OUTLOOK 2016 A ECONOMIC GROWTH Over the last decade, Western Australia has been Australia s strongest performing economy / Pg2 B LIVEABILITY Consistently ranked as one of the world s top ten most liveable cities / Pg3 A CONTEXT ON BUSINESS, CULTURE, LIFESTYLE AND RESIDENTIAL C POPULATION GROWTH Perth is a leading Australian destination for business and investment, with strong economic fundamentals and a competitive property market. 265 SUNNY DAYS EACH YEAR COTTESLOE BEACH STRONG POPULATION GROWTH IS FORECAST FOR HAY STREET MALL A city with strong growth forecasts and a multicultural social fabric / Pg4 D DEMOGRAPHICS Increasing proportions of Generation Y, migrant and Baby Boomer residents driving demand for apartments / Pg5 E INFRASTRUCTURE INVESTMENT Greater Perth is enjoying significant government investment in a variety of major projects / Pg6 F EMPLOYMENT Perth is home to more ASX-listed company headquarters than Melbourne or Sydney / Pg8 G APARTMENT AFFORDABILITY Perth s apartment market is currently more affordable than both Sydney's and Melbourne's / Pg10 IS AUSTRALIA S WESTERN GATEWAY THE SWAN RIVER AND 'S CENTRAL BUSINESS DISTRICT IS CONSISTENTLY RATED AS HIGHLY LIVEABLE THE BLACK SWAN: WESTERN AUSTRALIA'S OFFICIAL EMBLEM
OVERVIEW Perth is Australia s western gateway and the country s closest and most accessible capital city to the world s strongest economic growth regions. Perth has evolved to be a major hub for air travel, freight and logistics. Perth shares a time zone (plus or minus two hours) with 60 of the world s population in the emerging economies of Asia. Perth Airport is serviced by 18 major international airlines and 12 regional and domestic carriers. Perth has the shortest travel times any Australian capital city to key markets in Africa. Underlining the importance of the efficient mobility of people and goods to economic advantage is the $750 million redevelopment of Perth Airport. The project includes recently completed expansions to its international and domestic terminals, and the ongoing upgrades to Perth Airport s freight THRIVING EXPORTS Western Australia accounted for 42 of the total value of all goods exported from Australia in the 12 months to November 2015. ECONOMIC GROWTH Western Australia was the strongest performing economy in the nation over the past ten years. Average annual growth 10 years to 2014/15: 1.5 2.0 2.1 2.7 5.3 Source: ABS WESTERN AUSTRALIA 42 REST OF AUSTRALIA 58 IMF ADVANCED NSW VIC AUSTRALIA WA ECONOMIES Than the national WA s GSP per capita was 42 equivalent of $68,171 $96,475 in June 2015 in the same period Source: ABS, IMF (Constant Prices) HIGHER IMPORTANT TIMEZONE Perth shares an approximate time zone with 60 of the world s population. KEY TRADING PARTNERS Western Australia s top trading partners include the growth centres of Asia. The Economist predicts China will be the world s largest economy, come 2026. 1 hour Time Zone 5 hour Business Time Zone PROPORTION OF WA EXPORTS (AS OF DEC 2015) FORECAST GDP GROWTH TO DEC 2019 New Delhi Beijing Hong Kong Shanghai Tokyo 10 HRS 9 HRS CHINA JAPAN 53 6.3 16 1.1 3.5 HRS Source: Department of State Development Kuala Lumpur Singapore Jakarta Perth 3.5 HRS 8 HRS 5 HRS ASEAN 5 Source: ABS, IMF annual compound growth current prices 2 URBIS OUTLOOK - FOR THE EXCLUSIVE USE OF BLACKBURNE PROPERTY GROUP URBIS.COM.AU SOUTH KOREA 9 5.5 7 3.8
and road access through the Gateway WA project. Over the past decade, the airport has experienced growth rates of 9 per annum. The number of passengers to pass through the airport is expected to surge from 14 million in 2014 to more than 28 million by 2034. The Port of Fremantle, which operates through two harbours, is the state s largest and busiest general cargo port, and an important historical site. Residents of Perth enjoy an active, outdoor lifestyle thanks to a yearround Mediterranean climate and pristine beaches, the iconic Swan River, stunning parks and well-maintained public open space. Consistently rating as one of the world s most liveable cities, the Economist Intelligence Unit has a high opinion of Perth s education, healthcare and transport infrastructure. The University of Western Australia is ranked in the top 1 of universities world-wide, while the Western Australian Academy of Performing Arts has educated talent including Broadway stars and a Golden Globe winning actor. As Perth continues to grow, underpinned by strong economic fundamentals and ongoing investment, this provides a strong foundation for Perth s residential property market. MEDITERRANEAN CLIMATE Perth s inviting Mediterranean climate offers 12 months of sunshine and mild winters. HIGHLY LIVEABLE Perth has been rated among the world s top 10 most liveable cities every year for the past decade. In 2015 Perth ranked 8th and had the highest possible scores for health care, education and infrastructure. S LIVEABILITY SCORES 24 City Rank Overall (100=ideal, 0=intolerable) 13 265 Education Healthcare Infrastructure Social & Political Stability Culture ANNUAL AVERAGE Overall TEMPERATURE 0 20 40 60 80 100 Source: Bureau of Meteorology Source: Economist Intelligence Unit EMERGING ARTS CAPITAL Perth is on track to become Australia s performing arts capital. More than 1.4 million people (70 of Perth s population) visited central Perth over a three day period in February 2015 for Perth International Arts Festival events. RETAIL SUPPLY A record amount of new retail supply is confirmed for Perth, facilitating the entry of new international brands to Western Australia. This follows the deregulation of trading hours and the introduction of supportive government legislation. Perth International Arts Festival is the oldest international arts festival in Australia. The Western Australian Academy of Performing Arts was ranked among the world s top 25 Drama Schools in 2012. At 56, Western Australians aged 15 years or older had the highest ranking of all states for the proportion of people attending a performing arts event in 2013-14. The annual Perth Fringe Festival is a huge success - 600,000 people viewed events at one of 100 venues in 2015. Source: The Hollywood Reporter, UWA, ABS NEW SUPPLY AT REGIONAL SHOPPING CENTRES IN GREATER 22,500 x1 SQM COMPLETED IN 2015 AT ONE CENTRES 80,000 x4 SQM APPROVED OR UNDER CONSTRUCTION AT FOUR CENTRES 223,000 x3 SQM MOOTED AT THREE CENTRES Additional unconfirmed, but likely, projects. Source: Urbis 3 URBIS OUTLOOK - FOR THE EXCLUSIVE USE OF BLACKBURNE PROPERTY GROUP URBIS.COM.AU
POPULATION & DEMOGRAPHICS POPULATION GROWTH Healthy population growth usually equates to a healthy and prosperous residential property market. An increased population means increased demand for accommodation. INVESTMENT & INFRASTRUCTURE Cities that provide significant public and private investment are prime areas for residential development and growth, especially when they also offer convenient transport infrastructure. EMPLOYMENT OPPORTUNITIES Thriving employment nodes and centres are an essential fundamental for strong residential growth. New jobs lead to new residents as people relocate to take advantage of career opportunities. POPULATION GROWTH Western Australia accounts for 11 of the total Australian population. Between March 2008 and June 2015 it was Australia s fastest growing State. Greater Perth (Including Mandurah and Peel s) estimated resident population was 2.02 million people in June 2014; representing 79 of the state s population at the time. According to SAFi forecasts prepared by.id, the population of Greater Perth is expected to increase by 47,600 people per annum between 2016 and 2021. This reflects an annual growth rate of 2.2. The Australian Bureau of Statistics projects Perth s population will outnumber that of Brisbane from 2028, making Perth Australia s third most populous city. Forecasts by the WA Planning Commission show that the highest growth in household types will be lone person households which will increase by 47 between 2011 and 2026. Couples without children households will see an increase of 34. Demand from these household groups will result in a need for more smaller dwellings in high amenity locations. COMPONENTS OF WA POPULATION GROWTH ANNUAL GROWTH Prepared by Urbis; Source: ABS ESTIMATED RESIDENT POPULATION GROWTH FIVE YEARS TO JUNE 2015 NSW Prepared by Urbis; Source: ABS VIC 5.4 7.0 QLD 6.6 STRONG FORECAST POPULATION GROWTH FOR GREATER THOUSANDS 110,000 90,000 70,000 50,000 30,000 10,000-10,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 JUN 00 INTERSTATE NATURAL OVERSEAS ANNUAL GROWTH 1,455 Prepared by Urbis; Source: SAFi.id 1,577 JUN 03 1,834 JUN 06 2,108 2,346 JUN 09 2,577 JUN 12 WA 9.7 2001 2006 2011 2016F 2021F 2026F 2031F 2036F 2,801 3,022 JUN 15 4 URBIS OUTLOOK - FOR THE EXCLUSIVE USE OF BLACKBURNE PROPERTY GROUP URBIS.COM.AU
40 of Greater Perth s population was born overseas. A MULTICULTURAL CITY The city s social fabric reflected over 200 nationalities speaking 270 languages. In FY14, overseas migrants accounted for 64 of Western Australia s population increase. SHIFTING DEMOGRAPHICS Between 2011 and 2026 the WA Planning Commission forecasts the strongest growth in the 55+ age bracket, with a 59 increase. People aged 25-34 will also rise with a growth forecast of 17 in the same timeframe. These age groups have the highest propensity to live in apartments and will drive demand. Last Census, the top five foreign countries of birth for Greater Perth residents were New England, New Zealand, South Africa, India and Malaysia. The top three languages spoken at home after English were Italian (1.6 of households), Mandarin (1.5) and Cantonese (1.0). FORECAST POPULATION BY AGE 600,000 500,000 400,000 300,000 200,000 100,000 0 2011 2026 0-14 15-19 20-24 25-34 35-44 45-54 55-74 75+ Prepared by Urbis; Source: WAPC s WA Tomorrow (2015) Series C Forecast COUNTRY OF BIRTH RESIDENTS OF GREATER AUSTRALIA 60 UK AND IRELAND 12 COUNTRY NOT STATED 6 SOUTH EAST ASIA 5 NEW ZEALAND 3 EAST ASIA 2 INDIA AND SRI LANKA 2 SOUTH AFRICA 2 OTHER OVERSEAS 8 Prepared by Urbis; Source: ABS (2011) DEMOGRAPHIC SHIFT THE KEY DRIVERS 24 LIFESTYLE A KEY FOCUS IN HOUSING CHOICE GEN Y IMMIGRATION BABY BOOMERS Gen Y will represent a driving force behind Perth s apartment market as they continue to form independent households, advance their earning potential and play a bigger role as apartment occupiers (both renters and purchasers). OF 'S OVERSEAS MIGRATION POPULATION 23 ACCOUNTS FOR 57 OF THE STATE S POPULATION IN THE LAST 5 YEARS GEN Y MAKE UP 45 OF THE POPULATION IN THE LOCAL GOVERNMENT AREA 50 OF IMMIGRANTS TO WA AGED 20-34 YEARS 2010-2014 These young migrants are often coming from countries with much higher development densities and are looking for a vibrant, inner city lifestyle. TRANSITION FROM FULL-TIME EMPLOYMENT AND PREFER LOW MAINTENANCE DWELLINGS OF S POPULATION With more empty nesters considering downsizing, equity rich Baby Boomers are increasingly considering apartment living in well-designed, larger apartments. The effects of the Baby Boomer market will be seen far more over the next ten years. Note: of population based on 2011 ABS Census. Perth area is based on Greater Perth which includes Mandurah. 5 URBIS OUTLOOK - FOR THE EXCLUSIVE USE OF BLACKBURNE PROPERTY GROUP URBIS.COM.AU
INFRASTRUCTURE Greater Perth is enjoying significant government investment in a variety of major projects. Recently completed and future highlights include: ARENA 1 $548 MILLION / COMPLETED 2012 5 Capacity of 15,500 visitors and ranked seventh in the world in 2014 for revenue for venues in its size category (Pollstar). Perth Arena also hosts sporting events including the annual Hopman Cup tennis tournament and National Basketball League (NBL) matches. Located within the Perth City Link precinct, Perth Arena opened in 2012 and had a project value of $548 million. STADIUM 2 OVER $1 BILLION / COMPLETION 2017 The new 60,000 seat Perth Stadium will form a permanent centrepiece as part of the Burswood Peninsula redevelopment. Located on the Swan River, it will be a major sporting and entertainment venue, capable of attracting national and international events to Perth. The Tourism Council estimates that the stadium will attract 38,000 new interstate football fans each year, who will spend $45 million across WA. GATEWAY WA $1 BILLION / COMPLETION 2016 (STAGED) Focused on road infrastructure of the immediate south and west of Perth International Airport, the project has a value of $1 billion. Construction commenced in the September Quarter of 2013 and the completion date has been brought forward to March 2016. Features include five new or upgraded interchanges, new on-ramps, some 165-lane kilometres for vehicles, 21 kilometres of shared bicycle and pedestrian paths, ad integrated themed urban design projects. 6 FORRESTFIELD-AIRPORT LINK $2 BILLION / COMPLETION 2020 A $2 billion train line linking Forrestfield, Perth Airport and the Perth CBD (8.5 kilometres in length). Construction is expected to commence in 2016, with completion scheduled for 2020. The majority of the line (over 90) will be underground and three new stations will be delivered. 3 CITY LINK $1.3 BILLION / COMPLETION 2012+ (STAGED) Linking the Perth CBD and Northbridge, Perth City Link will ultimately comprise a vibrant mix of apartments, retail space and new office accommodation. It will also house an extensive public realm (4.4 hectares). Another major component has been the sinking of the Fremantle railway line and a new underground bus station, allowing easy pedestrian access and development over the top. The government is investing $752 million (excluding the value of Perth Arena) in the precinct. ELIZABETH QUAY 4 $440 MILLION / COMPLETED JANUARY 2016 (STAGED) Linking the Swan River and Perth CBD, Elizabeth Quay is planned to comprise a mixed use precinct of apartments, hotels, office retail space. Its impressive public realm has been opened as the first stage of its completion in 2016. The Quay will feature a sizable river inlet and represents an investment of $440 million by the government. 7 8 9 10 11 12 FIONA STANLEY HOSPITAL $2 BILLION COMPLETED 2013 CHILDREN'S HOSPITAL $1.2 BILLION COMPLETION 2015 FREIGHT LINK $1.6 BILLION COMPLETION 2019 NEW MUSEUM $428 MILLION COMPLETION 2019 RIVERSIDE $141 MILLION COMPLETION 2020 METRO AREA EXPRESS $2 BILLION COMPLETION 2022 6 URBIS OUTLOOK - FOR THE EXCLUSIVE USE OF BLACKBURNE PROPERTY GROUP URBIS.COM.AU
INFRASTRUCTURE & SUMMARY The approval of 131,300 sqm of CBD office space has seen the private sector contribute widely to Perth s infrastructure across 2015-2016. The service industry has seen several major hotel brands introduced into the Perth market including Westin, Ritz-Carlton, DoubleTree by Hilton and InterContinental. Urbis estimates that 3,800 new or upgraded rooms are under construction or proposed in the Perth CBD, East Perth and Northbridge areas. The offer at Crown Perth is also being extended, with the addition of a new café/restaurant precinct and a six star Crown Towers hotel (comprising 500 rooms and bringing the total number of rooms within the Casino precinct to 1,200). Perth Airport Pty Ltd is investing in numerous projects including a new $200 million Domestic Pier at the International Terminal One for use by Virgin Australia (Completed late 2015) and a $141 million expansion at international departures to accommodate the Airbus A330 and A380. 12 6 1 3 10 4 2 11 5 8 9 7 7 URBIS OUTLOOK - FOR THE EXCLUSIVE USE OF BLACKBURNE PROPERTY GROUP TRAIN STATION URBIS.COM.AU
INVESTMENT & EMPLOYMENT Western Australia continues to be a leader in the mining and resources sector. As of June 2015, the Department of Mines and Petroleum reported 1046 operating mines, 294 mineral projects and 48 operating oil and gas fields in WA, totalling $99.5 billion in value. Western Australia was ranked in Canada's Fraser Institute's top 5 jurisdictions for mining investment in 2014. According to the Office of the Chief Economist's Resources and Energy Major Projects October 2015, committed mining, oil and gas and infrastructure projects within the Western Australian jurisdiction have a combined project value of $123.1 billion. This represents approximately 55 of the total value of all such projects across Australia ($220.8 billion). Perth is a global resources hub and one of 20 international energy capitals (World Energy Cities Partnership). It is home to 35 of companies listed on the Australian Securities Exchange (ASX), which collectively account for the largest proportion of Australian mining companies in Africa, South America, Central Asia and other markets. VALUE OF COMMITTED PROJECTS BY JURISDICTION NEW SOUTH WALES 0.7 VICTORIA 0.8 SOUTH AUSTRALIA 0.3 NORTHERN TERRITORY 17.3 QUEENSLAND 25.2 WESTERN AUSTRALIA 55.8 Prepared by Urbis; Source: Office of the Chief Economist October 2015 MEGA PROJECT PROFILES GORGON WHEATSTONE US $55B PROJECT VALUE US $29B PROJECT VALUE The USD 55 billion Gorgon LNG project is the largest single resource development in Australia s history and one of the largest natural gas projects in the world. Gorgon is forecast to produce 15.6 million tonnes of LNG each year from commencement of operations. JOINT VENTURE PARTNERS Chevron, ExxonMobil, Shell, Osaka Gas, Tokyo Gas & Chubu Electric Power With onshore processing to occur 12 kilometres west of Onslow, Wheatstone has approval to produce 25 million tonnes of LNG annually from 2016. Over 7,000 Australian jobs have already been created as a direct result of the USD 29 billion project. JOINT VENTURE PARTNERS Chevron, Apache, KUFPEC, Shell, Kyushu Electric Power Company & PE Wheatstone COMPANIES HEADQUARTERED IN S&P ASX 100: COMPANIES HEADQUARTERED IN FORTESCUE METALS GROUP ILUKA RESOURCES MINERAL RESOURCES MONADELPHOUS GROUP NAVITAS SOUTH32 WESFARMERS WOODSIDE PETROLEUM Prepared by Urbis; Source: ASX Iron ore Mineral sands Iron ore, manganese Engineering Education Diversified metals Retail, resources, insurance, chemicals, energy, safety Oil and gas Perth is home to more headquarters of the 2,049 companies listed on the ASX (as at June 2015) than Melbourne or Sydney. DIVISIONAL HEADQUARTERS IN RIO TINTO BHP BILLITON CHEVRON Iron ore Iron ore Petroleum Prepared by Urbis; Source: Department of State Development OTHER WELL-KNOWN -BASED BRANDS IINET AMCOM PEET Telecommunications Telecommunications Property development 8 URBIS OUTLOOK - FOR THE EXCLUSIVE USE OF BLACKBURNE PROPERTY GROUP URBIS.COM.AU
INVESTMENT & EMPLOYMENT EMPLOYMENT PROJECTIONS EDUCATION PROJECTED EMPLOYMENT GROWTH FIVE YEARS TO NOVEMBER 2019 HEALTH CARE AND SOCIAL ASSISTANCE EDUCATION AND TRAINING RENTAL, HIRING AND REAL ESTATE SERVICES CONSTRUCTION ARTS AND RECREATION SERVICES ACCOMMODATION AND FOOD SERVICES ADMINISTRATIVE AND SUPPORT SERVICES PROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES FINANCIAL AND INSURANCE SERVICES RETAIL TRADE TRANSPORT, POSTAL AND WAREHOUSING OTHER SERVICES WHOLESALE TRADE ELECTRICITY, GAS, WATER AND WASTE SERVICES INFORMATION MEDIA AND TELECOMMUNICATIONS PUBLIC ADMINISTRATION AND SAFETY AGRICULTURE, FORESTRY AND FISHING MANUFACTURING Source: Department of Employment 22.4 19 17.8 16.9 16.6 14.9 13.9 12.8 12.7 12.0 10.0 8.6 8.4 7.4 5.8 5.5 4.1 1.3-16.8 MINING Projections by the Australian Department of Employment show growth across a broad range of sectors in the five years to November 2019. Most of Western Australia s largest employers are seeing strong growth projections to support a growing population despite a pullback in the resources sector. WORLD UNIVERSITY RANKINGS 2014/15 98 THE UNIVERSITY OF WESTERN AUSTRALIA 284 CURTIN UNIVERSITY 551-600 MURDOCH UNIVERSITY Prepared by Urbis; Source: QS World University Rankings 701+ EDITH COWAN UNIVERSITY Western Australia has a thriving and diverse education system, attracting people from all over the world. The University of Western Australia ranking among the top 1 of universities worldwide. WESTERN AUSTRALIA'S FOREIGN STUDENT NUMBERS INTERNATIONAL STUDENTS 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Prepared by Urbis; Source: Department of Education and Training MAJOR EMPLOYMENT INDUSTRIES TOURISM WA s workforce has grown by 7 over the past four years to 1.35 million people (ABS November 2015). The State has a broad employment base. Whilst mining is a major part of the WA economy, it ranks sixth in terms of the number of people employed. HEALTH CARE #1 157,000 CONSTRUCTION #2 150,800 RETAIL TRADE #3 126,700 PROFESSIONAL, SCIENTIFIC & #4 107,700 TECHNICAL TRADE #6 MINING 96,600 11.4 of workforce 11.2 of workforce 10.6 of workforce 7.7 of workforce 7 of workforce As one of the largest and most diverse states in the world, Western Australia offers a wide range of unique holiday experiences. Perth acts as the gateway for Western Australian tourism and the importance of the tourism sector is forecast to continue to grow. Some key facts about tourism in Western Australia are: 94,000 PEOPLE EMPLOYED IN TOURISM RELATED INDUSTRIES Although not a large direct employer, agriculture plays an important and growing part of the WA economy. In 2014-15, the state s gross value of agricultural production (GVAP) was 8.6 billion, 16.5 of Australia s total GVAP. 38 WHEAT ($3.2 BILLION) 13 CANOLA ($1.06 BILLION) 11 BARLEY ($998 MILLION) 7 WOOL ($581 MILLION) $8.26B SPENT BY TOURISTS IN WESTERN AUSTRALIA $2,253M SPENT BY INTERNATIONAL VISITORS IN FY2015 Prepared by Urbis; Source: ABS Prepared by Urbis; Source: ABS, Tourism Western Australia 9 URBIS OUTLOOK - FOR THE EXCLUSIVE USE OF BLACKBURNE PROPERTY GROUP URBIS.COM.AU
RESIDENTIAL MARKET RESIDENTIAL MARKET The median unit Sale Price for a house in Perth was $548,000, while the equivalent of a unit was $432,000 in the 12 months to September 2015. Perth s sales cycle has shown consistent upward trend since 2001. As seen in the chart below, rental yields in Perth have also been consistently strong, outperforming both Melbourne and Sydney since 2012. Both house and unit prices in Perth have shown a long term trend of rising prices, largely following each other. However as prices have risen, the affordability gap between houses and units has increased and there is now a $116,000 difference between median prices. This affordability gap is making apartments look like an attractive option for many younger purchasers and is giving owner occupiers an option to downsize in space and equity tied up in their principal place of residence. CAPITAL CITIES COMPARISON Data collected in by APM Price Finder (September 2015) indicate that the Perth apartment market has shown strength in key investment criteria (yield and capital growth) which have encouraged significant investor activity. Additionally, historically low interest rates are also creating interest among younger owner occupiers looking to enter the housing market. Perth unit prices saw average annual growth of 5.9 over the ten years to September 2015, which is the highest level for all Australian major capital cities except Darwin (9.7). Perth recorded a high return for investors in the 12 months to September 2015, at an indicative 4.8 gross rental yield. This measure acts as a valid indicator of increased investor demand in Perth. The result outperformed both Sydney (4) and Melbourne (4.1). INDICATIVE RENTAL YIELDS RESIDENTIAL MARKET SNAPSHOT 7 6 5 4 3 2 1 SYDNEY MELBOURNE BRISBANE 0 Jun00 Jun01 Jun02 Jun03 Jun04 Jun05 Jun06 Jun07 Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD Source: REIA MEDIAN SALE PRICE GROWTH MELB SYD BRIS SALES CYCLE MEDIAN UNIT SALE PRICE $432,000 $471,000 $655,000 $435,000 ANNUAL SALES 50,000 UNIT SALES PER ANNUM UNIT SALES PER ANNUM 45,000 MEDIAN UNIT PRICE MEDIAN HOUSE PRICE 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 ANNUAL CHANGE IN MEDIAN PRICE (10 years to Sept 2015) INDICATIVE GROSS RENTAL YIELD (12 months to Sept 2015) 5.9 4.8 5.3 4.1 5.3 4.0 4.1 4.7 Prepared by Urbis; source: APM PriceFinder Prepared by Urbis; Source: APM PriceFinder 10 URBIS OUTLOOK - FOR THE EXCLUSIVE USE OF BLACKBURNE PROPERTY GROUP URBIS.COM.AU
APARTMENT MARKET DRIVERS There are numerous factors that will drive a strong increase in demand for apartments in Perth. Key drivers, also applicable in interstate capitals with established apartment markets, can be summarised as follows: HIGH HOUSE PRICES (AFFORDABILITY) Perth has seen rapid growth in house prices over the last decade. Apartments offer a relatively affordable entry point alternative. Downsizers can remain close to their existing residence and trade down, while first home buyers can enter a suburb which may otherwise be unaffordable. Over the twelve months to September 2015, metropolitan Perth s median house price was $598,000 while the apartment equivalent was $432,000 (APM Price Finder). The house price result reflects ten-year growth of 6.7 per annum, while apartments rose annually by 5.9 over the same period. GOVERNMENT POLICY WILL DRIVE CHANGE AND HIGHER DENSITY The Metropolitan Redevelopment Authority, City of Perth and Western Australian Planning Commission all have central policy objectives seeking to provide greater variety in housing options, encouraging urban infill and creating vibrant and effective places. The key WA state policy that drives the location and style of dwellings in Perth is Directions 2031, released in 2010. Directions 2031 seeks a 50 improvement on current residential infill development trends of 30 and 35, and has set a target of 47 or 154,000 of the required 328,000 dwellings as infill development. Many of these projects will be apartments. INCREASING APARTMENT DEMAND...WHY? HIGH HOUSE $$$ Prepared by Urbis SHIFTING DEMOGRAPHICS Perth s population is growing at the fastest rate of any capital city in Australia. Indeed, it is forecast to overtake the population of Brisbane in 2028 (ABS November 2013), becoming Australia s third most populous centre. Overseas migration accounts for 60 of Perth s population growth and these migrants are coming from locations where apartment markets are more established. Additionally an aging population, lower fertility rates and declining household sizes are leading to an increase in demand for smaller dwellings. LOW LAND AVAILABILITY LOW LAND AVAILABILITY SHIFTING DEMOGRAPHICS INCREASING APARTMENT DEMAND Very few opportunities for new, single lot land subdivision, particularly in inner city areas, are increasing market acceptance of higher density residential product. Apartment living affords residents greater proximity to amenity including retail, food and beverage, entertainment, public transport, employment and green space. DWELLING APPROVALS BY TYPE Apartments Terrace Houses Houses In 2014/15 18 of New Dwelling Approvals in Perth were apartments, indicating the city is in the early stages of a shift towards higher density. This highlights a much lower supply in Perth as opposed to the Eastern capitals, with over 40 of approvals being for apartments in all cases. Sydney has the greatest supply of new apartments which encompass 58 of new dwelling approvals. 2,549 10 4,530 18 71 17,433 MELB BRIS SYD 23,456 41 14,777 9,134 16 48 43 36 16 10,950 4,925 24,308 15,710 31 58 29,477 10 5,226 Prepared by Urbis; Source: ABS 11 URBIS OUTLOOK - FOR THE EXCLUSIVE USE OF BLACKBURNE PROPERTY GROUP URBIS.COM.AU
urbis.com.au AUSTRALIA ASIA MIDDLE EAST Perth Level 1, 55 St Georges Terrace Perth WA 6000 08 9346 0500 This publication is prepared on the instruction of Blackburne Property Group and is not suitable for use other than by the party to whom it is addressed. As the publication involves projections and assumptions it can be affected by a number of unforeseen variables. The forecasts and assumptions are a prediction and whilst Urbis has made every effort to ensure that the forecasts and assumptions are based on reasonable information, they may be affected by assumptions that do not necessarily eventuate or by known or unknown risks and uncertainties. It should be noted that past performance is not necessarily a reliable indication of future performance. The information in the publication does not represent financial advice and should not be regarded as such. It has been prepared without taking into account your financial situation or investment objectives. You should consider the appropriateness of the information in regards to your current financial situation or needs. Urbis accepts no responsibility for the accuracy or completeness of any such material. The information is subject to change without notice and Urbis is under no obligation to update the information or correct any assumptions which may change over time. This study has been prepared for the sole use of Blackburne Property Group and is not to be relied upon by any third party without specific approval from Urbis. This publication is subject to copyright. Except as permitted under the Copyright Act 1968, no part of it may, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) be reproduced, stored in a retrievals system or transmitted without prior written permission. Enquiries should be addressed to the publishers. Data sourced in January 2016.