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INVESTING INTELLIGENTLY TOWARDS 2019/2020

CSIPROP INVESTMENT GUIDE

MELBOURNE


Melbourne Overall, Melbourne’s residential markets have held up well in spite of lower investor demand resulting from tightened lending regulations. The city is going through much change due to its expanding population — Victoria’s population is growing at a rate of 2.4% — requiring that policies be put into place to ensure that infrastructure can accommodate ballooning consumption levels. Going forward, the low interest rates, Melbourne’s growing population and its sound economic framework will continue to support rental values and prices.

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Research Report: Melbourne

Victoria Key Economic Indicators

Victoria (Melbourne)

Australia

3.1% State Final Demand Growth 4.3% Year-ended 4Q17

2.8%

Retail Turnover Growth

4.4%

1.6%

Population Growth

2.4%

2.7%

Year-on-year to Mar 2018 Year-ended 3Q17

Employment Growth Year-on-year to Apr 2018

Melbourne VS Sydney: Projected Population Growth

1.7% Population

Melbourne shows strong key economic indicators. Source: JLL

At a current growth rate of 2.7%, Melbourne — the World’s Most Liveable City for 7 consecutive times — is home to a population of 4.9 million. The city, now just 200,000 below Sydney’s, is set to become Australia’s most populated capital by 2036 (previous estimates had predicted that Melbourne would overtake Sydney as the largest Australian city in 2050)!

Victoria

*2036=projection 7 6 5 4 3 2 1 0

3.7m

3.2m

1991

5.0m

4.6m

2016 Sydney

6.7m

6.8m

2036 * Melbourne

Previous estimates of Melbourne overtaking Sydney as Australia’s largest city in 2050 have been revised to the mid-2030s, if not earlier. Source: ABS 3218 population figures & Bernard Salt/ The Australian.

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Melbourne VS Sydney: Y-O-Y Population Growth Natural Increase

34,994 36,284

Nett Internal Migration

-18,120* 9166

Nett Overseas Migration

84,684 79,974

101,559

Research Report: Melbourne

Population Change

125,424 -2

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0

1

3

3

4

5

6

7

8

9

10

11

12

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*More people had left Sydney for other parts of Australia than arrived. Sydney

Melbourne

Melbourne recorded the largest — and fastest — growth of Australia’s capital cities in 201617, surpassing Sydney, and increasing by 125,400 people. Source: ABS y-o-y regional population growth, Australia, 2016-2017

Quick Facts: Melbourne . . . .

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World’s Most Liveable City Since 2011 Fastest-growing city overtaking Sydney by mid-2030s 50,000 students studying and living in Melbourne Tight vacancy rates of 1.9%


Annual Price Growth Driven by Undersupply

Australia experienced a weakening in overall house prices at the start of 2018 vs 2017 as a result of weakened investor demand. This is due to APRA's investor lending regulations, various policy changes and removal of off-plan stamp duty concessions.

March 2018) indicating that there is an undersupply in dwellings led by population growth: the Urban Development Institute of Australia (UDIA) predicts that if current trends continue, Victoria’s undersupply of houses could reach in excess of 50,000 houses by 2020.

However, property prices in Melbourne rose by 6.2% annually (March 2017 -

Residential Property Price Index 2016-2017 Dec Qtr ‘16 - Mar Qtr ‘17

Dec Qtr ‘17 - Mar Qtr ‘18

Melbourne

3.1%

-0.6%

-13.4%

6.2%

Weighted Ave of 8 capital

2.2%

-0.7%

10.2%

2.0%

Mar Qtr ‘16 - Mar Qtr ‘17

Mar Qtr ‘17 - Mar Qtr ‘18

Research Report: Melbourne

House prices have weakened overall in 2018, however, demand for housing in Melbourne remains. Source: ABS

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Growth Areas MELBOURNE CITY Student Population Influences Housing Demand Melbourne’s city encapsulates the CBD and measures an area of about 36.2 km². More than 500,000 students study and live here as 5 of Melbourne’s top universities are located in the city, of which 2 are in the country’s top 10 list. The high international student enrolment has been driving the city’s housing market. There are 35,000 foreign students in Melbourne city alone. The University of Melbourne singularly has about 47,000 students, including >12,000 international students.

Boundaries of the City of Melbourne Source: whatson.melbourne.vic.gov.au

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States

Victoria Australia

Estimated Deficiency/Oversupply of Dwellings (‘000s) as at June 2017

2015

2016

2017

2018f

2019f

9.9 92.3

7.7 56.5

3.9 6.9

-2.0 -32.1

-4.1 -51.2

Research Report: Melbourne

Underlying Demand & Supply

BIS Oxford Economics has predicted an undersupply of housing in Melbourne city. Source: BIS Oxford Economics & ABS Data

Pipeline Undersupply BIS Oxford Economics went on record this year, reversing their initial predictions of an oversupply of housing in Melbourne city, predicting instead, an undersupply due to faster-than-expected population growth. As it turned out, Melbourne had some 35,000 extra households than initially expected.

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Research Report: Melbourne

Inner Melbourne Supply Pipeline Number of units 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

2016

2017

2018

Complete Currently Marketing Under Construction

2019

2020

2021

2022

Plans Approved Plans Submitted

The supply of apartments in Inner Melbourne has declined, a situation that looks set to continue over the next five years. Source: JLL Australia Melbourne Market Commentary 4Q17 Between 4Q16 and 4Q17, the number of apartments in the pipeline reduced by some 12,000, whilst apartments under construction dropped by 7,000 (33%) since 4Q16. JLL predicts that the number of apartments antici-

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pated for completion over the next 5 years will decline further.


City of Melbourne’s Forecast Population The City’s current population is estimated to be 151,176 residents. By 2037, this is expected to increase to around 266,455 residents. 275k 250k 225k 200k 175k 150k 125k 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037

The population of Melbourne City is poised to increase in the next few years due to immigration and births.

Research Report: Melbourne

Source: Geografia.com.au

Population Growth Projection The CBD itself has seen a population swell from 15,249 in 2006 to 35,447 in 2016. What will continue to keep the city thriving are its industries and jobs, and its proximity to universities, the arts, F&B, services and retail — all the things that are crucial to today’s dweller.

If you look at Melbourne, there’s 120,000 people moving to it per annum, but only 75,000 houses being built.

Statistics show that population growth will continue and is expected to hit 266,455 residents by 2037 (if not earlier), due to births and immigration. ABS reports that the population living within 10km of the CBD, meanwhile, had grown by 40% — from 743,000 to 1,042,000. This also hints at a reversal of trends, where cashed-up baby boomers are swapping their large suburban homes for apartments that are closer to the city, public transportation, cafes and restaurants.

- Ryan Felsman, CommSec Senior Economist

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Melbourne City Rental Vacancy Rates Nov 2018

Number of vacancies Vacancy rate

8

4

1.9%

Rental vacancy rates as at June 2018 are at 1.9% indicating a respectably strong demand for rental housing in the city. Source: SQM research.com.au

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Nov 18

Jul 18

Jan 18

Jul 17

Jan 17

Jul 16

Jan 16

Jul 15

Jan 15

0 Jul 14

Research Report: Melbourne

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WEST MELBOURNE MELTON

Research Report: Melbourne

Melton

Located in the Northwest, Melton is an upcoming suburb on the urban periphery of Melbourne city. Source: CBRE Infrastructure & Real Estate: Key Melbourne Projects

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City of Melton Forecast Population 500,000

400,000

300,000

Research Report: Melton

200,000

100,000

0

2016

2021

2026

2036

2041

2046

2051

The city of Melton is one of Victoria’s fastest-growing cities. Its population is forecast to hit 477,900 by 2051. Source: Population and Household Forecasts, 2016 to 2051, prepared by .id, July 2018.

Melbourne’s Population Growth Forecast by LGA 2011-2031 Melton is one of Victoria’s top growth areas, with a population that is projected to hit 175,000 by 2031. Its population growth rate is the second fastest of all Victorian LGAs (Local Government Area), and the most affordable of the top 3 LGAs, with over 70% of residents under the age of 45. Between 2008 and 2017, its population grew 61%. Projections indicate that the city’s population will exceed 374,700, almost equal the size of Canberra by 2041.

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2031

Job Growth There is strong job growth in the Melton region; it has been ranked Australia’s second fastest-growing job market in the country in the 21st century. Latest ABS data reveals that the Melton LGA had a 52% job growth rate from 2011 - 2016 and that jobs creation had outstripped the number of dwellings being built.


According to Domain Group data, rents in suburbs that were once considered affordable have increased by up to 18% in the year to March 2018, while the number of properties available in the least expensive suburbs was as low as 10.

South and Melton West experiencing increases of 407% and 293%, respectively. In terms of rental vacancy, Melton’s vacancy rates stand at 2.1%.

Melton, known to be one of the most affordable areas, has been rated one of the best performing boomtowns in Melbourne with annual capital gains of up to 27%. Melton South, in particular, charted the highest annual growth from 2000 - 2017 according to data by the Real Estate Institute of Victoria (REIV).

TIP

Melton saw some of the biggest growth in auction volumes y-o-y in Sept 2017 with Melton

Research Report: Melton

Property Hotspot

We also recommend paying attention to Wyndham, located in the outer southwestern suburb of Melbourne. Data by CoreLogic in 4Q2017 shows that Wyndham was Australia’s top performer for dwelling value growth over the past 10 years.

Quick Facts: Melton . One of Victoria’s top population growth areas . 2nd fastest-growing job market in Australia . 8390 jobs created vs 7968 increase in private dwellings (2011 - 2016) . One of Melbourne’s property hotspots of 2018 . Vacancy rates at 2.1%

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The Mernda rail project has brought accessibility, new jobs and integrated spaces to Mernda. Credit: Level Crossing Removal Authority

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NORTHEAST MELBOURNE MERNDA

Improved Accessibility Thanks to state funding, Mernda residents no longer need to be heavily reliant on private vehicles for transport as passenger services for the South Morang train line extension to Mernda has commenced. It is the first time a passenger train has run to Mernda in 60 years. This award-winning project comprises 8km of new rail line and 3 new stations that will cater up to 8000 commuters a day. It will give passengers access to 982 services to the city every week. The project also brings with it new and realigned bus routes, walking and cycling paths that link the new stations, brand new community spaces and created more than 1,800 jobs in other businesses and industries.

Price Growth House prices have been growing in Mernda, with houses charting a median sales price increase of 69.2% over the past 5 years compared to units (apartments) at 30.7%. In 2Q2018, Mernda broke the record as Whittlesea’s strongest performing housing market, driven by the Mernda Rail Extension. The highest demand for rental is for units with a yield of approximately 4% over the past 12 months (data as of Aug 2018). In terms of rental vacancy, Mernda’s vacancy rates stand at 1.7%. Like Melton in the west, Mernda has been ranked among the top-charting suburbs for house price growth in the country.

Research Report: Mernda

Just over 20km northeast of Melbourne lies Mernda, a suburb of the City of Whittlesea. From one of the least glamorous places in Victoria, Mernda had by 2015 become one of the fastest-growing areas in Australia. When fully developed, it will accommodate over 30,000sqm of retail space and around 80,000sqm of commercial space for offices, small businesses, medical facilities, gym and child care. By 2041, the population of Mernda will grow from 16,800 (2015) to an estimated 32,080. Latest data by the ABS puts Mernda within the top 10 largest growth areas in the country, fuelled by the area’s relatively affordable real estate.

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Words VIVIENNE PAL

Research VIRATA THAIVASIGAMONY VIVIENNE PAL IAN CHOONG

Design & Layout AHMAD MUNAWAR ABD RAHIM JANE TAN

MARKETING AGENT (SINGAPORE) CS PROP Pte Ltd (E.A. License No. L3010808F | Co. Reg. No. 201731379K) Level 22, Tower B, Ngee Ann City, 391B Orchard Road, 238874 Singapore

MARKETING AGENT (MALAYSIA) CI PROPERTIES Sdn Bhd (E (1) 1797 | Co. Reg. No 1254857-K) Level 3, North Block, Wisma Selangor Dredging, 142D Jalan Ampang, 50450 Kuala Lumpur, Malaysia

+65 3163 8343 info@csiprop.com

+603 2162 2260 info@csiprop.com

PROJECT MANAGER CSI PROP Pte Ltd @ 2019 CSI PROP Pte Ltd. First Edition. All rights reserved. This publication is the sole property of CSI PROP Pte Ltd (trademark: CSI PROP) and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of CSI PROP Pte Ltd. All descriptions and other particulars are given in good faith and are believed to be correct but any intending readers, purchasers or tenants should not rely on them as statements or representations of fact and must satisfy themselves by inspection or otherwise as to the correctness of each of them. The Marketing Agents and the Project Manager shall be held responsible for any negligence, consequential loss or damage arising from the use of this information. No person in the employment of the Marketing Agents and the Project Manager has any authority to make or give any representation or warranty whatever in relation to these investments and properties. This is an overseas investment. As overseas investments carry additional, financial, regulatory and legal risks, investors are advised to do the necessary checks as well as research on the investment beforehand. Investors are also advised to seek independent and qualified legal, financial and tax advisors. Past performance is not necessarily indicative of future performance even if the same strategies are adopted.

Profile for CSI Prop (Cornerstone International Properties)

Melbourne Investment Guide CSIPROP2019  

Melbourne Investment Guide CSIPROP2019  

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