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Vol 12. No.6

Landsburys Independent Accreditation Reports

Economic Overview

	Current	+/-	Movement
$AUS/$US	98.35	-1.06
Cash Rate	4.75	Steady
90 Day Bill	5.01	Steady
10 Year Bond	5.423	-0.092
ASX 200	4710.7	-1.6

New South Wales Property

• A private developer has bought a residential site located at 48-52 Barina Downs Road in Baulkham Hills for $10 million.
• The property includes 17,471 square metres of land and is DA approved for 114 units.

• Desane Group Holdings has won development approval to expand its planned Rozelle Bay Commercial Centre.
• The group can now develop a six-storey commercial office building on the site.
• Desane expects the completed project to be worth about $16 million.

National Property

• The Industrial property market is poised for a recovery after a tough couple of years for owners and developers.
• The sector was one of the worst affected markets during the global financial crisis as companies cut spending and crammed operations into existing space.
• Valuations fell and sales transactions dropped by 70% during the worst period in 2008.
• While developers held off in the first half of 2010, large institutions snapped up portfolios at the top end of the market.
• A GIC-backed fund bought the Salta industrial property portfolio for $220 million, while DEXUS’s funds arm purchased the Colonial First State Direct Property Industrial Fund for $231 million.
• In the biggest play, a consortium led by Goodman Group and including some of the largest sovereign wealth funds such as China Investment Corporation made a $1.4 billion bid for the ING Industrial Fund.
• A number of economic factors point to a slow recovery in the industrial market this year.
• Container volumes – a litmus test of the health of the economy and closely linked to demand for industrial space across the Port of Sydney and Port of Melbourne – has risen.
• The big retailers and logistics companies are starting to look for extra space.
• Big-name retailers and logistics companies such as Ingram Micro, Linfox, EB Games and DHL all signed major pre-commitment deals last year.
• A number of large groups have already expanded. Caterpillar has leased 30,700 square metres at Somerton Logistics Centre in Melbourne’s north; TNT has committed to a 18,800 square metre development at Welshpool in Perth’s east; and EB Games has taken 17,200 square metre at Eagle Farm in Brisbane.
• Higher demand points to a busy year for developers. Research predicts 2.4 million square metres of projects are in the pipeline for 2011.
• At least four major projects of over 50,000 square metres should be built this year, including the 78,000 square metre distribution centre for Kmart at Laverton North.
• Sydney and Melbourne in particular are expected to benefit from this recovery the most because of limited supply.
• While demand for space has increased, debt financing is still hard to obtain for second-tier property developers.
• Net face rents rose 1.8% in the third quarter of last year and research is forecasting A-grade warehouse rents to rise by 2.7% this year. Rental growth in the secondary market is expected to take longer.