cbre property market overview 2019 · source: abs, cbre research current indicators, while showing...
TRANSCRIPT
CBRE PROPERTY
MARKET OVERVIEW 2019
Ben Martin-HenryCBRE Research
Head of Capital Markets, Office and [email protected]
ECONOMY
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023
% c
han
ge p
.a. o
n q
uart
erl
y p
eri
od
s
Australia US Global
AUSTRAL IA W ON’T AVO ID GLOBAL S LOW DOW N
A N N U A L G D P F O R E C A S T S
Source: CBRE Research
Source: CBRE Research
I NTEREST RATE EXPECTAT IONS
RISES IN 2020 4 CUTS IN 2019
RISES IN 2020 2 CUTS IN 2019
ECONOMIC OUTLOOK HAS DETER IORATED
C H A N G E D O U T L O O K S I N C E L A S T Y E A R
ECONOMIC GROW TH IN 2019
3.6% 2.9%
2.5% IN 2020
Source: CBRE Research; Deloitte Access Economics
2.8% 1.8%
2.5% IN 2020
RESIDENTIALStability Emerging
PERTH RES IDENT IAL MED IAN PR ICES
H O U S E P R I C E S A R E S T I L L F A L L I N G ; U N I T P R I C E S L E V E L L I N G ?
Source: CBRE Research
$200
$250
$300
$350
$400
$450
$500
$550
$600
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Median house price ($) Median unit price ($)
$480,000Median house price (June quarter 2019)
down 4% q-o-q and 6.8% y-o-y
14% lower than 2015 peak
$376,000Median unit price (June quarter 2019)
down 1.1% q-o-q and 6.5% y-o-y
18% lower than 2017 peak
ANNUAL SALES VOLUME DECL INES F LATL INE
D E C L I N E N O T A S S E V E R E A S E A S T C O A S T M A R K E T S
Source: CBRE Research
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Houses Units
22,368House sales (year to June 2019)
down 4.5 y-o-y
down ~32,000 since 2014 peak
7,283Unit sales (year to June 2019)
down 9.2% y-o-y
~35% below 2014 peak
COMPLET IONS AND CONSTRUCT ION
B O T H T R E N D I N G D O W N
Source: CBRE Research
0
500
1,000
1,500
2,000
2,500
0
2,000
4,000
6,000
8,000
10,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Apartments under construction (lhs) Apartments completed (rolling annual) (lhs) Apartments commenced in quarter (rhs)
APPROVALS CONTINUE THE IR DECL INES
A N N U A L A P P R O V A L V O L U M E S
Source: ABS, CBRE Research
0
2,500
5,000
7,500
10,000
12,500
15,000
17,500
20,000
22,500
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Greater Perth Houses Greater Perth Other
3,247Medium/high density approvals year to
June 2019. Now 62% below their mid
2015 peak and dipping again
10,211Detached dwelling approvals over the
past year. Trending at the lowest total
on record
RENTS & VACANCY
V A C A N C Y U P S L I G H T L Y I N T H E Q U A R T E R B U T S T I L L S T R O N G
Source: ABS, CBRE Research
2.9% vacancy
lowest level since
2013
$325 for units
up marginally y-o-y
$340 for houses
up 3% y-o-y 0%
1%
2%
3%
4%
5%
6%
7%
$0
$70
$140
$210
$280
$350
$420
$490
$560
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Vaca
ncy
Rate
Med
ian
ren
t ($
/week)
Median 3br house rent ($/week) Median 2br unit rent ($/week) Vacancy rate (%)
SUMMARY
C U R R E N T T R E N D S
Source: ABS, CBRE Research
Current indicators, while showing encouraging signs, are still patchy
• Vacancy rate has improved 6.6% Sept 2016 to 2.9% in June 2019.
• ~3.6% net yield for units – Will this entince investors?
• The current Perth market is still dominated by Owner Occupiers
- Downsizers & First Home Buyers
• Demand for larger apartments and low to medium rise
developments and townhouses
OFFICERecovery on the way
PERTH & BR I SBANE TO OUTPERF ORM
P R I M E N E T E F F E C T I V E R E N T A L G R O W T H
Source: CBRE Research
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Sydney CBD Melbourne CBD Brisbane CBD Adelaide CBD Perth CBD Canberra Civic
Last 12 months Next 24 months (annualised)
PERTH GROW TH DR IVEN BY INCENT IVE DECL INES
C O M P O N E N T S O F P R I M E N E R G R O W T H O V E R T H E N E X T 5 Y E A R S
Source: CBRE Research
TW O-T I ER MARKET?
P R I M E V S S E C O N D A R Y V A C A N C Y R A T E S J U N - 1 9
Source: PCA, CBRE Research
0%
5%
10%
15%
20%
25%
Sydney CBD Melbourne CBD Brisbane CBD Adelaide CBD Perth CBD ACT
Prime Secondary
RETAILConditions remain challenging
Source: Deloitte, CBRE Research
DEPARTMEN T STORES & F ASH ION SL ID ING
R E T A I L S H A R E O F D I S P O S A B L E I N C O M E
0%
1%
2%
3%
4%
5%
6%
1984 1990 1996 2002 2008 2014 2020 2026
Department stores and discount department stores Apparel Households goods Other retailing
Source: CBRE Research, company accounts
K -MAR T OUTPERF ORMS
S T O R E C O U N T A N D S A L E S P E R S T O R E
0
50
100
150
200
250
300
350
$0
$10
$20
$30
$40
$50
$60
2012
2013
2014
2015
2016
2017
2018
2019
2012
2013
2014
2015
2016
2017
2018
2019
2012
2013
2014
2015
2016
2017
2018
2019
2012
2013
2014
2015
2016
2017
2018
2019
2012
2013
2014
2015
2016
2017
2018
Kmart Target Big W David Jones Myer
($m
)
Store count (RHS) Sales/store (LHS)
Source: CBRE Research
W HAT ABOUT SUB REG IONALS ?
N E T F A C E R E N T I N D E X
100
150
200
250
300
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Ind
ex
100 =
Q1
2000
Retail Sales Neighbourhood Regional Sub-Regional
LOGISTICSConditions softening
CONTR IBUT ION TO INDUSTR IAL GVA
D R A G G E D D O W N B Y C O N S T R U C T I O N
Source: Australian Bureau of Staistics
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
An
nu
al C
on
trib
utio
n (
%)
Manufacturing Utilities Construction Transport & warehousing Wholesale GVA - Industrial
PERTH RECOVERY BEGUN?
S U P E R P R I M E N E T F A C E R E N T S
$60
$70
$80
$90
$100
$110
$120
$130
$140
$150
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
$/s
qm
Greater Adelaide Greater Brisbane Greater Canberra Greater Melbourne Greater Perth Greater SydneySource: CBRE Research
SUPER PR IME INDUSTR IAL RE -RATED
B E S T I N C L A S S N A T I O N A L P R O P E R T Y Y I E L D S
Source: CBRE Research
4%
5%
6%
7%
8%
9%
10%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Office Super Prime Industrial Regional Shopping Centres
CAPITAL MARKETSMore yield compression to come
Source: CBRE Research
AUSTRAL IAN COMMERC IAL PROPERTY INVESTMENT
2 0 1 9 S H A P I N G T O B E A N O T H E R Y E A R O F H I G H V O L U M E S
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Sale
s V
olu
me (
$m
)
Industrial Office Retail
AUSTRAL IAN BANKS LOS ING MARKET SHARE
A U S T R A L I A N C O M M E R C I A L R E A L E S T A T E D E B T
Source: APRANote: Covers major domestic banks and all foreign banks
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
50,000
100,000
150,000
200,000
250,000
300,000
$000s
Domestic Bank Actual Exposure Offshore Bank Actual Exposure Major Domestic Bank Share Offshore Bank Share
Source: RBA, CBRE Research
PROPERTY Y I E LDS TAKE T IME TO AD JUST
Y I E L D S : A U S T R A L I A P R I M E C B D O F F I C E A N D 1 0 - Y E A R B O N D S
0%
1%
2%
3%
4%
5%
6%
7%
8%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Australia Prime CBD Office Aus. Govt. 10-year bond yield Trend bond yield (24 mma) lagged 12 months
r = 0.61
r = 0.82
Forecast
Source: CBRE Research
BONDS – A R I SK - F REE CAP ITAL LOSS ?
F O R E C A S T B O N D Y I E L D S A N D T O T A L R E T U R N S F R O M D E C - 1 9 I N V E S T M E N T
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 Dec-25 Dec-26 Dec-27 Dec-28 Dec-29
1 year held 2 years held 3 years held 4 years held 5 years held 6 years held 7 years held 8 years held 9 years held 10 years held
10-year Aus Gov Bond Yield (upper x axis) Annualised bond total return for Dec-19 investment (lower x axis)