzie flats to be built above garages in
new developments subject to council approval.
WA, NT, Tas and ACT also allow granny flats to be
rented but Qld, Vic and SA do not.
Our data suggests that on average a granny flat will
cost $121,000 to construct. Property owners have
found that they are usually able to achieve annual
rental yields of 15% on this investment.
Demand will be driven by population growth, rising
house prices and a trend towards single occupant
accommodation.

Brisbane Market Update

Brisbane has an emerging urban culture which is       This trend has been occurring year on year since
underpinned by the city’s unique lifestyle and        June 2012 and is likely to be a key contributing
climate.                                              factor continuing to underpin uplifts in rental
                                                      demand.
Rental market strength - Rental demand within
Brisbane is unquestionably on the rise. Prolonged
periods of underbuilding post GFC combined with
demographic and psychographic induced changes
to demand have seen vacancy rates tighten over
recent years.
The long-term impact of bought forward first-home
owner demand (as a consequence of government
first home ownership incentives) is likely to
continue to result in the downwards trend of
lending to first home owners who will remain in the
tenancy pool.

Australia’s fastest growing city

Brisbane is currently taking centre stage as the
nation’s number one growth city. It has an emerging
urban culture which is underpinned by the city’s
unique lifestyle and climate.
It is anticipated that over the next two decades that
Brisbane will be regarded as a top ten lifestyle city
and global economic hub.
Brisbane is forecast to grow faster than any other
mature world city over the next eight years
according to an international study compiled by
Jones Lang LaSalle in 2012
Over the past 20 years Queensland has set the pace
for population growth in Australia.

Massive infrastructure expenditure

Employment, population and economic growth
throughout Queensland’s capital continue to rise at
record levels.
Commensurate with this growth is a multi-billion
dollar program of infrastructure projects, either
under construction or in the planning stage which
have been put in place to cater to the long-term
growth in Brisbane’s population and economy.
Brisbane’s resident population is currently
estimated to sit at 2.1 million persons.
This is projected to increase to 3.4 million by 2036
(representing a total growth 1.3 million persons).

Migration trends

Between 2009 and 2013 Queensland accounted for
the highest increases in net interstate migration of
all Australian states and territories.
Leading economists BIS Shrapnel predict that over
the coming years, Queensland will continue to lead
the nation in terms of attracting new interstate
migrants.
Queensland’s commitment to the delivery of
infrastructure, estimated at $134 billion, is in place   Construction of Brisbane’s new $5 billion Bus and
to manage the ongoing long-term economic and             Train (BaT) project commenced in early 2014.
population growth.
                                                         The project will double the capacity of the rail and
This program represents the largest public               bus networks injecting significant new
infrastructure spending initiative in Australian         infrastructure capable of catering to the city’s long
history.                                                 term growth.

Employment growth

Queen’s Wharf in Brisbane’s CBD is currently
undergoing a super scale transformation which will
be the most significant privately and publicly
funded redevelopment in the CBD’s history.
The scale of international investment which is
currently being injected into Brisbane will not only
underpin employment and economic growth over
the long term but is representative of the City’s
position on the international stage.
The latest data available reveals that employment in
Brisbane’s CBD is forecast to grow by 42%.

Affordable market

The latest employment forecasts indicate that
metropolitan Brisbane’s workforce will grow from
an estimated base of one million in 2012 to reach
1.5 million by 2031.
Importantly, jobs growth will not only be focused
around the CBD but throughout a variety of inner
city nodes and within a diverse range of locations
which will foster growth not only across a diverse
range of industries of employment but fuel demand
for residential properties.
The latest data released by the Real Estate Institute
of Australia reveals Brisbane is currently the second
most affordable attached dwelling market out of
the eight capital cities in Australia.

Growth cycle commencing

Early signs for 2015 reflect upwards movement in             John McGrath, McGrath Real Estate: "Brisbane is
median values and demand pointing to a market                different – it’s only just beginning its recovery and
which has entered the early phase of upswing.                while we probably won’t see major price spikes like
                                                             we have in Sydney. I am expecting consistent
RP Data head of research Tim Lawless: "Brisbane property     growth in South-East Queensland in 2015,
prices to outperform the other capitals"                     particularly as more investors, owner-occupiers and
Terry Ryder, Founder of hot spotting: "As I suggested last   foreign buyers look beyond Sydney for more
week, South-East Queensland - Brisbane, Sunshine             affordable opportunities."
Coast and Gold Coast - is the nation’s No.1 market           Angie Zigomanis, BIS Shrapnel: "Queensland prices
entering 2015."                                              haven’t moved much for a long time, so it has
Property researcher at SQM, Louis Christopher: "Top picks    become increasingly affordable.
nationally for 2015, lie in the country's east, and          We think Southeast Queensland, as well as
include the outer ring of Sydney, the Gold Coast to          Brisbane, could finally be on its way to becoming a
Brisbane corridor, and Hobart."                              property market powerhouse."

Regional Markets Surge

Sydney will have a shortage of 190,000 homes by
2024 – this combined with a demand for smaller
housing and pressure on land supply is causing                        Newcastle & Lake Macquarie
people to consider regional areas.                        • Sales volumes improved but still well below levels
Regional markets in NSW, Victoria and Queensland              seen during market peak in the early 2000’s.
are showing signs of catching up to the strong              • Current sales activity is 5% above the five year
performance of their capital city neighbours,                                    average.
according to a new report.
                                                             • Home values across the region rose 7.2% for
CoreLogic RP Data’s Quarterly Regional Property                       houses and 5.8% for units.
Report shows that property prices in many areas are
rising solidly, thanks to the ripple effect from robust   • Houses are selling an average of 12 days faster and
activity in the capital city markets and the current         13 days faster for units compared to a year ago.
low interest rate environment.

NSW

                   Illawarra                                   Richmond – Tweed

Sales activity currently sitting 7% above the     Sales volumes rose 12% compared to the
five year average                                 previous year
Median house values climbed 8.2% over the         Detached house values rose moderately by
12 months to December 2014                        2.9% during the past 12 months, compared to
                                                  a 3.7% rise across the unit market.
Unit values rose 8%.
Vendor discounting levels and average time on
market both improved.

Queensland

                    Gold Coast                                          Sunshine Coast

House values rose 5.2% over the year ending           Values rising since mid-2013.
December 2014
                                                      Over the 12 months to December 2014, house
Unit values increased by a lower 4.7%.                values rose by 6.7%, while unit values increased by
                                                      6%.
The number of units sold rose 5% over the 12
months to November 2014, while house sales            Sunshine Coast increased by 9% over the year.
increased by 7%.
                                                      Vendor discounting rates improved over year, with
Gold Coast homes currently selling faster than they   houses discounted by -5.9% from the initial list
were one year ago. The average time on market for     price
houses dropped from 85 days in November 2013 to
73 days in November 2014 and units are selling in
92 days, compared to 105 days the previous year.

Queensland

                 WIDE BAY:                                        Cairns:

Home values increased by 0.5% for houses and   Number of homes sold was 5% higher over the
3.8% for units over the year to December       12 month period.
2014.
                                               House sales 1% higher over the period & unit
Sales volumes currently 3% higher than the     sales were up 12% year-on-year.
five-year average.
                                               Home values increased over the year, up 5.8%
On average, homes across the region are        for houses and 3.0% for units
taking upwards of three months to sell.

Victoria

                   Geelong:                                  Latrobe – Gippsland:

Home values rose 5.9% for houses and 0.8%       Homes sales fell -7% over the 12 months to
for units over the 12 month period to           November 2014.
December 2014.
                                                Homes are taking a long time to sell currently,
Advertised weekly rental rate for houses rose   118 days for houses and 122 days for units
by 1.5% over the 12 months to December
2014 - unit rents remained unchanged.           Days on market for houses dropped to 118
                                                days from 121 days compared to a year ago.

Property Investment Service

At AP-Realty we challenge conventional property investment strategies by creating a perfect link between factual,
historical, qualitative research and the selection of high growth income producing property.
This process sets us apart from traditional real estate agents and property marketing groups – as we actually “dare to
be measured by the results that we produce for our clients”
In simple terms we do the leg work for you… acting as Buyers Agents to source investment properties in high growth
areas – buying directly from developers, builders, project marketers and private vendors. No fee is payable by you for
this service.
The property Vendor pays us our normal property sales commission… we also have in-house cutting edge software
that can analyse a potential investment and determine your after-tax cash flow position quickly to assess whether a
deal is feasible before you’ve even seen the property.

AP-Realty Property Investment Advisory Team

Rick – Property research & sales                                                   Matt – SMSF & Accounting

                                   Cameron A. Early DBUS (Val), AAPI, FAIM, CPV,
                                           Reg’d Valuer (Qld & NSW)

   Mark – Property Consultant                                                        Craig – Property Consultant

                                            1800 99 00 11
                                                                                     Kevin – Finance & leasing
Chris – Agency Principal

AP-REALTY
RESIDENTIAL PROPERTY MAILER 4015

GRANNY FLATS, REGIONAL MARKETS SURGE &
BRISBANE MARKET UPDATE