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2013 Autumn

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THE PROPERTY REVIEW<br />

<strong>Autumn</strong> Quarter <strong>2013</strong><br />

www.towerlondon.com<br />

1


Summer Quarter 2012- <strong>2013</strong><br />

Message From John Tower<br />

4-5<br />

The property market is being<br />

stimulated by investors.<br />

Refurbishing Properties 6<br />

Depreciation 6<br />

What can Tower & London do for you? 7<br />

Residential Sales 8-17<br />

Residential Leasing 18-21<br />

What Drives Yields? 22-23<br />

Commercial Sales 24-25<br />

Commercial Leasing 26-27<br />

Our Offices 28<br />

Enquiries regarding this magazine should be made to:<br />

Tower & London<br />

38 Alfred Street, Milsons Point NSW 2061<br />

Phone: (61) 2 9956 6500 Fax (61) 2 9956 6522<br />

Email: reception@towerlondon.com<br />

Disclaimer:<br />

The information contained in this publication is for general information purposes only. Readers are advised that while an earnest effort has been taken to<br />

ensure the information in this document was obtained from reliable sources, Tower & London gives no guarantees or warranties, written or implied, over<br />

the accuracy of the information provided. Tower & London Pty Limited disclaims all responsibility for any loss or damage suffered as a result of the use of the<br />

contents of this publication. The views expressed in this publication are those of the writers and do not necessarily reflect the views of the publisher.<br />

Photography kindly supplied by Lionel Tregret (for contact details please contact Tower & London).<br />

THE PROPERTY REVIEW<br />

A quarterly magazine<br />

published by<br />

Tower & London<br />

2 3


The property market is being stimulated by investors.<br />

Confidence is returning to the property market largely as a result of interest rate reductions; in fact, it<br />

generally started late last year when we noticed offers matching the asking price were coming in soon<br />

after the property was listed. One measure that many commentators use is the Auction Clearance<br />

Rates: in February and March <strong>2013</strong> these rates in Sydney were 65% and 64% respectively, according<br />

to Domain’s APM. Overall, Sydney’s house prices have increased slightly over the past 12 months from<br />

December 2012; yet, home unit prices increased by about 6% over the same period, this could also<br />

be attributed to increase in sales<br />

of, the usually higher priced, new<br />

developments.<br />

The same pattern is followed<br />

in Sydney’s Lower North shore<br />

property where the house values<br />

increases have been modest<br />

over the same period above,<br />

unit prices have increased at a<br />

higher pace; for example, in the<br />

North Sydney Local government<br />

area, prices jumped by 8%<br />

according to figures obtained<br />

from REINSW Property Profile.<br />

These figures will have to be<br />

seasonally adjusted, but it is<br />

a marked increase in values,<br />

and more interestingly over a<br />

relatively short period of time,<br />

largely the second half of 2012.<br />

Despite these encouraging<br />

figures, The December 2011<br />

base figures were an aberration<br />

$1,000<br />

$1,000<br />

2,500<br />

2,000<br />

1,500<br />

1,000<br />

500<br />

House Sale Prices<br />

-<br />

Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12<br />

North Sydney 990 1,135 1,130 1,300 1,258 1,201 1,186 1,215 1,200 1,195 1,276 1,400 1,362 1,452 1,475<br />

750<br />

700<br />

650<br />

600<br />

550<br />

500<br />

450<br />

Mosman 1,950 2,050 2,000 2,150 1,988 2,110 2,285 2,350 1,850 2,010 1,780 2,175 2,010 2,030 2,050<br />

Willoughby 1,150 1,164 1,250 1,312 1,345 1,285 1,250 1,301 1,327 1,240 1,250 1,235 1,230 1,250 1,265<br />

Apartment Sale Prices<br />

400<br />

Mar-<br />

Mar-<br />

Mar-<br />

Jun-09 Sep-09 Dec-09 Jun-10 Sep-10 Dec-10 Jun-11 Sep-11 Dec-11 Jun-12 Sep-12 Dec-12<br />

10<br />

11<br />

12<br />

North Sydney 519 550 610 635 645 616 630 620 619 598 590 625 621 627 640<br />

Mosman 529 527 620 695 603 643 645 651 618 610 570 622 623 640 655<br />

Willoughby 499 520 563 570 600 581 582 600 605 600 570 580 580 585 600<br />

in my view because they dipped in December and<br />

then quickly bounced back in March 2012 in the<br />

three lower north shore local government areas<br />

we cover in this report. When the March <strong>2013</strong><br />

figures are released, we’ll have a more informed<br />

look at the previous 12 months movement, then<br />

the figures will probably show a slower rate of<br />

increase; albeit, an definite increase.<br />

One can only explain this increase in values by<br />

the increase of number buyers returning to the<br />

market; and perhaps the lack of properties on the<br />

market to satisfy this new level of demand; but,<br />

what we have found to be of substantial increase<br />

is in the property investor segment; particularly, in<br />

the $500,000 to $1million bracket for apartments,<br />

near the railway stations in good buildings. In the<br />

September quarter 2012, I reported ever so slight<br />

increases in property values and more or less<br />

pronounced the bottom of the market had been<br />

reached earlier that year. This was partly because<br />

investors had begun enquiring, making low offers,<br />

and being prepared to negotiate a reasonable sale;<br />

those early investors have, by now, already saved<br />

their Stamp Duty as there values have increased<br />

enough to cover their purchasing expenses.<br />

Investors drive these types of properties that<br />

attract quality tenants; when they’re not buying,<br />

property values stagnate. As interest rates<br />

tumbled over the term of 2012; rents increased<br />

steadily during that period, and the year before,<br />

despite doldrums in sales. This combination of<br />

rising rents and reduction in interest rates usually<br />

passes unnoticed for about six months to a year;<br />

the cleaver investors can sense it, and pick up a<br />

couple of bargains; and then, the rest will be in<br />

on the action. Until, what we saw in 2003, where<br />

some solicitors and accountants from the suburbs<br />

where colluding with developers to sell to their<br />

clients investment properties will guaranteed<br />

returns, that would never be achieved once the<br />

guarantee period had expired, leaving them well<br />

short of servicing their loans; culminating in forced<br />

sales. Lastly, right at the tip of the cycle: property<br />

spruikers appear, selling sham developments<br />

to mums and dads in high pressured sales<br />

environments.<br />

Six months have definitely passed since investors<br />

started buying again, and as mentioned, the<br />

cleaver ones had started earlier. A full quarter in<br />

<strong>2013</strong> has passed, with a high percentage in auction<br />

clearance; asking prices are being matched on<br />

Private Treaty sales; and the early signs are that<br />

values have continued to creep upwards. We are<br />

well into the year now, there’s still a shortage of<br />

properties at around the popular $1 million mark.<br />

Investors are well and truly stimulating the market.<br />

John Tower<br />

M.D. Tower & London<br />

Licensed Real Estate Agent<br />

Registered Property Valuer<br />

4 5


Refurbishing Properties<br />

Are you the owner of an investment property that has seen<br />

better days? It may be time to think about refurbishing your<br />

property to maximise your potential income.<br />

Refurbishing your investment property has many benefits<br />

beyond the pure cosmetic. A well designed, well maintained<br />

refurbishment can increase the immediate rental value of<br />

the property, impact the quality of tenants you attract, and<br />

influence the value of the property if you decide to sell.<br />

Whilst refurbishing may seem daunting, with large upfront<br />

expenses, it doesn’t have to cost a fortune. Simple changes<br />

such as new light fittings, carpet or a fresh coat of paint, are<br />

affordable and are the best ways to add quick value to your<br />

property. Similarly, giving your kitchen or bathroom a quick<br />

facelift with new doors and handles can drastically change<br />

the look of a room.<br />

In addition to increasing the rental value of your property,<br />

a well presented & well maintained property will not only<br />

increase the your rental value, more importantly it will<br />

impact on the quality of applicants you receive and also can<br />

eliminate lengthy vacancy periods between tenancies.<br />

Regardless of the size of your refurbishment project, any<br />

expenses relating to updating your investment property not<br />

only increase the property’s value, but also increase your<br />

depreciation allowances, meaning that you can claim back<br />

on expenses in the future.<br />

Before<br />

Jessica Brincat<br />

Property Consultant<br />

Tower & London<br />

After<br />

Depreciation<br />

Almost 80% of property investors (www.bmtqs.com.au)<br />

are missing out on thousands of dollars in depreciation<br />

deduction from their rental property. In the current<br />

economic climate, it is important for the investors to obtain<br />

the greatest return from their investment property.<br />

There is a common misconception that only new properties<br />

are eligible for depreciation. This is not the case. Whilst<br />

it is true that new properties attract higher returns<br />

of depreciation, older properties can produce attractive<br />

returns also. In fact, in 99% of cases (www.austtaxonline.<br />

com.au), a deduction of some tangible value is attainable.<br />

As a building gets older and items within it wear out, they<br />

depreciate in value. The ATO allows Property Investors<br />

to claim a deduction related to the building and plant and<br />

equipment items it contains. This deduction essentially<br />

reduces the investment property owner’s taxable income<br />

– they pay less tax!<br />

All ATO specified plant and equipment items as well<br />

as building write-off allowance (where the building qualifies)<br />

can be claimed. Plant and equipment items are basically<br />

items that can be ‘easily’ removed from the property<br />

as opposed to items that are permanently fixed to the<br />

structure of the building. Plant items include mechanically<br />

or electronically operated assets, even though they may<br />

be fixed to the structure of the building. Some examples of plant<br />

and equipment items include: hot water systems, carpets,<br />

blinds, ovens, cooktops, rangehood, garage door motors,<br />

air conditioning, and free standing furniture. The building<br />

write-off allowance is based on historical building costs<br />

of the building and includes the bricks, mortar, walls,<br />

flooring, wiring etc. From the date of construction<br />

completion, the ATO has determined that any building<br />

eligible to claim depreciation has a maximum effective life<br />

of 40 years. Therefore, investors can claim up to 40 years<br />

depreciation on a brand new building, whereas the balance<br />

of the 40 year period from construction completion<br />

is claimable on an older property.<br />

Sophie Wang<br />

Accountant<br />

Tower & London<br />

What can Tower & London do for you?<br />

Executive Leasing<br />

The main thrust of the business is its leasing department. The majority of the residential leases are negotiated<br />

to company executives, general managers and diplomats. The properties leased are middle level to exclusive<br />

apartments, most with prime harbour views. Many major Australian and international companies have entered<br />

into leases with Tower & London.<br />

Property Sales<br />

Apart from considerable private treaty and auction experience Tower & London assist in decorating the property<br />

for sale or auction in order to realise the highest possible sale price. The sale price often exceeds their valuation.<br />

Tower & London have sold every property listed within the exclusive agency period.<br />

Property Management<br />

Our property management team is focused on delivering the highest quality of customer service and in turn<br />

ensuring our clients’ interests are a top priority. At Tower & London we have a full time Trust Account who is<br />

dedicated to ensuring our clients financial matters are given the attention they deserve.<br />

Property Refurbishment<br />

Tower & London manage small refurbishment projects. Often apartments in prime locations require upgrading<br />

in order to maximise returns and increase owner’s equity. Over the years, Tower & London have accumulated an<br />

efficient team of tradespersons to undertake such projects with high quality and care.<br />

Valuations<br />

Property valuations for any purpose are prepared within 48 hours. Expert advice is provided on many technical<br />

issues concerning property values. Comprehensive feasibilty studies and Discounted Cash Flow analysis (DCF)<br />

are conducted on small to medium developments and refurbishment projects.<br />

Commercial Sales and Leasing<br />

Tower & London has a dedicated commercial department specialising in sales, leasing and management of<br />

commercial offices, industrial and retail premises. Our clients love the prompt efficient service they receive as<br />

we treat them like a big fish in a small school. No property is too big or too small, from small office suites to large<br />

industrial facilities. John Wood can tailor a sales or leasing campaign to put the focus on your property.<br />

6 7


Residential Sales<br />

709/2 Dind Street, Milsons Point<br />

For Sale $1,350,000<br />

Residential Sales<br />

Spectacular Harbour Views From The Pinnacle<br />

The Pinnacle is a luxuriously appointed modern building in prime location in<br />

Milsons Point, with first class amenities and 24 hour concierge. Set in midlevels,<br />

this superb 2 bedroom apartment enjoys sweeping harbour views<br />

from every room; the harbour bridge, in full view, is prominent from every<br />

window; like a post card from the living room. Two marble bathrooms, the<br />

master is lavish; and a delightful kitchen with quality fittings and stone<br />

benches. The balcony, accessed from the living room and the main bedroom,<br />

is private, sheltered and capacious with a great view. Not just car space, but<br />

a separate lock-up garage on title.<br />

2 2<br />

Details and Viewing:<br />

John Tower or Jessica Brincat<br />

Phone: 9956 6500<br />

Email: reception@towerlondon.com<br />

www.towerlondon.com<br />

1<br />

8<br />

9


Residential Sales<br />

2003-<strong>2013</strong>/30 Glen Street, Milsons Point<br />

For Sale $900,000<br />

11/1 Harbourview Crescent, Milsons Point<br />

For Sale $1,700,000<br />

Residential Sales<br />

Dual Apartment With Spectacular Views<br />

SOLD<br />

Mirvac on Lavender Bay<br />

The Colonnades is a famous building located diagonally across the park from<br />

Milsons Point station; and it comes complete with resort style amenities.<br />

This dual key apartment occupies the 20th floor capturing spectacular views<br />

of the harbour and the Opera House from the rounded point of the building;<br />

resembling the fabulous buildings of a bygone era in New York. Internally<br />

this cleaver property has two separate flats, in fact most of them on this side<br />

of the building were designed to this type, but few have such spectacular<br />

views. Currently returning about $1,000 per week; an impressive and solid<br />

income, at a fair and reasonable asking price.<br />

2 2 1<br />

Details and Viewing:<br />

John Tower or Jessica Brincat<br />

Phone: 9956 6500<br />

Email: reception@towerlondon.com<br />

www.towerlondon.com<br />

Away from the bustle of Milsons Point, opposite Clark Park there is an icon<br />

in the area: Helmspray, is one of the original quality buildings in Lavender<br />

Bay/Milosns Point area developed by Mirvac, arguably, Australia’s best<br />

development company; a relatively small well-built block, substantially<br />

owner occupied, with another access form the side lane to Milsons Point<br />

station. Unit 11 is perfectly positioned to capture pleasant views of Lavender<br />

Bay and the tranquil sounds of ropes ringing the boat masts. Accommodation<br />

comprises three bedrooms with ample hanging storage, two superbly<br />

renovated bathrooms, a quality kitchen with breakfast area, semi enclosed<br />

dining room, lounge and all the bedrooms are wrapped in balconies, laundry<br />

and storage.<br />

3 2 2<br />

Details and Viewing:<br />

John Tower or Jessica Brincat<br />

Phone: 9956 6500<br />

Email: reception@towerlondon.com<br />

www.towerlondon.com<br />

10<br />

11


Residential Sales<br />

1205/38 Alfred Street, Milsons Point<br />

For Sale $1,350,000<br />

507/2 Dind Street, Milsons Point<br />

For Sale $1,000,000<br />

Residential Sales<br />

North Eastern Aspect In Port Jackson Tower<br />

A Quintessential Milsons Point Apartment<br />

Port Jackson Tower is a tightly held quality building in a perfect a location<br />

in Milsons Point. Apartment 1205 is ideally positioned, high on the north<br />

eastern side of the building; bathed in sunshine in winter; floor to ceiling<br />

glass walls wrapped by balconies with some main harbour views. Three<br />

bedrooms, all with built-in; two bathrooms, breakfast area in the kitchen,<br />

laundry and ample storage, lends this apartment to a very comfortable<br />

home. The building: one of the best managed in the area, has a great indoor<br />

lap pool and gym/sauna facilities. Two side-by-side parking spaces on title<br />

and ample visitor parking. Freshly painted and updated, ready to move in;<br />

this property is an absolute gem.<br />

3 2<br />

Details and Viewing:<br />

John Tower or Jessica Brincat<br />

Phone: 9956 6500<br />

Email: reception@towerlondon.com<br />

www.towerlondon.com<br />

2<br />

The Pinnacle has been described as “the benchmark in Architectural<br />

Excellence this level of quality certainly ranks it as one of the best buildings<br />

in Milsons Point; ideally positioned at the edge of the high-rise precinct, with<br />

resort like facilities including a lap pool and a great gym. This elegant two<br />

bedroom apartment has a massive living area finished with solid parquetry<br />

timber floors spanning 8.4 meters, on one end is the kitchen on the other a<br />

large window with diagonal views of the western end of the harbour. Two<br />

fully fitted bedrooms with ample storage, the second is larger than most;<br />

two marble bathrooms that only pictures do justice; the kitchen is a delight<br />

with quality appliances, a square useful balcony and a lockup garage.<br />

2 2 1<br />

Details and Viewing:<br />

John Tower or Jessica Brincat<br />

Phone: 9956 6500<br />

Email: reception@towerlondon.com<br />

www.towerlondon.com<br />

12<br />

13


Residential Sales<br />

611/88 Berry Street, North Sydney<br />

For Sale $540,000<br />

6/187 West Street, Crows Nest<br />

For Sale $420,000<br />

Residential Sales<br />

Stylish One Bedroom in North Sydney<br />

Located on the edge of North Sydney in the “Harbourwatch building, this top<br />

floor one bedroom apartment boasts modern spacious interiors combined<br />

with an ideal location, only moments from the heart of North Sydney’s CBD<br />

and a short drive over the bridge to the city.<br />

The property includes a generous bedroom with built in wardrobes, modern<br />

kitchen with combined living and dining area, well-appointed bathroom and<br />

balcony capturing water views over Neutral Bay.<br />

SOLD<br />

1 1<br />

Details and Viewing:<br />

John Tower or Jessica Brincat<br />

Phone: 9956 6500<br />

Email: reception@towerlondon.com<br />

www.towerlondon.com<br />

1<br />

Newly Refurbished One Bedroom Apartment<br />

With Lock Up Garage<br />

This bright and well maintained one bedroom apartment is located in a<br />

quiet yet convenient position within a small security building. The building<br />

is ideally located within walking distance to all amenities and offers rapid<br />

access to the CBD. The property has a balcony off the living room and lockup<br />

garage.<br />

SOLD<br />

1 1 1<br />

Details and Viewing:<br />

John Tower or Jessica Brincat<br />

Phone: 9956 6500<br />

Email: reception@towerlondon.com<br />

www.towerlondon.com<br />

14<br />

15


Residential Sales<br />

401/206 Ben Boyd Road, Neutral Bay<br />

For Sale $485,000<br />

902/12 Glen Street, Milsons Point<br />

Undisclosed<br />

Residential Sales<br />

Spacious & Bright One Bedroom Apartment<br />

With Sunroom<br />

Located in a prominent medium rise building in the heart of Neutral Bay, this<br />

spacious one bedroom apartment with sunroom would make a perfect first<br />

home, or an ideal investment. Featuring a modern kitchen, internal laundry,<br />

open living room with the added space of an adjoining sunroom. The<br />

bedroom is perfectly positioned with sweeping views across Neutral Bay.<br />

Situated in a secure, well located building with beautiful gardens and<br />

outdoor pool, the property includes one secure car space and is minutes<br />

away from Neutral Bays fabulous shopping and dining district.<br />

SOLD<br />

1 1<br />

Details and Viewing:<br />

John Tower or Jessica Brincat<br />

Phone: 9956 6500<br />

Email: reception@towerlondon.com<br />

www.towerlondon.com<br />

1<br />

Modern Apartment with Great Views<br />

Large and modern one bedroom apartment with great views over Lavender<br />

Bay. The property features a generous bedroom with built in robes, a well<br />

appointment bathroom plus powder room, beautiful timber floors and an<br />

expansive balcony to take in the wonderful views of Lavender Bay.<br />

Secure parking for one car, gym & pool in building<br />

SOLD<br />

1 1 1<br />

Details and Viewing:<br />

John Tower or Jessica Brincat<br />

Phone: 9956 6500<br />

Email: reception@towerlondon.com<br />

www.towerlondon.com<br />

16<br />

17


Residential Lease<br />

LEASED<br />

202/5 Harbourview Crescent, Milsons Point<br />

For Lease $2,000pw<br />

Brand New- Chic harbour front<br />

apartment<br />

LEASED<br />

501/20 Alfred Street, Milsons Point<br />

For Lease $2,500pw<br />

Residential Lease<br />

Spectacular Views From ‘The Point’<br />

Situated on the second floor of Milsons Point’s newest<br />

development, Halcyon, this is a truly impressive apartment<br />

offering style & luxury as well as a level of appointment<br />

suitable for the most discerning executive.<br />

Located on the picturesque Lavender Bay, the property<br />

offers spectacular views & sits only minutes from all that<br />

one of the world’s most desirable cities has to offer.<br />

Open plan living areas lead seamlessly onto the spacious<br />

balcony with unsurpassed views of Sydney Harbour.<br />

Occupying the premium corner position in The Point<br />

development, this is a truly impressive apartment offering<br />

award winning design and luxurious appointment. Floor<br />

to ceiling glass encases the open plan living area providing<br />

jaw-dropping Harbour Bridge & Harbour Foreshore<br />

views. The living area wraps around to the spacious open<br />

Winter Garden with unsurpassed views of the Harbour<br />

and Bradfield Park below, perfect for those lazy weekend<br />

brunches or relaxed entertaining.<br />

3 3 2<br />

3 3 2<br />

LEASED<br />

2301/37 Glen Street, Milsons Point<br />

For Lease $1,250pw<br />

Breathtaking Views Across the<br />

Harbour<br />

LEASED<br />

19 Bayview Street, Mcmahons Point<br />

For Lease $1,500pw<br />

Fabulous Harbour Views<br />

Situated on the 23rd floor of the Peninsula Tower, this<br />

three bedroom apartment encompasses magnificent<br />

views from every window. The property boasts generous<br />

open plan living spaces framed by two balconies opening<br />

up to sweeping views of Sydney Harbour stretching as far<br />

as the Blue Mountains. Featuring three bedrooms each<br />

with their own unique views, the master includes a walk<br />

in robe and ensuite, whilst the remaining bedrooms are<br />

equipped with built-ins.<br />

This prestigious two bedroom town house boasts priceless<br />

harbour views capturing both the iconic Sydney Harbour<br />

Bridge & Opera House. Watch the boats sail past from the<br />

entertaining deck or the beautifully landscaped courtyard.<br />

The split level townhouse offers spectacular views from the<br />

formal lounge & master bedroom. The spacious kitchen<br />

has a beautiful marble bench & European appliances as<br />

well as plenty of storage. The bathrooms are beautifully<br />

appointed, ensuite includes a spa bath. The property also<br />

includes a study, wine cellar, & parking for one car.<br />

3 2 2<br />

2 3 1<br />

18<br />

19


Residential Lease<br />

Residential Lease<br />

1707/30 Glen Street, Milsons Point<br />

This prestigious two bedroom apartment boasts serene harbour views<br />

over Lavender Bay captured by the beautiful floor to ceiling glass that<br />

encases the living room. The apartment offers a modern kitchen with<br />

hardwood floors, gas cooking, stainless steel Bosch appliances & plenty<br />

of storage as well as an internal laundry. The property has recently been<br />

updated with fresh paint and flooring.<br />

2 2 1 $850pw<br />

1204/38 Alfred Street, Milsons Point<br />

Located in the landmark building Port Jackson Tower this apartment<br />

features a large living area with, and floor to ceiling glass capturing<br />

amazing views. Two spacious bedrooms, large kitchen and bathroom,<br />

sunny balcony with Internal laundry & one security parking. This building<br />

offers a gym, sauna, pool and spa.<br />

2 2 1 $850pw<br />

604/8 Glen Street, Milsons Point<br />

This is a truly impressive fully furnished apartment offering style &<br />

luxury as well as a level of appointment suitable for the most discerning<br />

executive. The spacious open plan lounge and dining area has wonderfully<br />

high ceilings and opens to a fabulous entertaining deck with spectacular<br />

Lavender Bay views. Available for lease until NOV <strong>2013</strong><br />

2 2 1 $1,250pw<br />

908/12 Glen Street, Milsons Point<br />

This one-bedroom apartment is perfectly located, close to the harbour<br />

foreshore, cafes, ferry wharf, and Milsons Point train station. The<br />

apartment itself features a large bedroom, combined living & dinning,<br />

modern bathroom, and balcony. Building facilities include a swimming<br />

pool and gym.<br />

1 1 $480pw<br />

LEASED<br />

LEASED<br />

LEASED<br />

60 Upper Pitt Street, Kirribilli<br />

A Light and Airy One Bedroom in Neutral Bay. Enter a house brimming<br />

with classic Victorian charm and tranquility. The property offers formal<br />

lounge and dining areas with high ceilings, large windows capturing plenty<br />

of natural light. The house features a spacious kitchen, which is extended<br />

by a family room overlooking a magical, child-friendly rear garden.<br />

4 2 1 $1,200pw<br />

131/48 Alfred Street, Milsons Point<br />

Peaceful One Bedroom Apartment with views over Lavender Bay.<br />

This one bedroom unit situated in the heart of Milsons Point offers<br />

superb views over Lavender Bay. The property is furnished, and features a<br />

stunning balcony overlooking the harbour. In addition there is one security<br />

car space and the building offers a gym and indoor pool.<br />

1 1 1 $680pw<br />

1305/38 Alfred Street, Milsons Point<br />

Modern high rise building in the most prominent location in Milsons Point.<br />

3 bedrooms, 2 bathroom apartment perched on the 13th floor enjoying<br />

outstanding views of the Harbour & Kirribilli. Security building, balcony,<br />

internal laundry, , parking, pool, gym, spa & sauna facilities.<br />

3 2 1 $950pw<br />

34B/2 Brady Street, Mosman<br />

This immaculately presented spacious 2 bedroom apartment in the exclusive<br />

Bridlewood Gardens complex. Generous size open plan lounge and dining<br />

which flows out onto a fabulous under cover balcony making it ideal for<br />

alfresco dining and entertaining. Gourmet granite eat-in kitchen with gas<br />

appliances and dishwasher. Ducted air-conditiong and 2 security parking.<br />

2 2 1 $775pw<br />

LEASED<br />

LEASED<br />

LEASED<br />

20<br />

21


COMMERCIAL REAL ESTATE<br />

Commercial Sales<br />

What Drives Yields?<br />

Welcome to the commercial section of our<br />

<strong>Autumn</strong> Quarter edition of The Property Review.<br />

In this article we will look at some of the principal<br />

drivers of property yields that influence returns<br />

on commercial, industrial and retail property in<br />

Australia.<br />

The Australian Dollar<br />

In the short term the Australian dollar is supported<br />

by a strong association with Asian markets, the<br />

strongest growth region in the world. There has<br />

been a 400% increase in merchandise exports<br />

from Asia since the late 1980s. This has resulted<br />

in an increasing demand for our commodities<br />

resultant in stronger terms of trade.<br />

In addition to our stronger terms of trade our<br />

much higher interest rates compared to the US<br />

dollar reflect the higher return position of the<br />

Australian economy. Given monetary policy in the<br />

US and Europe and, very recently, the dramatic<br />

devaluation of the Japanese yen, this position is<br />

likely to persist for the medium term.<br />

Overall the above influences indicate a relatively<br />

stable Australian dollar with any downside<br />

counterbalanced by an improvement in the<br />

affordability of our exports.<br />

Borrowing and some technical stuff...<br />

NTA and REITs<br />

Real Estate Investment Trusts , “REITs”, are listed<br />

property investment entities which can be traded<br />

on stock exchanges. Net Tangible Assets “NTAs”<br />

are calculated as the total assets of an entity,<br />

minus any intangible assets such as goodwill,<br />

patents and trademarks, less all liabilities and the<br />

par value of preferred stock. Also known as “net<br />

asset value” or “book value”.<br />

The property sector has seen a reduction in<br />

REIT leveraging to less than 30% during the last<br />

5 years. This has resulted in lower borrowing<br />

costs and an increase in price to NTA ratios.<br />

The lack of confidence in growth in the non<br />

mining sector has held back demand for increases<br />

in leverage notwithstanding a general trend of<br />

borrowing costs falling below property yields<br />

across most sectors.<br />

Re-emergence of property as a preferred<br />

investment<br />

The post GFC period saw a strong demand for<br />

secure deposit and cash linked offerings plus<br />

a higher level of super fund inflow into deposit<br />

accounts. The resulting fall in deposit interest<br />

rates plus stable property returns is likely to<br />

attract investors back to the property sector. This<br />

sentiment is reflected in strong REIT returns.<br />

Super funds looking to fund long term annuity<br />

streams will encourage the creation of<br />

development/financial models to meet this<br />

demand<br />

Supply<br />

The “boom and bust “ cycle which afflicted the<br />

economy in previous cycles has been largely<br />

avoided in the post GFC due to an absence of over<br />

supply of investment property. Non residential<br />

approvals indicate this situation will continue for<br />

at least the next two to three years.<br />

Despite falling borrowing costs, stable rental<br />

growth and moderate market confidence there<br />

is little to indicate an improvement in supply.<br />

Once growth expectations take a more positive<br />

outlook the impact on capital values and yields<br />

will begin to improve. There is also an expectation<br />

of improved activity once the tight financial<br />

conditions ease.<br />

Property yields<br />

Falling bond yields and stable rental returns have<br />

resulted in below average yields in the industrial<br />

and office markets. There are expectations that<br />

the yields will increase in the medium term<br />

however net face rental growth has exceeded<br />

long term averages in the office and industrial<br />

sector indicating a built in slowing of forward<br />

pricing and yield.<br />

The retail sector is heading into largely unknown<br />

territory as the impact of on line shopping<br />

on demand for speciality retail space is fully<br />

understood and addressed. Lower demand for<br />

retail space will inevitably result in longer vacancy<br />

periods which will impact on yield and growth<br />

expectations.<br />

Yields by Sector<br />

Sep 12<br />

20 Year<br />

Average<br />

Retail – Regional Centre 6.1% 7.0%<br />

Prime CBD Office 7.5% 7.5%<br />

Industrial – Grade A 8.5% 8.8%<br />

Source: CBRE<br />

Net Face Rental Growth<br />

Last 12<br />

Months<br />

20 Year<br />

Average<br />

Current Growth<br />

Relative to 20<br />

Year Average<br />

Retail 1.8% 3.6% -1.8%<br />

Office 3.9% 2.6% 1.3%<br />

Industrial 3.1% 1.3% 1.8%<br />

Source: CBRE<br />

In summary falling lower bond yields and falling<br />

interest rates are indicative of softer growth<br />

expectations and stable property yields. Current<br />

conservative market pricing should ensure a<br />

stable market in the foreseeable future resulting<br />

in limited downside to capital values.<br />

I hope this gives you an insight into the business<br />

end of property investment and some of the<br />

more technical aspects of that market. In the<br />

next edition we will see how this affects the<br />

commercial market on the lower north shore,<br />

particularly the most popular and affordable local<br />

strata commercial, industrial and retail sector.<br />

Until then remember “An investment in knowledge<br />

pays the best interest.” - Benjamin Franklin<br />

John Wood<br />

Licensed Real Estate Agent<br />

Commercial, Industrial and Retail<br />

22<br />

23


Commercial Sales<br />

G01/15 Atchison Street, St Leonards<br />

For Sale $560,000 + GST<br />

Lot 12/26 Ridge Street, North Sydney<br />

For Sale $165,000 + GST<br />

Commercial Sales<br />

Ground Floor Professional Suite<br />

-Super Super Investment<br />

Small Office - Big Ideas<br />

•Near New Building...<br />

•74 Sq Metres<br />

•Extensive fit out consisting of reception area,<br />

meeting room, general office area and large private<br />

executive office<br />

•Own Kitchenette<br />

•Maximum Exposure To Atchison Street<br />

•Fully Leased Until 31st March <strong>2013</strong><br />

•Gross Annual Return $36065 Gst Exclusive<br />

•33 Sq metres<br />

•Functional fit out<br />

•Character building<br />

Consider the opportunity to join the corporate world at an<br />

amazing $165000 (+ GST) entry point. This is a character<br />

building with an eclectic mix of owners and occupiers.<br />

Level 6 location enjoys a broad vista of Sydney all the way<br />

to Botany Bay!<br />

Total<br />

Area<br />

74sq<br />

Details and Viewing:<br />

John Wood<br />

Phone: 9956 6500<br />

Email: commercial@towerlondon.com<br />

56 Beaumont Road, Mount Kuring-Gai<br />

For Sale $36,160 + GST<br />

Total<br />

Area<br />

33sq<br />

Parking<br />

Available<br />

Details and Viewing:<br />

John Wood<br />

Phone: 9956 6500<br />

Email: commercial@towerlondon.com<br />

9/9-11 Chaplin Drive, Lane Cove<br />

For Sale $625,000 + GST<br />

Total<br />

Area<br />

3460sq<br />

Vacant<br />

Site<br />

Last Large Vacant Block In<br />

Mt Kuring-Gai<br />

•Zoned general industrial<br />

•Ideal contractors yard<br />

•Near level approx 3460 sq metres building area<br />

•Very secure site<br />

•7 Metre wide access to beaumont road<br />

•High side location<br />

The last opportunity to acquire a substantial site in the<br />

mt kuring-gai industrial estate. Mostly vacant land with<br />

existing approx 216 sq metre metal working/welding shed<br />

at rear - council approved<br />

Details and Viewing:<br />

John Wood<br />

Phone: 9956 6500<br />

Email: commercial@towerlondon.com<br />

24<br />

25<br />

Total<br />

Area<br />

192sq<br />

4<br />

High Tech Industrial Unit- Hugely<br />

Motivated Vendor- Security Estate<br />

Modern high tech industrial unit located in the Lane Cove<br />

Industrial area. It consists of ground floor warehouse<br />

area (104 sqm) and mezzanine level air conditioned office<br />

space (88 sqm). The total strata plan area is 248 sq metres<br />

inclusive of car parking - 4 car spaces in total.<br />

Chaplin Drive is a precinct of modern, recently developed<br />

industrial buildings and has easy access to the Gore Hill,<br />

M2 & M7 freeways. All major Sydney industrial areas are<br />

serviced by this network<br />

Details and Viewing:<br />

John Wood<br />

Phone: 9956 6500<br />

Email: commercial@towerlondon.com


Commercial Leasing<br />

302/161 Walker Street, North Sydney<br />

For Lease- Realistic Market Expectations<br />

Shop 4/59-67 Strathallen Avenue, Northbridge<br />

For Lease $48,000 + GST<br />

Commercial Leasing<br />

Sharp Fit Out - Sharp Pricing<br />

Main Road Retail With All Day Parking<br />

Retail Exposure At Office Rental<br />

Total<br />

Area<br />

125sq<br />

1<br />

•125 sq metres approximately<br />

•Internal Kitchen<br />

•Boardroom<br />

•Reception<br />

•General Office Area<br />

•2 Offices/Meeting Rooms<br />

This 125 sq metre office has a lot to offer with a very<br />

versatile layout. Walker House is conveniently located near<br />

Berry Street. Security car space in basement of building.<br />

Details and Viewing:<br />

John Wood<br />

Phone: 9956 6500<br />

Email: commercial@towerlondon.com<br />

Total<br />

Area<br />

91sq 7<br />

•91 sq metres<br />

•Central location<br />

•10 minutes to the 3 cbds<br />

•Modern refurbished centre<br />

•Look at the rent only $48000 pa + gst<br />

Looking for exposure and client parking??<br />

Look no further!!<br />

Details and Viewing:<br />

John Wood<br />

Phone: 9956 6500<br />

Email: commercial@towerlondon.com<br />

47/221 Miller Street, North Sydney<br />

For Lease $20,800 + GST<br />

Shop 1/144-150 Liverpool Street, Darlinghurst<br />

For Lease $39,300 + GST<br />

Top Of The Town<br />

Level 13, 221 Miller Street<br />

Prime Street Frontage Retail<br />

•52 Sq Metres<br />

•Quality Furniture Included<br />

•2 Offices Reception Utility Room<br />

•Massive Window Space And Natural Light<br />

•Top Quality Executive Suite<br />

•Busy Precinct<br />

•50 Metres From Oxford Street<br />

•Good Exposure and Signage<br />

•Long Term Lease Available<br />

•Approximately 32 sq metres<br />

1 Security basement car space @ $380 pcm + levy + gst<br />

This is a great opportunity for the switched on retailer to<br />

capitalise on this inner city location. Busy yet friendly with<br />

an eclatic mix of bypasses and neighbours.<br />

Total<br />

Area<br />

52sq 1<br />

Details and Viewing:<br />

John Wood<br />

Phone: 9956 6500<br />

Email: commercial@towerlondon.com<br />

Total<br />

Area<br />

32sq<br />

Details and Viewing:<br />

John Wood<br />

Phone: 9956 6500<br />

Email: commercial@towerlondon.com<br />

26<br />

27


Our Offices<br />

SYDNEY<br />

38 Alfred Street,<br />

Milsons Point, NSW 2061<br />

Sydney, Australia<br />

Phone: (612) 9956 6500<br />

Fax: (612) 9956 6522<br />

HONG KONG<br />

6/F Luk Kwok Centre,<br />

72 Gloucester Rd,<br />

Wan Chai, Hong Kong<br />

Phone: (852) 2918 8788<br />

Fax: (852) 2918 9808<br />

•Executive Leasing<br />

•Property Sales<br />

•Property Management<br />

•Property Refurbishment<br />

•Valuations<br />

www.towerlondon.com<br />

28

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