A tale of 3 cities – Sydneys winners and losers in the GSC’s visionary plans

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October 2017  Article by Build Sydney

 

This week the government announced a 3 city plan. These 3 cities will be fully functioning cities connected by major transport & infrastructure projects by the year 2056. These cities include:

  • The Harbour City (focused around the Sydney CBD, North Sydney, Chatswood, Macquarie Park, Sydney Airport & Port Botany)
  • The Central City (Focused around the Parramatta CBD, Sydney Olympic Park, Norwest, Rhodes & the Parramatta River)
  • The Western City (Focused around the Badgerys Creek Aerotropolis future development, Liverpool, Penrith, Campbelltown, Narellan & Leppington)

As outlined by the Greater Sydney Commissions map of a future Sydney, It clearly shows which areas are going to directly benefit via mass-transit projects, highways & their given timeline for the project. While some areas such as those around Badgerys Creek are going to benefit greatly, areas with current social-economic disadvantages & getting the short end of the stick, particularly around the Fairfield, Liverpool & Blacktown Local Government Areas which have some of the highest disadvantaged suburbs in NSW.

While it could be argued that having a Western City built to the west of them would benefit their job situation, it is quite clear that the airport itself is further away from the Sydney CBD both in distance & in the time taken to get there by current public transport.

To the contrary, the future looks great for the Greater Parramatta region which is set to benefit from a variety of infrastructure which will cement its place as Sydney 2nd CBD & facilitating the plan clearly shows Parramatta becoming the next central with the amount of public transport which will come through the suburb. Already NSW’s 4th business station, if trends continue then it should be well on its way to becoming the 2nd busiest by the time the Greater Sydney Commission’s plan is realized in 2056.

Future links to cement Parramatta as the New Central Include:

  • The Parramatta Light Rail Stage 1 & Stage 2
  • Westconnex
  • Sydney Metro West
  • A Future mass-transit link to Badgerys Creek
  • A future mass-transit link to Kogarah via Bankstown
  • A future mass-transit link to Epping
  • A visionary mass-transit link to Norwest
  • A Future Ring-road around the Parramatta region which consists of the Parramatta CBD, Westmead, Rydalmere, Camilia, Rosehill & North Parramatta.

The Harbour city which consists of the Sydney CBD and surrounding area’s looks to further cement its place as the financial capital of Australia with a focus on finance, fin-tech & innovation. It looks to strengthen in the global economic corridor which runs from Sydney airport & Port Botany through Green Square then onto the innovations hubs of Redfern & the Bays precinct then importantly into the Sydney CBD which from there the corridor continues over the harbour to North Sydney, St Leonards, Chatswood & finally to Macquarie Park.

A significant amount of density is set to rise around Mascot & Green Square, as well as around Maroubra & Eastgardens. There will also be a line of major infrastructure projects which include:

  • A future mass transit link from the Sydney CBD through the Eastern Suburbs onto La Perouse. This plan should facilitate higher densities within the Eastern Suburbs.
  • The Beaches Link motorway
  • The Western Harbour Tunnel
  • The Sydney CBD to Eastern Suburbs Light Rail
  • A Future Bays Precinct to the Sydney CBD Light Rail

While this plan is solid, it will clearly lead to a disadvantage for people who live in the Western City & commute to the Harbour City and vice-versa. In a perfect world the “30-minute city” as it has been dubbed would be just that but in a world of high property prices pushing commuters further out away from the major CBD & a majority of the high-paying technical jobs being located in the Sydney CBD, it could actually make the situation worse, however, its greater to see planning & transport come together for the first time in NSW to promote a proper 40-year vision for Sydney.

In order for a plan like this to work, it must be stressed that infrastructure & transport be put in before people & businesses move in. An example of the chaos this can cause is Wentworth Point being the most-dense suburb in NSW yet having one road (Hill Road) in & out of the suburb where only recently was the Bennelong Bridge opened, however, the point stands that infrastructure services & transport must be put in before any major developments & population spikes occur.

For a summary of the report click here 

 

Australia Surges in P2P Balance Sheet Lending

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24th September 2017

New research showing Australia has risen to become the second largest alternative finance market in the Asia Pacific sends a strong signal to the world about the underlying strength of Australia’s fintech and business environment.

Findings from a joint study by KPMG, the Cambridge Centre for Alternative Finance and the Australian Centre for Financial Studies, released today, reveals that Australia’s alternative finance market size grew by 53 per cent from 2015 to 2016 and has now reached US$609.6 million.

According to the Second Asia Pacific Alternative Finance Industry Report, Australia has leap-frogged Japan to become the second largest alternative lending market (behind China) across the Asia-Pacific.

FinTech Australia CEO Danielle Szetho said the report’s findings showed how the Australian fintech industry – in areas such as invoice financing, balance sheet lending, peer-to-peer lending and crowdfunding – was servicing the nation’s strong economy and the needs of growing small and medium-sized businesses.

“The demand for our products and services is strong and our fintech lenders are rising to the challenge. This broad-based reports showcases the cumulative efforts of government and regulatory bodies like the Australian Securities and Investment Commission (ASIC) and Australian Prudential Regulation Authority (APRA) to support the accelerating momentum behind alternative finance in Australia,” Ms Szetho said.

Click cultivating-growth-asia-pacific-alternative-finance-report-2017 to view the full report

 

The new Chinese investors about to make Australian foray

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Written by Michael Cranston, AFR July 2017

 

At least 10 Chinese investors and developers who are yet to make their mark on Australia’s property scene are preparing to make an entry despite a recent slowdown in corporate activity driven by China’s upcoming National Congress and tougher foreign investment restrictions imposed by Chinese regulators.

New federal and state taxes on foreign buyers and tighter lending restrictions have also created negative sentiment for potential Chinese developers and investors. However, JLL’s head of China desk, Michael Zhang, said many Chinese real estate companies were still very serious about investing here.

“Australia continues to be a major investment destination for Chinese capital and many Chinese real estate companies are serious about having some footprint in Australia,” Mr Zhang said.

In a report called The Future of Chinese Residential Developers in Australia, JLL conducted analysis into the 10 largest residential developers yet to enter the Australian market.

 

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Among the top 10 are Hong Kong-based Sun Hung Kai with a market capitalisation of $56 billion and Henderson Land, which recently paid a record $4 billion for a car park in Hong Kong. Other names include Evergrande and transportation business China Merchants Group.

“Some of the Chinese residential developers on this list are already showing interest in the Australian market or are involved in Australian industries outside of the residential real estate sector,” JLL senior analyst for residential research in Sydney and author of the report, Vince De Zoysa, said.

“We have already seen some of these firms enter Australia through other industries, in particular infrastructure. This allows them to establish a local presence in Australia in their core industry before moving up the risk and reward curve into residential development.”

A key driver for these developers will be the health of the foreign retail buyer market for new apartments in Australia. The federal budget changed the rules so that developers selling new multi-storey dwellings are now capped at vending 50 per cent of the total development to overseas buyers. Foreign owners will also start to incur a capital gains tax of 12.5 per cent when selling their main residential asset.

Interest from China remains high

“Despite increased taxes, tighter lending measures on development finance and limited availability of senior debt to overseas developers, the level of interest remains high for Chinese developers,” Mr Zhang said.

While Juwai.com has recently forecast Chinese buyers to spend $104.5 billion on global property this year, a significant fall from last year’s record high of $133.7 billion, Mr Zhang said that was not representative of a new wave of Chinese developers and investors.

“Australia continues to be a major investment destination for Chinese capital,” he said. “Australia’s average deal size is smaller than that of the US and the UK, which makes investing here accessible to investors of all sizes.

“Increasingly Chinese developers are seeking ready-to-go opportunities with existing DA or planning outcomes, thereby minimising planning risk and bringing clarity on project life cycle.”

Chinese corporate activity has slowed recently as a result of the upcoming 19th National Congress to be held in October. The tougher foreign investment restrictions imposed by Chinese regulators on $US1 billion-plus deals are still in place.

3 Industries Being Disrupted by Crowdfunding

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March 2017 Written By: Andrew Medal – Entreprener.com

Crowdfunding is rearranging the way that entrepreneurs finance their creative endeavors, whether they’re artists or engineers. From bringing startups a needed capital boost to getting students money to go to college, crowdfunding seems to be creating opportunity in almost everything.

More and more investors are noticing the clear-cut advantages offered by crowdfunding platforms, and it’s no surprise that they are rushing to claim their piece of the pie. In 2015, it was estimated that more than $34 billion was put into crowdfunding efforts.

At its current growth rate, the crowdfunding industry is multiplying in size every year. It’s trickling into several types of funding models (donation, equity and lending) and an array of industries (education, medical care and corporate finance). Whether willing or not, the majority of industry markets will be facing a major disruption in how capital is moved throughout the economy.

Here are the top three industries the crowdfunding sphere is set to disrupt and why:

1. Corporate finance: From software to farm equipment

Each year, U.S. companies invest in leased tools that range from software to construction equipment. As crowdfunding persists in its growth, the companies who lease utilities as a part of their businesses will have to engage with the crowdfunding sphere. The companies that embrace crowdfunding early will rake in the benefits of accessing small businesses that flock to it as a tool.

Large finance organizations can use it as a catalyst for gaining small businesses who seek to harness leased products that are tailored to them specifically. What’s more, the lower cost credit of the products they offer will appeal more to businesses that pay sky-high APRs.

For leaseholders of larger equipment, crowdfunding platforms will allow leaseholders such as farmers to finance crops and equipment from other farmers and associates. It’s in this way that their crowdfunding platforms will provide communities with better access financing.

2. Real estate: From housing to business establishments

For the real estate market, crowdfunding presents a huge solution. Before crowdfunding, closing an actual real-estate deal required back and forth passing and signing of documents among lawyers. Beyond being slow, the process often added up to thousands of dollars in legal fees. Crowdfunding allows businesses of all sizes to bypass the monotonous process and dodge expenses. What’s more, real-estate crowdfunding allows potential investors access to a wider array of deals.

Mark Suleman, the founder of real estate crowdfunding platform Macrocrowd, sees the benefits of this type of access firsthand. “I always hear from clients about how they struggled to access the right people and resources while looking for real estate investments abroad,” he explains. “But by getting on board with crowdfunding, though I can’t speak for other platforms, they’re able to access quality investments into institutional real estate — globally.”

It’s not just accessibility that’s grabbing the attention of venture capital dollars. Today’s internet-reliant consumer is well beyond acquainted with making investments online. Users are becoming more and more comfortable with putting their money into crowdfunded sites. For real estate businesses who get their hands into crowdfunding, this means access to a whole new crowd of their own.

3. Consumer lending: Cars and home appliances

While banks have backed away from lending consumer and small business with credit, peer-to-peer crowdfunding platforms are leaning in. As big banks begin to take themselves out of the equation, institutional and professional investors will begin to swoop in and sign up for them too.

For financial institutions, this means learning to leverage a crowd’s interest to inform their lending offers. As the trend continues, new crowdfunding platforms will pop up to cater to specific lending verticals. Imagine a crowdfunding space where consumers can get loans for anything related to transportation or kitchen appliances. In this way, brands will be able to save on financing costs while gaining on capital returns.

The Rise of Chinese Developers in Australia

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February 2017

 

Knight Frank have just released a report into emerging trends of Chinese developers in Australia, the report shows statistically an insatiable appetite for site acquisition throughout the country. This long term trend is set to continue and it’s impacting local developers as they become the under-bidders and miss out on new sites.

 

The following are key takeaways from the report:

  • Chinese developers are buying larger sites, average dwellings per site in 2016 = 502 (versus 2012 = 103);
  • Chinese site acquisition represent a massive 38%  of all direct residential sites in Australia (versus 2% in 2012)
  • Chinese developers are interested in larger sites and are diversifying from apartment sites into house and land product.

These statistics underpin the strength of demand for Australian residential assets. This interest driven by China is a net positive for our region as it ultimately results in increased economic activity which in turn creates jobs. 

For access to the Knight Frank report click here

 

Home Values Continue to Rise in Australia CoreLogic Jan 2017

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January 2017

 

The hedonic home value index released by CoreLogic (Australia’s leading property data and analytic company) has been released for January 2017, in summary:

  • Best performing capital city: Hobart +5.8%
  • Weakest performing capital city: Canberra +0.1%
  • Highest rental yields: Hobart & Canberra houses with gross rental yield of 5.0% and Hobart Units at 5.8%
  • Lowest rental yields: Melbourne houses with gross rental yield of 2.7% and Darwin units at 3.4%
  • Most expensive city: Sydney with a median dwelling price of $850,000
  • Most affordable city: Hobart with a median dwelling price of $366,000

For the full report on the above statistics click here

WTF is Happening? How Airbnb and Uber are Reinventing Economics

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Airbnb owns no real estate…..Uber owns no vehicles.

Ten years ago I bet you had never heard of Airbnb or Uber, in fact even a few years ago these companies weren’t household names. Today they are getting bigger and bigger in the economic world of the “sharing economy”.

 

Airbnb and Uber are US tech start-ups that chose their industry  – Airbnb (hospitality) and Uber  (transport) these startup disruptors are today worth $30B  and $68B respectively. 

These industries have been shaken up to the detriment of the existing incumbents and they are not going away. They’ve upset a lot of people along the way, leaving other competitors fighting to remain profitable and regulators playing catch up.

So why are they thriving?

People now see a clear benefit in using financial technology services over outdated old world businesses, the last 5 years has seen the economic landscape reshaped to the point of no return. 

WTF is happening?

What’s happening is a massive economic shift on a global scale, it’s a reinvention of how we transact and how much we pay for a service.

The invention of an internet based scalable service on an inefficient industry has been made possible by financial technology or fintech. It’s the start of what I call the smarter economy.

This global change is transforming not just transport and hospitality but also property and finance, the banks are in the fintech cross hairs scrambling to remain profitable and relevant.

Our Banking System – Get Set for Disruption

In the smarter economy, banks become less relevant as consumers (both businesses and individuals) realise the Uber effect -smarter and cheaper ways to borrow, invest, research and transact.

Imagine a massive 150-year-old organisation with hundreds of shopfront locations, thousands of staff, old and clunky internal processes and life long employees on huge salaries. Sound expensive? It is expensive….this is your typical incumbent bricks and mortar bank still making huge year on year profits.

Users of banks are becoming smarter and empowered through technology. Do we need to visit a bank to transact? No. Do people want a better deal from their bank? Yes. Do people have loyalty to their bank? No.

So where will we be in 10 or 20 years in the smarter sharing economy? I’m not 100% sure but I can guarantee many of the traditional business models will no longer be around and although many new businesses will fail you can bet the likes of AirBnB and Uber will be thriving.

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Crowd Property Capital is a non-bank lender that effectively cuts out the middle-men in business loan transactions. Put simply an investor (business or individual) who has funds to loan can provide a borrower with these funds on agreed terms. The lender receives a rate between 8-12% pa and the borrower gets access to funds faster.  Investments are available on a wholesale basis to local and international sophisticated investors with a minimum investment of $500,000 AUD. For more information visit www.crowdpropertycapital.com.au

 

 

 

 

 

 

 

 

 

 

Shark Tank Rejected Property Investment Platform Reloads

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January 2017

 

In what was one of Shark Tank Australia’s biggest shutdowns of the second season, founder of Crowd Property Capital (CPC) David Lovato reflects on what was a cringe-worthy flat out rejection on national TV.

“From the moment I entered the shark tank I realised they hated the idea of backing a property industry start-up. I was a made to look like a property industry villain and walked straight into a bear trap.

I didn’t get any feedback from the show until the actual airing. As soon as I watched it I knew it was bad. Instead of my mates giving it to me there were crickets; not a word of banter but rather uncharacteristic blokey support which was concerning”

Fast-forward 6 months and the impact of getting on the show (and failing) has inadvertently become a major factor towards the early success of CPC. The online property development funding platform has taken on board the collective criticism from the sharks and changed the focus of the business model.

Originally the CPC platform was pitching to smaller retail investors, the focus is now purely on the sophisticated investor interested in lending debt capital to developers solely on a 1st mortgage basis.

The reality is, property development and investment are inherently risky and investors entering this space usually have substantial funds to invest, an appetite for risk and it’s not usually their first deal.

“There has been a lot of buzz around the ability of the online community via P2P and crowdfunding to open up the property industry to smaller retail investors. I learned from the Shark Tank that even the sharks don’t fully understand the risks and returns in property development; so obtaining investment from smaller “unsophisticated” retail investors is a hard sell.”

Since the Shark Tank pitch last year, David’s taken a measured approach to growing the CPC investment platform.

Teaming up with existing established private lenders, CPC has found its place in the market by offering 1st mortgage security investments yielding between 8 to 12% annually. The CPC website www.crowdpropertycapital.com.au showcases some of the available debt finance deals. This web-based platform provides wider access to potential investors both locally and offshore. All investments are debt style and start at a minimum of $500,000 AUD.

“CPC is essentially evolved into what I’d call a “trad-tech” investment platform. We are focusing on partnering with established private lenders to increase their investor base as there is a huge demand at the moment for non-bank finance.  

With the major banks reducing their exposure to development debt finance local developers are seeking additional funds to complete their project pipeline. 

Traditional private lenders have numerous quality deals with great returns that they are struggling to fund purely due to the gap that has emerged in the market from the majors scaling back. With the property market so hot at the moment, we are focused on cherry picking the best deals. Quality, not quantity is key.”

 

Core Logic – Hedonic Home Value Index November 2016

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The monthly update on Australian house and apartment values has been released showing some strong trends as we head into the end of the year. Property investment proved again in 2016 that it remains a reliable and profitable assett class outperforming the stock market considerably in 2016.

The key findings for November can be summarised:

  • All states posted dwelling value increases in the month (except Melbourne)
  • The annual rate of capital gain has remained boyant in all states (except Perth)
  • Rental yeilds in Hobart were the highest in the country. Hobart remains the most affordable city.
  • Sydney remains the least affordable city.
  • Interest rates are predicted to rise next year which may slow down buyer activity and in turn reduce buyer demand in 2017

To read the full report click here 

CPC Shark Bait – The real Shark Tank Experience

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Late last year when I was up super early with my newborn I saw an ad for Shark Tank auditions on Channel 10.  Having just come up with the CPC business idea and website I thought what a great forum to launch this potential business into the world. So I filled in the forms, went through the audition process and got selected.

Fast forward to the day of filming I got the opportunity and went into the tank head first only to get eaten alive on the perceived investment risks being far greater than the offered returns. They initially liked the pitch but then it shifted and came across as preying on the little guy investors, the amount of editing and dramatisation assured the villain theme.

They then hated the business model as it was looking to use their reputation (i thought that was the reason people went on?) but apart from the grilling and the amount of editing I can honestly say the experience was amazing and well worth it. Not only have I tweaked the CPC business model but it has made me more hungry to succeed so I can prove the Sharks wrong.

In hindsight the CPC startup business was to early stage for the sharks, they want a tangible sure thing that’s already making money and they don’t want to work hard for it, why should they – they’ve already made their money.  Only a small lucky few startups get the funds most get ripped into for over valuing their business, chewed up and spat out for entertainment value.

I don’t want to discourage anyone from going on the show as the exposure you’ll get is huge but you must be prepared for failure. As Mark Bouris wrote in his article last year (click here to read his full article about Shark Tank)  – Australia needs more Entrepreneurs people willing to get up off their backsides and give it a good old Aussie crack. I believe the show needs to provide more to the participants in the form of genuine on and off camera business feedback but alas this doesn’t really make good telly.

I’m lucky  in a way that I will see this as a great talking point with colleagues friends and family, nothing is as good as providing  a self-deprecating source of humour. Time will tell if the exposure was worth it for the CPC business but one thing for sure I’m not going to die wondering.

 

Watch Dave on CPC on Shark Tank – Ten Play (approx 24th minute)

https://tenplay.com.au/channel-ten/shark-tank