Chinese McGrath Report 2014

McGrath Report The The McGrath Report

14 14 14

The Australian residential real estate recovery continues. In January of this year, every capital city in Australia recorded a quarter of positive capital growth simultaneously - the first time this has happened since the GFC. For me, this was an important milestone & it suggests we won’t be turning back.

My prediction at the time of last year’s McGrath Report was a 10%-15% price increase. This eventuated with Sydney prices lifting by 14.8% in the 12 months to August 2014.

The post-GFC recovery started with first home buyers under $600,000 & escalated above the $1 million mark soon after, as upgraders benefited from the surge of activity. The market strength has now moved up to & above the $2 million range in Sydney. Even the prestige market has seen some price movement & increased transactions. While we are yet to see the luxury end of the market show its true colours, I believe this will happen in the next 12 months.

I predict between 5%-10% growth across the board in Sydney values this year, with potentially higher growth in the prestige market as it makes up for lost time. However, the real mover in Australian real estate for the next 3-5 years will undoubtedly be South East Queensland - where I believe we can expect at least double the growth of Sydney values.

This year’s McGrath Report identifies several themes we believe will drive demand and prices, plus the hottest of hot spots on the East Coast.

John McGrath Chief Executive Officer

Around AustrAliA

A quick look at what’s happening to prices around Australia.

Around AustrAliA

A quick look at what’s happening to prices around Australia.

Canberra Adelaide $555,000 $411,000

Darwin Adelaide $552,500 $411,000

Brisbane Perth Adelaide $475,000 $535,000 $411,000

Median House Prices (RP Data August 2014)

Median House Prices (RP Data August 2014)

S $7

Melbourne Hobart $590,000 $320,000

Brisbane Adelaide $475,000 $411,000 Hobart Perth $320,000 $535,000

Canberra Hobart $555,000 $320,000

Hobart Darwin $320,000 $552,500

Sydney $745,000

Adelaide $411,000 Hobart Brisbane $320,000 $475,000

Hobart Adelaide $320,000 $411,000

Sydney $745,000

Hobart $320,000

The McGrath Rep

Melbourne $590,000

Brisbane $475,000

Adelaide $411,000

Canberra $555,000

Darwin $552,500

Perth $535,000 Perth $535,000

The McGrath Report 2014 The McGrath Report 2014 The McGrath Report 2014

Brisbane $475,000 The McGrath Report 2014

8

The McGrath Report 2014

8

Hobart $320,000 The McGrath Report 2014

The McGrath Report 2014

Canberra The McGrath Report 2014 $555,000

Darwin $552,500

Adelaide $411,000 Hobart $320,000

Melbourne Sydney $590,000 $745,000

8

8

8 8

H $2

Sydney $745,000

Median Apartment Prices

Sydney 745,000

(RP Data) Hobart $265,500 Hobart $265,500

Hobart $265,500

Hobart $265,500

Hobart $265,500

Median Apartment Prices

Canberra $435,000

Hobart (RP Data) $265,500

Canberra Brisbane $435,000 $390,000

Sydney $745,000 Hobart port$265,500 2014

Adelaide Brisbane Canberra $345,000 $390,000 $435,000

Adelaide $345,000 Brisbane Hobart $390,000 $265,500 Adelaide Hobart $345,000 $265,500

8 Adelaide Brisbane $345,000 $390,000 Canberra Hobart $435,000 $265,500

Perth Hobart $437,750 $265,500

Perth Canberra $437,750 $435,000 Darwin Sydney Hobart Brisbane $445,000 $569,000 $265,500 $390,000 Melbourne Adelaide $460,000 $345,000

Perth Brisbane $437,750 $390,000

Adelaide Perth $345,000 $437,750

Darwin Adelaide $445,000 $345,000

Darwin Hobart $445,000 $265,500

A $$ D Pe Ca $4 $43 $4 Me B $4 $3

Melbourne Hobart $460,000 $265,500

Sydney $569,000

8

8

Hobart 265,500

Melbourne $460,000

Darwin $445,000

Perth $437,750

Canberra $435,000 Brisbane $390,000 Adelaide $345,000

Around Aust Hobart $265,500 Canberra $435,000

Hobart $265,500

Brisbane Around Australia Around Australia $390,000 Adelaide $345,000

Around Australia

Around Australia

Around Australia

Around Australia

9

9

Hobart $265,500 Around Australia

Darwin $445,000

Perth $437,750

9

9

Around Australia 9

Melb $46

9

2014 2004 1994 1984

Capital City House Price Growth since 1984 (Dept of Housing, REIA & RP Data) Darwin not included due to impact of Cyclone Tracy in 1974.

Hobart

Perth

Brisbane

Adelaide

Melbourne

Canberra

Sydney

$745,000

$555,000 $590,000

$535,000

$499,999 $475,000

$411,000

$370,000 $320,000 (2014)

$310,000

$310,000

$255,000 $242,500 $227,000 (2004)

$172,000 $157,000 $132,500 $115,000

$130,000 $111,000

$100,000 (1994)

$84,250 $58,950

$44,750 (1984)

$48,175

$61,250

$65,000

$85,900

AustrAliA

A quick look at what’s happening to prices around Australia.

BiG tHeMes We believe there are currently four themes driving the market.

1. China Growth Continues

The Chinese interest in Australia is far from over as many immigrants & overseas investors seek to buy in major cities around Australia.

Sydney continues to be the favoured destination with Brisbane, Melbourne & Perth next in line.

Foreign Demand Australia’s education, lifestyle, economic & political stability continue to attract foreign investors & owneroccupiers. Chinese property portal, juwai.com reports Sydney, Melbourne, Brisbane & the Gold Coast are among the top 10 cities worldwide searched by visitors.

Foreign demand for residential real estate is increasing substantially, with 15,999 approvals worth $24.8B over the nine months to March 2014. This is 44% higher than the total value approved in FY13.

A report by Credit Suisse estimates the Chinese are buying 18% of new supply in Sydney & 14% in Melbourne (mostly apartments). There are 1.1 million Chinese who can afford to buy a Sydney apartment & this number is estimated to increase 30% by 2020.

(Treasury, FIRB)

Chinese Buyers Discovering Brisbane Chinese buyers are beginning to discover value in Brisbane. They are favouring the CBD & inner city areas including established Asian communities like Sunnybank Hills, University precincts like St Lucia & more affluent areas like Hamilton, Newstead & New Farm.

Development Chinese mega-developers are rushing to acquire development sites across Sydney & Melbourne.

Queensland & particularly the Gold Coast are also gaining favour. In FY13, there was $323M in land acquisitions by the Chinese in Queensland, up 38% on FY12. Singapore developers were second highest at $317M – up from $75M in FY12.

In Brisbane, Chinese buyers want low maintenance homes near educational facilities, infrastructure & also the CBD. On the Gold Coast, Southport is popular due to a large amount of new homes, the light rail, the new hospital & good schools. The new Chinatown precinct will make the area even more attractive.

(Queensland Registrar of Titles)

Among affluent Asian investors, there is increasing interest in QLD, with 29% considering buying there in the next year, compared to 34% ACT, 25% VIC & 20% NSW.

Projects Underway by Chinese Developers

(HSBC)

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$970M Jewel, Surfers Paradise, QLD $600M Greenland Centre, Sydney’s CBD, NSW $550M Promenade, Parramatta, NSW $500M Ryde Garden, Sydney, NSW $100M Sanbano, Gold Coast, QLD

The McGrath Report 2014

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Top 10 Brisbane Searches by Chinese Buyers

India To Follow

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

We expect the rising middle class in India to follow China as key foreign investors in Australian real estate.

The Indian economy has experienced 8% annual GDP growth over the past decade, with trade between Australia & India increasing significantly.

Brisbane Hamilton Bridgeman Downs Kangaroo Point Zillmere Pullenvale Bulimba Indooroopilly Newstead Aspley

(Juwai.com)

Fear In Context While Chinese & foreign buying is increasing, it remains a small percentage of the residential market (Australian Property Council estimates it is less than 5%).

Chinese buyers are generally prefer established Asian communities & new apartments in CBDs. We believe overseas buyers are not competing in the main with first home buyers, as they generally buy higher priced properties and new homes. Chinese owner-occupiers prefer new property & Chinese offshore investors are buying new, while Australian first home buyers prefer established housing.

(RBA, FIRB)

Big Themes

20% of all migrants entering Australia during FY13 were from India.

(Dept of Immigration)

There are 450,000 people of Indian heritage in Australia, including 50,000 students. The fastest growing language in Australia is Hindi.

Harris Park is Sydney’s ‘Little India’ with 40% of the population born in India.

(Census 2011)

Indian private business investment in Australia increased 75.8% over the 5 years to 2013, with China second at 41.7%.

(ABS/Govt figures – average annual compounding growth rate)

HSBC research shows 18% of affluent Indians are already invested in Australian real estate compared to 9% of affluent Chinese. QLD is the number one state of choice among affluent Indians considering investing in Australian property, closely followed by VIC.

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2. investors & First Home Buyers

Record Investor Activity NSW investor activity peaked at 53% of new loans in January before tapering to 48% in July as rising property values diminished yields.

Meantime, QLD rose from 33.5% to 34.6% as local & southern state investors began recognising QLD’s affordability & higher yields.

(AFG)

Changing Face of Australian Investors

These two groups often fight for prime property below $600,000 but for now the investors are ahead with strong demand from both private investors alongside Self Managed Super Funds. We anticipate that FHB’s will be back in strength so the battle may be on again.

1st Home

Bank of Mum & Dad

First home buying has plummeted to just 3.4% of loans in NSW & 4.8% in QLD – well below the long term average of 1520%. Government grants incentivising the purchase of new or off-the-plan properties are working but first time buyers still overwhelmingly prefer established properties.

First home buyers are increasingly seeking their parents’ help, particularly in expensive inner city locations. Parents are either acting as guarantor, gifting deposit shortfalls or buying for their own investment where their children want to live, often close to universities.

(AFG)

19% of Gen Ys received financial assistance from their parents to buy their first home according to realestate.com.au’s Housing Affordability Index.

Traditional investors are increasingly competing with SMSFs & ‘rentvestors’ – Gen Y buyers purchasing first investments ahead of first homes while renting in lifestyle precincts.

The SMSF market has a long way to run, with 2,700+ new funds set up every month & more than $20.5B currently invested in residential property, up 17%.

(ATO – 12 months to March 2014)

The McGrath Report 2014

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3. Prestige Market starts to Move

Whilst luxury property was lagging compared to the rest of the market, there are clear signals that it is stirring from its slumber & we are expecting material price rises above $2M this year.

Growth

Momentum

ASX

Ex-Pats

Australia’s most expensive suburbs have slightly outpaced the lower & middle markets in price growth, up 11.1% compared to 10.9% (middle market) & 9.2% (lower market).

Political & economic stability, rising business confidence & increasing overseas demand is driving new momentum in prestige property after several years of post-GFC stagnation.

Largely due to the weaker dollar & a higher number of prestige homes coming onto the market, ex-pats are back after years on the sidelines. Despite no plans to return soon, they are buying now with expectations of imminent price growth.

Brisbane $3M 80 sales, up 36%.

Improving company profits pushed the ASX 200 above 5,500 to be 9.75% higher. Banking & finance executives are once again receiving bonuses & upgrading their homes. The March Qtr NAB ASX 300 Business Survey showed the highest confidence among larger firms in the survey’s three-year history.

(RP Data)

(12 months to August 1, 2014)

Sydney $37M 112 Wolseley Road Point Piper

Brisbane $8.25M 15 Ningana Street Fig Tree Pocket

Gold Coast $8.7M 60 Admiralty Drive Surfers Paradise

Sunshine Coast $6.5M 25 Witta Circle Noosa Heads

$30M 130 Wolseley Road Point Piper

$4.5M 7 Wilonda Street Robertson

$7.3M 72 The Sovereign Mile Sovereign Islands

$5.7M 6 Belmore Terrace Sunshine Beach

$20M 12 Ginahgulla Road Bellevue Hill

$4.5M 8 Sentinel Court Cleveland

$7.22M 26 Marseille Court Bundall

$3.65M 44 Seaview Terrace Sunshine Beach

$19M 17 Carrington Avenue Bellevue Hill

$4.5M 602/1 Gray Street New Farm

$7.2M 49-109 Tallebudgera Connection Road Tallebudgera

$3.3M 31 Watson Street Currimundi

$15.6M 21 Carrington Avenue Mosman

$4M 39 Sentinel Court Cleveland

(RP Data 12 months to May 2014)

Sydney $5M 259 sales, up 13% in FY14;

Top 5 Sales in 2014 to June 30

Big Themes

$6.6M 103 Hedges Avenue Mermaid Beach 17

$3.2M 19 Wesley Court Noosa Heads (RP Data, McGrath)

4. urban Hubs

As infrastructure unlocks pockets of Sydney by creating local employment opportunities & reducing commuting time, values are likely to surge in some areas as families seek more value for money.

Outer Hubs

Middle Hubs

There are three major growth areas in Sydney targeted for new jobs & affordable housing in the long term.

The NSW Government’s Urban Activation Precincts program is fast-tracking new housing, jobs & has upgraded infrastructure in 8 key urban hubs away from the CBD. These areas include North Ryde Station, Epping Town Centre & Herring Road, Macquarie Park in Sydney’s north, Carter Street, Lidcombe in the west, & Wentworth Point in Sydney’s inner west.

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The Western Sydney Employment Area will be the state’s largest new employment space, creating 57,000 new jobs over 30 years & up to 212,000 jobs when fully developed The South-West Growth Centre incorporates 17,000 ha including Liverpool, Camden & Campbelltown LGAs. Major new centre at Leppington serviced by the new South West Rail Link. About 110,000 new homes to accommodate 300,000 people – almost the population of Canberra The North-West Growth Centre incorporates 10,000 ha including The Hills, Blacktown & Hawkesbury LGAs. There is a major new centre at Rouse Hill serviced by the North West Rail Link & upgraded Richmond line.

About 70,000 new homes to accommodate 200,000 residents

The McGrath Report 2014

Airport Located within the Western Sydney Employment Area, Sydney’s second airport at Badgerys Creek will create 35,000 new jobs by 2035, increasing to 60,000 by 2060. Construction will begin in 2016, creating 4,000 jobs initially.

First flights expected mid-2020s. A $3B road infrastructure program will commence shortly.

Price Growth

Surge of the West

A significant number of Sydney buyers are giving up on the expensive inner ring & buying in the middle ring, which have experienced some of the strongest price growth in FY14. They include North Rocks (up 23%), Northmead (16%) & Baulkham Hills (15%).

Five of the nation’s top 10 fastest selling suburbs are in Sydney’s west, with an average selling time of just 12-15 days.

(Australian Property Monitors)

(RP Data)

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1. Old Toongabbie (houses) 4. Parklea (houses) 5. Quakers Hill (apartments) 8. Lalor Park (houses) 9. Werrington Downs (houses)

Section Title

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AustrAliA

A quick look at what’s happening to prices around Australia.

sydney

A $60B infrastructure program is transforming Sydney, with major road & public transport upgrades enabling easier access between homes & job centres.

High density building approvals in Sydney more than doubled from 9,932 in FY11 to 20,354 in the year to March 2014, with strong activity expected to continue for the next 5 years.

Sydney’s population is expected to grow by 1.575 million people (36.7%) by 2031.

60 20,354 1.575

Sydney

23

sydney overview sydney overview

sydney overview

sydney overview

Together with a recovering Sydney has asserted its position There have been several economy, these factors key drivers of this growth as Australia’s strongest & fastest have driven demand for including: housing new levels growing residential real estate Together with atorecovering Sydney has asserted its position There have been several & are likely to continue The return of investors economy, these factors of this growth market over the past months withkey drivers as Australia’s strongest & 12 fastest the growth curve & influx of SMSF direct have driven demand for for including: several investments around 14.8% price growth across housing to newyears levelsto come, growing residential real estate albeit (thankfully) & are likely to continue at more The return of investors theover board. called the with ‘New York market theOften past 12 months modest rates Significant inflow of the growth curve for of growth & influx of SMSF direct from here. overseas investment in of Australia’, a combination of factors several years to come, investments around 14.8% price growth across the residential market albeit (thankfully) at more has driven for the Harbour the board.

Oftendemand called the ‘New York Significant inflow of modestWhilst rates Iofbelieve growthwe will continue to see the hottest Record low interest rates City to all time highs in FY14 & my from here. overseas investment in of Australia’, a combination of factors demand & price growth in alongside record high rents prediction is there is more to come the residential market has driven demand for the Harbour the inner ring & beachside Whilst I believe we will suburbs Sydney, a new continue ofhighs growth. to seeof the hottestthere RecordThe lowimpact interestofrates City in to terms all time in FY14 & my is a sharp increase State Government alongside record high rents demand & price growth in in prediction is there is more to come demand new residential the inner ring & for beachside areas in the Approval & suburbs of Sydney,outer therering The impact of a new in terms of growth.

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likeincrease Kellyvillein& Rouse commencement is a sharp State Government Hill, by new of several major demand forheightened new residential scheduled transportation infrastructure projects areas in the outer ring Approval & links. This will continue like Kellyville & Rouse commencement as Sydneysiders Underlying housing Hill, heightened by new strive to of several major balance the competing shortage coupled withscheduled transportation infrastructure projects factors of proximity, an anticipated population links. This will continue convenience, lifestyle growth of 1.57 million as Sydneysiders strive to Underlying housing & the affordability. by coupled 2031 balance competing shortage with ■

sydney overview

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an anticipated population growth of 1.57 million by 2031

Sydney has asserted its position as Australia’s strongest & fastest growing residential real estate market over the past 12 months with The McGrath Report 2014

The McGrath Report 2014

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factors of proximity, convenience, lifestyle & affordability.

There have been several Together with a recovering key drivers of this growth economy, these factors have driven demand for including: housing to new levels The return of investors & are likely to continue & influx of SMSF direct the growth curve for

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sydney overview sydney overview

If you study the price growth history of homes located close to the CBD compared to property located in the outer areas of Sydney, you will see a significant difference over the past 20 years with inner Sydney Paddington median values growing by 350% compared to outer Sydney Penrith increasing by 250%. Parramatta which is one of the largest CBD’s in the country delivered a formidable 335% growth in the same period. This really underscores the distinct yields of different locations over time for those investing in property.

As well we must remember that much of the growth over the past 12 months has been catch up for lost ground during the GFC when prices either slumped or plateaued for several years.

The majority of the price growth throughout Sydney in the last year has been in the sub $2M range.

I think given the improving sharemarket, we are likely to see demand for property above $2M start to escalate this year with many undervalued prestige markets about to surge ahead.

As dangerous as it is to make future predictions in this uncertain world in which we live, I believe the Sydney market has between 10%-20% growth left in it this cycle over the next few years.

This is unlikely to (ever) be straight-line growth, instead almost guaranteed to include periods of short term corrections fuelled by share market fluctuations, economic uncertainty & the inevitable interest rate rises.

sydney overview John McGrath’s Top Picks Millers Point/The Rocks this historical northern fringe of the CBD is about to explode.

With the top end of the town as one neighbour, Barangarroo as another & Sydney Harbour at your door it is the best located suburb in the country.

Camperdown/Erskineville/ Newtown close to the CBD & benefitting from Sydney University embedded within. King Street retail strip along with Erskineville Village are great spots to wander & find great coffee on the weekend. The Victorian terraces make this area somewhat unique and add to its charm.

Botany/Mascot once a working class industrial factory suburb, this area has transformed itself completely & is fast becoming a fashionable address. Right next door to the airport it will come into its own for commuters.

Balmain/Birchgrove this area is not cheap. Nor should it be.

Minutes by car or ferry to the CBD. Lace terraces alongside contemporary town homes, small warehouses & nearby apartments – all wrapped around a hub of activity & restaurants in the village.

Earlwood/Bardwell Park for many years this hidden gem has escaped the radar of many buyers. Only 12km from the CBD & with a historically large Greek community, it is now being discovered by a new group of buyers who may have previously bought in areas like Haberfield & Five Dock.

Sydney

25

Concord walk down the thriving coffee strip on Majors Bay Road.

Look around & you’ll feel that this is an area on the move.

Whilst prices are no longer the obvious value they were a few years ago, they’re still well short of where they will be in the next 10!

Little Bay/Matraville/Chifley the smart young families who want an Eastern Suburbs beachside location without the price tag have discovered this area.

Full of leisure & sporting pursuits, it’s now home to a growing army of young professionals with families seeking better value & more land than the inner City alternatives.

Forestville surrounded by bushland Forestville is hidden between the northern surf beaches & the leafy North Shore.

This cosy neighborhood is rapidly becoming the preferred address for many buyers from the East & Inner West who are craving more land & value for money.

Rouse Hill/Castle Hill an hour wandering through Rouse Hill Town Centre retail village tells you this area is thriving. As new transport links arrive this area will have everything it needs.

Strong growth over 5 years.

Dolls Point this picturesque pocket on the edge of Botany Bay is home to a small tight knit group of 1,500 residents. Buy to occupy or as an investment & you’ll be rewarded by the increasingly popular enclave.

of Houses Sold

Most Active suburbs Number of Houses Sold (RP Data)

Blacktown Baulkham Hills 540 526 ($480,500 ($780,000))

Baulkham Hills 526 ($780,000)

Glenmore Park Baulkham Hills 440 526 (Median $530,000) ($780,000)

Active suburbs

r of Houses Sold

0)

Glenmore Castle Hill Park 573440 (Median $530,000) ($961,125)

Blacktown Glenmore Park 540 440 ($480,500 ) (Median $530,000)

Baulkham Hills 526 ($780,000)

Baulkham Castle HillHills 526 573 Blacktown ($780,000) ($961,125) 540 ($480,500 ) GlenmoreKellyville Park 440 587 ($815,000) (Median $530,000)

Sydney City Kellyville 510 (Median $649,00 587 ($815,000)

Castle Hill 573 ($961,125)

Blacktown 540 ($480,500 )

Blacktow Kellyville Baulkham Hills Castle Hil 540 587 526 573 ($480,500 ($815,000) ($780,000) ($961,125

Glenmore Park 440 (Median $530,000)

Baulkham Hills 526 ($780,000)

Castle Hill 573 ($961,125)

Blacktown 540 ($480,500 )

Kellyville 587 ($815,000)

Sydney C 510 (Median $649

ark

,000) The McGrath Report 2014 The McGrath Report 2014

The McGrath Report 2014

ort 2014

The McGrath Report 2014

The McGrath Report 2014

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Most Active suburbs Number of Apartments Sold (RP Data)

Castle Hill 573 BlacktownKellyville 540 ($961,125) 587 ($480,500($815,000) )

wn ll

0 )) )

Kellyville 587 ($815,000)

Kellyville 587 ($815,000) Castle Hill Kellyville 587 573 ($961,125)($815,000) Kellyville 587 ($815,000)

Sydney City 510 (Median $649,000)Sydney City Cronulla 510 520 (Median $649,000) ($565,000 )

Kellyville 587 ($815,000)

Kellyville 587 ($815,000)

Dee Why Cronulla Parramatta Sydney Sydney 679 City 666 Dee WhyCity 520 510 510 ($565,000)) 666 ($565,000 ($475,000) (Median $649,000) (Median $649,000) ($565,000) Sydney City Rhodes Sydney City 510 561 510 (Median $649,000) ($641,000 ) Rhodes (Median $649,000) Cronulla Sydney City Sydney City 561 Rhodes 520 510 Parramatta ($641,000 ) ) 561 510 ($565,000 (Median $649,000) Cronulla Dee Why (Median $649,000) 679 ($641,000 ) 666 520 ($475,000) ($565,000) ($565,000 )

Most Active suburbs

Sydney City 510 Median $649,000) (RP Data)

Number of Apartments Sold

00)

Sydney City Sydney City 510 510 (Median $649,000) (Median $649,000)

Cronulla 520 ($565,000 )

Rhodes 561 ($641,000 )

Dee Why 666 ($565,000)

Sydney City 510 (Median $649,000)

Cronulla 520 ($565,000 )

Parramatta 679 ($475,000)

Rhodes 561 ($641,000 )

City

9,000) Sydney

Sydney

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Sydney

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Sydney Sydney

29 29

Sydney

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(

sydney at a Glance

3 in 5 NSW Residents Live In Sydney

Booming New Apartment Market

Sydney’s population is expected to grow by 1.57 million people (36.7%) by 2031. The areas expected to have the highest growth include Sydney’s west, greenfield areas on the outskirts & the CBD.

High density building approvals in Sydney more than doubled from 9,932 in FY11 to 20,354 in the year to March 2014, with strong activity expected to continue for at least 5 years.

(NSW Planning Dept)

(BIS Shrapnel)

Major New Infrastructure Unlocks Good Value Markets A $60B infrastructure program is transforming Sydney, with major road & public transport upgrades enabling easier access between homes & job centres. These include: ■

After an extended downturn in construction from the late 2000s, today’s boom is being driven by strong population & economic growth, a chronic undersupply, rising property prices, record low interest rates & high demand from local & foreign investors.

New Apartment Hot Spots (Council Areas)

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WestConnex (stage 1 completion 2017) NorthConnex (completion 2019) North-West Rail Link (completion 2019) CBD & South East Light Rail (completion 2019/20) South-West Rail Link (completion 2015) Inner West Light Rail extension (completed)

1. City of Sydney (3,700 new apartments pa) 2. Parramatta (1,600) 3. Ryde (1,200) 4. Auburn (1,100) 5. Ku-ring-gai (900) (BIS Shrapnel high density approval estimates)

The McGrath Report 2014

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Inner Sydney Still Has Affordable Options 67 suburbs in Greater Sydney have apartments with median prices under $400K. Below are 4 Inner Sydney LGAs with apartment median pricing under $550K. Suburb

Median

Ultimo

$425,000

Rushcutters Bay

$445,000

Elizabeth Bay

$530,000

Potts Point

$535,000

(RP Data)

location Matters The gap between inner Sydney property & the outer suburbs has widened over the years as buyers look for access to the CBD & lifestyle infrastructure.

Penrith Parramatta

Paddington

1994

2004

2014

$118,000

$321,000

$414,000

$163,000

$505,500

$712,500

$346,000

$1,050,000

$1,550,000

Penrith

Parramatta

Paddington

(RP Data)

Sydney

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Audi Benchmark Follow the smart money suburbs with the most Audi owners.

Baulkham Hills

Strathfield

The McGrath Report 2014

Killara

Wahroonga

Randwick

Chatswood

32

Burwood

Rhodes

Castle Hill

Mosman

AustrAliA

A quick look at what’s happening to prices around Australia.

BrisBAne & surrounds

Brisbane houses are 40% cheaper than Sydney & 22.5% cheaper than Melbourne.

In a tell-tale sign, Brisbane sales are up 25% year to February, with 31,770 homes sold compared to 25,470 over the same period in 2013.

Inner Brisbane is experiencing a construction boom, with 5,500 new apartments expected to be ready for sale June-Dec 2014.

Brisbane & Surrounds

40 25 5,500 35

sydney overview Brisbane & surrounds overview

Let the Sun Shine: Sunshine Coast recovery The Sunshine Coast has finally begun its recovery thanks to major new infrastructure, employment growth & a price disparity that is once again attracting Sydney & Melbourne buyers.

sydney overview

In 2007, the price gap between the Sunshine Coast & Sydney was just $55,000. There was little reason for Sydney investors to buy here. But the GFC hit hard & today that gap is $265,000 making buying very attractive.

sydney overview

In addition to a compelling value proposition, there’s nothing like major infrastructure & new jobs to spur on a property market.

All of this is happening Upgraders are driving most markets Rewind five years & the in Brisbane right now median house price in in Queensland, with increasing & it’s finally starting to Brisbane wasn’t that impact. with RP Data to Sydney & severalhave an interest fromhas Melbourne Together a recovering Sydney asserted&itsSydney position differentThere have been reports Brisbane property Melbourne. RP Data shows investors chasing better yields & these factors key drivers of this growthvalueseconomy, are up almost the price gap was just as Australia’s strongest & fastest 7% in the monthsdemand to $25,000 with Melbourne value. Over the next three years, have12driven for including: August 1 (which looks slow & $134,000 with Sydney.

Brisbane & South-East housing to new levels growing residentialQueensland real estate compared to Sydney’s 11%) Today, that hasof investors 14.8% & will deliver the best capital growth & Melbourne’s are likely to continue Thegap return market over the past 12 months with but as growth in Sydney widened significantly to of all the major cities & a fantastic the growth curve for & influx of SMSF direct & Melbourne slows down, $115,000 & $270,000 & Brisbanes is likely of gap that opportunity for southern investors, several yearstoto come, investments around 14.8% price growth across it’s this sort ramp up. has sparked Brisbane’s downsizers & seachanging families. albeit (thankfully) at more previous growth cycles. the board. Often called the ‘New York are the And that’s what we’re modest ratesbiggest of growth Significant inflow of Upgraders players in Brisbane’s market starting to see now. fromyear, here.the sub-$1M of Australia’, a combination of factors overseas investment intoday. Last the start of any growth the residential market was the standout sector, has driven demand for the Harbour Atperiod this year it has extended to in any location, you Whilst I believe we will sub-$1.5M. The $500,000 see a few tell-tale signs: to $700,000 bracket & out-of area rates continue to seeis very the hottest Record low interest City to all time highs in FY14 & my More local strong, with lots of families investors. More families demand & price growth in alongside record high rents selling to upgrade to $1M+ while value prediction is there is more to come upgrading & lotsring of buyers remains. First home buyers properties the inner & beachside ready to compete for their looking to get out of the The impact of a new homes.suburbs of Sydney, there in terms of growth. rental cycle. Returning developers. number of is a sharp increase in StateThe Government The inner ring markets sales goes up, the days on demand for new residential 5-6km from the CBD are in market goes down. More strongareas demand, buyers attend opens in thefollowed outer ring Approval & & by the middle ring about register to bid at auctions. like Kellyville & Rouse commencement 10km out. We are starting to see Hill, thatheightened classic ripple by new of several major effect as more people transportation infrastructure projects expandscheduled their search to the middle they links.ring Thiswhere will continue can get bigger blocks at Sydneysiders strive to Underlying housing slightlyasbetter prices yet easy access to the competing shortage coupled with still withbalance ■ the CBD. an anticipated population factors of proximity, The McGrath Report 2014 36 convenience, lifestyle growth of 1.57 million & affordability. by 2031 ■

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sydney overview

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Sydney has asserted its position as Australia’s strongest & fastest growing residential real estate market over the past 12 months with

There have been several Together with a recovering key drivers of this growth economy, these factors have driven demand for including: housing to new levels The return of investors & are likely to continue & influx of SMSF direct the growth curve for

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sydney overview No project is more significant than the Sunshine Coast Public University Hospital at Kawana, currently under construction & employing 1,800 workers.

On completion in 2016, the hospital will create 2,500 new jobs with another 2,500 by 2021.

The new private hospital opened in late 2013, employing more than 600 staff.

The 25-year plan to rebuild Maroochydore CBD was given formal approval in July with work to commence soon.

Old commercial buildings will be demolished, new roads built & Horton Park Golf Club will be developed. The new city centre will accommodate 240,000 sqm of retail & commercial space & 2,000 homes will be built nearby.

Today, we’re seeing a bottom up recovery with the sub-$500,000 market moving fast, followed by the middle market between $500,000 to $1M & a slight pick-up in the $1M+ sector – largely driven

by Sydney & Melbourne families moving here for lifestyle & value.

Investment activity is increasing due to affordability, attractive yields & great potential for capital growth. Australia’s largest mortgage broker, AFG reports a jump in Queensland investment activity this year. More buyers’ agents are setting up in Brisbane – indicative of increasing demand from interstate clients.

There is a well-worn path from Sydney/Melbourne to South-East Queensland but interstate migration is near record lows – mainly due to baby boomers remaining at work postGFC, hence delaying their trek north for their retirement in the sun.

On the Gold Coast, a wide John McGrath’s Top Picks range of buyers are active Indooroopilly offers a great mix for the first time in years. of property types including new Many people whobeen sat onseveralapartments & prestige Together withhomes. a recovering There have The new $450M refurbishment the sidelines post-GFC are Shopping economy, theseCentre factors key drivers of this growthof Indooroopilly back in action, confidence has created a major suburban is growing & the herd retail mecca a real alternative have& driven demand for including: to the CBD for major shopping effect is kicking in.

sydney overview sydney overview

Local upgraders are once again active in established suburbs with great schools such as Buderim, Tanawha & Mountain Creek.

Investors are back with a 50:50 split between locals & interstate buyers primarily from Sydney.

The Sunshine Coast’s house prices began improving in mid2013, with the median value up 5.5% over the 12 months to August 2014.

(RP Data)

Sydney has asserted its position as Australia’s strongest & fastest growing residential real estate are happening The return of investors market over the past 12 months withThings quickly because the area & influx of SMSF direct In Brisbane & on the was so heavily oversold Sunshine Coast, we are in the GFC. Another big investments around 14.8% price growth across beginning to see young factor boosting confidence haveYork is the completion of large Big infrastructure projects the board.

Oftensouthern calledfamilies the who ‘New sold for big prices back infrastructure projects, on the Sunshine Coast Significant inflow of home moving here for especially the Gold Coast (new public & private investment in of Australia’, a combination of factorsLight Railoverseas lifestyle & jobs that are on & Gold Coast university hospitals, par with southern incomes. University Maroochydore CBD the Hospital. residential market has driven redevelopment) & in demand for the Harbour An emerging trend Toowoomba ($100M statelow is miners Brisbane West I expectin thisFY14 trend to Record interest rates City toWellcamp all time highs &grow, my across the returning to former home Airport opening this year especially once southern alongside record high rents towns & cities or moving & the $1.6B Second Range city dwellers realise that prediction is there is more to come to lifestyle locations & Crossing starting midBrisbane today is not investing in real estate.

2015) are making national what they remember The impact of a new in terms of growth.

The mining boom turned headlines & attracting 10 years ago. Brisbane is ■

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(Census 2011)

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Some interstate investors in regional areas such as Townsville & the Sunshine Coast are ‘pre-retirees’ – an emerging buyer demographic purchasing now for investment with plans to move in later in retirement.

Brisbane & Surrounds

an urbane, cosmopolitan city with great culture, entertainment & restaurants. A good indicator is Brisbane’s debut on Monocle’s Top 25 World’s Most Liveable Cities Index this year.

Newtown less than 2kms west of the Toowoomba CBD, Newtown is an affordable hot spot undergoing change as more young couples & families move in & renovate.

Whilst I believe we will continue to see the hottest Helensvale located&aprice 15 demand growth in minute drive from Southport, Helensvale a sleeping the isinner ring giant. & beachside This large suburb offers a range of properties with good buying there suburbs of Sydney, available. There are good schools many average families into & easy access to highways is a sharp increase in State Government leading to Brisbane, Southport wealthy households & we & Surfers Paradise.for new residential demand expect to see more of this activityApproval in years to areas in the outer ring & come as mining winds down. like Kellyville & Rouse commencement Hill, heightened by new of several major scheduled transportation infrastructure projects links. This will continue as Sydneysiders strive to Underlying housing balance the competing shortage coupled with an anticipated population factors of proximity, 37 convenience, lifestyle growth of 1.57 million & affordability. by 2031 ■

interstate enquiry.

housing to new levels Carindale just 10kms the & are likely from to continue CBD benefitting as people widen their search the inner ring. the from growth curve for It offers bigger blocks & homes for fractionally & good severallessyears tolocal come, shops including a Westfield. albeit (thankfully) at more Hendra popular suburb with easy access to the airport.

A value modest rates of growth alternative to the renowned bluechip areas of Hamilton from here. & Ascot. excursions.

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Most Active suburbs Number of Houses Sold (RP Data)

NorthMorayfield Lakes 442 336 (Median $317,750) ($445,000 )

Most Active suburbs

Caboolture Morayfield Kallangur 350 359336 ($308,000) (Median $317,750) ($335,000 )

Number of Houses Sold Caboolture Morayfield (RPMorayfield Data) 336 (Median $317,750)

350 336 ($308,000) (Median $317,750)

Caboolture Kallangur 350 359 ($308,000) ($335,000 )

North Lakes 442 ($445,000 )

Morayfield 336 (Median $317,750)

Caboolture 350 ($308,000)

The McGrath Report 2014

Kallangur 359 ($335,000 )

Forest Lake 469 ($392,000)

Kallangur 359 ($335,000 )

North Lakes 442 ($445,000 ) The McGrath Report 2014

Morayfield 336 (Median $317,750) The McGrath Report 2014

Morayfield Forest Lake 336 469 Caboolture North Lakes (Median $317,750) ($392,000) 442350 ($308,000) ($445,000 )

Kallangur 359 ($335,000 ) The McGrath Report 2014

Caboolture 350 ($308,000) The McGrath Report 2014

40 40

40

40

Forest Lake 469 ($392,000) The McGrath Repo

Kellyville 587 ($815,000)

Most Active suburbs Number of Apartments Sold (RP Data) North Lakes Forest Lake 442469 ($445,000 ) ($392,000)

Forest Lake 469 ($392,000)

Sydney City 510 (Median $649,000)

Most Active suburbs

Number of Apartments Sold

Most Active suburbs (RP Data) Number of Apartments Sold Most Active suburbs Most Active suburbs North Lakes 442 ($445,000 )

(RP Data) Number of Apartments Sold Number of Apartments Sold Forest Lake (RP Data)

(RP Data)

Caboolture Forest Lake 350 469 Lakes North Kallangur ($308,000) ($392,000) 442 359 ($445,000 ($335,000) )

e

Brisbane City 666 ($500,000)

Kallangur 359469 ($392,000) ($335,000 )

Most Active suburbs

)

Number of Apartments Sold (RP Data)

)

Kellyville 587 ($815,000)

Kellyville Fortitude Valley 587 261 ($815,000) (Median $425,000)

Fortitude Valley 261 Sydney City (Median $425,000) 510 Rhodes Rhodes (Median $649,000) Cronulla 561 Dee Why 561 City Sydney 520 ($641,000 ) 666 ($641,000 ) 510 Cronulla ($565,000 ) ($565,000) (Median520 $649,000) ($565,000 )

Fortitude Valley 261 (Median $425,000)

Cronulla Sydney City 520 510 ($565,000 ) (Median $649,000)

Sydney City 510 Median $649,000)

Sydney City 510 Valley Fortitude Valley Fortitude (Median 261 $649,000) 261 (Median$425,000) $425,000) (Median

Dee Why 666 ($565,000)

Kellyville 587 ($815,000)

Fortitude Valley 261 (Median $425,000) Parramatta Dee Why 679 666 ($475,000) ($565,000)

Cronulla 520 Kangaroo Point ($565,000 ) 262 ($515,000 )

Rhodes 561 ($641,000 New Farm) 288 ($538,750 )

Cronulla Rhodes 520 561 ($565,000 )) ($641,000 Parramatta 679 ($475,000)

Nundah 321 ($413,500)

Sydney

ort 2014

40 40

Fortitude Valley 261 (Median $425,000)

Brisbane & Surrounds

41

Fortitude Valley 261 (Median $425,00

Brisbane at a Glance

Most Affordable East Coast Capital City Market

New Inner City Apartments In Record Numbers

Brisbane houses are 40% cheaper than Sydney & 22.5% cheaper than Melbourne.

Inner Brisbane is experiencing a construction boom, with 5,500 new apartments expected to be ready for sale June-Dec 2014. Demand driven by local, interstate & international investors as well as local downsizers & young professionals. Construction likely to peak in 2016.

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Median house price $475,000 vs Sydney $745,000 Median apartment price $390,000 vs Sydney $569,000 Property prices up 7% in FY14 vs Sydney 15.4% Average Queensland home loan $373,911 vs $506,696 in NSW Median rent $415 pw (h) $400 (a) vs Sydney $585 pw (h) $520 (a) Investment yields 4.6% (h) 5.4% (a) vs Sydney 3.7% (h) 4.5% (a)

(Urbis & BIS Shrapnel)

Inner Brisbane Still Has Affordable Options 41 suburbs in Greater Brisbane have apartments with median prices under $310K, down from 46 last year.

Below are 5 Brisbane LGAs with apartments sub-$310K.

(AFG, RP Data) Suburb

Median

Algester

$290,500

Kuraby

$292,250

In a tell-tale sign, the number of sales for the Brisbane region are up 19.8% in the year to May 2014, with 48,930 sales compared to 40,840 over the same period in 2013.

Bridgeman Downs

$295,000

Sumner

$300,750

Parkinson

$302,000

(RP Data)

(RP Data)

Cusp Of Recovery

Audi Benchmark

Buderim

Ascot

The McGrath Report 2014

Sunnybank Hills

Robina

Bardon

Bulimba

42

Paddington

Surfers Paradise

New Farm

Southport

AustrAliA

A quick look at what’s happening to prices around Australia.

AustrAliAn CAPitAl territory

Australian Capital territory snapshot

Highest Growth

Australian Capital territory snapshot House

Lowest Days On Market House

Suburb

1 Year

3 Year

Median

Suburb

Amaroo

14%

8%

$582,500

Page

Australian Hackett 9% Highest Growth14%

snapshot 14% 16% 13%

32

Capital $702,000 territory Stirling Days On Market Lowest

Bruce

Chapman House

$750,000

-4%

41 46 DOM

1 13% Year

3n.a.

Year

$618,848 Median

Latham Suburb

14%

8%

$582,500

Page

9%

$702,000

Stirling Weetangera

16%

$750,000

House Apartment Chapman

13%

-4%

$745,000

Suburb Suburb Wright

1 Year 13%

Amaroo

14%

8%

CaseyHackett 24% 17% 14% Highest Bruce 14% Harrison 24% Growth 22%

House 41

Median

Suburb

Suburb Latham

Median $618,848

$582,500

Page

Monash $702,000

$433,250

9%

32 40 Lowest Days On Market 40

Apartment Scullin

3 Year

3 Year n.a.

40

Scullin House

Wright Suburb

Hackett 14% Highest Growth Bruce 14%

Wright

Weston Suburb 12% Apartment

13%

3 $470,000

$618,848 Year Apartment Palmerston

1 11% Year

14% 35% Year

Bruce24% Apartment Chapman Harrison 24% Suburb Wright Lyons Casey 19%

17% 14%

$433,25016%

13% 1 Year 22% 13%

$463,000- 4% 3 Year n.a.

17%$428,950

Cook Suburb

Amaroo

n.a.

18% Year

Hacket t

Casey

24%

Highest Weston Number 12% Of Sales Harrison

8% $500,000 Median

14%

24%

Banks Suburb

9%

-4%

Monash Cook Median

$470,000

Suburb

1 Year

3 Year

Casey

Harrison House

24% 159

Lyons Highest Number Sales Australian Kambah 157 Suburb 1 Year Highest Number Of SalesOf 19% Weston 12% 14% snapshot 145 11%

Amaroo Cook House Hacket t

Bonner

FordeSuburb House Bruce

Casey Ngunnawal Chapman Suburb

124

14%

Kambah

Suburb

22%

Macgregor

8% 5% 9%

Isabella Plains

# Sales

16%

Melba House

159

- 4%

Chisholm Suburb

157

n.a.

Macgregor

Wright 13% Casey Highest 159 Number Of Sales Bonner 145 Kambah 157 Forde 124 Highest Growth House Ngunnawal 121 Apartment Bonner 145 Apartment Suburb Forde House Casey

Suburb

House

46 Suburb

$582,500

Page

57 DOM

Stirling

34 $750,000 Apartment $745,00042 Suburb $618,848 Monash 46 Cook

Weetangera Scullin

48

46

57 Palmerston $433,250 Gross

34 42

Latham

Banks Median

DOM

Latham

48 Apartment 57 Suburb

Lowest Rental Yield Rent P/W Days O Monash

$463,0005.20%

Cook $430 House

Latham - 4% $428,950 Highest Rental Yields Capital territory Charnwood 5.20% $398 3 Year Median Suburb Highest Rental Yields Palmerston 8% $470,000

14%

13% #121 Sales

17%

41

46

$702,000

Cook

Highest Growth Suburb # Sales Casey 24%

Scullin

Latham Median 48

$463,000

Lyons 19% - 4% $428,950 Australian Capital territory$470,000 Banks 5% Weston 11% 12% 8% $500,000 Apartment snapshot Cook 11% 5% $500,000 House House

32 40

Lowest40 Days On M

Weetangera 42

Highest PalmerstonRental Yields

22%

8%

$433,250 Latham

DOM

DOM 46

34 Stirling

16% $463,000 $750,000 Cook Australian Capital territory 13% - 4% $745,000 Latham -4% $428,950 snapshot

LyonsChapman House19%

40

Weetangera

$745,000

Amaroo

1 Year

DOM

# Sales 124

Suburb 1 Year 1 Year 121 3 Year 222 24% Amaroo 14% 8% Bonner Suburb # Sales Braddon 199 Harrison 24% Hackett 14% 9% Forde Kingston Highest Grow Lyons 19% th 222 Belconnen 142 Bruce 16% Ngunnawal 14% Braddon 199 Weston 12% Chapman 13% - 4% Griffith 128 Apartment Belconnen 142 House Cook 11% Wright 13% n.a.

Suburb 1 128 Year TurnerGriffith Suburb #105 Sales Apartment Turner 105 Amaroo 14% (RP Data)Suburb Kingston 222 (RP Data) Hacket t 14% Kingston Braddon 199 Bruce Number Highest Of14% Sales Apartment Braddon Australian Capital Chapman 13% Australian Capital Territory Territory142 Belconnen Suburb 1 Year 3 Year Belconnen Wright 13% House GriffithCasey 128 24% 17% Griffith Suburb 24% 22% Turner Turner Harrison 105 Casey Lyons 19% - 4% (RP Data) (RP Data) Kambah Weston 12% 8% Apar tment Highest Grow th Bonner Cook 11% Territor y 5% Australian Capital Suburb 1 Year Forde Suburb Kambah Kingston Ngunnawal Apartment Casey

$582,500 $500,0005.19% House $702,000

Charnwood # Sales

Apartment Isabella Plains

Page Banks $450 Stirling

5.15%

$480

Suburb $750,000

Gross Rental Yiel Weetangera

Macgregor 5.10%Rental $745,000 Gross

Yield

Charnwood $618,848

5.20% $440 Scullin Rent P/W 5.20%

Latham $430 Rental Yi Highest 5.19%

5.20%

Isabella Plains

$398 Melba5.20% 5.15% Lowest Days On Market House Chisholm 5.10% 5.19% $450

Suburb Apartment Suburb Gross Rental Yield Rent P/W Melba 5.15% $480 House 159 Macgregor Suburb 3 Year Median Median Suburb DOM 157 Charnwood Scullin 6.84% $355 Chisholm 5.10% $440 Apartment Monash 17% $433,250 $582,500 Page 145 Isabella32 Plains Suburb6.47% Gross Rental Yiel Franklin $370 Cook 22% $463,000 $702,000 Stirling 124 Melba 40 Scullin 6.84% Latham - 4% $428,950 City 5.88% $500 $750,000 Weetangera 40 121 Chisholm Franklin 6.47% Palmerston 8% $470,000 $745,000 Scullin 5.78% 41 Ngunnawal $390 Apartment City 5.88% Banks 5% $500,000 $618,848 Latham 46 Ngunnawal 5.78% Melba3 Year 5.67%RentalMedian $360 Suburb Gross Yield Rent P/W Apartment Melba 5.67% 8% $582,500 Scullin 6.84% $355 # Sales Suburb 9% $702,000 222 Scullin Franklin16% 6.47% $370 $750,000 Highest Renta Apartment 199 Franklin 45 $745,000 45 City - 4% 5.88% $500 Suburb DOM Median 142 Cit y n.a. $618,848 House Ngunnawal 5.78% $390 Monash 34 $433,250 128 Ngunnawal # Sales Suburb Cook 5.67% 42 $463,000 105 Melba$360 Melba 159 Macgregor Latham 46 $428,950 157 Charnwood Palmerston 48 $470,000 145 Isabella Plains Banks 57 $500,000 45 3 Year Median 124 Melba

Australian Capital territory snapshot

Australian Capital territory snapshot

Australian Capital Territory Casey House Ngunnawal

24%

121

45

17%

Harrison Suburb

24% 1 Year

22% 3 Year

Lyons Amaroo

19% 14%

4% 8%

$433, 250 Chisholm $463,000 Median $428,950 $582,500

sydney overview Australian Capital territory overview

sydney overview

sydney overview

Together with a recovering Sydney has asserted its position There have been several economy, these factors key drivers of this growth as Australia’s strongest & fastest have driven demand for including: housing to new residential estate Low interest rates & levels The growing biggest cut in publicreal sector jobs The ACT market has been & are likely to continue The returnover of investors a lack of quality houses quite uneventful the past 12 months in 20market years over & an the oversupply of new withpast year, curve for & influx of SMSF aregrowth keeping house with the usual direct for salethe years to come, investments around 14.8% pricechallenges growth across pause around prices several solid. The apartment election apartments are major (thankfully) sector albeit is a different story,at more time followed by a period the board.The Often called the ‘New York for Canberra. market has been modest rates of growth Significant with the oversupply having of uncertainty overinflow jobs of fromeffect here.on prices. investment ina material ofsince Australia’, a combination market activity jittery before the election of factorsthat keptoverseas residential many regionsmarket has driven demand the Harbour on ice inthe but property values haveforshown believe we will In innerWhilst northI Dickson, of the city. continue see the hottest Record low interest rates City to all time highs in FY14 & my some propertiestoare selling resilience. Downsizing is becoming demand & price alongside record high rents close to the growth in prediction is there is morebe to come The Budget announcement for prices a significant trend that should the inner ring beachside 2010 market peak as&more of 16,500 public service suburbs of Sydney, The impact of a new in terms of growth. locals look to upgrade. there job cuts by 2017 was turbocharged by new stamp duty a sharp increase in State Government Furtherisnorth in Gungahlin, especially concerning for concessions. demand for new residential newly completed suburbs Canberra, as 42% of the ■

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in are the outer ring & such asareas Crace nation’sApproval public servants like Kellyville commencement attracting families & &anRouse live & work in the city.

Hill, heightened by new of several major increasing number of Asian Nothing dampens market scheduled transportation infrastructure projects enthusiasm like job worries & Indian owner-occupiers links. after This a will continue purchasing few but after a slow Winter – as Sydneysiders strive to Underlying housing years of renting. which is pretty traditional balance the competing shortage coupled with anyway, we sense a factors proximity, anticipated population Downsizing is of becoming change an in confidence. convenience, growth of 1.57 million a significant trend, lifestyle & affordability. by 2031 with more of Canberra’s RP Data figures show ageing population looking Canberra house prices to transition to lower rose 3.2% January to maintenance properties.

August, with apartments As more public sector up 1%. This is a similar jobs go – with many rate of growth to 2013 redundancies aimed when houses rose 3.7% at senior managers; & apartments 1.5%. It’s we expect to see more certainly not booming downsizing helped along but they’re not going by the new Over 60s backwards.

Home Bonus Scheme.

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sydney overview

Sydney has asserted its position as Australia’s strongest & fastest growing residential real estate market over the past 12 months with The McGrath Report 2014

The McGrath Report 2014

46

There have been several Together with a recovering key drivers of this growth economy, these factors have driven demand for including: housing to new levels The return of investors & are likely to continue & influx of SMSF direct the growth curve for

24

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sydney overview

sydney overview

The two-year scheme provides massive stamp duty concessions forscheme The two-year over 60s.

Just $20 will be provides massive stamp charged on purchases duty concessionsup for to $595,000 – aJust drop$20 in will be over 60s. the ocean compared to charged on purchases up the $20,550 you would to $595,000 – a drop in normally thepay. ocean compared to the $20,550 you would I see an opportunity normally pay. for downsizers to buy well now inI see the oversupplied an opportunity for new apartment market with downsizers to buy well Audi Benchmark plentynow of choice, time & in the oversupplied negotiating power onmarket their with new apartment Audi Benchmark side. Some plentydownsizers of choice, time & prefernegotiating townhousespower & on their this demand is being met side. Some downsizers by developers building & prefer townhouses infill properties nowisthat this demand being met government land releases by developers building are being back. infill scaled properties now that government land releases Investment activity is down are being scaled back. & the apartment sector Yarralumla Kambah Canberra Kingston Deakin will remain tough for someis down Investment activity time. Mainland Chinesesector are & the apartment Yarralumla Kambah Canberra Kingston Deakin not bigwill players astough yet but remain for some a HSBC study of wealthy time.

Mainland Chinese are Asian not investors showsas34% big players yet but are interested in the of ACT – a HSBC study wealthy well ahead NSW (20%), Asianof investors shows 34% VIC (25%) & QLD (29%). are interested in the ACT – well ahead of NSW (20%), VIC (25%) & QLD (29%).

Australian Capital Territory

Australian Capital Territory

47

47

John McGrath’s Top Picks Ainslie a strong reliable John McGrath’s Picks performer, this is a large Top tightlyheld suburb with a significant Ainslie a strong reliable segment elevated to capture performer, this is aonto large tightlycity views & also backing held suburb with a significant bush reserve.

It is walking elevated to capture distancesegment to the city with wide city views & also backing onto leafy streets & vibrant village reserve.

It iseasy walking shops &bush cafes.

Also has distance to the city hubs with wide access to the employment leafy streets & vibrant village of Russell & Barton. shops & cafes. Also has easy access to performer the employment Turner very solid & one hubs of Russell & Barton.suburbs of the closest established to the CBD. A lot of new boutique Turner very solid performer & one apartments & townhouses are established suburbs going in.ofItthe hasclosest easy access to to the CBD. A lotUniversity of new boutique the Australian National & townhouses (ANU) &apartments is popular with students, are going in. It has easy access to academics & CBD executives. the Australian National Low long-term vacancy rates & University is popular with students, reliable (ANU) capital&growth. academics & CBD executives.

Low long-term vacancy rates & Crace/Franklin these relatively reliable capital growth. new neighbouring suburbs are very popular with families due to Crace/Franklin these relatively their modern housing, landscaped new neighbouring suburbs are parks, sporting facilities, cafes veryCrace popular with families due to & schools. is Australia’s their modern housing, landscaped fastest growing housing market parks, sporting facilities, cafes according to the Housing Industry & schools.

Australia’s Association, basedCrace on theisvalue of fastest growing housing market new home approvals & population growth.according to the Housing Industry Association, based on the value of new home approvals & population growth.

AustrAliA

A quick look at what’s happening to prices around Australia.

reGionAl new soutH wAles

sydney overview regional new south wales snapshot

Australian Capital territory snapshot Sydney has asserted its position

There have been several key drivers of this growth including:

as Australia’s strongest & fastest growing real estate territory Australian Highest Growth residentialCapital Lowest Days On Market The return of investors snapshot market over the past 12 months with House House & influx of SMSF direct 14.8% price across Suburb investments Suburbaround 1 Year 3 Year growth Median DOM Dareton 49% 9% $130,000 Valley Heights the board. Often called the ‘New York Significant inflow of21 Blue Bay 48% 46% $635,000 Currans Hill 21 Highest Growth Lowest Days overseas investment of Australia’, a combination of factors Balranald 45% 21% $145,000 North Gosford 22 in the residential market Berrima 43% n.a.

23 has driven demand for the$860,000 Harbour Kahibah Ewingsdale 40% 30% $1,263,000 Wyoming 29 Record low interest rates City to all time highsCapital in FY14 & my territory Australian Highest Growth alongside record high rents snapshot prediction is there is more to come Apartment Apartment of growth.

Suburbin terms 1 Year 3 Year Median Suburb The impact of a new DOM ■

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House

Together with a recovering economy, these factors have driven demand for housing to new levels & are likely to continue the growth curve for several years to come, albeit (thankfully) at more modest rates of growth On Market from here.

House

DOM Whilst I believe we will 32 continue to see the hottest Hackett 14% 9% $702,000 Stirling 40 Lowest Days On demand & price Bruce 14% 16% $750,000 Weetangera 40 growth in Chapman 13% - 4% $745,000 Scullin the inner ring41& beachside House House Wright 13% n.a. $618,848 Latham 46 suburbs of Sydney, there Suburb 1 Year 3 Year Median Suburb Amaroo 14% 8% $582,500 Page is a sharp increase in Mittagong 45% 96% $460,000 KariongState Government18 Hacket t 14% 9% $702,000 Stirling demand for new residential Murwillumbah 30% $240,000 16% Lisarow 23 Bruce42% 14% $750,000 Weetangera Apartment Apartment areas in the outer ring Approval & Chapman 13% 4% $745,000 Scullin Bermagui $295,000 Merewether 24 Suburb DOM Suburb 38% 1 Year 2% 3 Year Median Wright 13% n.a. $618,848 Latham& Rouse like Kellyville commencement Australian Capital territory Monash 34 Casey 24% 17%$484,475 $433,250 Gregory Hills 36% n.a.

Mardi 24 Cook 42 by new Harrison 24% 22% $463,000 snapshot Hill, heightened of several major Batehaven 35% -20% $251,000 Bligh Park 29 Latham 46 Lyons 19% - 4% $428,950 scheduled transportation infrastructurePalmerston projects 48 Weston 12% 8% $470,000 ApartmentGrowth Highest links.Apartment ThisLowest will57continueDa Banks Cook 11% 5% $500,000 Suburb Suburb 1 Year 3 Year Median as Sydneysiders strive to Underlying housing Australian Capital territory Highest Casey Number Highest Rental Yields Monash 24% 17% $433,250 HouseOf Sales House balance the competing shortage coupled with snapshot Cook Suburb Harrison 24% 22% $463,000 Suburb 1 Year 3 Year Median Latham Lyons 19% - 4% $428,950 Amaroo 14% 8% $582,500 Page of proximity, population Highest Number Of Sales Highest Rentalfactors Yields House House an anticipated Palmerston Weston 12% 8%9% $470,000 Hacket t 14% $702,000 Stirling convenience, lifestyle growth of 1.57 million Suburb Cook #11% Sales Gross Rental Yield Banks Rent P/W 5%16% Suburb $500,000 Bruce 14% $750,000 Weetangera House House & affordability. by 2031 Chapman - 4% Killcare $745,000 Scullin Port Macquarie 86813% 16.71% $2,650 Suburb # Sales Suburb Gross Rental Y Suburb

1 Year

3 Year

Amaroo

14%

8%

Median

Suburb

$582,500 ■

Page

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Wright

13%

159 DubboCasey 718 Highest Kambah Growth 157 OrangeHighest Number 585 Of Sales Bonner 145 Goulburn 467 House Forde 124 House Apartment 1 Year Suburb Suburb Amaroo 14%

Suburb Ngunnawal Armidale

384

3 Year 121

1 Year 8% 24% 9%

n.a.

Rosedale Malua Bay Broulee

Median Mossy Point # Sales 3 Year $582,500

$618,848

Latham

Macgregor 5.20% 15.05% $1,400 Lowest Days On Market 5.20% Charnwood 11.73% $925 Rental Highest Isabella Plains 5.19% 11.46% $850 House Melba 5.15% Suburb Chisholm 11.09% Median Page $433,250 Stirling

Australian Capital territory 159 17% $702,000 157 snapshot 22% $463,000 $750,000 Weetangera Apartment

Casey Casey Hackett 14% Highest Grow th Kambah Harrison 24% Bruce 14% 16% Apartment Bonner Lyons 19% Chapman 13% -# 4% Suburb Sales Apartment House Forde Weston 12% Wright 13% n.a.

Kingston 222 Suburb 1 Year Suburb Ngunnawal # Sales Cook 11% Braddon 199 Amaroo 14% Wollongong 558 Belconnen 142 Hacket t 14% Griffith 128 Port Macquarie 503 Bruce 14% Apartment Apartment Turner 105 Chapman 13% Coffs Harbour 312 Suburb Highest Number Of 3 Sales Suburb 1 Year Year (RP Data) Wright 13% Kingston TweedCasey Heads 243 24% 17% Braddon House Harrison 24% 22% Australian Capital Territory Gosford 188 Belconnen Suburb Lyons 19% - 4%

House Apartment DOM 5.10% $1,290 Suburb Suburb 32

Macgregor Monash 40 Charnwood Cook 40 145 Isabella Plains Latham - 4% $428,950 $745,000 Scullin 41 Suburb Gross Rental Y Apartment 124 Melba Palmerston 8%$618,848 $470,000 Latham 46 Scullin 6.84% 3 Year Gross RentalMedian Yield Chisholm Rent P/W 1215% Suburb Banks $500,000 Franklin 6.47% 8% $582,500 Lavington 7.88% $210 City 5.88% 9% $702,000 Ngunnawal 5.78% Tolland16% 7.76% $185 $750,000 Apartment Apartment Melba 5.67% - 4% $745,000 7.64% $360 # SalesSapphire Beach Suburb Highest Re Suburb DOM Median n.a. $618,848 222 Scullin Cowra 7.40% $175 Monash 34 $433,250 199 Franklin House Cook7.16% 42 $463,000 45 Nowra $230 142# Sales Cit y Suburb Latham 46 $428,950 128159 Ngunnawal Macgregor Palmerston 48 $470,000

Australian Capital territory 24 snapshot

Griffith Casey Weston

12%

8%

Apar tment Highest Grow th The McGrath Report 2014 Turner Kambah Cook 11% 5% Suburb (RP Data) Bonner Casey House Forde Harrison Suburb Australian Capital Territor y Ngunnawal Lyons Amaroo

Regional New SouthNumber Wales Highest Of Sales Weston Hacket t

Cook Bruce Apartment House Chapman

1 Year

24% 24% 1 Year 19% 14% 12% 14%

105 157 $500,000 3 Year 145 17% 124 22% 3 Year 121 4% 8%

51

8% 9%

11% 14%

5% 16%

13%

- 4%

Banks

Melba Charnwood 57 Median Isabella Plain $433, 250 Melba $463,000 Median 45 Chisholm $428,950 $582,500

Highest Rental Yields

$470,000 $702,000

House

$500,000 $750,000 Apartment $745,000

sydney overview regional new south wales overview

sydney overview

sydney overview

Together with a recovering Sydney has asserted its position There have been several economy, these factors key drivers of this growth as Australia’s strongest & fastest have driven demand for including: housing tobaby new levels residential estate Post-GFC, many The growing heat of the Sydney real market Many NSW markets are & are likely to continue The return of investors boomers have delayed experiencing a good markettoover 12 months with is starting havethe anpast influence the growth influxactivity of SMSF direct retirement to give curve their for level of &buyer several years to come, around 14.8% growth super nest eggs a chance or improving on regional areas,price inspiring newacross & steadyinvestments albeit (thankfully) at more to regenerate.

Sydney’s prices.

In many cases, local the board.

Often called the ‘New York Significant inflow of confidence among local upgraders of growth recentmodest propertyrates boom upgraders are dominating fromthem here.newfound overseas investment of Australia’, a combination of factorsthe market but local & out- inhas given & investors seeking to take the residential market equity that is enabling has driven demand forrates, the Harbour of-area investors are also advantage of low interest Whilst I believe we will them to buy their future out in increasing force. continue to see Record low interest rates City to all time highs in FY14 & my retirement homes now.the hottest high yields & great capital growth & price growth in alongside record high rents a very typical predictioninistheir thereown is more to come Many Sydney investors are This isdemand opportunities backyard. the inner ring &such beachside scenario in locations expanding their search to suburbs of Sydney, there The impact of a new in terms of growth. as Byron Bay, Banora Point, regional areas as rising Competition from Sydney buyers is a sharp increase in State Government Kiama, Berry & Bowral. prices back home reduce is increasing as city dwellers demand for new residential yields. More investors are the outer ring Approval & This isareas reallyin smart thinking using self-managed super look further afield for investment, like Kellyville & Rouse commencement given most regional areas funds (SMSF) where they retirement &/or a lifestyle change.

Hill, for heightened by new of several are in line good capital are buying housesmajor as well ■

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scheduled transportation infrastructure projects growth; & strong rental as apartment that deliver links.

This will continue yields of up to 7% means strong yields. as Sydneysiders strive to Underlying housing these properties will pay balance the competing shortage coupled with for themselves until the The ‘pre-retirees’ – factors of to proximity, an anticipated population owners choose move in. those that are purchasing convenience, lifestyle growth of 1.57 million now for investment with & affordability. by 2031 the specific intention of ■

sydney overview

moving in themselves in retirement – are becoming a significant new buyer demographic.

Sydney has asserted its position as Australia’s strongest & fastest growing residential real estate market over the past 12 months with

The McGrath Report 2014

The McGrath Report 2014

52

There have been several Together with a recovering key drivers of this growth economy, these factors have driven demand for including: housing to new levels The return of investors & are likely to continue & influx of SMSF direct the growth curve for

24

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sydney overview Another trend not seen Of course, we are still in many years is Sydney seeing downsizing retirees buyers purchasing relocating permanently The two-year scheme to lifestyle markets, provides massive stamp weekenders – & not just particularly those with for easy beach shacks either, duty concessions access back to Sydney over 60s. Just $20 to will be we’re talking $1.5M-$2M+ visit charged the grandkids.

In Port up properties on the Central on purchases Macquarie’s Town–Beach, to $595,000 a drop in Coast & in Bowral & early 12 out 17 in acompared new luxuryto $1Ms in Berry. theofocean complex sold to Sydney the $20,550 you would We are also seeing downsizers. normallyThe pay.lowest instances of Chinese price paid was $950,000 for the ground floor & thefor activity in some markets I see an opportunity for the first time. In the penthouses are to being downsizers buy well Southern Highlands, there marketed $2.2M now inabove the oversupplied beenBenchmark several major which could set a record new apartment market withhaveAudi for the town. plenty of choice, time & landholding purchases negotiating power on theirof 100 acres or more, including the 11-hectare As isside. often the case with Some downsizers site of the iconic Milton Sydney booms, city prices prefer townhouses & reach a point where somemet Park guesthouse which this demand is being young simply by families developers building sold for $13M in December giveinfill up &properties leave Sydney now that 2013. A few Sydney-based for agovernment lifestyle destination. land releases Chinese buyers are also in Newcastle & Others their back. are expand being scaled Port Macquarie looking search & buy in commuter regions like the activity Central is downfor development sites.

Investment Coast, Wollongong, & the apartmentBowral sector Yarralumla Kambah & the Blue Mountains. will remain tough for some We’re starting to see more are time.

Mainland Chinese of this notnow. big players as yet but a HSBC study of wealthy Asian investors shows 34% are interested in the ACT – well ahead of NSW (20%), VIC (25%) & QLD (29%).

Regional New South Wales

Australian Capital Territory

sydney overview John McGrath’s Top Picks Moss Vale beautiful village area John McGrath’s Top Picks with diverse housing. Moss Vale is a 10 minute drive south of Ainslie a strong Bowral & offers betterreliable value but performer, this is a large tightlythe same lifestyle (median house suburb with a significant price held approximately $185,000 segment elevated to capture less than Bowral). city views & also backing onto bush reserve. It is walking Mount Ousley/Balgownie distance to the city with wide positioned north of Wollongong & vibrant village CBD, leafy thesestreets areas are popular shops families & cafes.&Also has easy with young Sydney access with to the employment commuters, easy access to hubs of Russell & Barton. the Princes Motorway for a 30 minute trip to Sydney’s southern Turner very local solid village performer & one border.

Fantastic closest established shopsofatthe Balgownie & a lot of suburbs to the CBD. A lot of new boutique housing diversity. apartments & townhouses are going in.

It has easy access to Blackheath offers wonderful the Australian University character homes onNational quarter-acre (ANU) is popularItwith blocks from&$350,000. hasstudents, a executives. lively academics local village& &CBD is already Low long-term rates & benefitting from roadvacancy upgrades reliable capital growth. enabling faster access to Sydney.

Canberra

53

47

Kingston

Deakin

Crace/Franklin relatively Kincumber the more these affordable new neighbouring suburbs are neighbour of Avoca Beach & very–popular with offers families due to Saratoga Kincumber good modern housing, landscaped yieldstheir & prospects for capital parks, facilities, cafes growth with sporting today’s prices about & schools.

CraceBeach is Australia’s 20% less than Avoca & fastest growing housing market Saratoga. according to the Housing Industry Association, based on the value of new home approvals & population growth.

Around tHe world Around tHe world

As the global economy continues to recover so do the key international real estate markets.

As the global economy continues to recover so do the key international real estate markets.

The McGrath Report 2014

The McGrath Report 2014

56

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new york

The Manhattan residential market is showing signs of stabilising after a year of robust activity, record low inventory & strong foreign buyer interest.

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Chinese replace Russians as Manhattan’s Top Apartment buyers. Russian activity dropped off due to unrest in Ukraine & US imposing sanctions against Russia

new york

The Manhattan residential market is showing signs Continued shortage of stock & restoration of prices of stabilising after a year of robust activity, record low levelsbuyer resulted in a slower pace in 2014 inventoryto & pre-2008 strong foreign interest.

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GrowasatManhattan’s Disproportionate rate.

ChineseLuxury replaceSales Russians Top Apartment Shift towards larger unitsoff in due newto luxury developments buyers. Russian activity dropped unrest in contributed to higher priced sales Ukraine & US imposing sanctions against Russia

Top 5 Sales in 2014

Properties $3M for of 12% of sales Continued shortageabove of stock & account restoration prices (up 3% in last 12 months) to pre-2008 levels resulted in a slower pace in 2014

US$90M Penthouse, 432 Park Avenue, Upper East

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US$70M

45 sales at at $10M+, an increase of 181% in 12 months Luxury Sales Grow Disproportionate rate.

Penthouse, 960 Fifth Ave, Upper East Shift towards larger units in new luxury developments New Developments saw the largest median price contributed to higher priced sales Top 5 Sales in 2014 US$50.912M growth in one & three bedroom units. Average sales Penthouse, Walker Tower, US$90M price increased 63% in 12 to $3.59M Chelsea Properties above $3M account formonths 12% of sales ■

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(up 3% in last 12 months) Co-ops & older condos $5M+ have slowed ■

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45 sales at $10M+, an increase of 181% in 12 months Average sale price increased 20% in 12 months to $1.697 millionsaw the largest median price New Developments ■

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new york

growth in one & three bedroom units. Average sales Price Per63% Square SetstoNew Record. Focus on price increased in 12Foot months $3.59M high-end sales drove average price per square foot US$45M upolder to $1,286 Co-ops & condos $5M+ have slowed ■

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has the largest of sales AverageDowntown sale price increased 20% volume in 12 months to at 27% $1.697 million

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US$43M Triplex Penthouse, One Madison, Downtown

Price Per Square Foot Sets New Record. Focus on high-end sales drove average price per square foot up to $1,286 Downtown has the largest volume of sales at 27%

World (Corcoran Around Report, the realdeal.com)

Around the World

NYC NYC NYC NYC

15 Century Park West, Upper West

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(Corcoran Report, realdeal.com) ■

Penthouse, 432 Park Avenue, Upper East US$45M 15 Century Park West, US$70M Upper West Penthouse, 960 Fifth Ave, Upper East US$43M Triplex Penthouse, One Madison, US$50.912M Downtown Penthouse, Walker Tower, Chelsea

57

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london

The Manhattan residential market is showing signs of stabilising after a year of robust activity, record low inventory & strong foreign buyer interest.

■

Chinese replace Russians as Manhattan’s Top Apartment buyers. Russian activity dropped off due to unrest in Ukraine & US imposing sanctions against Russia

new york

London continues to be one of the world’s most Continued shortage & restoration expensive residential marketsof asstock it is buoyed by theof prices pre-2008 levels resulted a slower pace in 2014 wealth ofto Russians, Chinese & Arabs.inPrime London ■

property becomes akin to a global reserve currency.

Luxury Sales Grow at Disproportionate rate.

Shift towards larger unitshas in new luxury developments The pace of house price growth slowed in Q2 to higher & priced sales 2014 as contributed the market stabilises returns to more normal ■

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trading conditions Properties above $3M account for 12% of sales 3% in last 12 months) Investors(up account for nearly 31% of all Prime London

US$90M Penthouse, 432 Park Avenue, Upper East

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purchases made in Q2 2014, the highest level on record 45 sales at $10M+, an increase of 181% in 12 months ■

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US$70M Penthouse, 960 Fifth Ave, Upper East

new york

Prime Central London (Chelsea, Kensington, Mayfair, Developments saw the largest Notting New Hill, Holland Park, Pimlico) is the key median hotspotprice for House price growth US$50.912M Q2, 2014 growth in one & three bedroom units.

Average overseas investors, cash buyers account for 68% of all salessteadies inPenthouse, Walker Tower, price increased 63% in 12 months to $3.59M Chelsea purchase in Q2 2014 (+26%) Prime Central ■

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Top 5 Sales in 2014

US$45M

Top 5 Sales In 2014 £140M Penthouse, One Hyde Park, Knightsbridge

Average Property Price: Co-ops & older condos $5M+ have slowed Prices are still rising, particularly in lower price brackets 15 Century Park West, £43M £2,239.559 Upper West where demand is outstripping supply. One bedroom House, Mayfair Average saleLondon price increased in 12 months to Quarterly Change: units in Outer Prime (Clapham,20% Balham, US$43M £35M 2.1% $1.697 million Battersea, Barnes, Fulham) have seen fastest annual Triplex Penthouse, One Madison, House, St Johns Wood Downtown growth (+28%) Annual Change: Price Per Square Foot Sets New Record. Focus on 10.5% £30M House, Kensington high-end sales drove average pricebuyers per square foot As prices have climbed in Central London, Outer Prime London up toafield $1,286 look further to more affordable urban ‘villages’ ■

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of Outer Prime London. Hotspots are Clapham, Downtown has the largest volume of sales at 27% Brook Green & Balham ■

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Report, realdeal.com) 55% of (Corcoran Prime London property is valued at £1 million or more

Average Property Price: £1,183,570

Annual Change: 15.3%

Around the World

The McGrath Report 2014

NYC LDN

Quarterly Change: 4.3%

(Marsh & Parsons, Lonres.com, databiens.com)

57

60

£29.95M House, St Johns Wood

Paris

new york

The Manhattan residential market is showing signs of stabilising after a year of robust activity, record low inventory & strong foreign buyer interest.

■

Chinese replace Russians as Manhattan’s Top Apartment buyers. Russian activity dropped off due to unrest in Ukraine & US imposing sanctions against Russia

The French government’s punitive tax regime, rising Continued shortage&ofbusiness stock & restoration interest rates, low consumer confidence of prices pre-2008 levelson resulted in a slower pace–in 2014 has had atonegative impact the residential market ■

Paris becomes a buyer’s market.

Luxury Sales Grow at Disproportionate rate.

Shift towards larger in new luxury developments Since Q3 2011, average priceunits of three-bedroom contributed to higher homes down from €1.5 millionpriced to justsales above €1 million ■

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in Q1 2014 Properties above $3M account for 12% of sales 3% in last 12 months) Buyers’ (up Market continues.

Active sales market in

US$90M Penthouse, 432 Park Avenue, Upper East

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Top 5 Sales in 2014

Paris for heavily discounted properties. Buyers largely US$70M 45 sales at $10M+, an increase 181% in 12 months French nationals living abroad.

Foreignof buyers mainly Penthouse, 960 Fifth Ave, Upper East Middle East & Russian. U.S. re-emerge (celebrities & New Developments saw the largest median price businessmen) Top 5 Sales in 2014 US$50.912M growth in one & three bedroom units. Average sales Penthouse, Walker Tower, €11 400 000 price increased 63% in 12 months to markets, $3.59M Chelsea While recovery underway in most European ■

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France has stagnated due to weak consumer spending Co-ops & older Unemployment condos $5M+ have & business investment. at a slowed new record high of 3.36 million Average sale price increased 20% in 12 months to $1.697 millionover €1.3 million, increased VAT Wealth tax on assets ■

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new york

Apartment (Odeon) June 2013 approx 34500€/m2 US$45M 15 Century Park West, €7 000 000 Upper West Apartment (Etoile Foch) Jan 2014 approx 11750€m2 US$43M Triplex Penthouse, One Madison, € 5 600 000 Downtown Apartment ( Trocadero) May 2014 approx 16000€/m2

on renovations & higher business taxes, dampened Per Price Square Foot Sets evident New Record.

Focus on prestigePrice market. stabilisation in more high-end sales drove average price per square foot upmarket arrondissements € 5 350 000 Apartment up to $1,286 ■

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Top end price growth subdued as buyers factor has thecreating largest volume sales at 27% in wealthDowntown tax implications, surplus of stock & downward pressure on prices

( Place des Vosges) Jan 2014 Approx 26300€/m2

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(Corcoran Report, realdeal.com) ■

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Most purchasing activity sub €1 million Introduction of Loi ALUR in March 2014 to contain growth in rental values in line with RPI as well as to regulation rental values by location*

*retail price index the World Around

57

(databiens.com)

Around the World

NYC PAR

€5 000 000 Apartment (Grenelle) Feb 2014 at approx. 28000€ m2

61

Hong Kong

The Manhattan residential market is showing signs of stabilising after a year of robust activity, record low inventory & strong foreign buyer interest.

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Chinese replace Russians as Manhattan’s Top Apartment buyers. Russian activity dropped off due to unrest in Ukraine & US imposing sanctions against Russia

new york

Despite a continued softening in the luxury residential Continued shortage of stock & from restoration market due increased transaction costs stricterof prices to pre-2008 levels stamp resulted in a slower pace in 2014 policy measures & multiple duties, Hong Kong ■

Island is the third-most expensive city in the world after Luxury Sales Grow at Disproportionate rate.

Monaco & London.

Shift towards larger units in new luxury developments contributed higheratpriced sales Buyers of propertiestovalued HK$2M+ pay double ■

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stamp duty up to a 8.5% ceiling since February 2013 if $3M account 12% of sales non HKGProperties residents.above Legislation doublingfor stamp duty was (up 3% in last 12 months) passed on July 2014

US$90M Penthouse, 432 Park Avenue, Upper East

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Top 5 Sales in 2014

US$70M

45 sales atprices $10M+, an increase of 181% 12 months Luxury apartment down by 8% from theirinpeak Penthouse, 960 Fifth Ave, Upper East in Q4 2012 New Developments saw the largest median price Top 5 Sales In 2014 US$50.912M growth in one & also threeaffected bedroom Average sales Luxury residential sales byunits. declining Penthouse, Walker Tower, HK$690M increased 63% in 12 months to $3.59M Chelsea demandprice in leasing as multinationals cut rental budgets

new york

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& many expats return to recovering economies back Co-ops & older condos $5M+4% have slowed home. Luxury rents falling by around in Q1 2014 ■

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salein price increased 12 months to Only 95Average luxury sales Q1 2014, a 41%20% dropincompared $1.697 million with the 161 transactions in Q1 2013. Low volume a result of cooling measures & declining investment interest Price Per Square Foot Sets New Record. Focus on sales drove average price per square Prices inhigh-end the mass-residential market showed signs of a foot HK$231M up in to Q1 $1,286 correction 2014 across Hong Kong Island, Kowloon ■

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House at 28 Barker Road, The Peak – HK Island US$45M 15 Century Park West, HK$650M Upper West House at 3 Gough Hill Road, The Peak – HK Island US$43M Triplex Penthouse, One Madison, HK$430M Downtown Apartment, Stubbs Road, The Peak – HK Island

& the New Territories, however increasing demand for hasflats the largest volume of sales at 27% small to Downtown medium-size

House at Shouson Peak – HK Island

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realdeal.com) Recent(Corcoran signs ofReport, revival in the Hong Kong market due to developer discounts on higher stock levels, low interest rates & some government concessions on stamp duties with some recent high priced sales

(Savills, Knight Frank) Around the World

The McGrath Report 2014

NYC HKG

HK$200M House at Pok Fu Lam – HK Island

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