Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - & author of Things That Make You Go of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, MacroBusiness.

Tuesday, 23 December 2014

Fields of Gold

Someone asked me the other day if I thought that the decline in iron ore prices would lead to lower property prices in Sydney. 

Inner Sydney? No, I wouldn't have thought so!

The latest in a stream of such articles in 2014, this time from SMH (note in particular the figures quoted):

"An office block will be turned into apartments with arguably the best views of Sydney Harbour after it was snapped up by China's  Dalian Wanda Group for $425 million.

The sale of Gold Fields House, at 1 Alfred Street, Circular Quay, comes as more Chinese investors are tipped to enter the Australian market in the coming year. 

They are cashed up and very large insurance and pension funds that like this country's transparent regulations and ease of doing deals.

CBRE head of research Australia Stephen McNabb said investors are expected to remain risk averse and this will ensure that, in most cases, there will continue to be a wide spread between the yields that can be achieved for prime versus secondary assets until there are signs of stronger economic growth.

It is expected the Goldfields site will be redeveloped into upmarket apartments. The harbourside building, controlled by Blackstone and a group of pension funds, was sold by JLL and CBRE. 

Another 1960s-era building nearby, 275 George Street, is understood to be close to being bought by Charter Hall. 

More large-ticket sales are due to be completed in the last business week of  2014.

Neil Brookes, Knight Frank's head of capital markets Asia Pacific, says investors are shifting their focus towards sustainable returns in the long term.

"The key factors for Chinese investors are the policy push from the Chinese government to diversify into other countries; a softening domestic market; and the pull from higher returns achievable in overseas markets.  

Australia, the US and the UK are the top three markets most Chinese investors are looking at. 

"We saw five times as much capital outflow from China into these three markets in 2013 alone compared to the previous year. 

We expect the transaction volumes from Chinese investors into these three markets this year will match or even exceed that of last year.

There has been a tremendous surge of Chinese outward investment in overseas real estate in recent years. 

From 2009 to 2014, the total value of Chinese overseas investment volume has skyrocketed from $US600 million to hit an estimated US$15 billion ($18.45 billion).

"So far the thrust of this investment has been focused in gateway cities of Australia, the US and the UK. 

In 2014, Australia has seen the strongest growth in inbound real estate investment from China at over 60 per cent increase year on year," Mr Brookes said.

If like me you have been living around the city or CBD fringe you will know only too well what a spectacular transformation is taking place in inner Sydney. Continues SMH:

"The Goldfields house sale comes as Circular Quay is set for a $1 billion revamp after a plan for a striking angular office building was approved for the site of the AMP building at 50 Bridge Street. 

The approval for the second phase of the project involves rejuvenation of AMP Capital's prime holdings in Circular Quay, including 33 Alfred Street, 50 Bridge Street, and properties at Young and Loftus streets (1.1 hectares). 

The redevelopment at the northern end of the city will throw down the gauntlet to its western corridor rival Barangaroo."

Pacific investment will continue to explode in the years to come, mainly into inner Sydney and now inner Brisbane, with inner Melbourne the third horse in what is essentially a three horse race.

"Colliers International managing director of capital markets and investment services John Marasco said in the year to date, investment volumes in Australia were slightly higher than the same time last year, with $19.8 billion transacted among all asset classes compared with $17.7 billion in 2013.

Colliers International national director of research Nerida Conisbee said the city in which Pacific investors prefer to invest is Sydney (58 per cent), followed by Brisbane (44 per cent),  then Melbourne (43 per cent). 

Compared with previous surveys, Ms Conisbee said such strong interest in Brisbane was a new trend, probably reflecting the higher yields being achieved in this market."

No great surprises, for you can easily see this transformation happening with your own eyes.

Interesting to hear the sheer scale of the numbers, though.