Month in Review June 2021 The Month in Review identifies the latest movements and trends for property markets across Australia - Herron Todd White
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Month in Review June 2021 The Month in Review identifies the latest movements and trends for property markets across Australia.
Contents
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any state or
page number
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access
A message from our CEO 3
Feature –2021’s half time score 4
Commercial - Industrial 5
Tax Deduction for Investment Properties 6
New South Wales 9
Victoria 10
Queensland 11
South Australia 15
Western Australia 16
Australian Capital Territory 18
Residential 19
New South Wales 22
Victoria 36
Queensland 43
South Australia 54
Western Australia 57
Northern Territory 61
Australian Capital Territory 63
Tasmania 64
Rural 65
Disclaimer
This publication presents a generalised overview regarding the state of Australian property markets using property
market risk-ranking scales. It is not a guide to individual property assessments and should not be relied upon.
Herron Todd White accepts no responsibility for any reliance placed on the commentary and generalised
information. Contact Herron Todd White to obtain formal, specific property advice on any matters of interest
arising from this publication.
All rights reserved. This report can not be reproduced or distributed without written permission of Herron Todd White.
A message from our CEO
Month in Review
June 2021
As we reach the end of FY21, Australians continue to be tested in ways we’d never imagined.
As we close the month of June, five of our states Information Security certification, placing HTW as In the residential section, our expert teams deliver
and territories have been in lockdown for a total one of the most robust, secure, and quality-forward their half-time scorecard of Australia’s diverse real
of 24 days. This is a reminder that Australia is not valuation firms in the nation. This commitment to estate markets. Our professionals also reveal some
yet through this period. However, I’m buoyed by quality cannot be released without the collective thoughts on how markets might proceed over the
the fact we can come together and support one effort of our people around the country. Our remainder of 2021.
another during the challenges and, overall, remain processes and systems ensure that we continue to
Among the excellent stories on offer this month are:
optimistic about the future. provide our clients with market-leading solutions.
◗ Sydney – North Shore prestige market driven by
The concept of being stronger together is It is due to the diligence of our people and our
ex-pat demand;
something we have always adopted at Herron Todd genuine commitment to the business that positions
White, but even more so of late. this commitment to quality at the forefront of our ◗ Newcastle – growth in the median house price
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service offering. Quality solutions for our clients, outperformed all capital cities;
In recent weeks I was pleased to announce the
quality solutions and processes for our people, and
CEO
merging of our South East Regional Australia and ◗ Shepparton – ex-Commission properties gained
a quality support structure.
Melbourne entities to create Herron Todd White approximately 80 per cent in value in the past 12
VIC/TAS. This latest amalgamation follows multiple It is a priority to ensure that we have rigor within months.
Western Australian operations consolidating to our business to respond and remain at the forefront
Our abridged rural submissions have also
create the single Herron Todd White Western of quality client lead solutions.
adopted this mid-year theme and discussed how
Australia entity in 2020, along with New South
Our June edition Month In Review submissions key primary production property markets have
Wales and the ACT in 2019. This exciting merger is
offer an opportunity to assess the current state of performed so far in 2021.
set to improve client services, and create further
the market, and prepare for what’s to come.
operational efficiencies across the business. Please enjoy this latest addition of
The commercial section sees local area specialists Month In Review.
Our program will see more regional offices
discuss unrealised investment opportunities within
integrate with capital city operations and create Gary Brinkworth
the industrial sector.
large single state entities. This will significantly
improve the company’s operation and its appeal to Stories include:
employees, partners, and investors. I look forward
◗ Sydney – lack of industrial stock continues to
to revealing more in the coming months.
drive prices;
In other news, As part of Herron Todd White’s
◗ Brisbane – continued outperformance of industrial
commitment to quality, we are proud to announce
compared to other commercial sectors; and
that we have now received formal ISO9001
certification. This important international standard ◗ QLD regional – across the board strengthening in
for quality builds on our existing ISO27001 industrial markets continues.
3
2021’s half time score
Month in Review
June 2021
There’s nothing quite like a game of two halves.
The chance to pause during any major endeavour, But, of course, the Australian real estate market over the past twelve months. Our teams have dug
and spend a few moments assessing and planning, is not a simple beast. There are multiple locations deep and unearthed prime opportunities for savvy
is a gift. When things are in full flight, sometime the driven by varying influences. There are even operators.
midway spot is your only opportunity to recharge, markets within markets, so you can still buy
And onto rural. We have a concise update from
refocus and get primed for the next half. the wrong property in the right location and be
a few teams this month with a selection of
financially worse off than your neighbours.
Even though the concept of ‘planning for a certain submissions on how primary industry markets
future’ has taken a bit of a hit since early last year, How to make sense of it all? Well, we have the are tracking.
it’s still better to try and expect the unexpected, crew for you.
There it is folks – Herron Todd White is your coach
rather than letting it hit you full in the face.
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This month, our residential teams have taken the for the big game.
FEATURE
This can be applied to property as well. opportunity to jot down musings about how their
While the mid-year provides a chance to catch your
markets have tracked so far in 2021. Think of them
So far in 2021 we’ve seen mostly robust markets breath, it’s also no time to sit back and bask in past
as delivering the half time oranges while moving
across the nation. A sense of confidence flowed successes. Get active and contact your local Herron
magnetic ‘players’ across their mobile white boards.
through many centres fuelled by low interest Todd White office. They stand ready with no-holds-
A play-by-play of what’s unfolded so far.
rates, bullish returns to economic form and barred advice set to see you through the next half
substantial government assistance. Buyers who’d This month’s publication will not only convey of 2021… and beyond.
been keeping their powder dry were suddenly information on what’s happened up to now, but
given a hurry up, as activity and price growth also provide signposts on what’s to come as we
gained momentum. progress toward year’s end. It’s a ‘must read’ for
every residential property stakeholder.
In addition, reduced discretionary spending saw
many of us with a few extra dollars in the savings For commercial property fans, it’s time for some
account waiting to be utilised for a deposit or advice on investment opportunities in the industrial
renovation. sector. Our experts delve deep into what has been
a relatively buoyant part of the commercial market
A sense of confidence flowed through many centres
fuelled by low interest rates, bullish returns to economic
form and substantial government assistance.
4
Commercial June 2021
SPECIAL REPORT SPECIAL REPORT SPECIAL REPORT SPECIAL REPORT SPECIAL REPORT SPECIAL REPORT SPECIAL REPORT
Tax Deduction for Investment
Month in Review
June 2021
Properties: What can you claim?
Belinda Botzolis
The start of the financial year doesn’t have the same excitement as the start of a new
calendar year.
No hashtag #newfinancialyearresolutions trending on social media and no New
Financial Year Eve party hangovers on July 1st. But what we do have is a clean slate. A
time to start again, financially speaking. It’s also a chance to begin prepping information
which will help an accountant lodge your tax return.
As a Property Valuer and Registered Tax agent the best advice I can give property
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investors is this – it pays to do your homework on exactly what you can and cannot
claim against your taxable income. Because accounting for every dollar is important
and will prevent you from paying more tax than you should.
BELINDA BOTZOLIS
Senior Property Advisor at HTW
6
SPECIAL REPORT SPECIAL REPORT SPECIAL REPORT SPECIAL REPORT SPECIAL REPORT SPECIAL REPORT SPECIAL REPORT
The big question is, however, do you know what Month in Review
those deductions are and how to claim them? It’s your money, it’s your right to claim and if you make the June 2021
When it comes to investment properties there are choice to buy an investment property, then you should claim
many considerations. For example, whether you
own the property outright, rent out part or all of it,
what you’re entitled to.
or even have a commercial owner occupier asset,
Claiming the depreciable loss of a property via It’s important to do your homework on the tax
there are still many items you can claim. It’s not
a Tax Depreciation Schedule is, still commonly benefits, rules and guidelines when it comes to
just investors who are negatively gearing their
misunderstood. As a result, a substantial portion of property investment. It’s also important to talk
investment property that enjoy all the deductions.
depreciation goes largely unclaimed, so there could with your accountant or financial advisor, not just
Every investor has the same opportunity to claim
be literally thousands of dollars in deductions that at tax time but well before you buy an investment
tax benefits, they just need to understand what
you are failing to take advantage of. property. Utilising these professionals ensures
they are.
you’ll understand exactly what your financial
I regularly hear the misconception that, ‘only new
The most commonly claimed deductions are options, benefits and risks are.
properties qualify for depreciation’, or ‘the amount
the interest portion (not the principle portion)
you can claim in depreciation on an older property Herron Todd White are more than just property
of mortgage repayments, along with repair
is not worth the hassle of obtaining a report’. valuers. We are fully qualified and accredited
and maintenance, managing agents fees,
property advisors, in all areas and class of
fees associated with leasing the premises, The fact remains any property built after the
property. If you or someone you know needs Tax
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landlord insurance, building insurance, water 16th of September 1987, regardless of condition,
Depreciation advice on your investment property
and council rates, strata fees and all directly qualifies for depreciation. You have 40 years
please do not hesitate to contact us at tds@htw.
related expenses suitably associated with the to claim from this date and I would recommend
com.au, as we have fully qualified experts who are
investment. looking into getting a Tax Depreciation Report as
ready to help.
soon as possible. Also, for any property built before
Some costs are tax deductible in the year you
September 1987 that has some level of alterations
incur them, whereas others can be used to reduce
or renovation undertaken (such as a new bathroom,
your profit, or ‘capital gain’ – think Stamp Duty
new kitchen, repaint or hard landscaping works
and Conveyancing fees. It’s also important to
etc.) you are entitled to claim depreciation on that
understand that by owning a rental property, any
capital improvement. No matter how large or small
money earned or spent will need to be recorded
the amount you claim in depreciation, it’s still better
and kept, no matter how large or small the sum is.
than not claiming anything at all. It’s your money,
So basically, if you’ve spent money and claimed it,
it’s your right to claim and if you make the choice to
then you must keep an accurate record of it for at
buy an investment property, then you should claim
least five years.
what you’re entitled to.
The abovementioned deductions are fairly common
The best way to have your property correctly
knowledge. Most investors are well versed and
assessed for depreciation is to engage the services
educated in the idea of investment strategies and
of a fully qualified Tax Depreciation Specialist
what can and can’t be claim as deductions.
who is also a registered Tax Agent. That way what
But there is one area where investor tax benefits you claim will be in accordance with the ATO’s
continue to be underutilised. guidelines, and no deductions will be overlooked.
7
National Property Clock: Industrial
Month in Review
June 2021
Entries coloured purple indicate positional change from last month.
Gold Coast
PEAK OF
Brisbane MARKET
Ipswich
Southern Highlands
Approaching Starting to Central Coast
Peak of Market Decline
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Sunshine Coast
Adelaide Illawrra
Ballina/Byron Bay Lismore
C’berra/ Q’beyan Mackay RISING DECLINING Orange
Coffs Harbour Newcastle MARKET MARKET Toowoomba
Echuca Sydney
Hobart
Bundaberg Melbourne
Cairns Mildura
Geelong Perth Start of Approaching Alice Springs
Recovery Bottom of Market Darwin
Gladstone Rockhampton
South West WA
Hervey Bay Townsville
Horsham BOTTOM OF
MARKET
Liability limited by a scheme approved under Professional Standards Legislation.
This report is not intended to be comprehensive or render advice and neither
Herron Todd White nor any persons involved in the preparation of this report
accept any form of liability for its contents.
8
New South Wales
Month in Review
June 2021
Overview site is relatively unimproved industrial land that has businesses look to take advantage of low interest
Industrial property markets have, on the whole, an area of approximately 3,000 square metres. The rates and move from tenancy to owner-occupation.
thrived throughout the past 18 months. While property sold in December 2019 for $3 million. The Combined with a growing need for warehousing
this has been an excellent outcome for property property was resold a few weeks ago at auction for and improved business conditions, we are seeing a
owners, anyone looking to invest will be faced with $4.65 million, a 55 per cent increase in less than 18 growth in both capital values and rental rates.
challenges. months.
Earlier in the year we noted that demand from
This month, our commercial teams reveal what Another example is a site in Lansvale. The site investors was slow but they too are now more
they consider to be the prime industrial property is also relatively unimproved and has an area of active in the market although are often priced out
investment opportunities throughout their service approximately 4,800 square metres. The property by owner-occupiers who are willing to pay more to
areas. sold in May 2019 for $3.77 million. The property secure a property.
was resold in early May at auction for $5.5 million,
Opportunities still exist in overlooked areas or
Sydney a 46 per cent increase.
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where there is new development. The central
The industrial market in Sydney has been growing
west has seen some new supply in suburbs such
in leaps and bounds in 2021 and has shown
as Chullora and Enfield. Entry level strata units in
the most promise following the lockdowns and
areas such as Penrith and Blacktown could also
uncertainty brought about by COVID-19. This
present an opportunity to secure a property that
growth has made it most certainly the asset to
also benefits from proximity to major roads.
watch this year. We are noting a shortage in supply
that is seeing values being driven up and the Overall, we are optimistic about how the market
competition between buyers has become quite will perform over the remainder of the year. The
fierce. strengthening prices do not seem to be showing
signs of slowing.
Whilst all areas of Sydney are doing very well at
present, the industrial precincts closest to major The Lansvale property Source: RP Data)
Angeline Mann
infrastructure have performed best. The industrial Commercial Director
precincts along the M4, M5 and M7 motorways
Fuelling current demand is the significant lack of
have soared in price and demand.
supply of industrial properties across the Sydney
An example of this is a site in Chipping Norton. The area along with increased demand as more
Earlier in the year we noted that demand from investors was slow but they too are now more
active in the market although are often priced out by owner-occupiers who are willing to pay
more to secure a property.
9
Victoria
Month in Review
June 2021
Melbourne The Melbourne industrial market has, in effect, become hot
The global Coronavirus pandemic event has been
an unprecedented time with multiple lockdowns
property over the past 18 months.
in Melbourne dampening confidence. Whilst those
lease expiry profile, strong tenancy covenant Should this trend continue, vacant industrial
effects have been significant in some commercial
and low maintenance improvements will remain land would present as the best value growth
real estate sectors, the industrial market has
in strong demand. This is particularly so for opportunity for investors or owner-occupiers.
been relatively resilient. The Melbourne industrial
prime properties. For city fringe and inner
market has, in effect, become hot property over Of particular note this month is an industrial
suburban industrial properties where there is a
the past 18 months. development site in East Bendigo that has just hit
high underlying land value and redevelopment
the market. 110-128 Strickland Road, East Bendigo
With more people working from home and online potential, demand and pricing is expected to hold
is 6.6 hectares of Industrial 1 Zoned land and is
shopping for supermarket items, fashion and up and show continued appreciation.
currently listed for $4.75 million. It is one of very
household goods trebling since March 2020, the
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On the back of this, demand is expected to remain few remaining large industrial infill sites suitable for
demand for industrial warehousing and serviced
at unprecedented levels and the shortage of new further development. In the current market, a site
developable land has continued to rise and outstrip
space to meet that demand would indicate further such as this will provide a unique opportunity for
performance of their counterparts. Multiple
capital value uplift. further development.
Australian Real Estate Investment Trusts have been
re-positioning their portfolios towards the industrial Nick Michael Our office will continue to monitor this listing and
Director
sector, with this combination expected to put any further developments as we eagerly await the
further pressure on capitalisation rates within the outcome and market insight it provides.
prime industrial market.
Bendigo
The industrial sector in Bendigo has remained Trent Goodmans
Property Valuer
Developers have also struggled to keep pace with stable despite negative impacts in other sectors
demand from logistics and e-commerce occupiers of the commercial property market from the
and given the scarcity of available serviced COVID-19 pandemic. Agents are reporting that
industrial land within proximity of major transport there has been strong interest in the industrial
linkages, we have seen strong upward pressure property sector from both owner-occupiers
on industrial land values throughout the past 12 and investors. With a limited supply of listings,
months. This is expected to continue throughout the result appears to be price growth and yield
2021 and land values have broken through the compression. There is a notable shortage of
$500 per square metre of land area barrier (across vacant industrial land in Bendigo at present and
the western industrial market in particular). no new supply coming online this year that we are
aware of. This shortage has led to some existing
For industrial investment properties, yields are
sites being advertised and sold well above what
likely to remain tight in the current low interest
was previously considered an appropriate range.
rate environment and properties with a long 110-128 Strickland Road, East Bendigo Source: realcommercial.com.au
10Queensland
Month in Review
June 2021
Brisbane attempt to capitalise on the current depth of both shorter WALEs or are carrying some vacancy. In
The year to date has seen Brisbane’s industrial the occupier and investor market. particular, the south-western corridor has seen
investment market go from strength-to- a flurry of activity over the past 24 months as
In the institutional space, investors and super
strength, with increasing investor demand investors seek to uncover opportunities that have
funds have turned to Brisbane in their hunt for
tightening yields to record levels. This frenzied to date been overlooked.
yield. Brisbane assets offer attractive returns
demand is largely driven by the low interest
(circa 4.25% to 5.25%) relative to their New South The graph below illustrates the historic sales
rate environment, however the investment
Wales and Victorian counterparts (circa 4.0% to volumes and values over the past 10 years:
characteristics of prime industrial real estate,
4.5%) whilst offering diversification
in particular the long WALE and secure income
benefits for the funds’ portfolios.
streams (relative to the COVID impacted cash-
flows of other asset types), have been a major Despite the current environment,
contributing factor to the current yield trend. savvy private investors have been
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Capital growth has been the primary component able to uncover some accretive
of total return for this asset class, as market investment opportunities. A
income growth is constrained by increasing common theme amongst these
incentives offered by landlords competing for opportunities is that they are off-
covenant and tenure. market deals. In securing an asset
off market, these investors are
Whilst demand for quality industrial assets remains
avoiding the competitive bidding
extremely strong, particularly for well-located
tension created by a full and proper
properties with long-term leases and strong lease
marketing campaign, however it is
covenants, secondary properties continue to
becoming difficult as most vendors
see long lease up periods and are generally less
are acutely aware of the benefits of
attractive in the current market. We have seen
an on-market campaign. We have Source: Pricefinder
prime assets transacting in a general yield range of
also seen investors moving up the
between 5.00% and 6.50%, with secondary assets
risk curve to generate return. They have achieved As illustrated above, the total number and value
generally achieving softer yields in the market. This
this by exploiting external expertise to reposition of sales fell in 2018, which made for a slower start
surge in demand has seen increased development
secondary assets to unlock capital. These assets in 2019. This was primarily due to a shortfall in
activity as experienced and also novice developers
are typically located in non-core locations and have supply of quality industrial assets. After the federal
election in May 2019, there was an increase in sales
volumes. Stronger sales activity was expected to
The industrial market has proven quite resilient, rebounding continue throughout the first half of 2020 with the
from the COVID-19 trough of 2020 that shocked investors in final number being the highest number of sales
all other markets. since 2015.
11Investment yields for high quality assets continue years and highlights the response to strong buyer Month in Review
to trend further into the 5% range. An example of demand at present. June 2021
a major transaction is a property in Eagle Farm, a
The current boom in construction of new
traditionally well sought-after location within the
complexes has even reached Tugun, where the first
TradeCoast. The property had a 5.6 year lease term
industrial unit development is slated for 71-77 Boyd
and transacted at circa $8 million with an analysed
Street and is currently going through the approval
yield of 5.25%.
process.
The industrial market has proven quite resilient,
There is a lack of available sites for development
rebounding from the COVID-19 trough of 2020 that
in the region, unless a premium price is paid
shocked investors in all other markets. Industrial
to secure properties off-market, which is one
assets have found favour as investors search for 57 Newheath Drive, Arundel Source: realcommercial.com.au
strategy being implemented by some developers.
well leased, quality assets due to the lower risk
For the passive investor, potentially the best
profile these properties offer, coupled with the In terms of recent transactions, of note is the sale
opportunity for value growth in the market is in
very low cash rate. To date there is no evidence of of 36 Central Drive, Burleigh Heads, a multi-unit
the small to medium size freestanding industrial
diminution in industrial values for modern, either strata titled industrial complex which sold in
property segment. This is due to the price point
owner-occupied or well leased properties, but February 2021 at $4.2 million, reflecting a circa
of such properties generally reflecting good
rather a firming in values is quite evident across the 5% net yield with average lease expiry of circa
value in comparison to industrial strata units.
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various industrial sectors. three years. The sale is a strong result, however
Although prices have also exceeded peak levels,
Isaac McConnell the yield is also reflective of its multi-unit nature
they have generally not been elevated to quite
Valuer with strata divestment potential, which generally
the same degree. This is predominantly due to the
translates to a lower cashflow risk if any tenancy
relative affordability of units which are attractive
Gold Coast to small business owner-occupiers or small-scale
was to become vacant.
The industrial market on the Gold Coast continues
investors.
to perform above expectations and has weathered
difficult economic conditions over the course of At the time of writing this article, there were
2020 through to 2021 quite convincingly. Buyer only five tenanted industrial properties on the
appetite for modern industrial units in the smaller Gold Coast listed on www.realcommercial.com.
range has been voracious on the southern Gold au between the search range of $1.5 million and
Coast in particular where there is limited supply. $5 million. The slim pickings are a stark reminder
Recent developments in Burleigh Heads have of the current tight state of the market. As an
fully sold out in a short time frame with limited alternative, it may be necessary to seek willing
further projects in the pipeline. However, there vendors off-market which is a hit and miss strategy,
is one notable large development planned for but could have a big upside.
314-328 Burleigh Connection Road which has 36 Central Drive, Burleigh Heads Source: realcommercial.com.au
There is one notable property, utilised for food
recently been approved for three medium size
processing, at 57 Newheath Drive, Arundel asking
and two large industrial/showroom units at the Ryan Kohler
$3.25 million, with a new five year lease. This
front of the site, 10 self-storage units and 31 small Director
price would reflect a 6% net return (assuming all
industrial warehouse units. A project of this size
outgoings are recoverable).
has not been undertaken in the area for many
12Bundaberg appears to have experienced an Month in Review
Townsville Rockhampton absorption of vacant industrial stock, however June 2021
Townsville’s industrial market continues to show In the Rockhampton, Gladstone and Central
rental levels appear to be holding firm.
positive signs on the back of optimistic growth in Highlands industrial space, purchasers and
the mining sector and a continued focus on jobs tenants have generally trended towards better Whilst owner-occupiers are still the most active for
growth. quality buildings. Modern format industrial vacant industrial properties, there appears to be a
buildings that provide good clearance and good reasonable level of demand for leased investment
The majority of sales over the past 12 months
utility of both the building and site are preferred stock with recent evidence suggesting market
have occurred in the sub-$1 million price bracket
rather than older, low clearance industrial yields of circa 8% depending on remaining lease
underpinned by owner-occupiers.
buildings with limited site utility. term and quality of the overall property.
There are currently some good buying Ben Harnell
The best opportunity for growth remains in
opportunities in this sector given that we are Property Valuer
buying vacant industrial properties with broad
coming off a low base. Entry level freestanding
tenant appeal and converting them to a tenanted
sheds are priced around $500,000 to $600,000.
investment. Investor appetite remains for tenanted
Mackay
There are also good opportunities in the sub $3 Paget remains a premier industrial location in
properties over vacant properties, but, as always,
million price bracket for upgraders and investors. regional Queensland. The best buying opportunities
the tenant profile and lease covenant remain
With the increased activity in the mining sector, for value growth are modern, heavy engineering
central to investors’ decisions on yield and price
support service industry is likely to experience workshops with large site areas and lower site
points. Regarding market segmentation, owner-
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growth resulting in additional space requirements. coverages. There are however very limited
occupiers are generally active up to $1.5 million and
Areas such as Shaw, Bohle and Mount St John listings at this time. In recent years, these types
investors are active up to $5 million, however they
are established industrial precincts that are well of properties have been marketed for sale around
are most active up to $2 million.
located in terms of transport connectivity and offer the same time that new lease or option terms are
modern sheds. Greg Williams agreed to provide longer unexpired lease terms,
Director
greater certainty and lower risk to investors. Yields
There are currently many factors at play in the
demonstrated over the past two years have been
market including historically low interest rates and Wide Bay around 8.0%, however because of tightening yield
significant government stimulus targeting certain The industrial property market is starting to
levels in the capital cities, it is likely that yields will
sectors in the economy (including the property demonstrate a broad improvement in market
firm within this asset as investors get priced out of
market). Locally we have experienced a relatively conditions, with many factors influencing this
the metropolitan markets.
sustained period of business positivity, increased trend.
sentiment surrounding the mining sector, jobs We notice that local owner-occupiers are beginning
Hervey Bay is experiencing a significant reduction
growth and falling unemployment. Whilst not to take advantage of firming yields and rising
in vacancies to a very low level. Local agents are
creating a break-neck speed of market acceleration, investment property values by offering their
reporting low stock availability which has the
these factors along with longer term prospects properties for sale on a lease back basis. In these
potential to increase rental levels, however this is
of on-shoring manufacturing may influence the situations, it is important for investors to consider
yet to be demonstrated.
market over time.
Jason Searston
Director The industrial property market is starting to demonstrate a broad
improvement in market conditions, with many factors influencing
this trend.
13whether the lease back rent is at an affordable ◗ Lot 11, 57 Heinemann Road, Wellcamp: $7.2 Month in Review
market level and has not been pumped up to million in November 2020. A modern industrial June 2021
artificially create a higher sale price. facility on 1.62 hectares with a lettable area
Greg Williams of 3,956 square metres. Sold with a lease to
Director NuFarm/Croplands with an unexpired lease term
of 7.80 years. Passing net yield of 6.97%.
Toowoomba ◗ 275-283 McDougall Street, Glenvale: $23
Demand from investors continues to be strong with
million in September 2020. A modern industrial
premiums achievable for assets with good tenants
facility on 3.5 hectares with a large office
on long lease terms. In previous years, net yields in
component. Lettable area of 6,471 square
Toowoomba have ranged between 8.0% and 9.0%
metres. Sold on a leaseback basis for an initial
for fully leased properties. Recent sales however
term of nine years. Passing net yield of 6.74%.
indicate a firming of these yields for properties with
quality tenants and a strong lease expiry. Whilst the investor market is strong, anecdotal
evidence suggests leasing enquiry has been
Major sales of note in Toowoomba over the past
subdued which tends to have a negative impact on
year include:
vacant or owner-occupied properties with extended
◗ 339-351 Anzac Avenue, Harristown: $8.5 lease-up periods applied for valuation purposes
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million in January 2021. A modern industrial when assessed on a vacant possession basis.
facility on 2.17 hectares with a lettable area of
The reduced enquiry level is reflected in higher
3,286 square metres. New lease to Savanna with
vacancy levels observed in the Toowoomba
an unexpired lease term of 4.54 years. Passing
industrial precincts and a trend towards increased
net yield of 6.88%.
incentives offered to attract tenants.
◗ 13-17 Kimberley Court, Torrington: $3.4 million Ian Douglas
in February 2021. A semi-modern industrial Director
facility on 1.49 hectares and a lettable area of
1,230 square metres. Sold with a lease to Lindsay
International with an unexpired lease term of
4.07 years. Passing net yield of 7.12%.
13-17 Kimberley Court, Torrington Source: commercialrealestate.com.au
14South Australia
Month in Review
June 2021
Adelaide
The industrial market continued solid performance
throughout the start of 2021. The demand for
industrial space has remained steady, with long-
WALE, high quality assets drawing a lot of investor
interest. Land sales have also been on the rise in
the state with spec building also becoming a factor
during the first half of this year.
Although demand has been high, there are still a
number of opportunities in the industrial market
at either end of the scale. At the higher end of the
investment market, 28 Park Avenue, Woodville
COMMERCIAL
North is offered for sale through Raine and Horne
Commercial with a net rental income of $479,874.
The industrial warehouse at 28 Park Avenue, Woodville North Source: realcommercial.com.au
The property is leased to Viridian Glass – one year
into a five- bvyear term with one right of renewal
Our last industrial update touched on the is leased to the Light Regional Council for $20,800
of five years. The property features over 4900
popularity of Tonsley as an increasingly sought- per annum (including GST) until August 2024
square metres of improvements and 800 square
after industrial hub in South Australia. There are and comprises 566 square metres of warehouse
metres of canopy on a substantial site of 13,450
currently a number of land opportunities in Tonsley: space with small internal offices. In the south, 40
square metres.
Lot 220 Valiant Road; Lot 93 MAB Circuit; and Lot Donegal Road, Lonsdale is currently listed for sale
Another higher end investment opportunity is 333 MAB circuit are all currently listed for sale. The at $445,000 and features 420 square metres of
available at 126 Days Road, Ferryden Park. The allotments range between 4299 and 5634 square warehouse and office space, leased on a three plus
property is currently leased to Enerven Energy metres and offer valuable space in the growing three year term with an approximate 6.5% yield.
Infrastructure (a subsidiary of SA Power Networks) Tonsley innovation district.
Overall, there are still a number of opportunities
with a lease expiry of 31 January 2026 – the tenant
There are also some smaller-scale industrial in the industrial market for investors at either
has occupied the property since 2016. 126 Days
opportunities presenting themselves, particularly end of the scale. Many agents have reported that
Road has a current annual net rental of $281,139
in outer northern and outer southern areas. 18 industrial property is still highly sought after and
with a strong rent review structure of three per
Stephenson Street, Freeling presents a lower-end, the market remains competitive. With land, small
cent fixed increases per annum.
small-scale investment opportunity. The property scale warehousing and prime, long-WALE assets
all currently available, there are opportunities for
entry level investors and higher-end buyers.
Many agents have reported that industrial property is still highly Chris Winter
sought after and the market remains competitive. Commercial Director
15Western Australia
Month in Review
June 2021
Perth
As we approach the end of the 2021 financial year,
it has become clear that the industrial property
market in Western Australia has fared the best
of the three big asset classes in the wake of the
COVID-19 pandemic.
To date, leasing demand for modern, high-quality
fabrication, transport and logistics facilities over
the past six months has been firm with such
properties currently in limited supply.
Leasing demand for older style stock has remained
COMMERCIAL
subdued given the current oversupply, especially in
secondary industrial estates. Tenants will continue
to take advantage and reassess their space
requirements with a view to negotiating a lease
on favourable terms ahead of the next forecast
upswing in activity.
The Kwinana industrial area, south of Perth Source: Colliers
Our enquiries suggest that present day building
compliance has rendered older facilities often that both the Tonkin Highway Industrial Estate in Prospective buyers appear to be focused on the
unfeasible to bring up to code or meet the current Bayswater and the Roe Highway Logistics Park in financial strength of the tenant, the length of
operational requirements of prospective occupants. Kenwick are virtually sold out. agreed lease terms, prospects for rental growth
Accordingly, such tenants are inclined to enter into and depreciation benefits.
From a purchase perspective, demand for industrial
design and construct agreements, often at inflated
property has slowly improved in the past six Traditionally low risk forms of investment (e.g.
rental rates negotiated on a formulaic basis as a
months. Demand has certainly strengthened for long-term deposits, bonds) are offering insufficient
percentage of total construction cost (i.e. economic
modern, securely leased investment property returns causing investors to re-direct capital
rents) as opposed to market fundamentals.
on the back of the prevailing low interest rate reserves to industrial property in a bid to secure
Arguably a ‘two tier’ market (design and construct environment leading to further yield compression. higher yields.
versus existing stock) has emerged.
The rise of e-commerce after the disruption to Interestingly, it appears as though limited regard
This represents one of the more immediate normal business operations caused by the COVID-19 is being paid by purchasers to the often-significant
opportunities for existing land-owners, especially pandemic has put the spotlight firmly on large scale variance between the passing rental and the
given the lack of supply of new land in the prime, warehousing, transport and logistics facilities. market rental for the accommodation achievable
core industrial estates. Our enquiries indicate under a standard leasing campaign where offered
16with vacant possession. The potential downside Month in Review
risk of significant rent reversions in the event of June 2021
tenant default is seemingly being disregarded in the
current low interest rate environment where yields
are continually being further compressed due to
the historically low cost of debt funding.
An opportunity may exist in a counter-cyclical
acquisition of older premises in a non-core precinct
at well below historical price levels, however the
key, as far as investors are concerned, is securing a
tenant. The achievable rental income, although well
below that for a prime industrial asset, may provide
a sufficient level of return against the capital
outlay, especially compared to yields being derived
from other asset classes of late. In the event that
the Perth industrial market continues to improve
in the near term, scope exists for improved returns
COMMERCIAL
at market rent reviews (either mid-term review or
lease renewal) as market rental levels increase from
the relatively low levels at which a number of older
style industrial properties have been leased in the
period from late 2019 through to mid-2020.
Alternatively, such premises may be viewed as a
short-term redevelopment option, particularly in
light of the lack of new industrial land available
within say a 15-kilometre radius of the Perth CBD.
Positively, the Western Australian economy
continues to go from strength to strength on the
back of successful containment of COVID-19 and a
strong mining and resources sector, which bodes
well for Perth’s industrial property market in 2021.
Greg Lamborn
Director
17Australian Capital Territory
Month in Review
June 2021
Canberra We see good opportunities in the industrial unit
The ACT industrial market has shown its resilience development market going forward with the limited
over the past year and this resilience has continued supply of modern single and dual bay industrial
while government economic incentives have begun units on the market and the strong uptake over the
rolling back. The low cost of finance has been a past 12 to 24 months.
strong driver for owner-occupiers while investors James Feeney
are attracted to the historically stable ACT market. Valuer
The sub $1.5 million industrial market continues to
be dominated by owner-occupiers. Prices for small
to medium size industrial units in the region have
been increasing as demand outstrips supply of
these units.
COMMERCIAL
There have been limited investment sales in the
region, however yields are tightening on good
quality properties with strong sublease covenants
and expiries.
Units 2&3, 71 Tennant Street, Fyshwick Source: realcommerical.com.au
The low cost of finance has been a strong driver for owner-
occupiers while investors are attracted to the historically stable
ACT market.
18Residential June 2021
National Property Clock: Houses
Month in Review
June 2021
Entries coloured orange indicate positional change from last month.
Albury Dubbo
Bathurst Launceston
Burnie/Devenport Tamworth
Canberra
Geelong PEAK OF
Wodonga MARKET
Approaching Starting to
Adelaide Gold Coast Perth Peak of Market Decline
RESIDENTIAL
Adelaide Hills Hervey Bay Port Hedland
Albany Hobart Rockhampton
Ballina/Byron Bay Illawarra Shepparton
Barossa Valley Ipswich South West WA
Brisbane Kalgoorlie S’thn Highlands DECLINING
Cairns Karratha Sunshine Coast
RISING
Central Coast Lismore Sydney MARKET MARKET
Coffs Harbour Mackay Toowoomba
Darwin Melbourne Townsville
Emerald Mildura Whitsunday
Geraldton Mount Gambier
Gladstone Newcastle Start of Approaching
Recovery Bottom of Market
Alice Springs
Broome
Bundaberg
BOTTOM OF
MARKET
Liability limited by a scheme approved under Professional Standards Legislation.
This report is not intended to be comprehensive or render advice and neither
Herron Todd White nor any persons involved in the preparation of this report
accept any form of liability for its contents.
20National Property Clock: Units
Month in Review
June 2021
Entries coloured blue indicate positional change from last month.
Bathurst
Burnie/Devenport
Launceston
Tamworth
PEAK OF
MARKET
Geelong
Wodonga
Approaching Starting to
Peak of Market Decline
RESIDENTIAL
Adelaide Gold Coast Mt Gambier
Adelaide Hills Hervey Bay Newcastle
Albury Hobart Port Hedland
Ballina/Byron Bay Illawarra Rockhampton
Barossa Valley Karratha Shepparton
RISING DECLINING Canberra
Broome Lismore S’thn Highlands MARKET MARKET
Coffs Harbour Mackay Sunshine Coast
Dubbo Mildura
Gladstone Mount Gambier
Start of Approaching
Albany Emerald South West WA Recovery Bottom of Market Central Coast
Alice Springs Geraldton Sydney
Brisbane Ipswich Toowoomba BOTTOM OF
Bundaberg Kalgoorlie Townsville
Cairns Melbourne Whitsunday
MARKET
Darwin Perth
Liability limited by a scheme approved under Professional Standards Legislation.
This report is not intended to be comprehensive or render advice and neither
Herron Todd White nor any persons involved in the preparation of this report
accept any form of liability for its contents.
21New South Wales
Month in Review
June 2021
Overview 11.4 per cent increase, compared to a five per cent Inner Sydney/Eastern Suburbs
No matter the endeavour, pausing to take stock of increase in the bottom quartile, while the middle Houses and land within the inner Sydney and
what’s come to pass provides an opportunity to part of the market experienced a seven per cent eastern suburbs regions seem to be two of the
plan for the future. increase, according to CoreLogic data. most resilient markets in the country, with strong
rebounds from the economic uncertainty caused by
And so it is with Australian residential real estate
COVID-19 able to be traced back to mid-2020.
which has seem some extraordinary performances
so far in 2021. Since 2021 began, there has been significant heat
in the market with Domain consistently reporting
With the half year upon us, our teams from
80 per cent plus auction clearance rates each week
around the nation provide their detailed
and prices for some market segments in some
assessment of how markets are tracking in their
areas surpassing previous peaks. This is largely
service areas. Change in Sydney property values 30 April 2021 Source: CoreLogic driven by low interest rates and snowballing fear of
RESIDENTIAL
missing out of purchasers.
Sydney The main reasons for the strong growth in the
The Sydney residential property market was Particularly strong results have been seen in the
market have been the continuing historically low
already in full swing as we moved into 2021, but perennially over-achieving inner city suburb of
interest rates along with increasing confidence in
few could have predicted just how strong the Paddington, such as the recently sold 30 Leinster
the economy post-COVID seeing demand continue
growth would be, particularly over the February Street, a three-bedroom, one-bathroom terrace
to strengthen. At the same time, supply has not
to April period. The median value for all dwellings on an 82 square metre block with no parking.
kept pace, with new listings and total listings for
in Sydney, according to CoreLogic, increased 9.3 This property sold for $2.5 million in May 2021,
Sydney to the end of March down on the equivalent
per cent by the end of April, with 8.8 per cent of previously selling (in similar condition) during the
period in 2020.
that in the February to April period. Median values COVID-induced market slumber for $1.9 million in
now sit above the previous highs of July 2017. There is an expectation that vendors are more June 2020.
likely to list given the strong market conditions
Houses have continued to show the strongest In the beachside suburb of Malabar, a dated single
being experienced and that this should start to
growth with an increase of 11.2 per cent during level, three-bedroom brick dwelling on 460 square
even out the current demand and supply imbalance.
April, compared to 4.6 per cent for units. The top metres of land at 37 Napier Street sold in March for
This is likely to lead to a moderating of growth as
quartile of the market has seen the strongest a strong $3.63 million. This compares to a similarly
the rest of 2021 plays out.
growth over the February to April period, with an positioned property at 4 Fox Street, which sold in
There is an expectation that vendors are more likely to list given the strong market conditions
being experienced and that this should start to even out the current demand and supply imbalance.
This is likely to lead to a moderating of growth as the rest of 2021 plays out.
22December for $2.565 million, comprising a dated Units have seen a more mixed recovery, with Bondi Beach, which sold for $20.1 million in March Month in Review
single level three-bedroom clad dwelling on 462 better quality buildings and those suited to owner- through Ben Collier of The Agency. The renovated June 2021
square metres of land. occupiers more favoured by the market, such as four-bedroom, four-bathroom penthouse unit, with
512/47 Cooper Street, Surry Hills, a neat two- parking for three cars, along with a large terrace,
It is quite common during periods of high price
bedroom, two-bathroom split level unit in a smaller captures amazing views of Bondi Beach, Ben
growth for buyers who have been priced out of
scale semi-modern complex. This unit sold in March Buckler and the ocean beyond.
beachside suburbs further north, such as Coogee
2021 for $1.41 million, previously selling during
and Bondi, to look at more affordable options and
COVID restrictions in June 2020 for $1.32 million.
this appears to be what is happening in Malabar
presently. The suburb also had its sale record Investor stock within the inner city typically
broken in March with a golf course fronting home comprises studio and one-bedroom units in average
at 147 Prince Edward Street setting the new quality complexes. Properties such as these have
benchmark at $4.75 million. seen a far more subdued recovery in the past six
months and have been held back largely due to a
Higher price points have also seen strong results
significant reduction in rental demand driving down
such as 71 York Road, Queens Park, a five-
rental returns.
bedroom renovated period home with a two-
bedroom flat above the garage on a 607 square Nowhere is this more evident than in the CBD
metre block, which recently set a record for the where the tenant profile is commonly overseas 16/16 Notts Avenue, Bondi Beach Source: CoreLogic
RESIDENTIAL
suburb, selling in May 2021 for $8 million. The contractors or students who are currently few and
property previously transacted in March 2018 for far between due to international border closures.
The most surprising aspect of the 2021 inner city
$5.1 million. This has led to increasing numbers of investors
and eastern suburbs property markets has been
looking to sell and has caused an increase in the
the overall comfort purchasers seem to have in
supply of available one-bedroom units. One such
massively exceeding guide prices and offering
unit is 217/45 Shelley Street, Sydney which sold
above recent comparable sales. Entering 2021,
in March 2021 for $875,000 and appeared to be
there was significant uncertainty surrounding
asking a weekly rental of $490 at the time. This unit
unemployment and upcoming JobKeeper and
previously transacted during the last market peak
JobSeeker changes, however these concerns
in February 2017 for $820,000 and appeared to be
seem to have fallen away in the wake of the fear
asking $680 per week at that time.
of missing out which is currently driving the
The prestige unit market is outperforming the rest market.
of the unit market as downsizers, cashed up from
Inner West
the sale of their family homes, continue to drive
71 York Road, Queens Park Source: CoreLogic The property market in the inner west region of
this market. The most eye-catching prestige unit
Sydney has seen strong increases in value over
sale so far this year has been 16/16 Notts Avenue,
The most surprising aspect of the 2021 inner city and eastern suburbs property markets has been
the overall comfort purchasers seem to have in massively exceeding guide prices and offering above
recent comparable sales.
23the course of the first half of 2021. Areas such as lack of international migration (which is a historic clearly had an impact on buyer sentiment and the Month in Review
Balmain, Annandale, Glebe and Newtown have driver of price growth). It would appear the pandemic has made the Northern Beaches more June 2021
experienced a strong increase in demand from general market will track in a similar direction for accessible to the wider market.
both homeowners and investors. Areas further the remainder of 2021 given the recent federal
A notable sale in 2021 to date is 13 Keith Payne
towards the western and southern geographical budget announcements and the unlikelihood of
VC Place, Narraweena. The property is a circa
boundaries of the inner west including Five Dock, the RBA deciding to increase interest rates in the
2005 single level, four-bedroom, two-bathroom
Concord, Strathfield, Marrickville and Dulwich foreseeable future. However, the market could
dwelling with a two-car garage on approximately
Hill have also experienced surging increases in see a general slowdown if any intervention occurs
833 square metres of land. The property sold in
demand accompanied by relatively few properties by APRA in relation to limiting investor or interest
August 2019 for $1.98 million and re-sold in April
on the market for sale. only loans, a surge of disgruntled buyers leaving
in very similar condition to the previous sale for
the market with a sense of hopelessness of
As a result, capital growth throughout all areas $2.8 million.
entering the market at such rampant conditions,
of the inner west has seen unprecedented
or any government policy aimed at curbing the
increases, in particular relating to dwelling prices.
demand side of the market (such as changes to
Apartments and strata titled townhouses have
land tax, stamp duty or capital gains tax).
also experienced an increase in sale prices,
however at a lower growth rate than dwellings. Northern Beaches
Apartments and townhouses in lower density The Northern Beaches housing market has
RESIDENTIAL
developments (walk-up buildings, duplexes, etc) performed admirably across the board with
have experienced stronger capital growth rates varying levels of growth across all markets and
in comparison to strata apartments in higher property types. The owner-occupier and entry
density developments. level markets have certainly performed the
strongest.
It appears that the strong market conditions are 13 Keith Payne VC Place, Narraweena Source: realestate.com.au
prevalent in all properties including those in the Domain recorded the annual growth of Newport
sub $1 million price range as well as properties in and Avalon at circa 23 per cent and 20 per cent
North Shore
the $1 million to $5 million price range. It would respectively as at March 2021. The majority of
Over the past six months, the Lower and Upper
appear the decision by the majority of the major that growth was experienced in 2021 and with the
North Shore detached housing markets, like most
lenders to fix home lending rates for a period of market continuing to strengthen over subsequent
of Sydney, have being performing extremely well.
three years (on average) has been a catalyst in months, those figures would now be closer to
Strong market conditions have been experienced
the unprecedented growth and surge in demand. circa 30 per cent growth - an incredible rate in
at the entry level price point, but even more so in
Additionally, general optimism in relation to such a short space of time. These figures are
the prestige sector. Almost all detached housing
the COVID-19 pandemic as well as generally low not outliers and most suburbs are experiencing
products across the North Shore have seen
supply levels appear to be the major drivers of the similar levels of housing growth this year.
substantial growth including large family homes,
capital growth experienced in the past six months.
The prestige sector has also performed very well newly constructed products and renovation or
The level of price growth and the ferocity of the with increased demand from ex-pats and supply developer projects.
housing market has been the most surprising constraints driving values. The biggest surprise
As mentioned, the prestige sector has really
thing to witness in the first half of the year, given would be the level of demand the market has
flourished after what were very volatile times in
the current economic uncertainties created by experienced, particularly from the inner-west and
April last year when the volatility of the pandemic
the Coronavirus pandemic including Australia’s eastern suburbs markets. The commuting factor
took its toll. In late October, evidence of market
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