PIR 1211 - Zillmere QLD

Property Investment Report
PIR – 1211
84 Hirschfield Rd Zillmere QLD 4034
Positive Real Estate Pty Ltd
Suite 3, Level 2, 11 Albany St
St Leonard’s
NSW 2065
P: +61 1300 365 886
F: +61 2 8282 4432
Table of Contents
Table of Contents ..................................................................................................................... 2 Disclaimer ................................................................................................................................. 3 84 Hirschfield Rd Zillmere QLD 4034 ....................................................................................... 4 Statistics ....................................................................................................................................................................................................... 4 Investment Brief ....................................................................................................................................................................................... 4 Liquidity Meter .......................................................................................................................... 5 Property Overview .................................................................................................................... 6 Price List ................................................................................................................................... 7 Terms & Conditions of Sale ................................................................................................................................................................. 7 History of Negotiation/Acquisition ................................................................................................................................................. 7 Key Investment Indicators ................................................................................................................................................................... 7 Comparable Listings ................................................................................................................. 8 Tenancy/Rental Details .......................................................................................................... 10 Rental Appraisal ..................................................................................................................... 11 Body Corporate ...................................................................................................................................................................................... 12 Property Expectations ............................................................................................................ 14 Proximity to Local Infrastructure ............................................................................................. 15 New Government Office Precinct at Carseldine ..................................................................... 16 Property Photos ...................................................................................................................... 17 Location and Surroundings..................................................................................................... 21 Location Map ........................................................................................................................................................................................... 22 Google Earth Map................................................................................................................... 23 Google Street View ................................................................................................................. 24 Property Financial Details....................................................................................................... 25 10 Year forecast– ................................................................................................................................................................................... 25 Financial summary– ............................................................................................................................................................................. 26 Appendix I | Site Plans............................................................................................................ 27 Appendix II | Floor Plans ........................................................................................................ 30 Appendix III | Depreciation Schedule ..................................................................................... 34 Appendix IV | Schedule of Finishes ........................................................................................ 35 Appendix V| Comparable Sales.............................................................................................. 37 Appendix VI | Capital Growth ................................................................................................. 39 Appendix VII| Demographic Details ........................................................................................ 40 Appendix VIII | Risks............................................................................................................... 42 Appendix IX | Glossary of Terms ............................................................................................ 44 Appendix X| FAQ’s ................................................................................................................. 45 Short term bonds ................................................................................................................................................................................... 45 Long Term Bonds .................................................................................................................................................................................. 45 2
Disclaimer
Positive Real Estate Pty Ltd does not provide advice on investments. All interested parties must
rely on their own research before making any investment decision and should seek advice from a
qualified Financial Planner or similar professional.
The information contained within this document has been compiled from various sources to assist
you in conducting your due-diligence. Please ensure you validate all information contained within this
document. All sources for information contained within this Property Summary will be disclosed at
your request. Positive Real Estate Pty Ltd will not accept responsibility for inaccurate information
provided from external sources or third parties.
As part of your due-diligence, it is the Purchaser’s responsibility to seek a legal opinion of the
contract and any additional terms or clauses. You must adhere to the terms, conditions and subject
clauses contained within the contract of sale. We note that Positive Real Estate Pty Ltd has made a
number of assumptions when preparing this analysis – these assumptions have a material impact on
the financials and therefore should be assessed carefully by investors.
3
84 Hirschfield Rd Zillmere QLD 4034
Property Strategy
Newly complete development – growth buying –
DISCOUNT buying – bottom of the market
Property Type
2
Price per m
Brand New 2 bedroom units. Boutique block of 8
From $4,583
Market Timing:
Investment Brief
Demographics
Young working families or executive couples
with no children, high rental population.
Manufacturing, retail trade and healthcare
dominating workforce.
800m from Zillmere Train Station
Infrastructure
Internal Size
Property Age
Lending
Category
Total Purchasing
Costs
100m from Centro Taigum
78m²
1km from Sandgate Rd
2km from Brisbane Entertainment Centre
Brand New
3.5kms from North side Private Hospital
Max 90% LVR
5.0
Suburb Yield
Approx. $54,000
(Stamps + Deposit + LMI + Solicitor)
Deposit Types
Cash or Bank Guarantee
Av. Growth 10
years
17.6% (API March 2012)
Supply And
Demand
Demand increasing in line with affordability
and population movements. Supply also
increasing in line with population, generally
Capital Growth
2000 to 2011 - % growth (2003 peak)
boutique developments
Population
Brisbane LGA expected to grow 200,000
from 1.085m people in 2011 to 1.272m
people in 2031.
Zillmere: Approx 9,000+
Statistics
Purchase Price
From $357,500
Market Rent
$380
Gross Yield
5.4%
4.0%
Net Yield
Yr 1 Pre-tax Cash-flow
-$11,250
Yr 1 Aft-tax Cash-flow
-$2,226
Note: Completed on 100% finance. For more financial information see property financial details. Buyers please be aware that all information has been collected by third parties and
buyers need to conduct their own further due diligence on all aspects suggested within this report.
4
Liquidity Meter
5
Property Overview
Positive Real Estate has secured a fantastic investment opportunity in the growing North Brisbane
suburb of Zillmere. Located at 84 Hirschfield Road is a boutique block of only 8 brand new 2
bedroom, 2 bathroom, and 1 carport units.
The units are located close to all necessary amenities and are finished very well, including such
items such as; tiled living areas, carpeted bedrooms, split system A/C to living room, ceiling fans to
bedrooms, tiled splash-backs to all wet areas, reconstituted stone bench-tops throughout, stainless
steel appliances and tiled balconies/patio’s. The ground floor units have grassed areas on title as
‘exclusive use areas’, whilst the 1st floor units have spacious tiled balconies. The private areas are
landscaped and present very well.
The units are brand new. They were completed roughly 5 months ago and present very well. The
block of 8 units is split into two separate blocks of 4, which gives the complex a very spacious and
private feel. Access to the rear carports is down the centre of the block via a concrete driveway.
The developer has already sold 5 units in Dec of last year at a price of $377,500 (1st floor) or
$382,500 (ground floor) and needs to sell rid of the remaining three. This allowed PRE to secure a
solid $20,000 discount at a sales price for the units of $357,500 to $362,500.
Zillmere is very much an ‘up and coming’ suburb of Brisbane located roughly 13kms directly north of
the CBD. Over the years it has undergone a lot of gentrification as older styled ‘Queenslander’
homes have been bought and developed into boutique blocks of units or townhomes. This has taken
place as the population of Brisbane has been growing at a rapid rate and suburbs outside 5kms from
the CBD have become increasingly attractive because of affordability. Young families or executive
couples are now calling suburbs such as Zillmere home due to the affordable prices of new dwellings
and the ever improving infrastructure and amenities to the area, which cater for a comfortable living
and quick travel into the city for work or leisure. Located around Zillmere is:
-
Zillmere Train Station, providing direct access into the CBD
-
Arterial Highways i.e. Sandgate Rd or Gympie Rd
-
Holy Spirit North side Hospital
-
Brisbane Entertainment Centre
-
Varying shopping outlets i.e. Centro Taigum
This suburb has experienced sound average 10 year growth of 17.6% (API March 2012) and is in a
position to continue to see such growth into the future as demand increases.
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Price List
Internal External Carport Exclusive Patio/ Size
Size
Size
Use Area Balcony
Price
Original Price
Unit
Floor
Bed
Bath
Carport
5
G
2
2
1
78
14
16
34
Patio
$ 357,500 $ 377,500 6
G
2
2
1
78
14
16
94
Patio
$ 362,500 $ 382,500 8
1
2
2
1
78
14
16
‐
Balcony $ 357,500 $ 377,500 Terms & Conditions of Sale
21 days finance, 21 day settlement.
History of Negotiation/Acquisition
Initially the deal was offered to PRE at the original asking price of $377,500 and $382,500. From this
point negotiation ensued, which was helped by the fact we understood the developer needed to get
rid of the remaining stock for financial purposes. After several weeks of negotiating we finally got
them down to a rounded figure of $20,000 below what the other units had settled for. Another
incentive behind this pushed discounting was in order to boost the rental return above a simple 5% to
a more solid 5.5%.
Key Investment Indicators
Discount buying in a property market at the bottom of the property cycle
$20,000 discount below recent settlements in the block
Brand new 2 bedroom units, full depreciation benefits
Boutique block of only 8 units
Solid rental return of 5.5% gross, which is 10% higher than suburb average
90% LVR possible
Fantastic location close to all necessary amenities and modes of transport i.e. Centro Taigum
and Zillmere Train Station
7
Comparable Listings
Some newly complete 2 bedroom units in Zillmere are selling for up to $398,000, which gives you an
idea of the great value ascertained in Hirschfield Street with a price of $357,500. Some current
comparable listings can be seen below:
8
As we can see from the graph below sourced from the ABS, 2 bedroom units are the more popular
type of product as household sizes are becoming smaller and smaller with close to 68% of
households in Zillmere being comprised of no more than 1 or 2 people. This type of product is very
popular with renters and owner occupiers and will continue to be into the future as this type of
demand continues.
9
Tenancy/Rental Details
All of the other 5 units that have settled are now rented for an amount between $330 and $380. The 3
units for sale are still vacant and the vendor ahs kept them this way so as to be applicable still for the
QLD Gov. $10,000 Boost. Upon settlement it is expected that the units will rent for $380pw. The
other units that are renting for less than this possibly rushed to secure a tenant before waiting for the
highest amount.
Council rates are estimated at $1,100pa
10
Rental Appraisal
11
Body Corporate
12
13
Property Expectations
Socio-economic Assessment
Zillmere is very much an up and coming suburb. It is experiencing a changing demographic to
younger professionals or younger working families. The population is considered a blue collar
working
demographic
with
the
bulk of
occupations
placed
in
retail,
manufacturing
or
healthcare/admin.
Flood Zone
The suburb of Zillmere is not a flood prone area. If you look at the link below it is not even considered
in the flood mapping of Brisbane City Council.
http://www.brisbane.qld.gov.au/2010%20Library/2009%20PDF%20and%20Docs/5.Community%20S
upport/5.4%20Emergency%20management/Flood%20maps/flooding_zillmere_flood_flag_map.pdf
Zoning Risk and Assessment
Zoned residential
Vacancy Risk
Minimal vacancy risk considering the other 5 units that settled received tenancies very shortly after
their settlement. It is a suburb dominated with 40% rental population so demand for rental properties
is very strong. It is predicted that you may have 1-2 weeks vacancy
Valuation Shortfall Risk/Attempts to Purchase
There is minimal valuation shortfall risk with this purchase considering comparable sales and listings
to the area. The other 5 units in the block all recently settled for $20,000 higher. There is also a
valuation report by Lever valuers from Nov 2011 showing a value on the units of $375,000.
Highest & Best Rental Returns
The highest and best rental returns are based on the product being presented ‘as is’. The highest
expected rental for these units is in the vicinity of $380 or possibly higher for the units that have a
private grassed area such as Unit 2
First 6 Months Purchase Expectations
During the first 6 months you should focus on securing a solid tenancy and establishing a good
relationship with your rental manager. It is also important to undertake depreciation estimation before
EOFY.
Strata Synopsis
The strata is already established as over 50% of the units have sold. The body corporate will receive
your details once you settle and contact you about their management. You will begin to pay rates
every quarter.
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Proximity to Local Infrastructure
Transport:
-
800m to Zillmere Train Station
-
1km to Sandgate Rd
-
2.5kms from Gympie Rd
-
3kms from Gateway Motorway
Education:
-
Huge range of primary schools: St Flannan’s Primary School, St Dympna’s Primary School,
St Kevin’s Primary School, Aspley East State School and many more
-
Huge range of High Schools: Aspley State High School, St Josephs Nudgee College and
many more
-
5kms from Aus. Catholic University Brisbane Campus
Entertainment:
-
3.5kms from Brisbane Entertainment Centre
-
1.2kms from Zillmere/Geebung RSL
-
2.5kms from Chermside Megaplex movie cinema
-
Within 1.5kms to varying café’s, pubs and other night-spots.
-
2.5kms form Virginia Golf Course
Shopping Centre’s & Retail:
-
100m to Centro Taigum
-
2km to Homemaker City Aspley
-
3kms to Chermside Westfield
-
2.5kms to Chermside Markets
-
800m from Newman Rd Retail
15
New Government Office Precinct at Carseldine
Ministerial Media Statement
Premier and Minister for Reconstruction
The Honourable Anna Bligh
Saturday, August 13, 2011
New Government Office Precinct at Carseldine
Queensland Premier Anna Bligh has announced that new life will be given to the former QUT Carseldine Campus as the
Government begins construction of a new government services facility.
Under the plan up to 1000 Queensland public servants will also be relocated from inner city Brisbane from the end of
2012.
Premier Bligh said works are underway on transforming former Carseldine campus in to a new government office precinct
as part of the State Government’s decentralisation commitment.
“By decentralising some services, we are not only providing employees with the opportunity to work closer to home, but
also stimulating urban growth including increased job opportunities and greater services for local residents.”
“This move will help deliver on my long term vision of creating stronger services for Queenslanders.”
The new services facility means that locals will be able to do things like renew their license locally, pay SPER fines, and
lodge vehicle transfer paperwork locally.
“I have always been committed to reducing congestion in the CBD and one way that we are doing this is by re-locating
some government functions,” said the Premier.
“This is not only a great move for the many public servants that commute to the City from the north side each day, but
also a great economic boost for Carseldine and its surrounds,” she said.
With construction due for completion and occupied by the end of 2012, the new Government office precinct at Carseldine
is within walking distance of train and bus services.
A number of State Government agencies will be relocating work units to the new precinct, with the Department of
Transport and Main Roads as the main tenant.
Premier Anna Bligh said those work units are currently being identified and processes are being developed to encourage
public servants to express their interest in the move to Carseldine.
MEDIA CONTACT: 07 3224 4500
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Property Photos
17
18
19
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Location and Surroundings
Zillmere is located roughly 13kms directly north of the Brisbane CBD. It is characterised by older style
Queenslander homes and some newer smaller developments of townhouses and units. It is
surrounded by parklands, sporting facilities, retail strips, entertainment spots, shopping facilities and
education hubs such as ACU Brisbane.
Access into and out of the city is made easy by access to arterial roads such as Sandgate Rd and
Gympie Rd or the Northern Train Line, which has a station at Zillmere that provides direct access into
the CBD. The airport is also only a short 15 minute drive away to the SW.
Zillmere is bounded by Taigum to the N, Geebung to the S, Aspley to the E and Boondall to the W.
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Location Map
22
Google Earth Map
23
Google Street View
24
Property Financial Details
10 Year forecast–
25
Financial summary–
26
Appendix I | Site Plans
27
28
29
Appendix II | Floor Plans
Units 1 and 2
30
Units 3 and 4
31
Units 5 and 6
32
Units 7 and 8
33
Appendix III | Depreciation Schedule
34
Appendix IV | Schedule of Finishes
35
36
Appendix V| Comparable Sales
37
38
Appendix VI | Capital Growth
www.homepriceguide.com.au
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Appendix VII| Demographic Details
40
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Appendix VIII | Risks
All investments involve risk. While drivers of growth and other attributes that have a positive effect on
an investment have been analysed in depth, it is equally important to be aware of and understand the
risks that could have an adverse impact on the investment’s performance. Following are some of the
risks that investors should consider prior to investing in property:
1. Market Value Risk
This risk relates to the risk of the investment failing to achieve the expected growth. Much of
the information we have used in our analysis is predictive and the rate of return may be
affected by known and unknown risks and uncertainties. This in turn could result in the re-sale
value of the investment not achieving what is expected if the vendor chooses to sell during or
following depressed market activity.
2. Construction Risk
This is applied to properties purchased off the plan. Throughout such projects the developer
may arrange finance facilities related to the land acquisition, development and construction of
the project. This may result in issues arising in the delivery of the product on time and as
specified on the contracted terms. Delays in the delivery period would result in opportunity
costs as investors funds may not be able to be redirected to alternative investments.
3. Rental Yields
Rental yields fluctuate and are affected by other market factors. They may go up or down
depending on factors such as supply, demand, employment, investment in the area and the
state of the overall residential market.
4. General Risk
In addition to the risk factors specific to investment in property development projects, there
are more general risks that can affect the value of the investment in the development,
including:




The state of Australia’s and the world economies
Movements in inflation and employment
Changes in socio-economic factors
Natural or man-made disasters.
5. Personal Risk
Investment strategies will often depend on the income of the investor. Should there be a
reduction or loss in the flow of income from the investor it may present a risk in the future
ability to hold the investment. These risks may be managed through the appropriate use of
income protection insurance, life insurance and trauma insurance.
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6. Interest Rate Risk
Movements in interest rates can have a number of effects on an individual property
investment. Specifically, an increase in interest rates may have an immediate effect on the
costs of holding an investment property. Additionally, sustained interest rate rises may have a
lagging effect in the form of reduced sales activity and property growth.
7. Policy Risk
Changes in government policy may affect both holding costs and the expected growth
performance of specific property investments. This may result in additional expenditure in
order to finance your portfolio and the expected returns.
8. Oversupply
An oversupply in property will have effects on both achievable rents and growth performance.
Due to the length of time typically required to construct medium and high density
developments, the short term supply curve is inelastic. This means that property supply has
an inherent inability to adjust quickly enough to meet demand. A sudden reduction in demand
or an unexpected increase in supply may result in oversupply. Typically this risk is most acute
towards the end of the property cycle. We do not foresee any short term risk of oversupply in
the current market.
9. Settlement Risk
Settlement risks may prevent the purchaser’s ability to settle on the property. Typically, these
are related to difficulties in obtaining finance through valuation shortfalls at the time of
settlement or changes in the purchaser’s personal circumstances that result in the refusal of
the purchaser’s credit application. This may result in the loss of the deposit or any monies
owed to the developer. This risk may be managed by obtaining pre-approval of finance (for
completed property) prior to exchange of contracts.
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Appendix IX | Glossary of Terms
Common terms used by property Investors and Financial Institutions.
Application
Fee
Bridging
Finance
A fee paid by the borrower to the lending institution for obtaining finance.
A short term loan/facility that is often used when buying a new dwelling previous to settling
an existing dwelling.
Body
Corporate
The term ‘Body Corporate’ refers to a home owners association charged with the administration
of one or more housing units. Owners of the individual dwellings pay a fee to provide for
maintenance of common areas and provide cover for repairs that may arise in the future.
Capital Growth
The change in value of an investment. This is calculated by subtracting the purchase price from
the current value of the investment and is usually expressed as a percentage. If the price of the
capital asset has declined instead, this is called a capital loss.
Comparison
Rate
A rate used to compare the borrowing costs from competing lenders. The basis of comparison
includes the interest rate and the majority of fees and charges payable during the life of the loan.
The figure is expressed in percentage terms. It should be noted that some costs including
redraw fees or early repayment fees, and cost savings such as fee waivers, are not included.
Deposit
Guarantee
A substitute for a cash deposit used to purchase a property. At the time of settlement, the buyer
is required to pay the full purchase price.
Equity
The net value of the asset. This is calculated as the value of the property less any outstanding
loans secured by the property.
Gross
The complete amount before deductions for taxation, inflation, or any other various fees that may
be incurred. The term ‘gross return’ refers to the amount of capital growth and yield before
taxation, body corporate, fees, inflation and other expenses are taken into account.
Infrastructure
Basic facilities required for a community or society to function as an economy, including
transportation, communication, provision of water and power and the public institutions needed
for security, welfare, health and education.
Interest in
Advance
When interest is charged at the beginning of a period of time. For example, charging the first
years interest in the first month of a loan. It is generally only available on fixed rate loans for
investment purposes.
Interest Only
Loan
A loan facility commonly used for investment loans where the borrower only pays the interest
component of the loan for a specific period of time.
Price $/m2
A measure for determining the relative value of a given property based on the internal size.
This is calculated by dividing the purchase price by the internal area (measured in m2) and
expressed as dollars per m2.
Real Return
The return on investment, less the reduction in its value as a result of inflation. Real rates are
important as they tell you what the actual increase in value is, and how much of a return was
less the effect of inflation.
Rental
Guarantee
A guarantee by developers to pay an agreed level of rent should a shortfall achievable in the
market arise. This is usually based on a percentage of the purchase price.
Valuation
The estimated worth of a project based on comparable sales with projects of a similar type.
This is conducted by a registered valuer.
Yield
An annualised rate of return for a given investment. This is calculated as the annual achievable
rent expressed as a percentage of the purchase price (or current market value) of paid investment.
44
Appendix X| FAQ’s
Short term bonds
To apply, clients need to complete an application form (available from their broker), together with:




A loan approval
A copy of the Contract for property sold that will assist in the purchase of the new property
Evidence of funds accessible prior to the completion date, such as savings, a fixed term
deposit, or share certificates
Evidence of other funds that will assist in the purchase such as the First Home Owners Grant.
Long Term Bonds
To apply, clients will need to complete an application form (available from their broker) and provide
evidence that they are an existing property owner:


Rate notice/s for residential property owned
Mortgage statements
45