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Australia Real Estate Report Q3 2012
Description:
The Australia Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Australia's Real Estate industry.
The Australian commercial real estate market continues to be fairly balanced because, structurally, the industry functions in a way that restricts over-development. It operates in an economy that, despite weak consumer sentiment and structural changes, is performing reasonably well. The economy and sector are underpinned by resources and demand from China, a reducing threat of interest rate rises, low unemployment and a strong infrastructure sector. We caution, however, that our outlook for the economy in 2012 is bearish, and the country will be negatively affected by the expected slowdown in Chinese economic growth.
Having consulted our in-country sources in December 2011, we can confirm that whilst rents in some regions experienced strong growth, it seems our view for a slowdown in Australia’s economic growth has already started to play out.
National Australia Bank’s commercial property survey for Q311 described the short-term outlook for retail property as subdued and forecast to remain negative through much of 2012. Property services firm CB Richard Ellis has said that it detects the long-awaited emergence of Chinese investors into the direct Australian commercial property markets.
Treasurer Wayne Swan has said the IMF's annual report on Australia's economy is a strong endorsement of the government. It said the economy’s performance since the onset of the global financial crisis has been enviable.
Some of the key opportunities in the real estate market include:
- There is a resources boom in Australia at present, built significantly but not entirely on exports to China. This is putting money into the economy and bolstering downstream industries.
- Following the global financial crisis most Australian REITs have deleveraged to a large degree and now have capacity, by way of undrawn facilities among other measures, to invest as opportunities arise.
- The Australian commercial real estate market continues to be fairly balanced because, structurally, the industry operates in a way that restricts over-development. Careful bank lending policies meant that when demand for space dropped off in 2008 and 2009 there was not suddenly a glut of vacant property.
- The natural disasters in Queensland at the beginning of 2011 are providing a significant lift in the level of work for the construction industry and businesses that supply the industry. Also, monetary policy will be kept accommodative in order to drive the post-disaster recovery efforts, although the effects of this will taper off as work is completed.
The Australian economy is in essentially sound shape. Some key risks to the current real estate market are:
- Weaker-than-expected growth in China would lead to weaker economic performance for Australia, given that Chinese demand is the largest driver for Australian exports, including coal and iron ore.
- Weakening investor sentiment could result in a subdued market during 2012.
- There is a widening gap between the flourishing resources sector and the rest of the economy.
- We are concerned about weak consumer sentiment in Australia.
The Australian commercial real estate market continues to be fairly balanced because, structurally, the industry functions in a way that restricts over-development. It operates in an economy that, despite weak consumer sentiment and structural changes, is performing reasonably well. The economy and sector are underpinned by resources and demand from China, a reducing threat of interest rate rises, low unemployment and a strong infrastructure sector. We caution, however, that our outlook for the economy in 2012 is bearish, and the country will be negatively affected by the expected slowdown in Chinese economic growth.
Having consulted our in-country sources in December 2011, we can confirm that whilst rents in some regions experienced strong growth, it seems our view for a slowdown in Australia’s economic growth has already started to play out.
National Australia Bank’s commercial property survey for Q311 described the short-term outlook for retail property as subdued and forecast to remain negative through much of 2012. Property services firm CB Richard Ellis has said that it detects the long-awaited emergence of Chinese investors into the direct Australian commercial property markets.
Treasurer Wayne Swan has said the IMF's annual report on Australia's economy is a strong endorsement of the government. It said the economy’s performance since the onset of the global financial crisis has been enviable.
Some of the key opportunities in the real estate market include:
- There is a resources boom in Australia at present, built significantly but not entirely on exports to China. This is putting money into the economy and bolstering downstream industries.
- Following the global financial crisis most Australian REITs have deleveraged to a large degree and now have capacity, by way of undrawn facilities among other measures, to invest as opportunities arise.
- The Australian commercial real estate market continues to be fairly balanced because, structurally, the industry operates in a way that restricts over-development. Careful bank lending policies meant that when demand for space dropped off in 2008 and 2009 there was not suddenly a glut of vacant property.
- The natural disasters in Queensland at the beginning of 2011 are providing a significant lift in the level of work for the construction industry and businesses that supply the industry. Also, monetary policy will be kept accommodative in order to drive the post-disaster recovery efforts, although the effects of this will taper off as work is completed.
The Australian economy is in essentially sound shape. Some key risks to the current real estate market are:
- Weaker-than-expected growth in China would lead to weaker economic performance for Australia, given that Chinese demand is the largest driver for Australian exports, including coal and iron ore.
- Weakening investor sentiment could result in a subdued market during 2012.
- There is a widening gap between the flourishing resources sector and the rest of the economy.
- We are concerned about weak consumer sentiment in Australia.
Contents:
Executive Summary 5
SWOT Analysis 7
Australia Real Estate/Construction SWOT 7
Australia Political SWOT 7
Australia Economic SWOT 8
Australia Business Environment SWOT 8
Real Estate Market Overview 9
Market Analysis - Office 11
Rents and Yields 11
Table: Historic Office Rents, 2010-2011 (AUD per m2/month) 12
Table: Net Office Yields, 2011-2012 12
Table: Terms of Office Rental Contract/Lease, Mid-2011 12
Supply and Demand 13
Industry Forecast Scenario 14
Table: Forecast Office Rents - (AUD per m2/month) 14
Table: Forecast Net Office Yields, 2008-2016 14
Market Analysis - Retail 15
Rents and Yields 15
Table: Historic Retail Rents, 2010-2011 (AUD per m2/month) 15
Table: Net Retail Yields, 2011-2012 16
Table: Terms of Rental Contract/Lease, Mid-2011 16
Supply and Demand 16
Industry Forecast Scenario 17
Table: Forecast Retail Rents, 2012 (AUD per m2/month) 17
Table: Forecast Net Retail Yields, 2008-2016 17
Market Analysis - Industrial 18
Rents and Yields 18
Table: Historic Industrial Rents, 2010-2011 (AUD per m2/month) 18
Table: Net Industrial Yields, 2011-2012 19
Table: Terms of Industrial Rental Contract/Lease, Mid-2011 19
Supply and Demand 19
Industry Forecast Scenario 20
Table: Forecast Industrial Rents, 2012 (AUD per m2/month) 20
Table: Forecast Net Industrial Yields, 2008-2016 20
Forecast Scenarios 21
Infrastructure Report 21
Table: Australia Construction And Infrastructure Industry Data, 2008-2016 21
Table: Australia Construction And Infrastructure Industry Data 2013-2021 22
Construction And Infrastructure Forecast Scenario 23
Table: Largest Expansion Plans 27
Macroeconomic Forecast 29
Table: Australia - Economic Activity, 2011-2016 31
Real Estate/Construction Risk Reward Ratings 32
Table: Real Estate/Construction Risk/Reward Ratings 32
Australia Business Environment 32
Table: BMI Business And Operation Risk Ratings 33
Institutions 34
Table: BMI Legal Framework Rating 34
Infrastructure 36
Table: Labour Force Quality 38
Market Orientation 39
Table: Asia - Annual FDI Inflows, 2008-2010 39
Table: Trade And Investment Ratings 41
Table: Top Export Destinations, 2002-2009 44
Operational Risk 44
Competitive Landscape 45
Company Profiles 48
Bovis Lend Lease (BLL) 48
Brookfield Multiplex (BM) 50
Laing O’Rourke 52
Leighton Holdings 53
Mirvac 56
Stockland Group 58
Demographic Data 61
Table: Australia's Population By Age Group, 1990-2020 ('000) 62
Table: Australia's Population By Age Group, 1990-2020 (% of total) 63
Table: Australia's Key Population Ratios, 1990-2020 64
Table: Australia's Rural And Urban Population, 1990-2020 64
BMI Methodology 65
How We Generate Our Industry Forecasts 65
Construction Industry 66
Bank Lending 67
Real Estate/Construction Business Environment Rating 67
Table: Weighting Of Indicators 68
Sources 71
SWOT Analysis 7
Australia Real Estate/Construction SWOT 7
Australia Political SWOT 7
Australia Economic SWOT 8
Australia Business Environment SWOT 8
Real Estate Market Overview 9
Market Analysis - Office 11
Rents and Yields 11
Table: Historic Office Rents, 2010-2011 (AUD per m2/month) 12
Table: Net Office Yields, 2011-2012 12
Table: Terms of Office Rental Contract/Lease, Mid-2011 12
Supply and Demand 13
Industry Forecast Scenario 14
Table: Forecast Office Rents - (AUD per m2/month) 14
Table: Forecast Net Office Yields, 2008-2016 14
Market Analysis - Retail 15
Rents and Yields 15
Table: Historic Retail Rents, 2010-2011 (AUD per m2/month) 15
Table: Net Retail Yields, 2011-2012 16
Table: Terms of Rental Contract/Lease, Mid-2011 16
Supply and Demand 16
Industry Forecast Scenario 17
Table: Forecast Retail Rents, 2012 (AUD per m2/month) 17
Table: Forecast Net Retail Yields, 2008-2016 17
Market Analysis - Industrial 18
Rents and Yields 18
Table: Historic Industrial Rents, 2010-2011 (AUD per m2/month) 18
Table: Net Industrial Yields, 2011-2012 19
Table: Terms of Industrial Rental Contract/Lease, Mid-2011 19
Supply and Demand 19
Industry Forecast Scenario 20
Table: Forecast Industrial Rents, 2012 (AUD per m2/month) 20
Table: Forecast Net Industrial Yields, 2008-2016 20
Forecast Scenarios 21
Infrastructure Report 21
Table: Australia Construction And Infrastructure Industry Data, 2008-2016 21
Table: Australia Construction And Infrastructure Industry Data 2013-2021 22
Construction And Infrastructure Forecast Scenario 23
Table: Largest Expansion Plans 27
Macroeconomic Forecast 29
Table: Australia - Economic Activity, 2011-2016 31
Real Estate/Construction Risk Reward Ratings 32
Table: Real Estate/Construction Risk/Reward Ratings 32
Australia Business Environment 32
Table: BMI Business And Operation Risk Ratings 33
Institutions 34
Table: BMI Legal Framework Rating 34
Infrastructure 36
Table: Labour Force Quality 38
Market Orientation 39
Table: Asia - Annual FDI Inflows, 2008-2010 39
Table: Trade And Investment Ratings 41
Table: Top Export Destinations, 2002-2009 44
Operational Risk 44
Competitive Landscape 45
Company Profiles 48
Bovis Lend Lease (BLL) 48
Brookfield Multiplex (BM) 50
Laing O’Rourke 52
Leighton Holdings 53
Mirvac 56
Stockland Group 58
Demographic Data 61
Table: Australia's Population By Age Group, 1990-2020 ('000) 62
Table: Australia's Population By Age Group, 1990-2020 (% of total) 63
Table: Australia's Key Population Ratios, 1990-2020 64
Table: Australia's Rural And Urban Population, 1990-2020 64
BMI Methodology 65
How We Generate Our Industry Forecasts 65
Construction Industry 66
Bank Lending 67
Real Estate/Construction Business Environment Rating 67
Table: Weighting Of Indicators 68
Sources 71
Companies Mentioned
Bovis Lend Lease (BLL) , Brookfield Multiplex (BM) , Laing O’Rourke , Leighton Holdings , Mirvac , Stockland Group ,
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