MEREWETHER SENIORS’ PRECINCT SET TO GO AHEAD

Merewether Golf Club is celebrating today.

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Sydney is missing out on new high-quality apartments as developers increasingly head north to Newcastle to take advantage of strong population growth, huge infrastructure investment and more affordable living.

The city, 160 kilometres away from Sydney, is experiencing a boom in high-quality apartment construction, with supply predicted to continue well into the future.

“Newcastle is a smaller city and it’s probably a different level of financial commitment while the councils in Sydney are different,” said Warwick Miller, chief executive of Miller Property Corp, who’s developed a number of apartment projects in Newcastle – and only his own home in Sydney’s Point Piper.

“I suppose I never choose to develop in Sydney because it’s a lot bigger a deal than Newcastle. And the lifestyle up here is very attractive with its beauty and nature and fishing and sailing.”

Miller’s latest Newcastle development, Verve Residences, 209 apartments over the two tallest 20-storey towers in the city, have just won three prestigious architecture awards for the region and, to add insult to injury, it’s now been shortlisted for the overall NSW titles.

Fellow developer Luke Berry of the Thirdi Group, which has developed a large number of apartments in Sydney, is also now doing major projects in Newcastle, including the major West End development. He’s just launched his latest big residential project of his 650 to 700 apartments for the precinct, two towers with 155 units overlooking the harbour, called Stella.

“Newcastle for us is a hidden gem,” he said. “Land is cheaper and the build price is less relative for the product you’re building with finishes that need to be the same standard as Sydney finishes.

“But Novocastrians are sensitive to good brands and it gives us the opportunity to bring some Sydney flair to Newcastle, like home automation. We have close to $50 million in capital that we want to leave in Newcastle so we can reinvest there. So our commitment to the city is long-term, and we’ll be building there for the next 10 years.”

Other developers with major projects in Newcastle include the Canberra-based Doma Group, Iris Capital, which has been particularly busy in Newcastle’s East End and Hunter Land.

Certainly, Newcastle now has the size, and growth, to attract the big players in the development world. With an estimated population growth of 19.47 per cent between 2020 and 2041 according to demographers idcollective, Greater Newcastle is now Australia’s seventh largest city and its biggest regional economy, generating an estimated $34.5 billion in output, on ABS figures.

In addition, there’s been a large amount spent on the city’s infrastructure with $510 million spent on a new transport system, with light rail replacing the heavy rail in the city centre, new business parks, $200 million being spent on the redevelopment of the former Store Site, and $780 million of pledged investment.

Property values are rising too, with Domain Group figures showing that apartment prices in Newcastle have risen by 47.2 per cent over the past 10 years. But the median price of a unit still compares favourably to Sydney: $515,000 as against Sydney’s $735,387.

Brent Sinclair, Knight Frank’s Newcastle director, joint head of department, sales & leasing, says Newcastle is doing extremely well, especially when compared to Sydney. “We are definitely attracting developers from the capital cities like Sydney,” he said. “Certainly, over the past few years, we’ve been riding a residential boom and the bigger players have come in and capitalised on the momentum.

“We’re absolutely getting a lot more interest from the Sydney market. And the apartments being built have a lot of local buyers as well as investors attracted from outside to Newcastle by the price point, and owner-occupier interest because of the harbour, waterfront, ocean, lifestyle and jobs.”

For developers, land is a lot cheaper in Newcastle and both construction costs and developer contributions are less, says Dane Crawford general manager at Newcastle agents Commercial Collective. That means an apartment with a harbour view in Newcastle, for instance, is generally around half the cost of one with an outlook over Sydney’s harbour.

In addition, there are plenty of jobs from a rapidly diversifying local economy, great beaches, vineyards and lots of good cafes, restaurants and bars. On the other hand, there’s less traffic and fewer people which makes the city easier to navigate.

“It’s for those kinds of reason we’re seeing a lot more Sydney net migration here,” Crawford said. “The number of Sydneysiders buying here has been increasing year-on-year and it’s not uncommon for us these days to experience 20 per cent of our inquiries from Sydney.

“Some have already moved to Newcastle but others are investing here with a view to moving here in a couple of years. The kind of apartments being built here are high quality and sophisticated and appeal to all tastes. Newcastle now presents a really viable alternative to Sydney in that development space.”

Miller, who sold his home in Sydney, the waterfront estate Routala, in 2007 for a then Australian record of $28.75 million, sold apartments in Verve for around $475,000 for a one-bedder. He’s soon to launch another Newcastle development, Horizon, on the harbour in the prestige Honeysuckle precinct.

“The buyers for Verve would be wealthier 50-plus people and quite a number come from outside Newcastle, either from Sydney or the Lower Hunter,” he said. “I think every place has its turns.”

Sinclair agrees. “But with Sydney’s massive price growth, Newcastle now offers disproportionate value for money,” he said. “It’s hard to go past our lifestyle, too. As an alternative to Sydney, it can’t be beaten.”

Read Article Here: https://www.domain.com.au/news/developers-bypassing-sydney-to-spend-their-millions-building-in-newcastle-952219/?utm_campaign=strap-masthead&utm_source=smh&utm_medium=link&utm_content=pos5&ref=pos1

The coronavirus crisis is making ripples in the property market, but surprisingly, the off-the-plan sector, so far, appears to be weathering the storm.  March data from realestate.com.au reveals a 6.8 per cent increase in searches for new homes compared to the same period last year, which chief economist, Nerida Conisbee, says is “surprising”.

COVID-19: What will happen to property prices in Australia?

“When this all started, I expected everything to go into freefall, but it seems to be far more robust than I expected,” she says.

Conisbee adds, the effects of the pandemic are complicated and there will be winners and losers.

“There seems to be a lot of blanket statements out there about what’s happening in the property market and how it’s all bad,” she says. “But the reality is, we’re seeing a lot of difference across Australia in terms of how property is being viewed. Some markets seem to be far worse impacted than others.”

Confidence rebounding

Search results for off-the-plan homes dipped through the latter half of March after social distancing restrictions kicked in, but even accounting for the drop in activity, the results are a positive indicator of the sector’s resilience.

Conisbee says the rebound in weekly search activity is in line with broader consumer sentiment data.

Searches for new homes are up year-on-year. Picture Getty

“ANZ released their consumer sentiment and that picked up as well last week,” she says.

“What I think is happening is people are obviously not feeling great, overall, about things. But there was a lot of stimulus announced last week. That third level announced by the government last week seems to have made people feel more confident.”

Buyers still active in Sydney

Metrics used to measure buyer engagement, interest and interaction with new home projects at realestate.com.au have also shown strength in many markets across the country, especially in Sydney.

Sydney house and land was showing a lot strength before the pandemic kicked in, but through March leads per listing in Sydney were up 35% for apartments and 66% per land estates, which Conisbee describes as “incredible.”

Realestate.com.au data for new homes in Sydney has been robust. Picture: Getty

Director of sales and marketing at Thirdi Group, Luke Berry, says despite the challenges in the current market, his group is still planning to launch new projects, lodge Development Approvals and make sales in Sydney.

“If I was to compare this quarter to the same last year, we’re doing better, which is amazing with the corona cloud,” says Berry. “I think if you have good projects in good areas, they are always going to be supported.”

Gentry Alexandria recorded a $2.2 million sale last weekend. Picture: realestate.com.au/buy

Last weekend, a $2.2 million sale was made at Thirdi’s Gentry Alexandria project at 29-41 William Street in Alexandria. Berry says the project, which only has five apartments left, has conducted an average of 11 private tours over the past month with a similar number lined up for the next fortnight.

Berry adds, the property’s target market is owner-occupiers who are making long-term lifestyle-driven purchasers. He suggests this demographic is a bit more insulated to the financial impact of the crisis than other buying groups, such as investors.

“We’re in this weird little bubble where things aren’t too bad,” he says. “I’m definitely having to do deals, but I’m not compromising the value of the project. I think that’s a combination of timing, good luck and the right product,” he says.

Online engagement a key

The use of digital tools has been a key factor in off-the-plan projects continuing to appeal to buyers, according to Berry.

“We’ve had to innovate and really use our social media platforms,” he says. “We’re working really hard on video content and engaging with buyers through our site.”

Conisbee believes the sector’s embrace of digital tools, such as virtual inspections, are a factor in its relative strength compared to the established property market.

“Where developers have an edge is, when you’re selling a new home you’re selling something that doesn’t exist with great graphics, videos or 3D,” she says. “It’s very different to an existing home where people would typically come and walk around the property.”

https://www.realestate.com.au/news/off-the-plan-market-showing-signs-of-covid-19-resilience/

In Sydney, more than $8 million in sales have been notched up at the Gentry Alexandria development during the past month. Luke Berry, co-founder of developer Thirdi Group, said an ongoing negotiation for a $2.2 million townhouse may ratchet up the total to more than $10 million.

“When you combine all the DNA of our product, it’s really attractive to the most active person in the market right now and that’s the cashed-up downsizer who is looking to exit a $3 million to $4 million home,” he said.

“They want to leave a bit of money in the back pocket, but they still want to live in luxury in a beautiful home with all the bells and whistles.

“That’s why I think we’re doing well.”

Read Full Article Here https://www.domain.com.au/news/local-family-pay-record-price-for-luxury-off-the-plan-penthouse-at-rondure-house-in-kew-952186/

By Rohan Clarke
Small rather than large residential gold estates is the new trend in golf-course living. And seniors living developments are at the forefront for many clubs that wish to secure their long-term future. Australian Golf Digest spoke to three experts about the phenomenon of ‘Retiring On The Fairway’.

Seniors Living: The Merewether Experience
Merewether Golf Club in Newcastle has taken advantage of zoning legislation in NSW to create a seniors living development in exchange for course improvements and a clubhouse redevelopment. However, Merewether will retain ownership of the land to be used for the retirement complex. Merewether is leasing a 1,400sqm parcel of land for 99 years to property developer Thirdi, which is building six floors of apartments for over-55’s.
A minimum of 150 units is planned, depending on the development approval. Private golf clubs that own their own land are subject to state planning legislation. In NSW, seniors living complexes designed for over-55’s are permitted on golf courses even if the zoning is non-residential. The NSW government actively encourages these properties for pensioners or older couples under State Environment Planning Policy Number 65 (SEPP65) whereas Victoria and other states don’t make allowances. Therefore, in some cases, it’s actually beneficial to have zoning as RE2 (recreational private) as opposed to general residential because it provides greater scope to undertake development.
For example, Merewether is able to pursue a development with unlimited height restrictions. Whereas if its land were zoned residential it would have a limitation of say, two floors. Merewether put its development plan to tender on the open market to identify who had the best offering. The value of the land was placed at $16.5 million, which is the total amount the club will receive from Thirdi. Merewether has allocated $9 million for the construction of a new clubhouse. At least $1.5 million will be spent on course renovations as a consequence of the seniors living development. That provides for relocation of the maintenance shed and ensuring the course remains as an 18-hole layout and at least a par 70 during the construction period. Another $500,000 has been set aside for temporary facilities while $3.5 million will be invested into income-generating assets.
Rather than selling off part of its course Merewether is actually leasing the parcel of land to Third over a 99 year period. The developer has the right to put a seniors living development in place. The golf club earns an income off the lease and Merewether also receives a percentage of the deferred management fee (DMF). The contract accords the golf club a percentage of any apartments sold under the banner of that development. So Merewether collects 2% of the value of apartments that are sold to members (for instance, $20,000 on $1million unit). The developer wishes to minimise costs in the marketing of the apartments and similarly the golf club wants as many members as possible to buy into the units. Then every time an apartment is re-sold, a management fee is applied to the sale price. This is typical of all seniors living or aged-care units. For example, a person buys a seniors living apartment for $1 million.
The person lives in that unit for 15 years before its sold for $2 million. In the Merewether instance, the DMF is 25% of the $2 million which is $500,000 and the golf club gets a share of that DMF. All the risk is with the property developer rather than the golf club. Merewether retains ownership of the course but still gets the benefits of being able to utiliser it, says Aaron Spalding captain of Merewether Golf Club.
“Everything has been funded by the developer. We don’t do anything until we’ve either got the money from the developer or there is an approval stage which says we’re going to get the money.” Off the back of what’s occurring at Merewether, Spalding formed a company (Valentem Consulting) to advise golf clubs. he figured that private golf courses have become targets of developers because they are asset-rich in terms of land. Because of the nature of club cards, they don’t necessarily have the knowledge to equally negotiate with developers. With a background in finance and general management, Spalding says: “I have seen clubs not receiving full value from developers, in some cases outright predatory behaviour, so I’m seeking to help them out where I can.”
While development deals exist for private golf clubs that own their land, there are still opportunities for ‘public’ courses that lease land from a council, water utility or other landlord. Spalding says it’s worth examining the terms of the lease and what it allows.
For instance, if a club has a 50-year lease and the lease allows building on that land. It may be a case where it requires a renegotiation with council to say this is what needs to happen to ensure the ongoing viability of the golf club.
As long as council wants to ensure the ‘green space’ is maintained and isn’t seeking to replace the golf course with sporting fields, there is still scope to renegotiate a longer-term lease. And the longer the timeframe that is available, the more attractive the return from a developer’s viewpoint. Additionally, the prospect of a seniors living development integrated with the course delivers increased rates revenue to council.
Thinking laterally, senior residents have the potential to be the lifeblood of a golf club. A seniors living operator has a legislative requirement to provide food to all of its residents. So if a golf club puts in a caveat for food/beverage across the entire area, suddenly the club is in a position of authority to control the pricing and generate revenue. Golf clubs need to think outside the square rather than “next year we’ll get 25 new members”. First National Real Estate’s Ellis says golf clubs may need to make brave decisions with regard to their land use: “It comes down to how a golf club is going to maximise their investment. Their strategic
plan is to get more members. Well, how are they going to get more members if golf is a dying sport? How are they going to protect their asset?”

Glen James and John Pidgeon of My Millenial Money sat down with our own Luke Berry to talk about buying off the plan.
We know it can be a scary thing buying a property, but we have absolute confidence in our abilities.
Glen and John asked Luke some important questions for all you need to know about buying off the plan.
Give it a listen to find out more!