Assessment Summary Pace of Northcote

Transcription

1 Assessment Summary Pace of Northcote 5 Beavers Road Northcote Leaders in Property Intelligence. Gerard F Righetti Director gerard.righetti@charterkc.com.au charterkc.com.au ADVISORY. RESEARCH. VALUATIONS. PROJECTS.

2 Assessment Summary Pace of Northcote, Contents. Instructions Executive Summary Assessment Summary Conclusion Instructions. Instructing Party Pace Development Group Level Fitzroy Street ST KILDA VIC 3182 (Mr Daryl Wilkinson) Telephone +61 (0) daryl@pacedg.com.au Date of Assessment - 28 April Our Reference J071275:GR:LA/LK H:\GERARD_RIGHETTI\NORTHCOTE - 5 BEAVERS ROAD (X )\J071275\J ASSESSMENT SUMMARY.DOCX Liability limited by a scheme approved under Professional Standards Legislation. Executive Summary. Terms of Reference Further to recent instructions in relation to the proposed project at, Charter Keck Cramer has been instructed by Pace Development Group to assess value on an as if complete basis as at the relevant date. Values assessed are based on project information provided with your instructions, and have been prepared with direct reference to comparative sales evidence. This assessment summary is not to be construed as a recommendation for mortgage purposes. No liability is accepted for title and statutory details; zoning and planning issues; measurements and occupation and environmental issues. We state however that we have inspected the property, and have been provided with plans upon which our assessment is based. We draw attention to the provisions of our professional indemnity insurance, that all advice is only valid for 90 days from the date of assessment, no responsibility being accepted for clients' reliance upon reports beyond that period. Accordingly, any parties authorised to rely upon our opinion should be aware of the need for a review as necessary. PAGE 1

3 Relevant Date The relevant date of this assessment summary is 28 April Due to possible changes in market forces and circumstances in relation to the subject property, this assessment summary can only be regarded as relevant as at the Date of Assessment. Development Proposal Designed by abott Holt Architects, the proposal relates to an eight level mixed use building over two basement levels of car parking, comprising 120 apartments and five ground level retail tenancies. The project is to be developed over two stages, with this assessment summary relating to Stage 1 of the development. Stage 1 will comprise 48 apartments offering mostly two bedroom accommodation, with a small selection of one bedroom apartments with living areas ranging between sq.m. (65 sq.m. average). Review of the project specifications indicates a standard of finish considered well suited to the owner occupier and investor markets. The apartments will feature engineered timber flooring, reconstituted stone finishes to kitchens and bathrooms, wool carpets to bedrooms and stainless steel kitchen appliances. Having regard to the intended target market and price-points, we are satisfied that the proposed standard of finish is appropriate and will be well received by the market. The development proposal has been reviewed and we are satisfied that the project is well designed, appropriately appointed and well positioned with regard to amenity complementing residential occupation. The project has a number of appealing features, including the well-conceived floorplans and modern architectural form. We are satisfied that subject to a realistic pricing structure (as assessed), the project is likely to be adequately supported by both the investor and owner occupier markets. PAGE 2

4 Locality Physical Location Within the Municipality of Darebin, suburb of Northcote, Postcode 3070, the site is situated on the south-western corner of High Street and Beavers Road, a short distance to the north of Separation Street, approximately 6 kilometres north of the Melbourne Central Business District (CBD). Surrounding Development The surrounding precinct comprising a variety of land uses including properties fronting High Street generally incorporating office, retail and shop and dwelling style residences, whilst along Beavers Road and the broader precinct comprising period residential dwellings, interspersed with modern developments. Services The site is well serviced by public transport, including tram services along High Street and bus services along Separation Street to the south. Croxton and Northcote Railway Stations are both located within close proximity. Other The site is complemented by living amenities within close proximity, including Northcote Plaza Shopping Centre immediately to the east, as well as a vibrant mix of traditional strip shopping along High Street. The site is further complemented by parkland and educational institutions in the surrounding area. SUBJECT SOURCE - Melbourne on CD Edn 41 - Standard PAGE 3

5 Melbourne Apartment Market Overview The following overview of conditions across Melbourne s apartment market has been prepared by Charter Research. Demand Considerations - Melbourne is Australia s second largest city with a population of approximately 4.35 million and anticipated to reach around 6 million by Population growth in Melbourne was 95,000 through with significant contributions from immigration and natural increase. This rate of growth compares to 50,000-60,000 p.a. observed in the early-mid 2000s. - Melbourne s population growth is forecast to remain at near historic highs of approximately 85,000-90,000 persons p.a. over the next decade, which will drive underlying demand for housing and apartments. - Living in apartments has become a more accepted housing choice across Melbourne since the mid-1990s and will continue to evolve in response to a range of structural demographic, social and economic factors. - Purchaser demand for apartments will be driven primarily by its comparative affordability to established housing and a range of financial incentives available to investors. Supply Considerations - At the end of 2014, there was a stock of 106,000 contemporary apartments across Melbourne that have been completed since Figure 1: Melbourne Local Government s: Supply Indicators (as at September 2015)** LGAs Melbourne, Port Phillip, Stonnington and Yarra Banyule, Bayside, Boroondara, Darebin, Glen Eira, Maribyrnong, Moonee Valley and Moreland Brimbank, Greater Dandenong, Hobsons Bay, Kingston, Knox, Manningham, Maroondah, Monash and Whitehorse dinia, Casey, Frankston, Hume, Melton, Mornington Peninsula, Nillumbik, Whittlesea, Wyndham and Yarra Ranges Sub-Region Average Annual Completions ( ) Average Annual Completions ( ) Currently Under Construction Currently Marketed Central 3,345 5,700 20,280 16,940 Inner 800 2,640 7,530 6,360 Middle 230 1,105 4,000 4,590 Outer ,030 Metro Melbourne 4,415 9,595 32,160 28,920 SOURCE - Charter Keck Cramer ** 10 apartments or more. The Central Region has been extremely active in the last few years, with an average of 5,700 apartments p.a. being completed over the period There are approximately 20,280 apartments in projects under construction with a further 16,940 apartments in projects being marketed in the Central Region. The Inner Region of Melbourne has produced an average of 2,640 apartments p.a. between which is a substantial increase from the annual average of 800 apartments p.a. between There are currently 7,530 apartments in projects under construction with a further 6,360 apartments in projects being marketed across this region. Whilst the Middle Region of Melbourne has a lower number of completed apartments than the Central and Inner Regions, this region has also grown significantly with 1,105 apartments p.a. completed between as compared to an average of 230 apartments p.a. between The Outer Region of Melbourne is currently the least mature apartment submarket which reflects the continuing preference for traditional housing choices. Interestingly, there is emerging level of activity in projects now under construction and being marketed in this sub-region. PAGE 4

6 Market Commentary Melbourne s medium density apartment market has been relatively buoyant since early Clearance rates and market sentiment generally for 2015 was relatively strong, with a similar level of market enthusiasm during the first quarter of Market conditions are due to a number of the key issues, but in particular the following: - The maintenance of a low interest rate environment has been a positive driver of demand, resulting in improved affordability, stimulating strong investor demand. The current low rates also provide purchasers with an opportunity to lock-in a set rate in the event of any speculation as to interest rate rises, although commentary from the Reserve Bank of Australia would suggest that this is unlikely to occur in the near term. - Over the past months the value of the Australian dollar has continued to decrease, which has had the effect of again promoting investment from overseas interests in Asia (mainland China, Malaysia, Kuala Lumpur and Singapore), a market segment which retreated in late 2012 once the dollar reached parity and beyond. The increased overseas activity is not only confined to the micro level (i.e. the acquisition of new apartments), but also at the macro level, with many high value strategic sites acquired by off shore purchasers. - Off-shore investors are particularly active in Melbourne s market at present. As a separate issue to the leverage obtained due to the current exchange rate, there is presently a strong flow of investment funds from Asia, and China in particular, seeking to diversify into a safe haven economy. Melbourne s investment market has been a beneficiary, with the majority of investment focused to Melbourne s Central City Region, although increasingly over the last 12 months off-shore investors have been active in Melbourne s inner and middle ring suburbs. - The purchaser profile continues to mature, not only confined to investors who have traditionally been the mainstream parties in projects of this nature, but increasingly owner occupiers, particularly younger people, including professional singles and couples, who would prefer a more secure, contemporary and low maintenance form of apartment accommodation in comparison to standard housing which is increasingly becoming outside the financial capacity of many first home purchasers within the City fringe and inner urban locations. - A changing investment criteria is also impacting on this market, with many investors backed by self-managed super funds, having preference for more conventional bricks and mortar form of an investment, particularly to middle aged purchasers or people bordering on retirement who have either insufficient or low superannuation. The depreciation and negative gearing tax benefits are also major considerations. - The housing market has demonstrated a material improvement over the past 18 months, particularly within the inner and suburban locations of Melbourne, providing increased equity in the family home, and therefore enhancing the affordability factor in relation to the acquisition of an investment property. - The housing market, viewed as a strong barometer to the strength of most other sub-markets in Melbourne, with particular reference to the medium density segment, has also improved over the past 12 months, characterised by an increased sales rate, more realistic vendor price expectations and in some cases higher values, providing increased equity in the family home. The medium density market is presently sound, assisted by a low interest rate environment and relative strength in the established housing market. The established housing market throughout 2015 was relatively strong, although with an easing of clearance rates during the last quarter, possibly influenced by tighter lending regulation by the banks and an easing of off-shore buyer activity. The established housing market has been relatively strong during the first quarter of 2016, with a clearance rate of around 75%, being a similar rate to the majority of Inner urban projects continue to be sought by the market, particularly projects within proximity to public transport and retail facilities. The purchaser profile for this property is considered to be a mix of investors and entry level owner occupiers. We are satisfied that these price-points are well supported by the hierarchy of house values within the local area. PAGE 5

7 Market Context - Residential Project Sales In arriving at our assessment of value, we have given consideration to a variety of residential projects that have been marketed within the region. In particular, we detail the following projects of relevance: Summary - Comparable Projects Project Name & Address Aradena 470 High Street Northcote 66 Station Street Fairfield The General High Street Northcote St George Apartments St Georges Road Northcote Mayven Apartments 56 St Georges Road Northcote Fitz & Co Nicholson Street Fitzroy North 808 Sydney Road Brunswick per square metre () Market Release Project Status No. of Ap nts Building Level Average Value Rate Average Ap nt (sq.m.) Q Marketing 40 7 $8, Q Marketing 14 4 $8, Q Under Construction 88 8 $8, Q Under Construction 37 5 $8, Q Under Construction 32 6 $8, Q Marketing 32 5 $8, Q Marketing 89 7 $8, The above table demonstrates a high level overview of projects in the study region. The average value rates for the projects range between $8,100 - $8,700 A pricing exercise has been undertaken with reference to the comparative projects mentioned above. As we understand, the architectural integrity of the project will be of a high standard, we have assumed the quality of specifications proposed will be commensurate with competing projects. The project summary demonstrates a cross section of projects that are broadly comparable to Pace of Northcote due to location, price points and target market. Projects analysed are further detailed as follows: PAGE 6

8 Aradena, 470 High Street, Northcote - Known as Aradena, the proposal relates to a seven storey building comprising 40 apartments with ground level retail café. - The apartments will offer a mix of one, two and three bedroom accommodation, with living areas ranging between sq.m. (67 sq.m. average). - Each apartment will feature a balcony and be complemented by at least one car space each. Sales Evidence. Released to the market since November 2015, the project is over 55% pre-committed to date. A selection of sales within the project is summarised as follows: Ap nt (sq.m.) (sq.m.) BRs BthRs Spaces Sale Price $609,000 $7, $579,000 $7, $429,000 $7, $564,000 $8, $579,000 $8, $584,000 $7, $409,000 $8, $409,000 $8, $424,000 $8, $510,000 $8, $414,000 $7, $839,000 $8, $769,000 $8, $589,000 $8, $449,000 $7,741 Average. The average value rate for sales to date across the project is approximately $8,107 PAGE 7

9 66 Station Street, Fairfield - Designed by architect Mills Gordon, the proposal relates to a boutique mixed use development comprising 14 apartments and a ground level retail shop within a four storey building. - The project will offer a mix of one, one plus study and two bedroom apartments, with living areas ranging between sq.m. (57 sq.m. average). - The development is to be appointed to a quality standard, with each apartment featuring a balcony. Most apartments will be further complemented by one car space each. Sales Evidence. Released to the market since March 2016, a selection of sales and reservations are summarised as follows: Unit (sq.m.) (sq.m.) BRs BthRs Spaces Sale Price *$399,000 $7, $420,000 $7, S 1 1 *$430,000 $8, S 1 1 *$450,000 $8, $425,000 $8, *$650,000 $8,904 * Reservation Average. The average value rate for sales to date across the project is approximately $8,300 PAGE 8

10 The General, High Street, Northcote - Modern eight level mixed use building to be known as The General. Comprising a total of 88 apartments, providing a mixture of one, two and three bedroom accommodation, appointed to an average standard, with an average apartment size of 74 sq.m. - Apart from residential accommodation the ground floor will also comprise four retail shops and a restaurant, whilst the first level will also comprise two offices suites. The project will be complemented by car parking within the ground and basement levels, together with bicycle racks, storage cages and private external balconies to each apartment. Sales Evidence. Released to the market April 2014, a selection of sales occurring off the plan are summarised as follows: Unit Aspect (sq.m.) (sq.m.) BRs BthRs Spaces Sale Price 1.20 West $510,000 $7, North-East $820,000 $7, North $385,000 $7, North -West $385,000 $8, West $580,500 $8, East $679,000 $7, North $470,750 $9, North-West $474,000 $9, East $665,000 $8, North-East $900,000 $8, East $655,000 $8,096 Average. The average value rate for sales to date across the project is approximately $8,120 Valued by Charter Keck Cramer PAGE 9

11 St George Apartments, St Georges Road, Northcote - Known as St Georges Apartments, the proposal relates to a residential development comprising 37 apartments, within a five level building over common basement car parking. - The apartments offer one and two bedroom accommodation, with living areas in the range sq.m. (58 sq.m. average). Each apartment is complemented by a private external balcony and single car space. - The project is located within a desirable position, fronting St Georges Road a busy thoroughfare, on the fringe of Northcote, within close proximity to Fitzroy North. Sales Evidence. Released to the market mid-2014, a selection of sales are summarised as follows: Ap nt Internal (sq.m.) External (sq.m.) BRs BthRs Spaces Sale Price G $375,000 $8,333 G $388,000 $8,083 G $540,000 $8, $415,000 $8, $535,000 $8, $420,000 $8, $420,000 $8, $425,000 $8, $425,000 $8, $425,000 $8, $590,000 $9, $680,000 $9, $698,000 $9,307 Average. The average value rate for sales to date across the project is approximately $8,644 PAGE 10

12 Mayven Apartments, 56 St Georges Road, Northcote - Known as Mayven Apartments, the proposal relates to a boutique development over six levels with a 1930s art deco style building façade, comprising 32 apartments and two ground level retail shops with basement car parking. - The residential component will offer a mix of one and two bedroom accommodation, with living areas ranging between sq.m. (51 sq.m. average). - Each apartment will feature a balcony and be complemented by one car space. Some car spaces are in hydraulic car stackers. - Construction commenced late The project is expect to be completed during the second quarter of Sales Evidence. Released to the market since the second quarter of A selection of sales within Mayven Apartments are summarised as follows: Ap nt (sq.m.) (sq.m.) BRs BthRs Spaces Sale Price $515,000 $8, $530,000 $8, $525,000 $8, $515,000 $8, $535,000 $8, $550,000 $8, $440,000 $8, $440,000 $8, $415,000 $9, $415,000 $9, $530,000 $8, $555,000 $8, $408,000 $9, $545,000 $8, $405,000 $9, $410,000 $9,762 Average. The average value rate for sales to date across the project is approximately $8,748 PAGE 11

13 Fitz & Co., Nicholson Street, Fitzroy North - Known as Fitz & Co., the approved proposal relates to a residential development comprising 32 apartments within a five level building and 12 three storey townhouses. - The apartment component will offer a mix of two and three bedroom accommodation, with living areas ranging between sq.m. (82 sq.m. average). - All apartments will feature a balcony or courtyard and be complemented by at least one car space. - The townhouse component will offer three bedroom accommodation with living areas ranging between sq.m. (175 sq.m. average). - All townhouses will be complemented by one or two car spaces each. Sales Evidence. Released to the market since the first quarter of 2016, a selection of sales within the project is as follows: Ap nt (sq.m.) (sq.m.) BRs BthRs Spaces Sale Price $879,000 $8, $555,000 $8, $675,000 $8, $615,000 $8, $855,000 $8, $560,000 $8, $885,000 $8,976 T House (sq.m.) (sq.m.) BRs BthRs Spaces Sale Price $1,150,000 $7, $1,075,000 $7, $1,290,000 $6, PDR 1 $1,090,000 $6,940 Average. The average value rate for sales to date across the apartment component of the project is approximately $8,772 The average value rate for sales to date across the townhouse component of the project is approximately $6,969 Valued by Charter Keck Cramer PAGE 12

14 Sydney Road, Brunswick - Designed by architects Fieldwork, the project is being developed and built by Pace Development Group. The proposal relates to a seven level mixed use building over basement car parking, comprising 89 apartments and six ground level retail tenancies. - The majority of the residential component will comprise apartments with one and two bedroom floor plans ranging in size from sq.m., in addition to two three level penthouse apartments with areas of 103 sq.m sq.m. - A selection of apartments throughout the building will be complemented by relatively large external balconies. All apartments will be complemented by at least one car space each. Sales Evidence. Released to the market since the first quarter of 2016, a selection of sales within the project is as follows: Unit (sq.m.) (sq.m.) BRs BthRs Spaces Sale Price $ 374,000 $8, $ 498,000 $8, $ 399,000 $8, $ 374,000 $8, $ 374,000 $8, $ 379,000 $8, $ 514,000 $8, $ 374,000 $8, $ 374,000 $8, $ 415,000 $8, $ 599,000 $8, $ 559,000 $8, $ 405,000 $8, $ 559,000 $8, $ 410,000 $8, $ 569,000 $8, $ 639,000 $8, $ 449,000 $8, $ 589,000 $9,203 Average. The average value rate for sales to date across the townhouse component is approximately $8,614 PAGE 13

15 Assessment Summary. Stage 1 - Pace of Northcote Detailed below is a summary of our individual assessments which have been derived by the direct sales comparison approach having regard to the aforementioned sales evidence. Having reviewed the project, we are satisfied that the proposed pricing structure is reasonable, with the apartments considered appealing to the investor and owner occupier markets. The following individual assessments are summarised as follows: Gross Realisation Summary Ap nt (sq.m.) (sq.m.) BRs BthRs Spaces Assessment $ 555,000 $7, $ 520,000 $7, $ 520,000 $7, $ 555,000 $7, $ 535,000 $8, $ 505,000 $8, $ 505,000 $8, $ 550,000 $8, $ 515,000 $7, $ 485,000 $7, $ 485,000 $7, $ 525,000 $7, $ 475,000 $7, $ 475,000 $7, $ 420,000 $7, $ 525,000 $7, $ 475,000 $7, $ 475,000 $7, $ 485,000 $7, $ 515,000 $7, $ 500,000 $8, $ 500,000 $8, $ 520,000 $7, $ 555,000 $7, $ 530,000 $8, $ 530,000 $8, $ 555,000 $7, $ 530,000 $7, $ 480,000 $7, $ 480,000 $7, $ 425,000 $7, $ 570,000 $7, $ 580,000 $7, $ 565,000 $8, $ 535,000 $8, $ 535,000 $8, $ 565,000 $7, $ 495,000 $8, $ 430,000 $7, $ 430,000 $7, $ 380,000 $8, $ 540,000 $8, $ 540,000 $8, $ 570,000 $7,917 PAGE 14

16 Gross Realisation Summary Ap nt (sq.m.) (sq.m.) BRs BthRs Spaces Assessment $ 590,000 $8, $ 450,000 $7, $ 545,000 $8, $ 575,000 $7,986 Total 3, $24,600,000 $7,790 Conclusion. In conclusion, we reiterate our instructions to provide individual valuation assessments of the proposed development on an as if complete basis as at the relevant date. This assessment summary is not to be construed as a formal valuation. No liability is accepted for title and statutory details; planning and zoning; measurements and occupation; environmental issues and any other matters usually fully researched for the purpose of a formal report. This assessment summary is based on plans and marketing material provided, whilst the values reported herein have been assessed by direct reference to recent comparable sales, briefly summarised herein, with full details retained on file. This advice is for the use only of the party to whom it is addressed and for no other purpose. No responsibility is accepted for any third party who may use or rely on the whole, or any part, of the content of this assessment summary. No responsibility will be accepted for photocopied signatures. It should be noted that any subsequent amendments or change in any form to this assessment summary would only be notified to and known by the parties to whom it is addressed. Yours sincerely Charter Keck Cramer Gerard F Righetti, AAPI Certified Practising Valuer API Member No Director T +61 (0) Date of Issue of the Assessment Summary - 28 April Liability limited by a scheme approved under Professional Standards Legislation. PAGE 15

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