RESEARCH & FORECAST REPORT SYDNEY APARTMENT

SECOND HALF 2011 | RESIDENTIAL RESEARCH & FORECAST REPORT SYDNEY APARTMENT Capital Growth Opportunities Prosper The performance of the Sydney CBD market and surrounding suburbs rests on the fundamentals of supply and demand. Currently, there are 13 projects or 1,916 apartments being marketed. Of these projects, four are completed with only 13% of the stock remaining for sale. A further six projects or 940 apartments are under construction with the remaining yet to commence. Of the projects under construction, approximately 86% of the apartments have already been pre-sold. The Sydney CBD and surrounding suburbs are not facing an oversupplied market, due to numerous factors including the established nature of the locality, funding requirements and limited development opportunities. Demand levels are expected to remain sound and in some localities pent-up demand, due to the lack of new supply, is likely to drive prices skywards. The Stamford Residences and The Reynell Terraces The recently completed development has few buying opportunities remaining. RECENT SALES PERFORMANCE Q2 2011 NEW AND ESTABLISHED APARTMENTS NORTH MID EAST SOUTH The fundamentals of the market have historically assisted with healthy capital growth opportunities. Colliers International has undertaken a resale analysis of five buildings within the CBD in various geographical locations which provide varying view profiles and levels of fixtures and finishes. Of the 417 resales recorded in the five buildings, 97% of the transactions resulted in positive capital growth forthe owner. This data suggests the Sydney CBD provides prosperous capital growth opportunities for the astute buyer. The analysis included the two most recently completed buildings - The Stamford Residences and The Reynell Terraces, within the Northern Precinct, and INMARK Terraces, in the Southern Precinct. To date The Stamford Residences and The Reynell Terraces have recorded nine resales, all positive, and an average capital growth of 17%. The highest capital gain achieved is 30% and a furtherthree sales reported 20%+ gains. INMARK Towers has reported 16 positive resales and an average capital gain of 14%. The most significant resale resulted in a 31% capital gain forthe owner. The apartment was initially purchased for $411,840 in July 2009 and resold for $540,000 in November 2010. A furthertwo purchasers have made a capital gain in excess of 20%. These projects demonstrate the strength of the off-the-plan market and the capital growth achievable. SYDNEY NEW APARTMENT MARKET INDICATORS - Q3 2011 KEY HIGHLIGHTS • Approximately 35% of new stock remains. • The 13 projects on offer comprise 1,916 apartments. • There are 21 development equating to a minimum of 4,107 apartments planned for the future. • During the 2011 June quarter the most popular price range for new and established product was $500,000 to $600,000. Precinct North Mid East South No. of Apartments Available 125 42 317 1,432 No. of Sold Apartments 115 4# 209 919 No. of Projects for Sale 1 2 5 5 Total 1,916 1,247 13 # No update available. Source: Colliers International Research www.colliers.com.au/research RESEARCH & FORECAST REPORT | SECOND HALF 2011 | RESIDENTIAL | SYDNEY “With few new investment opportunities going forward, particularly within the Northern Precinct, it is anticipated demand for established product will remain strong.” The Hyde development, which is also located in the Southern Precinct, was completed in 2010 and has recorded 41 positive resales. The average capital gain forthe building is 22%. To date the largest capital gain forthe building is 45%. The apartment originallytransacted for $1.28 million in November 2006 and resold for $1.85 million in October 2010. Another resale also resulted in a 41% gain. The resales in The Hyde have ensured six owners gained a 32% or 33% profit with a further 15 selling their apartment for a 20% to 29% capital gain. Strong capital returns are not only apparent within new developments as Bennelong and the Cove have also been analysed for their resale prowess. Bennelong was completed in 1999 and the Cove was finished in 2003. Bennelong has recorded a total 164 apartment resales, with some apartments changing hands up to three times. Five apartments transacted at a loss and one apartment was resold at the same price. Eight sales have resulted in a capital gain in excess of 100%. One sale achieved an outstanding 198% capital gain achieved between April 1999 and February 2008. A further 40 owners attained a capital gain between 50% and 100% and another 20 resales resulted in growth ranging from 40% to 49%. The Cove building has recorded 195 resales with 11 resulting in a loss ranging from -1% to -17%. A further three sales were resold at the initial purchase price. The resales have averaged 20% within the Cove. Two sales resulted in a capital gain of 71%. One apartment was purchased for $535,000 in August 2002 and resold for $915,000 in May 2010 whereas the other apartment was acquired in 2003 for close to $6 million and resold in 2006. A furtherten resales ensured a 50% to 70% capital gain and another 24 sales resulted in a 30% to 50% gain. The resilience of the Sydney apartment market can further be seen in the resale prices achieved during the Global Financial Crisis. Within the five buildings analysed, 30 resales occurred between October 2008 and December 2009. The average capital gain achieved during this period was 35%. The weakest result was a 1% capital gain whereas two resales resulted in a 103% and 116% gain. Only three resales ensured single digit capital growth. This is at a time when global markets were enduring significant turmoil resulting in price discounting due to oversupply. With few investment opportunities going forward, particularly within the Northern Precinct, it is anticipated demand for established product will remain strong. Approximately 750 apartments are within Concept Plan stage, a further 380 are awaiting development approval and 720 apartments have been deferred within the CBD and surrounds. Five projects have gained approval and are either waiting for pre-sale levels to be met or have yet to commence marketing. All of these projects will have a yield of less than 50 apartments. SEPP 65 challenges will further exacerbate supply levels going forward. Our analysis has demonstrated significant capital growth opportunities can be achieved by buying off-the-plan or within an established building. The Sydney CBD and surrounding suburbs represent a good buying opportunity and this trend is expected to continue well into the future. AVERAGE RESALE CAPITAL GROWTH 45% 40% 35% 30% 25% 20% 17% 15% 10% 5% 0% The Stamford Residences & 14% INMARK Tower 39% 20% Bennelong Cove 22% The Hyde The Reynell Terraces Source: RP Data / Colliers International Research COLLIERS INTERNATIONAL | P. 2 RESEARCH & FORECAST REPORT | SECOND HALF 2011 | RESIDENTIAL | SYDNEY Market Activity SYDNEY CBD Over the last six months’ total apartment supply levels within the Sydney CBD and surrounds have risen by 33% due to the release of four new projects. Two new developments have been released in the Southern Precinct whilst an additional building is being marketed in the Mid Precinct and another in the Eastern Precinct. Three projects have also been recently completed – The Stamford Residences and The Reynell Terraces in the North, East Exchange in the East and INMARK Tower in the South. Luxe Six sales were reported during the 2011 September quarter. “There is no new supply anticipated within the Northern Precinct until at least 2015. Demand is anticipated to outstrip supply and owners are likely to hold onto their highly sought after dwellings.” Of the new projects released the largest is “Park Lane” which is stage two of Central Park. Approximately 26% of the 385 apartments on offer have sold in the few months since their release. Residents will benefit from a concierge service, pool, gym and spa. Park Lane follows on from an outstanding sales rate achieved in One Central Park, stage one, with 80% of the 623 apartments sold off-the-plan within approximately one year. Central Park remains the largest project and is the only master planned development on offer. In total, the development will provide approximately 1,800 apartments over the next 8-10 years. The three most recently completed projects comprise of a total 373 apartments, however strong pre-sales have resulted in only 16% of the supply remaining. The Stamford Residences & The Reynell Terraces only has 8% of residual stock yet to be absorbed with the sale of a terrace for an undisclosed price being the most recent transaction. There is no new supply anticipated within the Northern Precinct until at least 2015 ensuring demand for new and established apartments will remain strong. Demand is anticipated to outstrip supply and owners are likely to hold onto their highly sought after dwellings. The average sale price achieved in INMARK Towers during the September 2011 quarter was just under $930,000 and approximately 15% of the apartments are still available for sale. As previously mentioned, resales for off-the-plan sales within the building have resulted in strong capital gains. As no sales have been recorded in East Exchange over the last quarter, the average sale price achieved in the first six months of the year was just over $1.1 million. East Exchange has approximately 60% of total stock remaining. The Southern Precinct offers the largest selection with five projects totalling 1,432 apartments, excluding the future stages of Central Park, in various marketing /development stages. This equates to 75% of the current new supply within the Sydney CBD and surrounds. However, due to the strength of the market 64% of the stock has already been sold. The Southern Precinct is expected to record the most new development in the medium/long term further assisting in rejuvenating the area. Demand for product is particularly strong due to the proximityto the University of Technology and Sydney University. The Eastern Precinct has three projects currently under construction, Luxe, Dominion and The Residences. These developments comprise of 272 new apartments and coupled with the completed East Exchange the precinct has seen an increase of just over 300 apartments. To date 66% of this total new supply has been absorbed. The most successful project during the 2011 September quarter was Luxe with six pre-sales being recorded. COLLIERS INTERNATIONAL | P. 3 RESEARCH & FORECAST REPORT | SECOND HALF 2011 | RESIDENTIAL | SYDNEY Market Activity Continued SYDNEY MARKET ACTIVITY Precinct North Mid Project The Stamford Residences & The Reynell Terraces Eliza Suburb Sydney CBD Sydney CBD Status Completed Under Construction Total Sold to Units Date 125* 115 19 4# Sold Sept QTR 1 N/A Available (%) for Sale Sold 10 92% ... - tailieumienphi.vn