Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

'Huge fan of your work. Very impressive!' - Scott Pape, The Barefoot Investor, Australia's #1 bestseller.

'Must-read, must-follow, one of the finest analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, must-follow for accurate & in-depth analysis' - David Scutt, Business Insider.

'I've been investing 40 years yet still learn new concepts from Pete; one of the finest young commentators' - Michael Yardney, Amazon #1 bestseller.

'The most knowledgeable person on Aussie real estate - loads of good data & charts...most comprehensive analyst I follow in Oz' - Jonathan Tepper, Variant Perception, 2 x NYT bestseller.

Tuesday, 25 April 2017

Northshore Hamilton

Hamilton (Brisbane)

I haven't done a post on a construction hotspot for, gosh, at least two weeks.

So let's take a look at Hamilton in Brisbane, which has a vacancy rate of about 9 per cent.

Granted, 9 per cent doesn't sound like a whole lot.

And it isn't from an international standpoint, implying after all an occupation rate of more than 90 per cent.

But you have to look at it in terms of the Australian reporting standard - by way of comparison, the entire metropolis of Melbourne has an official vacancy rate of 1.5 per cent. 

The trend is the important thing to watch, and until lately it's been up, up, and away...from close to zero half a decade ago, give or take a few frictional vacancies. 

Source: SQM Research

For new Brisbane apartments at the moment, we're starting to see plenty of 'incentives' to lease.

I went for a wander around down at Northshore Hamilton today.

Ready for some photos?

Northshore Hamilton

Hamilton is a pleasant suburb on the north bank of the Brisbane River, located a little further downstream than most of the other major construction hubs in Brisbane, at 4 miles or about 7 kilometres from the Central Business District. 

The suburb has had the highest mean taxable income in Queensland, and is home to some phenomenally expensive real estate in the elevated locations with amazing water views, leading to a median house price comfortably (and, to be fair, deservedly) in the 7-figure range. 

In 2008 it was announced by the Urban Land Development Authority (ULDA) that the northshore of Hamilton would be developed. 

The area to be developed close to the river covers some 304 hectares and a strip of around 2.5 kilometres of land along the riverfront.

The land was previously government owned and zoned for industrial use. 

The areas that have been developed to date are pleasant enough, although in truth there isn't an awful lot down there besides a ferry terminal and a nice cafe.

Not all of the development stages come as apartments, which is a bonus, although the terraces don't exactly come with cheap price tags. 

All but one of the terraces have now reportedly been sold in this Parkside Circuit development. 

Vacancy rates are already shifting higher as evidenced by the 'For Lease' signs.

There is a chance that vacancy rates may be potentially understated at this stage in the construction cycle, a point covered in more detail in my market reports. 

Pretty quiet around here in parts...

Hamilton: A construction hotspot

The $400 million mixed-use riverfront development was planned to comprise 700 to 1,000 apartments, parkland, a pool, and a restaurant and retail precinct.

'ICON', meanwhile, a new $650 million four-tower mixed use development proposal has been submitted for 19 Hercules Street in Hamilton, a 7,637 square metre site. 

The Hercules Street site previously had approvals for a 23-storey tower comprising 582 apartments by Mirvac (the development formerly known as 'Foreshore Hamilton'), but the site has now been sold on for a private property trust to develop. 

The new development is expected to comprising a hotel and three residential towers adding 567 apartments. 

Apartments are also now for sale off the plan from a retail price of $394,000 at Hamilton Reach.

Construction is getting underway at a new stage of the apartment living options. 

The development of more than 300 hectares of land in total is planned to be delivered in stages.

The government is reportedly pitching in $20 million for amenities, although it is not clear what plans have been made for public transport, aside from the existing CityCat ferry service. 

This part of Hamilton was previously a bit stranded away from the prestigious homes on the hill.

The suburb is effectively scythed in two by the noisy through-route of Kingsford Smith Drive (which, as the route name implies, runs away from the City to Brisbane Airport). 

From start to finish the project is expected to take about a decade to complete. 

Display suites are now open...

More than 15,000 people are projected to move in to the area over the next two decades, as the last strip of undeveloped land along this side of the river is converted to residential use from its industrial past. 

Northshore Hamilton is located fairly close to the airport. 'Good for transport' as they say in real estate parlance!

Future riverfront stage selling...

You can just about see the Central Business District, shimmering some 6 kilometres or so in the distance.

The wrap

The ICON development alone is expected to create 2,000 full-time jobs (and a further 1,500 ongoing full-time positions), while another 500 full-time jobs were reportedly to be created for the Northshore Hamilton development.

This certainly represents an opportunity for Brisbane, but also highlights one of the salient risks facing Australia right now, with more than 1.1 million people employed in construction from an employed labour force of just over 12 million. 

Over the year to April 2016 a record 21,679 units, townhouses, and apartments were approved in Greater Brisbane, but in the early months of 2017 new approvals have slowed to a trickle, while dwelling starts are also now clearly dropping off in the Queensland capital. 

I think it would be fair to say that Brisbane will have no shortage of new apartments over the next few years.

The biggest unknown factor in the market right now is how new apartment settlements and sales will hold up since local lenders became unwilling to lend to non-resident buyers.

New apartments tend to command a price premium in Australia, and as such foreign buyers often account for a high percentage share of sales in new apartment blocks.

Non-resident buyers are generally restricted from buying established dwellings, except for development purposes when adding to the dwelling stock.


Hugely important data release due out tomorrow morning, being the inflation figures for Q1, 2017.

If you have mortgage debt, you should be hoping for a low print.

The market expects a headline result of 0.6 per cent, with forecasts ranging from 0.3 per cent to 0.8 per cent.