On 27 October 2020, ACBC Vic successfully held its premiere online property seminar with industry leaders Kevin Cheong (Partner, Balmain), Scott Keck (Chairman, Charter Keck Cramer), Kurtis Prescott (Partner, Mitchell Brandtman) and Ben McMahon (Chair ACBC Vic Property & Development Working Group & Manager, McMahon Property Group).
Speakers covered an important array of real estate market changes including to interest rates, bank v non-bank financing, immigration, construction costs, profit expectation, regional and city investment opportunities and future trends.
Our speakers were optimistic and showed unanimous support of a manageable pandemic situation with mitigated flow-on effects to commercial property. Trends emerging pre-virus are showing signs of continuing largely unabated – the ‘light being shone’ on regional property grows brighter and immigration will pick up. Overseas students are enrolling in Australian universities for 2021 and will require accommodation. Although the beleaguered tourism sector will be one of the slower sectors to rebound, local and interstate holidays are on the rise and will lead to increased property rentals, hotel bookings, Airbnb usage, etc. And for those seeking to invest, the growing competitiveness of low-cost inner suburban property near to capital works remains a prominent feature on the Australian real estate landscape.
Thank you once again to our industry supporters Balmain and Mitchell Brandtman for their generous support.
Key takeaways from our speakers:
- In the long term, nothing has occurred, and nothing will occur with COVID-19 that will impact your property investments – so don’t panic!
- COVID has sped up many trends that were already emerging: the move to work from home; greater use of IT; trend to on-line shopping/eCommerce over bricks and mortar; and people relocating to regional centres (particularly in Victoria).
- Keep an eye on government expenditure on infrastructure and capital works to identify prime investment locations around Australia.
- Banking institutions are withdrawing from the bond market and quickly being replaced by non-banking players who have more versatility with their lending.
- The big 4 banks still dominate the CRE debt market, however there has been a decline in banking institution lending due to high capital requirements, write down of certain asset classes, etc.
- There has been an uptake in greenfield lend loans.
- Interest rates are very, very low and will be for quite a long time – expect five to six years.
- The COVID-19 restrictions represent a pause and an economic interruption from which we will cautiously move forward. Positive by-products will be ingenuity, efficiencies and better business practices.
- Some recent trends in the sector are:
- Notable lower profit margins on projects – together with a word of caution that investors need to ensure works can be completed under the allocated budgets.
- Demand for owner occupied properties remains buoyant.
- Developers are looking to construct with a lower level of pre-commitments.
- Increased sales rate for house and land packages.
- Regional property sales are accelerating the trend which started 3-4 years ago.
- There have been no massive falls in residential property values.
- Low cash rate environment continues to invigorate commercial and residential development space.
- A notable trend towards ‘Build to Rent’ properties.
- Property developers are looking at longer term strategies.