Feb 2006 by wanghonghx


									                                         PROPERTY NEWSLETTER
                                                                                                            Inside this issue:

                  MACKAY / WHITSUNDAYS - ACVAL J D Dodds                                                Mackay/Whitsunday 1/2
              (Jeffrey Dodds, Justin Robert Smith, Greg Clacher, Timothy Adams,
                        Paul Krause, Stephen Lane, Phillip Humphreys )                                  Sunshine Coast             2

                                                                                                        Toowoomba                  3
Residential                                          A new concept in the industrial market in
                                                     Mackay is the establishment of industrial parks    Valuation Practice         4
The Mackay residential market is showing signs       providing smaller high quality premises on a       Manual
of peaking after 3 years of strong growth.           Community Title basis, and including some
                                                     residential/caretaker accommodation.               Gold Coast                 5
Prices for all forms of property remain high,                                                           Rental Report              5
however we have noted that selling periods are       Major commercial transactions in the city have
starting to lengthen and vacant land is available    included the tendering of the Sugar Research       Cairns                     6
in some estates. Some agents have cited price        Institute on Nebo Road, West Mackay, includ-
accessibility for the level out of the market.       ing en-globo land suitable for residential sub-    Special points of inter-
                                                     division, two dwellings, and a major split level   est:
Whilst the market is showing signs of peaking it     office/laboratory building available for occupa-   • Mackay residential
also has some solid backing. There is currently      tion.                                                peaking?.
no over-supply of land or houses. The rental
                                                                                                        • Whitsunday/Bowen still
market continues to remain strong with limited       Whitsundays & Bowen
                                                                                                          sought after.
vacancy rates and increasing rents.
                                                     Some agents in the Airlie area are reporting       • Sugar price improves.
The local economy continues to remain strong         some softening in the high end price range of
with a booming mining sector and a firming           the market, but lower price range property is      • Hospitality report is mixed.
sugar price.                                         still sought after with near zero vacancies in     • Sales volume on the Sun-
                                                     residential properties in the Airlie/Jubilee/        shine Coast showing
The first 6 months of 2006 will be interesting to    Cannonvale area.                                     decreasing numbers.
see if the market gains momentum as it has in
                                                                                                        • Darling Downs and western
the preceding 2 years.                               At present construction is underway on
                                                                                                          rural towns show strong
                                                     “Double Cones”, “Azure Sea”, “Peninsula”,            increase in values.
Commercial/Industrial                                and “Marina Shores” resort unit developments
                                                     as well as “Whitsunday Business Centre”, a 1       •   Professional Practice
There has been no easing in the demand for           hectare Commercial Strata Office complex ad-           Standards on Price, Cost,
commercial and industrial properties throughout      joining the Cannonvale Shopping Centre,                Market and Value.
Mackay, with agents now reporting a very high        “Airlie Marketplace”, a major regional shop-       • Gold Coast tourist numbers
demand for industrial tenancies, coupled with an     ping centre with Woolworths anchor tenant on         effect on income and pros-
almost total lack of supply. This is of course all   the southern outskirts of Cannonvale, “One-          perity.
associated with the mining boom, and the short-      Two-One” a 26 unit Strata Office complex in
age of properties in Mackay has caused an in-        Cannonvale, and “Sanctuary Estate – Stage          • Special Report on housing
                                                                                                          rentals across the whole of
crease in demand for industrial premises situated    Three” sub-division. This level of construction
in the hinterland mining regions. It is also en-     activity has seen unprecedented demand for
couraging a continuation of the development of       rental property with upward pressure on resi-      • Cairns report a continuing
pre-leased industrial complexes in the city, al-     dential rents and consequently on prices for         demand for valuation work.
though there is an obvious delay in this process     housing and unit rental market.
                                                                                                        • Far North coast develop-
in servicing the market.                                                                                  ments have strong interest.
 The former Lascorp property, “Airlie Marketplace” at the         Hospitality
 corner of Shute Harbour and Paluma Roads on the outskirts         The demand for hotels throughout Regional Queensland re-
 of Cannonvale, which was sold prior to development com-          main strong, and including the entry into the market of some
 mencement, is now nearing completion and is due for open-        southern based syndicates intent on acquiring a chain of these
 ing in April. This large complex includes Woolworths as a        properties. Major hotel sales have included the Shamrock in
 major tenant and a number of bulk retail tenancies together      Mackay, the Queens and Commercial in Ayr, Magnums in
 with a new estate of 11 vacant industrial sites, which are       Airlie Beach, the reported sale of the Agnes Water Tavern,
 reported to have sold ‘off the plan’ in 3 days.                  and the sale of the lease of the Andergrove Tavern in
 The recent rapidly increasing construction costs of domes-
 tic property and lack of available builders has seen upward      Balance of turnovers and gaming income continue as the
 price pressure on existing housing stocks and there are now      main catalysts in major hotel transactions, but the recovery
 no basic three bedroom homes in the Cannonvale or Jubilee        value of gaming authority's together with potential for appre-
 area under $300,000, and basic two bedroom apartments in         ciation in the value of these items has obviously influenced
 Cannonvale are now pushing the $200,000 price barrier            the prices paid for some smaller hotels in Regional Queen-
 (still well below equivalent replacement cost).                  sland, which in some instances have demonstrated Operating
                                                                  Yields as low as 7%.
 Rural                                                            Caravan parks and motels also continue to be subject to a
                                                                  high demand, with a limited offering of these properties
 The big rural news in the Mackay Region is the improve-          throughout Regional Queensland, and what appear to be unre-
 ment in the sugar price for the 2006 crop. After four suc-       alistic price expectations from vendors, particularly with cara-
 cessive seasons of prices below $300 per tonne, the price        van parks.
 for the 2006 crop is looking to be in excess of $500. Rural
 agents are reporting vendors removing previous listed cane       However the number of caravan sites in Queensland contin-
 farms from the market, or adding significant increases to        ues to decline due to redevelopment pressures, with another
 the asking price. Future market direction in value levels        park in the Whitsunday Coast region currently being sold on
 will be heavily reliant on the outlook for the sugar price in    this basis, and it is possible the rising tariff levels will eventu-
 2007 and 2008. Sustained increases in the                        ally justify the returns available in this rising market. How-
 sugar price is likely to see a firming in the                    ever an obvious concern in this equation is the affordability of
 cane farm market, which has fallen by 40-                        increased tariffs to the caravanning tourist, who include a
 50% over the last 8 years.                                       high proportion of retirees, together with the obvious effect of
                                                                  rising fuel prices.

                                      SUNSHINE COAST - ACVAL J D Dodds
                                                          (Ryan Booth)

 Generally the value levels of residential property on the
 Sunshine Coast has been stable since late 2003. Agents are       Vacant residential land sales have decreased in similar levels
 advising however that unit developments are becoming dif-        (681 to 438 in the same time frame) and the median price has
 ficult to fully sell, and also vacant land sales have signifi-   decreased from $240,000 to $225,500.
 cantly slowed. With limited speculative purchasers in the
 market place, it appears that buyers are becoming more se-       Historically, the property cycle which developed in the early
 lective.                                                         1990’s saw a similar pattern. The current situation of reduced
                                                                  sales volume may lead to a further easing in value levels. In
 Our research has indicated that the Maroochy Shire has           saying this however the influx of population onto the Sunshine
 shown a decrease in the volume of sales of units by some         Coast should help soften any market correction.
 30% (1,282 sales from February 2004 to February 2005 and
 890 from March 2005 to February 2006), whilst the median
 price has been stable.

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ACVAL Property Newsletter—FEBRUARY 2006                                                                                     Page 2
                                 TOOWOOMBA— ACVAL J D Dodds
                       (Bret Taylor, Brad Volp, David Hutchison and Basil Simitci)
 Darling and Western Downs Rural Towns Show Strong              Pittsworth
                  Increase in Values
                                                                Located about 40 kilometres south west of Toowoomba,
Dalby                                                           Pittsworth is located in the heart of the Darling Downs and is
                                                                predominantly rural industry based. Just west of the town
Located about 84 kilometres north west of Toowoomba on          are some of the most fertile and productive alluvial flood
the Warrego Highway in the heart of cotton, grain and cattle    plains of the Darling Downs and produce a wide range of
producing country, Dalby continues to show sound increases      agricultural and horticultural crops, both irrigated and dry
in the prices being obtained for vacant land and single unit    land.
dwellings over the past two years.
                                                                The following figures also demonstrate solid growth in val-
Vacant land –                                                   ues for this town over the past two years.
February 2004 to February 2005:
30 sales, median sale price $45,000 (1,079 m2)                  Vacant land –
February 2005 to February 2006:                                 February 2004 to February 2005:
22 sales, median sale price $59,900 (1,012 m2)                  42 sales, median sale price $40,000 (1,000 m2)
                                                                February 2005 to February 2006:
Percentage increase – 33%                                       22 sales, median sale price $54,000 (1,000 m2)
Single Unit Dwellings –                                         Percentage increase – 35%
February 2004 to February 2005:
372 sales, median sale price $140,000                           Single Unit Dwellings –
February 2005 to February 2006:                                 February 2004 to February 2005:
204 sales, median sale price $167,750                           70 sales, median sale price $149,000
                                                                February 2005 to February 2006:
Percentage increase – 20%                                       66 sales, median sale price $175,500

Chinchilla                                                      Percentage increase – 17.7%
Located about 89 kilometres north west of Dalby on the          Oakey
Warrego Highway in the centre of the western downs, Chin-
chilla is predominantly rural industry based and is currently   Located about 25 kilometres west of Toowoomba in the east-
experiencing an increase in population and industry develop-    ern Darling Downs, Oakey is known for being Australia’s
ment through major energy projects associated with coal and     largest Army Aviation base, its surrounding rural industries
gas exploration and associated power station development.       including grain, cotton, cattle and horses and its export abat-
The respective median sale prices for both vacant land and
single unit dwellings are as follows:                           The CBD of Oakey has recently seen the development of a
                                                                large modern Super IGA Supermarket and the main street
Vacant land –                                                   has undergone a major beautification project.
February 2004 to February 2005:
24 sales, median sale price $43,500 (911 m2)                    Vacant land –
February 2005 to February 2006:                                 February 2004 to February 2005:
27 sales, median sale price $56,000 (890 m2)                    92 sales, median sale price $41,750 (797 m2)
                                                                February 2005 to February 2006:
Percentage increase – 28.7%                                     14 sales, median sale price $50,000 (914 m2)

Single Unit Dwellings –                                         Percentage increase – 20%
February 2004 to February 2005:
175 sales, median sale price $125,000                           Single Unit Dwellings –
February 2005 to February 2006:                                 February 2004 to February 2005:
121 sales, median sale price $165,000                           133 sales, median sale price $137,000
                                                                February 2005 to February 2006:
Percentage increase – 32%                                       87 sales, median sale price $150,000

                                                                Percentage increase – 9.5%

ACVAL Property Newsletter—FEBRUARY 2006                                                                               Page 3
            An excerpt from 38 API and NZPI PROFESSIONAL PRACTICE 2004
 4.0 Price, Cost, Market, and Value                               of a property market; understand the interaction of partici-
 4.1 Imprecision of language, particularly in an international    pants in the market; and are, thereby, able to judge the most
 community, can and does lead to misinterpretations and           likely prices to be concluded between buyers and sellers of
 misunderstandings. This is particularly a problem where          property in that market avoid the unqualified term value by
 words commonly used in a language also have specific             preceding the term with some adjective describing the par-
 meanings within a given discipline. That is the case with        ticular type of value involved. Market Value or in some
 the terms price, cost, market, and value as they are used in     States Open Market Value is the most common type of value
 the valuation discipline.                                        associated with property valuations and is discussed in Inter-
                                                                  national Valuation Standard 1. Although common usage pos-
 4.2 Price is a term used for the amount asked, offered, or       sibly dictates an understanding that Market Value is intended
 paid for a good or service. Sale price is an historical fact,    in the absence of a statement to the contrary, it is especially
 whether it is publicly disclosed or kept confidential. Be-       important that Market Value, or whichever basis of value is
 cause of the financial capabilities, motivations, or special     used, be clearly identified and defined in each such assign-
 interests of a given buyer and/or seller, the price paid for     ment.
 goods or services may or may not have any relation to the
 value which might be ascribed to the goods or services by        4.8 The value concept contemplates a monetary sum associ-
 others. Price is, however, generally an indication of a rela-    ated with a transaction. However, sale of the property valued
 tive value placed upon the goods or services by the particu-     is not a condition requisite to estimating the price for which
 lar buyer and/or seller under particular circumstances.          property should sell if it were sold on the date of valuation
                                                                  under conditions prescribed in the definition of Market Value.
 4.3 Cost is the price paid for goods or services or the
 amount required to create or produce the good or service.        4.9 The Market Value of real estate is a representation of its
 When that good or service has been completed, its cost is        market-recognised utility rather than its purely physical
 an historical fact. The price paid for a good or service be-     status. The utility of assets to a given enterprise or individual
 comes its cost to the buyer.                                     may differ from that which would be recognised by the mar-
                                                                  ket or by a particular industry. Therefore, it is necessary that
 4.4 A market is the environment in which goods and ser-          asset valuation and reporting for accounting, under the con-
 vices trade between buyers and sellers through a price           vention, which reflects the effects of changing prices, distin-
 mechanism. The concept of a market implies that goods            guish between values recognised in the market, which should
 and/or services may be traded among buyers and sellers           be reflected in financial reporting, and non-market types of
 without undue restriction on their activities. Each party will   values. Depreciated Replacement Cost (DRC) as defined in
 respond to supply-demand relationships and other price-          International Valuation Standard 2 and as applied to special-
 setting factors as well as to the party’s own capacities and     ised properties, can be considered an acceptable method used
 knowledge, understanding of the relative utility of the          to arrive at a surrogate for Market Value.
 goods and/or services, and individual needs and desires. A
 market can be local, regional, national, or international.       4.9.1 Considerations similar to those expressed above are ap-
                                                                  plied to the valuation of property other than real estate. Ex-
 4.5 Value is an economic concept referring to the price          cept where DRC is appropriately applied, financial reporting
 most likely to be concluded by the buyers and sellers of a       will require application of Market Value methods and a clear
 good or service that is available for purchase. Value is not a   distinction between such methods and Non-Market Value
 fact, but an estimate of the likely price to be paid for goods   methods.
 and services at a given time in accordance with a particular
 definition of value. The economic concept of value reflects      4.10 The total cost of a property includes all direct and indi-
 a market’s view of the benefits that accrue to one who owns      rect costs of its production. If supplemental capital costs are
 the goods or receives the services as of the effective date of   incurred by a purchaser subsequent to acquisition, they will
 valuation.                                                       be added to the historical acquisition cost for cost accounting
                                                                  purposes. Depending upon how the utility of such costs is
 4.6 There are many types and associated definitions of           perceived by the market, they may or may not be fully re-
 value (for examples see IVSC Standard 2). Some defined           flected in the property’s Market Value.
 values are commonly used in valuations. Others are used in
 special situations under carefully identified and disclosed      4.11 A cost estimate for a property may be based on either an
 circumstances. It is of paramount importance to the use and      estimate of reproduction cost or replacement cost. Reproduc-
 understanding of valuations that the type and definition of      tion cost is the cost to create a virtual replica of the existing
 value be clearly disclosed, and that they be appropriate to      structure, employing the same design and similar building
 the particular valuation assignment. A change in the defini-     materials. A replacement cost estimate envisions constructing
 tion of value can have material effect on the values that        a structure of comparable utility, employing the design and
 would be assigned to properties.                                 materials that are currently used in the market. (In some
                                                                  States, the term modern equivalent asset is used to describe a
 4.7 Professional Valuers, who possess intimate knowledge         structure whose cost is estimated on a replacement basis.)

ACVAL Property Newsletter—FEBRUARY 2006                                                                                    Page 4
                                 GOLD COAST -ACVAL Eccleston & Fraser
                              (Greg Fraser, Ian Brosnan, Scott Coote, Adrian Falcke)
 TOURIST NUMBERS INCREASE                                         A complete analysis of the data on international visitors and
 The growth in the use of the Gold Coast airport demonstrates     visitor accommodation is now available in The Midwood
 the strength of our main industry – The Tourist and Hospital-    Report and the International and National Visitor Survey at
 ity Sector.                                                      Tourism Queensland.

 A 14% increase in the passenger numbers to 352,000 over the      Specialised tourism marketing such as Sporting Events,
 year to January 2006 has prompted a call to upgrade facilities   Conferences, Medical reasons and Business Rewards etc are
 such as full air conditioning and the end to passengers having   all contributing to an increase in tourist numbers. Business
 to cross the tarmac to access the aircrafts.                     and Convention numbers have both increased by 50,000
                                                                  persons over the past five years.
 Competitive airfares make the Gold Coast more accessible to
 tourists from all over the country. The planned extension of     An example of combined marketing comes with the high
 the runway over the next couple of years will permit direct      profile coverage of Japanese Golfers in the recent ANZ La-
 flights from South East Asia.                                    dies Masters, the Japanesecorporate rewards and incentive
                                                                  based holiday packages and the use of the Convention Cen-
 The continued population growth and the provision of infra-      tre to present company awards. The most recent arrival of
 structure such as the Convention Centre and the Robina Foot-     1500 business people as part of a rewards package for an
 ball Stadium will promote further short stay growth.             International Pharmaceutical Company flew in four Jumbo
 Accommodation income has also trended up over the past           jets, will stay for three days and inject significant income to
 year with an overall rise of 7% over the same quarter last       the Gold Coast.
 year.                                                            The incentive based holiday/reward sector is one of the fast-
 International visits rose by 10% and domestic growth 1%.         est growing areas of specialised Tourist marketing.

                                                 SPECIAL REPORT
 HOUSE RENTALS IN QUEENSLAND                                      Central. The Gold Coast shows up with the highest figures
 The Residential Tenancies Authority (RTA) provides a sta-        with five of the six regions in the top 8. The Inner City area
 tistical report based on new bonds lodged each month. The        of Brisbane is the second highest with five inner regions in
 report contains median weekly rents for selected areas of        the top 12.
 Queensland and for various types of accommodation.               A most interesting statistic is that Emerald comes in fifth
 The report provided for January 2006 includes median rents       placing from the top.
 for three bedroom dwellings in 51 nominated locations and        Mackay at number 13 in 2006 showing a most dramatic in-
 includes the figures for January 2004, 2005 and 2006 as well     crease from 2004 through 2005 as well. This is probably an
 as the median rents for November 2005 and December 2005.         indication that the increase in mining and development in
                                                                  these areas has pushed demand and house rentals up.
 An analysis of the median rents for January for the three
 years supplied indicates the following information:              Following down the list, the Sunshine Coast follows with
                                                                  Cairns and Townsville close behind. Brisbane outer areas are
     •    The highest median rent in 2004 was $295, increas-      scattered through the figures around this level along with the
          ing to $320 in 2005 (+8.47%) and rising to $330 in      areas surrounding Brisbane. Mt Isa is also in this range.
                                                                  The next level down includes Toowoomba, Atherton, Rock-
     •    At the other end of the scale, the lowest median rent
                                                                  hampton and the Wide Bay areas as well as Ipswich.
          in 2004 was $140, rising to $160 in 2005(+14.29%)
          and reaching $175 in 2006(+9.38%).                      At the bottom of the list, with the lowest median rents are
     •    The relative rise was higher from 2004 to 2005 than     Roma, Gatton, Warwick, Charters Towers Mareeba and Kin-
          from 2005 to 2006 at both ends of the scale.            garoy.
 The figures provided by RTA are broken up into 51 regions        Overall, the relationship between locations does not change
 with 12 in Brisbane and the surrounding areas of Redcliffe,      very much over the years. Apart from the significant increase
 Caboolture, Pine, Redcliffe, Ipswich and Logan given indi-       in Mackay rents mentioned above, the only other increases to
 vidually. The Gold Coast has six regions with Beaudesert         be seen are in some inner areas of Brisbane and Roma in
 alone. Toowoomba has Warwick and Roma separate. Sun-             2005.
 shine Coast has five areas with Gympie as well. Wide Bay         The most noticeable changes downward were in Gladstone
 has three areas and Kingaroy. Rockhampton, Gladstone and         in 2005 and Kingaroy.
 Emerald are the central area. Mackay is on its own then
 Townsville and Thuringowa have Charters Towers and Mt            The comments offered here are mainly in regard to the rela-
 Isa separate. Cairns has Mareeba and Atherton as well.           tionship between areas of the State and where changes to
  Looking at the break-up of the range of rentals across the      these relationships are noted.
 State, it shows that the highest median was in Gold Coast        Overall median rents have continued to rise at all levels.

ACVAL Property Newsletter—FEBRUARY 2006                                                                                  Page 5
                                                                                          CAIRNS - ACVAL D J Jones & Co.
                                                                                                                                    (Doug Jones)
Overview.                                                                                                                                                               Cairns Activity.
In what is meant to be a quiet period, we are being kept very                                                                                                           These charts illustrate the pattern of sales volume and me-
busy by demand from a broad range of clients. Residential                                                                                                               dian prices over several years. Underpinning demand for
traffic has been steady at realistic prices with activity driven                                                                                                        residential accommodation is an ongoing increase in popula-
by new arrivals and upwardly mobile locals.                                                                                                                             tion, which statisticians put at 3,000 for last year.
There are signs of increasing interest from both state and                                                                                                              Unfortunately, fragmentation of the nuclear family is also
federal governments. This week we will be working on two                                                                                                                generating demand for two living units when one should do.
substantial properties, an accommodation complex proposed                                                                                                               During a recent inspection of a childcare centre, several
to be purchased by the State and a large commercial property                                                                                                            small people mobbed me. I asked the supervisor why this
targeted by the Commonwealth.                                                                                                                                           was happening and she explained that I was probably the
Client demand has also been strong for provision of advice                                                                                                              first man they had been close to for several weeks.
which is not market related, being taxation depreciation
schedules, insurable value calculations and sinking fund                                                                                                                The trend bodes ill for our society!
                                                                                                                                          S A L E S               V O L U M E

       4 0 0 0                                                            L A N D

       3 5 0 0
                                                                          H O M ES

       3 0 0 0
                                                                          U N IT S
       2 5 0 0

       2 0 0 0

       1 5 0 0

       1 0 0 0

        5 0 0

 Y EA R S         7 9         8 0         8 1         8 2         8 3         8 4         8 5         8 6         8 7         8 8         8 9         9 0         9 1         9 2         9 3         9 4         9 5         9 6         9 7         9 8         9 9         0 0         0 1         0 2         0 3         0 4         0 5

                                                                                                                    M E D IA N                   P R IC E IN D IC A T O R S

       ($ T h o u s a n d s )

            3 0 0                                                                           L A N D

                                                                                            H O M E S
            2 5 0
                                                                                            U N IT S
            2 0 0

            1 5 0

            1 0 0

              5 0

  Y E A R S             8 0         8 1         8 2         8 3         8 4         8 5         8 6         8 7         8 8         8 9         9 0         9 1         9 2         9 3         9 4         9 5         9 6         9 7         9 8         9 9         0 0         0 1         0 2         0 3         0 4         0 5

Other Centres.                                                                                                                                                          Island Coast property is also on the move, thanks to sewer-
There are lots of visitors in Port Douglas for this time of                                                                                                             age installation and resultant land development. We have
year. The market is subdued but in the background Juniper's                                                                                                             recently been involved in four new units construction pro-
large Sea Temple complex is nearing completion and con-                                                                                                                 jects at Wongaling Beach and South Mission Beach which
struction of Bale is proceeding apace.                                                                                                                                  are strong indicators of interest from southern investors. The
                                                                                                                                                                        recent approval of a golf course/residential/resort project at
Innisfail is on the move. We are involved with three small                                                                                                              SMB should generate even stronger interest. Government
but significant projects there which will make local residents                                                                                                          authorities are still examining the Clump Point marina pro-
aware of the inherent quality of their surroundings. If you                                                                                                             ject. If approved, it should exert an even stronger influence
are a potential investor, speak to Innisfail agents.                                                                                                                    on this attractive location than did Port Hinchinbrook on
                                                                                                                                                                        comatose Cardwell.

                                                                                                                                                                    Local Knowledge -
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                                                                                           DISCLAIMER: The information contained in this publication is
                                                                                           provided for general information only and should not be relied upon for specific projects without further reference to a Direc-
                                                                                           tor of ACVAL Pty Ltd. The Company takes no responsibility for any action taken by a third party in relation to information

ACVAL Property Newsletter—FEBRUARY 2006                                                                                                                                                                                                                                                                                       Page 6

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