Ray White’s monthly White Paper (April)
What happened to the markets in March?
For those of us in the real estate industry, March is the month you hope will never end! Always, March brings fabulous activity. Everyone is confident. The perfect environment for transactions to take place! And, with a little luck records get broken. So it was with March 2015.
To our surprise the Ray White Group set a new record of $3.72billion. Listening to the many dire forecasts made at the beginning of 2015, this was not supposed to happen.
But it wasn’t even across our markets. The dramatic change in the resources boom seriously impacted Western Australia’s real estate market, particularly in Perth. Another useful reminder of how tied-in property is with underlying economic forces.
The big cities including Sydney, Auckland and Melbourne had amazing activity. All time Ray White bests were created in all three markets. Queensland wasn’t far behind.
Record low interest rates in Australia were maintained by ourReserve Bank this month and there’s much speculation that the rate could ease even further in coming months. Loan Market achieved another all-time best in line with these strong market conditions, with our finance activities reaching over $1billion in lodgements in March. This result was led by NSW where a record $308m was achieved. Victoria also had an impressive month, coming in at $320m – a figure just shy of its best ever month.
Our commercial businesses are experiencing much stronger conditions in the hotel and leisure sectors. The gap between the returns available in this sector and interest rates, commonly referred to as the yield spread, has not been this large for a very long time.
This yield spread, together with the falling Australian dollar which is expected to assist Australian tourism, is giving hotel operators and investors the confidence to chase opportunities more aggressively. In March alone, our Commercial team transacted over $100m in hotel sales, including the the iconic Newport Arms by Andrew Jolliffe for more than $45m, andDaydream Island for approximately $30m.
What’s new at Ray White
Of interest to Australian and New Zealand property owners, the much publicised downturn in domestic housing in China – where prices have actually been dropping in the major cities – has not been reflected in the continuing interest into Australian and New Zealand property.
Of particular interest are recent seminars in Hong Kong where support for projects
being marketed by Ray White in Sydney and Melbourne have maintained at remarkable levels. In March our Ray White Projects team in Sydney launched the 62 unit project Monarch at Mosman, as well as the 35 unit project; Marquis at Epping. By the close of the launch day, 80 per cent of Monarch was sold, and 100 per cent of Marquis was sold. The contribution of our Hong Kong office was an important factor in our success at Monarch.
Ray White’s Commercial team in Sydney will test the depth of local and offshore developer interest as they market some significant sites across the city. Of particular interest is a privately owned shopping centre at Surry Hills which has the potential for a large apartment development. The property was bought by the current owner 30 years ago for $6.3m. Similar sites in the inner city have sold for more than $95m in the past year. Scott Timbrell and Jeff Moxham of Ray White Commercial NSW are advising on the sale.
More than five months out from our newly announced whole-company conference, Connect, 60 per cent of tickets have sold. The announcement of Lachlan Murdoch, Don Meij and Andrew Denton as speakers has been applauded by ticket holders.
This month we welcome new offices across the geographic breadth of our company; from Lansdale in Western Australia to Barrington in Christchurch. In Queensland, we welcome Ray White Everton Park, Ray White Mango Hill and new business owner at Ray White Bargara.
In New South Wales we have new offices in Wahroonga, Mosman and Sutherland. Our specialist property management brand, Living Here, has three new offices this month: Kangaroo Point, Coolangatta and Palm Beach.
Finally, congratulations to livestock agent Blake O’Reilly of Ray White Rural Armidale/Guyra who took out first place in the NSW Young Auctioneers Title at the Sydney Royal Easter Show.
Read the March edition of the White Paper here.