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MARKET OUTLOOK EAST PERTH

East Perth’s riverside amenity is a major drawcard for residents, visitors and workers. Being highly accessible, the suburb is in close proximity to key employment, retail and entertainment nodes in the Perth CBD and Northbridge.

02

Western Australia Overview

04

Connectivity

06

Infrastructure & Employment Growth

07

Demographics, Population & Employment

08

Residential Market Analysis

09

Rental Market Analysis

Prepared exclusively for

Frasers Property Australia November 2020


WESTERN AUSTRALIA OVERVIEW​ Western Australia (WA) is located on the west coast of Australia. As the largest State in the country, WA offers a diverse climate and a wide variety of landscapes, making each region unique. ​ •

The state accounts for 10 per cent of the national population (2.6 million people) and has seen the third highest level of population growth over the past 10 years compared to other states. ​

With the WA Planning Commission’s strategic land use planning documents aiming to accommodate 3.5 million people in Perth and Peel by 2050, it is likely to continue to see strong growth.​

WA’s Gross State Product (GSP) was $259.4 billion as at June 2019. GSP per capita was $100,003 in the same period, making it higher than the other states of New South Wales, Victoria and Queensland. Additionally, this was 34% higher than the national equivalent of $74,873 in the same period and accounted for 14 per cent of the national GDP. ​

MINING, OIL AND GAS​ Western Australia is a major international hub for the global mining and resources sector. According to the Office of the Chief Economist (December 2019), committed mining, oil and gas and infrastructure projects in WA have a combined project value of $14.9 billion, representing 49% of the total value of committed projects across Australia ($30.4 billion). In addition to committed projects there is a further $99.7 billion in the feasible and publicly announced stages within WA​. Oil and gas operators in WA include some of the biggest international players who have recently invested in new production facilities. This investment in WA production capacity as well as other national projects means that Australia is now the largest exporter of LNG globally. In 2019 WA accounted for 57% of national LNG production.​

PERTH OVERVIEW​ THRIVING EXPORTS

KEY PROJECTS​

Western Australia accounted for 48% of the total value of all good exported from Australia in the 12 months to July 2020

GORGON Chevron $69 B​

Located off WA’s north west coast, the Gorgon project is the single biggest LNG investment in history. This is a joint venture between Chevron, ExxonMobil, Shell, Osaka Gas, Tokyo Gas and JERA.​

2

WA is the world's largest producer of Lithium (56% of global production), Iron Ore and Garnet and the second largest producer of Diamonds and LNG.​ The resources sector accounts for nearly 1/3 of the $248 billion WA GSP (Chamber of Minerals and Energy of Western Australia and KPMG WA Resources Sector Outlook 2018).​ Western Australia produces over 50 different commodities, more than any other state or territory in Australia.​ Western Australia has the world’s largest diamond mine located in Kununurra. It produces up to 20 million carats each year from operations. ​ The Super Pit, located in Kalgoorlie is Australia’s largest open pit gold mine. It produces 800,000 oz. of gold a year.

Market Outlook East Perth

Perth shares time zones with approximately 60% of the world’s population, primarily to major Asian cities including China, Indonesia and Singapore. With Perth’s location and closer proximity to these countries than the other states in Australia, it provides a valuable strategic advantage. Tokyo

Western Australia

WHEATSTONE LNG Chevron and Woodside $45 B​

The project is Australia’s first LNG hub, providing energy supply as well as providing economic benefits such as employment, revenue and local business opportunities.​

Shanghai New Delhi

48%

Jakarta

1 hour timezone 5 hour business timezone

Rest of Australia

52%

The project is the world's largest floating liquefied natural gas platform as well as the largest offshore facility ever constructed. ​ THE BROWSE Woodside $20 B​

Prepared by Urbis; Source: Urbis, ABS.

The proposed project entails construction of 2 gas FPSO facilities located offshore Western Australia. KBR have been appointed as the lead contractor.

The Economic Intelligence Unit (EIU) scores cities on over 30 factors within five broad categories: stability, healthcare, culture, education and infrastructure which ranks the most liveable cities in the world. In the 2019 EIU Global Liveability Report, Perth ranked as 14th most liveable city in the world and recorded perfect scores in healthcare, education and infrastructure.​ Prepared by Urbis; Source: Economic Intelligence Unit

LIVEABILITY RATING

WORLD UNIVERSITY RANKINGS 2020/21

Overall universities in WA rank well with the University of Western Australia ranking among the top 1% of universities worldwide. No. 91 University of Western Australia

VALUE OF COMMITTED MINING, OIL AND GAS PROJECTS BY JURISDICTION​

No. 217 Curtin University

QLD 40% NSW 3% SA 3% NT 2% VIC 2%

Perth

LIVEABILITY

EDUCATION PERTH’S MEDITERRANEAN CLIMATE OFFERS SUNSHINE AND MILD WINTERS WITH 265 SUNNY DAYS EVERY YEAR (BUREAU OF METEOROLOGY).

Hong Kong

Kuala Lumpur

PRELUDE FLNG Shell $12.6 B​

PRODUCTION •

TRADE FRIENDLY TIME ZONE

No. 571–580 Murdoch University

Prepared by Urbis; Source: QS World University Rankings Note: Based on the median Australian Tertiary Admission Rank (ATAR).

88.7

Education

100

Healthcare

100

Infrastructure

100

Stability

95

EMERGING ARTS FOCUS •

Perth hosts Australia’s oldest International Arts Festival (67 years).​

The Western Australian Academy of Performing Arts (WAAPA) has been ranked as one of the best 25 acting schools in the world.​

Fringe World is the most popular annual festivals in Perth and the third largest fringe festival in the world. The 2020 Fringe World Festival featured over 700 shows at 156 venues.​

Over 825,000 people attended the event and had a total flow on economic impact of $100.6 million.​

No. 651–700 Edith Cowan University

WA 49%

Culture and Environment

Prepared by Urbis; Source: WAAPA, PIA, Fringe World

Prepared by Urbis; Source: Office of the Chief Economist December 2019

Prepared exclusively for Frasers Property Australia

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CONNECTIVITY Located next to the Perth CBD, East Perth is one of Perth’s inner suburbs offering residents a variety of employment, recreation, entertainment and lifestyle amenity.​

Perth Airport

​PUBLIC TRANSPORT AND MAIN ROADS​ East Perth is well serviced by public transport, offering both train and bus services, including free Central Area Transit (CAT) buses. East Perth features multiple train stations that are easily accessible with Claisebrook Train Station, East Perth Train Station and McIver Train Station nearby. Similarly, major arterial roads such as the Graham Farmer Freeway connects the area to the south eastern suburbs. ​

The Causeway Crown Casino Heirisson Island Matagarup Bridge Optus Stadium Trinity College

RETAIL & ENTERTAINMENT​

Gloucester Park

Adelaide Terrace, Hay Street Mall and Royal Street are the suburb’s main commercial strips including office space, retail and food and beverage options. East Perth is on the doorstep of many lifestyle attractions including Perth’s CBD, Crown Casino, Claisebrook Cove, Perth Cultural Centre, Perth Mint, Optus Stadium and the Northbridge entertainment and cultural precinct. ​

WACA Stadium

Claisebrook Cove Queens Gardens Swan River

PARKS & RECREATION​

Langley Park

East Perth features a multitude of recreation areas such as Queens Gardens, Gloucester Park, Langley Park, Ozone Reserve and Wellington Square within easy reach. Additionally, the suburb borders the picturesque Swan River, providing scenic walking and cycle paths, green space and foreshore reserves. ​

T

Market Outlook East Perth

Claisebrook Train Station

EE

4

Wellington Square

TR

East Perth residents can choose from a number of schools with Mercedes College, Trinity College, Wesley College and Perth Anglican Grammar School all in close proximity. Tertiary education is easily accessible for residents with the North Metropolitan TAFE East Perth and Northbridge Campus, and Curtin Graduate School of Business, as well as the University of Western Australia within 10 minutes drive. Furthermore, as part of the Perth City Deal, there will be an enhanced presence of universities in the heart of the CBD which will include a new Edith Cowan University (ECU) Cultural and Creative Industries Education CBD Campus, a vertical campus for Murdoch University and expansion of the Curtin University Graduate School of Business and Law School.

North Metropolitan TAFE East Perth

YS HA

EDUCATION​

Perth Mint

Mercedes College

Graham Farmer Freeway

Royal Perth Hospital

McIver Train Station Campus Perth

Perth CBD

Prepared exclusively for Frasers Property Australia

5


INFRASTRUCTURE & EMPLOYMENT GROWTH

DEMOGRAPHICS, POPULATION & EMPLOYMENT

INFRASTRUCTURE

East Perth is forecast to see strong population growth (based on forecasts) by .id’s Small Area Forecasts. Between 2016 and 2041, there are expected to be an additional 12,200 new residents to the suburb welcoming an average of 488 people per annum. This rate of growth of 4.2% per annum is significantly higher than that expected within Greater Perth at just 2.2% per annum. Growth will be further spurred by new housing supply and the location of East Perth being close to the Perth CBD, education and lifestyle amenity.​

Transport upgrades including cycle paths and a new bridge ($105 m)​

Perth Cultural Centre precinct ($20 m)​

Perth Concert Hall ($42 m)​

WACA ($100 m)​

East Perth Power Station ($20 m)

PERTH CITY LINK $1.36 Billion The development entails sinking the railway line which will reconnect the Perth CBD and Northbridge. ​In conjunction with the railway sinking, the project opens up additional space for new apartments, offices, student housing, hotel and short-stay accommodation, restaurants and retail. It is anticipated to create 244,000 sqm of commercial space, 263 room hotel and 314 apartments.

EAST PERTH POWER STATION $218 Million Australian Capital Equity and Minderoo Group have been announced as the preferred proponents for the redevelopment of the East Perth Power Station. This proposed developed is awaited to be transformed into “an iconic mixeduse waterfront precinct” with a mix of residential, commercial, recreational and tourism opportunities.

CHEM LABS SITE (LOT 101 HAY STREET) $200 Million In addition to residential development, there are plans for commercial space and a new microbrewery at the Chem Labs Site. Construction is expected to commence by the end of 2022 with an estimated 500 jobs expected to be created through the construction period.

Market Outlook East Perth

WATERBANK $1.5 B​illion Located between The Causeway and Trinity College, this project entails development of residential, office accommodation and retail space. Situated on the banks of the Swan River, it will include water-based community facilities, cafés and restaurants. It anticipates to attract 7,000 new residents and 6,000 new workers to the area.

EMPLOYMENT GROWTH With ongoing infrastructure investment, population growth and the implementation of a number of Covid-19 stimulus measures, WA is expected to rebound strongly from Covid-19. Global resource and energy companies including Rio Tinto and BHP are recruiting local workers, to meet peak economic recovery demand. According to ANZSIC Industry employment projections, employment in the Inner region is forecast to increase by 6%, resulting in 6,200 new jobs by 2024.​ EMPLOYMENT GROWTH Key Inner Region Growth Industries May-19

May-24

Professional, Scientific and Technical Services

15,600

Health Care and Social Assistance

14,400

Mining

9,100

16,600 15,200

With a high proportion of white-collar workers on higher incomes, residents are attracted to walkable hubs with high levels of lifestyle amenity. Over a third of households are lone person households (37%) and 68% are couple families with no children. These traits, coupled with steady population growth are expected to drive demand in the residential market moving forward. ​ The East Perth suburb is attracting more affluent residents with aspirational people moving to the area. The average household income in the suburb was higher than Greater Perth. The average household income in the suburb has recorded average annual growth of 1.8% over the last five years, to $111,800 in 2016. Those households earning over $130,000 per year account for 33% of all households in East Perth, compared to 29% across Greater Perth indicating the affluency of the area.​

EMPLOYMENT Residents are close to several major employment nodes making it easily accessible from East Perth. Within East Perth, 79% of residents are white collar workers, 11 percentage points more than Greater Perth. ​ Easy access to Perth CBD and West Perth, as well as being an area with a significant commercial office market itself, makes the area a good location for white collar professionals. As a result, professional, scientific and technical services is the top industry of employment, followed by accommodation and food services and health care and social assistance. This is likely due to the various restaurants and hotels around the area as well as several medical centres and hospitals nearby such as Royal Perth Hospital, St John of God Mt Lawley Hospital West Leederville Private Hospital, Sir Charles Gairdner Hospital and QEII Medical Centre.

Average Household Income

$111,834

$100,524

Aged 25-39 Years

45%

23%

Renter

62%

28%

Proportion Living in apartments

88%

7%

Lone Person Households

37%

23%

Couple families with no children

68%

38%

White Collar Worker

79%

68%

Prepared by Urbis; Source: ABS Census 2016

TOTAL PROJECTED POPULATION GROWTH 2016-2041 East Perth

23,800

The project encompasses the upgrade of the existing Wellington Square which will include a new inter-generational playground, water play, event spaces, sporting fields and community space. The project will be undertaken over five stages and is expected to be completed by early 2021.​

2,022,044

23,000

In addition, investment into the following assets will be undertaken:​

WELLINGTON SQUARE $18.7 Million

The area has undergone significant urbanisation over the last few years. Between 2011 and 2016, the proportion of people living in apartments increased from 75% to 88%, indicating a favourable shift towards apartments. This shift in apartment living has attracted a younger demographic who are seeking modern, low maintenance dwellings. This is evident with 45% of residents in East Perth being aged 25-39 years. ​

11,600

20,300

Anticipated to be completed by 2023, the project aims to reshape the venue to include additional seats, a cricket training facility and the development of an aquatic facility which includes a 50-metre pool, learn to swim pool and leisure slide.​

Estimated Resident Population

17,000

The recently signed Perth City Deal will activate and re-energise the city centre, creating up to 10,000 jobs. As part of the Deal, major educational institutions including ECU (including a new home of the prestigious WA Academy of Performing Arts), Murdoch University and Curtin University will create a campus in the CBD bringing more than 25,000 students and staff in the city. This will be an investment of $1.05 billion.

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WACA $100 Million

Greater Perth

14,300

​ ERTH CITY DEAL P $1.5 Billion

East Perth

11,600

THE ONGOING REDEVELOPMENT ACTIVITY AND REVITALISATION OF EAST PERTH WILL ENHANCE THE AREA ADDING A VARIETY OF AMENITY OFFERINGS TO RESIDENTS, WORKERS AND VISITORS.

WHO LIVES IN THE AREA?

2016 ERP

2021

2026

2031

3036

2041

Prepared by Urbis; Source: ABS Census 2016, SAFi

MAIN INDUSTRIES OF EMPLOYMENT East Perth Residents

1 Professional, scientific & technical services 15% 2 Accommodation & food services

14%

3 Health care & social assistance

11%

4 Mining

8%

5 Construction

7%

Prepared by Urbis; Source: ABS Census 2016

10,000

Prepared by Urbis; Source: Department of Employment, Skills, Small Business and Family Business, ABS

Prepared exclusively for Frasers Property Australia

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$480,000

321

$840,000

20

$435,000

328

$1,006,500

4

$467,500

32

Northbridge

$360,000

3

$410,000

27

City of Perth

$1,125,000

27

$460,000

734

Perth (SD)*

$465,000

27,014

$375,000

6,238

Perth Highgate

As of June 2020, the median house price in East Perth was $1,365,000, well above the Greater Perth median of $485,000. Over the past 12 months prices have maintained positive growth increasing by 21% based on 14 transactions. Similarly, with a median unit price of $480,000 during the 12 months to June 2020 in East Perth, growing from a median unit price of $465,000 in June 2019 to $485,000 in June 2020. This indicates that purchasers see the value in living close to the Perth CBD and modern apartment living.

MEDIAN ANNUAL PRICE GROWTH As at June 2020 12 Months

Across Perth, apartment development has slowed significantly. Whilst there was a 55% fall in the number of apartments under construction in July 2020 compared to March 2019. The fall in construction levels in the inner city has been even more dramatic, with 1,353 apartments (in seven projects) under construction in September 2018, falling to only one project with 38 apartments under construction in September 2020. With the planned transformation and ongoing development in East Perth, this will enhance the urban benefit for residents, visitors and workers as well as the liveability and vibrancy of the area.

East Perth City of Perth Greater Perth

3 Years

House

Unit

House

Unit

21.3%

4.3%

11.9%

1.5%

-13.5%

-2.1%

With 62% of residents renting their dwellings compared to 28% in Greater Perth based on the latest ABS Census, the area has a well-established rental market. The area is popular amongst young professional couples, health care workers and students due to its proximity to employment nodes such as hospitals, university and the Perth CBD, and will continue to grow in popularity as the Perth City Deal brings more students and workers to the area.

5.5%

1.9%

-1.8%

PROPORTION OF TENURE TYPE Perth City SA2 vs Greater Perth

-1.4%

-2.4%

-2.9%

MEDIAN PRICE AND TRANSACTION VOLUMES FOR HOUSES AND UNITS IN EAST PERTH 25 Years to June 2020 $1,400,000

East Perth

$1,200,000

700

Greater Perth

Prepared by Urbis; Source: ABS Census 2016

$1,000,000

600 500

$800,000

400

$600,000

300

$400,000

200

$200,000

100

$0

0 1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

Median Price

Number of Sales

29% 43% 28%

16% 24% 62%

800

Purchaser Renter

Prepared by Urbis; Source: Pricefinder

900

Owner

PERTH SAW THE SHARPEST DECLINE IN RENTAL VACANCIES ACROSS ALL OF THE CAPITAL CITIES, DECLINING FROM 7.3% TO 2.0% IN THE THREE YEARS TO JUNE 2020 AND A FURTHER DROP TO 1.0% IN THE MOST RECENT QUARTER OF SEPTEMBER 2020.

$380

4.8%

4.6%

4.8%

$420 $340 4.7%

4.7%

3.9%

Perth saw the sharpest decline in rental vacancies across all of the capital cities, declining from 7.3% to 2.0% in the three years to June 2020 and a further drop to 1.0% in the most recent quarter of September 2020. This is a positive indicator of recovery, confidence and a sign to investors to return to the Perth property market, as historically, decreasing vacancy rates have generally been followed by periods of rental growth.

Prepared by Urbis; Source: Pricefinder

$350

Greater Perth

14

$400

Median Unit Asking Rent (Last 12 Months) Indicative Gross Rental Yield Prepared by Urbis; Source: Pricefinder

MEDIAN ASKING RENTS BY BEDROOM IN NEW* APARTMENT BUILDINGS WITHIN EAST PERTH VS GREATER Jan 2020 – Sep 2020 No. of Listings

East Perth

Greater Perth

56

$380

$363

2 Bedrooms

128

$485

$470

3 Bedrooms

17

$950

$805

1 Bedroom

Prepared by Urbis; Source: Urbis, Pricefinder​ Note: ‘New’ apartments have been classified as those buildings being completed since 2014 in developments of 25 apartments or more.

MEDIAN RENT AND VACANCY RATES IN GREATER PERTH As at June 2020 Median Rent

Vacancy Rate

500

10

400

8

300

6

200

4

100

2

0

0

(Vacancy Rate (%)

$1,365,000

East Perth

$420

City of Perth

Sales Volume

Northbridge

Median Unit Price

Highgate

Sales Volume

Jun-82 Jun-84 Jun-86 Jun-88 Jun-90 Jun-92 Jun-94 Jun-96 Jun-98 Jun-00 Jun-02 Jun-04 Jun-06 Jun-08 Jun-10 Jun-12 Jun-14 Jun-16 Jun-18 Jun-20

Median House Price

MEDIAN ASKING RENTS YIELDS - UNITS As of June 2020

East Perth

Similarly, the level of growth in the last three years to June 2020 has been higher than the City of Perth and Greater Perth average whereby unit prices increased by 1.5% in East Perth.

New apartment buildings in East Perth have achieved rental premiums, relative to Greater Perth. The median asking weekly rent for one-bedroom apartments in new apartment buildings was $380 recording a premium of 5%. Two-bedroom apartments recorded a median rent of $485 with a rental premium of 3%, and three-bedroom apartments have the highest rental premium of 18% and weekly rents of $950.

SALE PRICE COMPARISON - MEDIAN PRICES East Perth vs Surrounding Suburbs 12 months to June 2020

Median House Rent ($)

Predominantly being an apartment market, East Perth has experienced strong growth over the past 12 months to June 2020, while also maintaining solid growth in the medium to longer term. The median unit price has increased by 4.3% in the 12 months to June 2020, much higher than the Greater Perth average.

RENTAL MARKET ANALYSIS

Perth

RESIDENTIAL MARKET ANALYSIS

Prepared by Urbis; Source: REIA, REIWA 8

Market Outlook East Perth

Prepared exclusively for Frasers Property Australia

9


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P0027860

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