80 Collins Street. Photo credit: Multiplex.
This week on the front cover:
“RBA upbeat despite fire, virus crises”, the Australian.
“RBA boss Philip Lowe warns of ‘excessive’ pricing for housing, shares, corporate bonds; markets push out rate cut timing; cheap money can get too risky”, the AFR.
“Cruise ship quarantined, 200 Aussies trapped”, the AFR.
“Treasurer doesn’t rule out economic contraction; ASX set to tumble; $A close to 11 year low”, the AFR.
“Virus crisis could cost nation $13 billion”, the Australian.
After its first meeting of 2020, RBA announced that the cash rate will remain unchanged at 0.75%. Despite the bushfire and coronavirus outbreak, RBA did not downgrade its growth forecasts for the year and maintained a positive outlook on the economy. “The central scenario is for the Australian economy to grow by around 2¾ % this year and 3% next year, which would be a step up from the growth rates over the past two years”. The RBA further stated that “The overall outlook is also being supported by the low level of interest rates, recent tax refunds, ongoing spending on infrastructure, a brighter outlook for the resources sector and, later this year, an expected recovery in residential construction.” An extended period of low rates is expected with the market pricing in another rate cut later this year.
Domain reported a strong auction clearance rate this week in Sydney (80%) and Melbourne (74%). This is an increase from Sydney (77%) and Melbourne (65%) last week despite an increase in listing numbers demonstrating strong demand from first-home buyers and owner-occupiers.
Prices for premium medium-density homes (townhouses and low-rise apartments) are expected to increase by up to 10% in 2020 due to limited supply. According to Knight Frank, the share of medium-density homes due to complete by 2022 has declined by 47% nationally compared to the last three years. Limited development sites in blue-chip suburbs and challenges in obtaining building approvals are key challenges faced by developers delivering more stock. (Nila Sweeney, 4/2/2020, Medium-density home prices to climb 10pc)
The AFR reported a mega build-to-rent project by Greystar (US property giant) in South Yarra. The $400 million mixed-use development includes office space (5,000 square metres), retail (1,000 square metres) and more than 500 build-to-rent apartments. (Ingrid Fuary-Wagner, 6/2/2020, Mega build-to-rent project headed for South Yarra)
Law firm Ashurst has signed a 10-year lease commencing in June 2021 at new office development, 80 Collins Street. Joining other law firms, including Herbert Smith Freehills and DLA Piper, Ashurst will take up a total area of 4,427 square metres across 4 floors. Dexus acquired the site in May 2019, for a total consideration of $1.5 billion. The site includes an existing A-Grade office tower with major tenants including the Minister of Finance and Cenitex (North Tower), a brand-new office tower (South Tower), retail podium (21 retail and dining tenancies) and a 255-room boutique hotel. Since the acquisition, Dexus has increased pre-committed leased space at the South Tower from 63% to 97%. Only one floor is left for lease, and the development of the South Tower is expected to complete by mid-2020.