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Property Overview

It has been a year of mixed fortunes in the Perth property market, with inner city residential developments a real high point and low interest rates driving housing demand.

Commercial

THE CBD commercial market has enjoyed a strong year with the top 10 sales to date totalling more than $240 million, boosted by active private investors and syndicates.

With a volatile stock market and interest rates at a 40-year low, syndicates and private investors can look towards the relatively stable property sector.

Perth syndication company Glenmont Properties was responsible for two of 2001’s big sales, the $42.5 million purchase of the AXA Centre at 111 St Georges Terrace and the $9.6 million purchase of the Department of Transport building at 441 Murray Street.

A Perth investment syndicate acquired the Reserve Bank building for $18.75 million, while the Acumen Capital syndication company bought the FAI Insurance building for $10.25 million.

Knight Frank agency director John Corbett said the current environment had boosted the popularity of syndicates.

“This year the demand to invest in syndicates has been strong,” he said. “In this environment you can get a property that will show you an eight or 9 per cent yield, which is a good return and it is relatively safe.”

The year also will be remembered for the unveiling of plans for four new office towers and the continuing race between the respective developers to sign up enough tenant pre-commitment.

In May, James Fielding Investments announced a $300 million twin-tower project for Kerry Packer’s Westralia Square site, followed in June by the unveiling of plans by Hawaiian Management Group for a $200 million office development on the Bishop’s See site.

Cape Bouvard is planning an office tower in Mounts Bay Road and Futuris Corporation subsidiary Caversham Property plans to purchase 100 St Georges Terrace with a view to developing an office tower.

“The new office towers have been the big factor this year but the reality of the situation is all of them are still looking for enough pre-commitment to go ahead,” Colliers Jardine research manager David Cresp said.



Industrial

THE industrial property market has been through a patchy year but industry sources say the past two months indicate a much stronger 2002.

The introduction of the GST and a lacklustre mining and resources industry continued to affect the industrial property market throughout 2001, with the leasing and land sales sector remaining relatively flat.

“The market has generally been less active than last year, land sales have dropped right off,” CB Richard Ellis industrial director Matthew Lyford said. “There has been a general reluc-tance in the market, people seem to be sitting on their hands.”

LandCorp is the State’s largest industrial landholder and its chief executive officer, Ross Holt, reported several estates performed well despite the current climate.

“East Rockingham was a solid performer throughout the year, highlighted by the sale of 13 lots to developer First State Zorzi,” Mr Holt said.

“This year also witnessed the release of Access Park Forrestfield, which is generating strong interest, particularly from freight and transport-related industries looking for well-located land in the eastern corridor of Perth.”

Mr Holt also pointed to Enterprise Park in Wangara as another solid performer.

Knight Frank commercial and industrial sales director Martin Reeson said some highlights of the year included the Mayne Nickless development at Canning Vale, the construction of the Costa’s distribution centre at Jandakot and the commencement of construction of Star Track’s $9 million freight facility at Westralia Airports Corporation.

Mr Reeson also noted owner-occupiers might soon be presented with new opportunities.

“There are a number of empty premises owned by investors who may soon look to sell them, so the opportunity may soon exist for owner-occupiers to come in and purchase some of these, with the advantage of low interest rates,” he said.

Burgess Rawson industrial sales and leasing associate director Andrew McKerracher said inquiry levels had picked up in the past month, indicating a good start to 2002.



Residential

AIDED by the first homebuyer’s scheme and six interest rate cuts, the residential property market this year rebounded from the devastating effects of the GST.

The year started on a dismal note for the residential real estate and building sectors as the Federal Government’s $7000 First Homebuyer’s Grant failed to stem the downward slide of the two industries.

The $7000 grant, introduced with the GST in July 2000, took well over six months to kick in, as did the increased $14,000 grant for first-time homebuilders, which the Federal Government introduced in March this year.

Real Estate Institute of WA public affairs director Lino Iacomella said the year had been a mixed package for the sector.

“At the beginning of the year the market was still in a downturn brought on by the GST, yet it has ended the year in a very strong position, brought on by the impact of the first homebuyer’s grants and the interest rate cuts,” he said.

Starting in February, the Reserve Bank of Australia has cut interest rates six times this year, with rates now at 4.25 per cent.

“I think this is the first time in a decade that we have seen interest rate cuts timed so perfectly,” Mr Iacomella said.

“Each time the cuts came when the market was just starting to lift, thus giving it an extra push and allowing for a steady increase in the market over the year.”

Mr Iacomella said the success of the first homebuyer’s grant had contributed to an increased rental vacancy rate of about 5 per cent and stagnant rent rates, although this was not a cause for concern.

The popularity of inner city residences continue to rise this year, with projects such as Panorama, Manhattan Towers and Apartments 569 attracting strong interest.

“Inner city living is no longer seen as a ‘fad’, it is now a continuing trend,” Colliers Jardine residential executive Nicholas Wells said. “There is a real demand and desire from people to live in central locations.”

He said the $200,000 to $350,000 price bracket was in high demand, with the majority of that stock released this year already absorbed.

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