Australian Financial Review, pg 53. Matthew Cranston. 4 June 2009.
CB Richard Ellis's
most recent global occupancy report said office space in the city,
which includes rents, taxes and charges, had seen its costs decline
over 15 percent in the 12 months to April.
Australian Financial Review, pg 50. Lisa Carapiet. 4 June 2009.
GPT Group
has posted a better than expected result and is in a strong position to
consider strategic acquisitions having sold $560 million of non-core
assets in the first half of the current financial year. According to
Jones Lang LaSalle Real Estate Intelligence Service, GPT's office
portfolio is 98.5 percent leased compared to an industry average of
92.9 percent. In the three months to March 31 the group signed leases
with PricewaterhouseCoopers, HSBC and Mills Oakley Lawyers. One area of investment that remains a thorn is its joint venture with the failed Babcock & Brown investment bank, with the venture' s asset management now being transitioned.
Australian Financial Review, pg 47. Lisa Carapiet. 4 June 2009.
Analysts at Credit Suisse say the recent rise in the Australian dollar
to US82 cents yesterday is a positive development for Australia’s
troubled real estate investment trust sector. The increase in the
Australian dollar has reduced pressure from the large amount of
overseas debt carried by many in the REIT sector, such as Westfield
Group and ING Office. Trusts, such as Macquarie Office, Macquarie
Countrywide and Centro Retail, could also see reduction in their net
cross currency liability position, says the broker.
Australian Financial Review, pg 47. Lisa Carapiet. 4 June 2009.
The delay in the joint-venture development of 145 Ann Street, Brisbane with Leighton Properties
has seen property developer Devine downgrade its profit guidance for
fiscal 2009 by a third. Devine chief financial officer Viv Grayson said
profits related to the development that would have been realised in
this year had now been pushed back to 2010.
Australian Financial Review, pg 45. Scott Elliott. 4 June 2009.
Australian banks have imposed strict new lending criteria for new apartment projects that prevent many developers from obtaining finance. Building and construction industry analysts Reed Construction Data have identified deferrals of $12.5 billion worth of apartment projects in the first three months of 2009. The National Australia Bank, Commonwealth Bank of Australia and Westpac Banking Corporation now require such elements as a precommitment rate of 100 percent. Morgan Stanley analysis shows Westpac has reduced its maximum loan to valuation ratio regardless of presales. Suncorp margins have put it out of the market.
Corporate international law firm Freehills’ partner David Sinn says that banks’ margins have gone up as a result of the economic climate and in some cases it makes [their services] unviable.’ Robert Papaleo, director of property consultancy Charter Keck Cramer, says that the banks are now wanting developers to tip in a lot more equity.’ The Royal Bank of Scotland has caused the company building Vision Tower to go into receivership. Mathews Abraham, a spokesman for the Barton Tower project in Melbourne, says that although progress has been slowed by NAB demands, construction should commence within several months. Analysts say that the Wrap development by the Baracon Group has experienced precommitment difficulties.
The residential building tower in Southbank proposed by developer Central Equity has been deferred. Perth developer Saville Australia has gone into administration and John Corbett of Knight Frank says private developers are looking at its Altus and Capital Square developments. Australian Bureau of Statistics figures show approvals of only $288 million worth of apartment projects in April this year. The may statement from the Reserve Bank of Australia says the property development industry is suffering most from the tighter credit conditions. Following the merger of St George and Westpac, Westpac now has a $60 billion exposure to commercial property; NAB has $70 million.
Australian Financial Review, pg 45. Robert Harley. 4 June 2009.
Macquarie Capital Advisors' Rod Cornish has experience in watching the
cycle of property boom and recession and said that the cycle of
recovery is always the same; an initial rise in equities, then house
prices stop falling, and then commercial rents stop falling. The rise
in equities, especially in Australian real estate investment trusts
(REITs), has occurred, yesterday rising another 6 percent with Westfield Group closing at $12.35. JPMorgan analyst Rob Stanton estimates that the net operating income for REITs will decline in the fiscal year 2010. Jones Lang LaSalle's
head of research for Australia, David Rees, advised his clients
yesterday that the positive headline GDP growth figure would boost
confidence - 'Following today's numbers the Reserve Bank and the
Treasury are likely to be revising their growth forecasts upwards.'
Australian Financial Review, pg 44. Nick Lenaghan and Ben Wilmot. 4 June 2009.
Developer Grocon, headed by Daniel Grollo, is planning to use the
previously successful property fund model used in the construction of
Axa’s headquarters in Melbourne’s Docklands. Bevan Towning, formerly of
fund managers Colonial and Challenger, and Andrew Kerr, formerly of Merrill Lynch, have been hired to develop Grocon’s property fund division. In other developments, Grocon is close to sealing a deal on Macquarie Office Trust’s
development at Melbourne’s 171 Collins Street. Grocon is also looking
to purchase John Boyd Properties planned $900 million office tower at
Sydney’s 163 Castlereagh Street, with Australia and New Zealand Banking Group expected to base its headquarters there. The site, which sits opposite the Sydney Hilton, was also linked to UK building firm Laing O’Rourke in 2008.
Australian Financial Review, pg 11. David Crowe. 4 June 2009.
The Federal Government has claimed vindication with the release of
Treasury figures yesterday showing 0.4 percent growth during the March
quarter. According to Federal Treasurer Wayne Swan, the data had
completely shredded’ the Coalition Party’s strategy of rejecting the
stimulus. Last night, the government also distributed comments from TD Securities saying the government had every right to be thrilled.’
Australian Financial Review, pg 4. Sue Mitchell and Mark Skulley. 4 June 2009.
The Australian National Retailers Association has been joined by the
chief executives of Bunnings, David Jones, Coles and Woolworths in
pressuring the Federal Government to review its award modernisation
plans. The new award is set to impose costs such as higher penalty
rates and casual loadings on retailers during a time which sees many of
them struggling. Workplace Relations Minister Julia Gillard has assured
that no company would face higher costs as a result of the award
modernisation being undertaken by the Australian Industrial Relations
Commission. Elsewhere, the ACTU’s Jeff Lawrence has called on Ms
Gillard to be similarly interventionist’ on the issue of lost pay and
conditions under award modernisation.
Australian Financial Review, pg 1. Simon Evans. 4 June 2009.
Australian companies which import large volumes of goods or have substantial offshore sales are putting in place new hedging contracts to guard themselves against the volatility of the Australian dollar. In the past three months the AUD has gained 32 percent, meaning companies such as Incitec Pivot, BlueScope Steel and James Hardie may see their overseas earnings translating to lower profits in Australian dollar terms. However the higher currency will benefit importers such as clothing group Pacific Brands and Coca-Cola Amatil. Myer chief executive Bernie Brookes says the volatility of the AUD meant suppliers were making short-term decisions and impacted buying power. But airlines Qantas and Virgin Blue have benefited from lower fuel costs, priced in US dollars. Greg Goodsell, equity strategist at Royal Bank of Scotland, said Australian companies were getting better at dealing with the fluctuating AUD.
KPMG analysts said companies would be risking it by not hedging in the current environment. The managing director of Target Launa Inman, said the retailer had a hedging program to guard against currency volatility. Surf wear maker Billabong International blamed volatile exchange rates for last month's its fall in revenue, whilst kitchenware group McPhersons also lost profit when the AUD tumbled 37 percent in October 2008. The company - whose products include cutlery brands Wiltshire and Stanley Rogers, and Lady Jayne hair products - said there was no choice but to hedge. Likewise, the fall of the AUD last year forced Transfield into a capital raising. ANZ economist Riki Polygenis said the strong dollar could be a drag on the broader economy later in the year.
