header
Palladium Insights - Summer 2014 Edition
 
We are pleased to present our Summer 2014 edition of Palladium Insights, a quarterly publication providing brief overviews of trending topics pertinent to property investment, development and strategic asset management on a range of categories in the local property market.

In the current edition, two current topics allied to new development opportunities and business ventures have been analysed, as well as recent Palladium Property projects.

We welcome any queries for further information and would be pleased to assist with any property advice or other assistance you may require.
 
1. Urban Activation Precincts - Sydney's new development opportunities   2. Sydney's child care market trends
The Urban Activation Precinct scheme created by the NSW Department of Planning & Infrastructure recently announced by Barry O’Farrell provides real opportunities for adept developers. This has generated extensive interest and backlash throughout the greater Sydney region. The plan was created... Read more...   The highly anticipated population increase in Sydney over the next 20 years will undoubtedly place immense strain on existing infrastructure. Child care services are not immune from these pressures, as a shortage of approved facilities has become apparent in Sydney’s suburbs over the last decade. Of the 743... Read more...
3. Palladium secures development application approval for large and complex mixed use project   4. Palladium welcomes new property development analyst
Acting as development manager and property advisor, Palladium Property have secured approval for a multi-use proposed project located on Old Northern Road from the Joint Regional Planning Panel (JRPP) and The Hills Shire Council. The proposed development is located on an elevated inclined site of... Read more...   Palladium Property is pleased to welcome Brian Mooney to our team, who joined us in October 2013 as a property development analyst. Brian brings to Palladium Property extensive research, analysis and reporting experience gained over a five-year career as a commercial valuer at a mid-sized firm... Read more...
 
one
Urban Activation Precincts - Sydney's new development opportunities

Figure 1: NSW Urban Activation Precinct Map
(source: NSW Department of Planning & Infrastructure 2013)
The Urban Activation Precinct scheme created by the NSW Department of Planning & Infrastructure recently announced by Barry O’Farrell provides real opportunities for adept developers. This has generated extensive interest and backlash throughout the greater Sydney region. The plan was created in response to the severe housing shortage that has plagued Sydney, expected to worsen over the next 20 years with anticipated population growth of 1.3 million and the requirement for more than 545,000 new homes. The Urban Activation Precinct program was announced in the 2012-2013 NSW budget, which includes $50 million available to local councils for upgrades to public spaces and streetscapes. The first eight precincts have been identified as able to accommodate up-zoning with the potential of creating 30,000 additional dwellings upon full build-out. The aim of the program is to transform areas situated in close proximity to existing or proposed transport infrastructure into engaging and vibrant live, work and play communities.

Epping Town Centre Urban Activation Precinct
The Epping Town Centre structure plan is on exhibition in accordance with the visions of the Urban Activation Precinct scheme. Epping Town Centre has been identified as ripe for increased density due to its excellent transportation access and its proximity to Macquarie Park. The rezoning of large tracts of land will increase the densities and building heights of properties located within close proximity of these areas. Some sites near Epping Town Centre will see maximum building heights increase from four storeys to 22 storeys, as well as FSR increases from 1.5:1 to as much as 6:1. As these structure plans come to fruition, significant development opportunities are expected to arise, particularly on underutilised commercial sites and lower density residential surrounding the precinct centres.

Aside from increased densities in the immediate vicinity of Epping Station, the structure plan also recommends considerable FSR increases for five residential areas outside the core. Recent studies conducted on the financial feasibility of the structure plan found that increased densities are a necessity to make new development viable. While competition for attractive sites will likely be fierce, particularly in the Epping Town Centre and North Ryde precincts, increased densities of the eight Urban Activation Precincts along with council support is likely to encourage creative and lucrative development opportunities for the savvy investor.


Figure 2: Existing of Oxford Street in Epping Town Centre
(source: NSW Department of Planning & Infrastructure)


Figure 3: Artist's Rendering of Future Oxford Street Development
(source: NSW Department of Planning & Infrastructure)

Contact Brian Mooney on (02) 9432 7866 to discuss how we can assist to secure a suitable site and realise a profitable development project.
 
two
Sydney's child care market trends
The highly anticipated population increase in Sydney over the next 20 years will undoubtedly place immense strain on existing infrastructure. Child care services are not immune from these pressures, as a shortage of approved facilities has become apparent in Sydney’s suburbs over the last decade. Of the 743 long day child care centres in Sydney that disclose occupancy information, more than 30% have nil vacancies. However, this situation is exacerbated in Sydney’s more popular inner-city suburbs, in the Eastern Suburbs and the Lower North Shore, where it is common for parents to experience 24-month waitlists to get their child into long day programs. Several government programs have been implemented to increase the affordability and access to child care in Australia, perhaps most notably the Child Care Benefit and Child Care Rebate programs.

The Child Care Rebate, which provides an annual reimbursement for child care, was increased from 30% of the total costs to 50% of the total costs (capped maximum rebate increased from $4,354 to $7,500 per child) in July 2008. The average government expenditure on child care is projected to reach $22 billion for the four years between 2013-14 and 2016-17, which represents a three-fold increase from 2003-04 and 2006-07 (DEEWR 2013).

Cost per child for child care in New South Wales has increased 44% just in the last six years, with a 7.3% rise in average daily fees between 2011 and 2012. At the same time, the number of children in child care in New South Wales has increased nearly 40% between 2006 and 2012, suggesting further cost increases are likely with anticipated supply shortages. As the cost of child care continues to rise, the practicality and likelihood of women returning to work diminishes. A July 2013 report published by the Australian Women Chamber of Commerce & Industry (AWCCI) estimated that if women aged 25-44 attained similar workforce participation levels as their male counterparts, Australia’s GDP would increase 11%. These underlying economic factors of Australia’s high costs of child care will likely continue to find themselves at the top of political agendas for the foreseeable future, which may have profound impacts on local real estate markets.
Figure 1: Actual and Estimated Child Care Benefit and Child Care Rebate Funding
(source: MyChild.Gov referencing DEEWR administrative data)


Figure 2: Number of Children in Child Care by Service Type – New South Wales (source: MyChild.Gov referencing DEEWR administrative data)

New Development Opportunities Abound

Prolonged waitlists and rising costs for child care in the majority of Sydney’s prominent and most sought-after suburbs has created significant demand for real estate opportunities. However, as Sydney’s population continues to grow and development moves outward, immense opportunities exist for new child care facilities in many of Sydney fastest growing population centres. Furthermore, the majority of recently adopted Local Environmental Plans (LEPs) allow child care facilities in a variety of zone districts, including most business, residential and mixed use designated areas. Finally, continued pressure from interest groups, local councils and from abroad makes it likely that the federal and state governments will pursue policies aimed at more affordable and accessible child care.

The culmination of these factors is likely to make child care development an attractive business venture from both an owner-operator and an investment perspective. The inclusion of child care within mixed use development projects helps diversity risk factors of development, particularly from a realization and income stream factor. In addition, it increases exposure and has a catalytic effect on attracting new tenants.

Contact Phillip Hoare on (02) 9432 7866 to discuss how we can assist with the incorporation of child care in your development project.
 
three
Palladium secures development application approval for large and complex mixed use project

Artist's Impressions



Acting as development manager and property advisor, Palladium Property have secured approval for a multi-use proposed project located on Old Northern Road from the Joint Regional Planning Panel (JRPP) and The Hills Shire Council. The proposed development is located on an elevated inclined site of some 9,500sqm, blessed with extensive views of the Blue Mountains and the surrounding picturesque countryside. A cascading building form comprising five landscaped levels with flowing water pools and roof gardens ensures the project reflects a contemporary rural village theme and unique experience.

A host of complimentary and economically interactive uses are planned, including a number of fine dining restaurants/cafes/wine bars, boutique service retail, business premises, medical centre and allied services, indoor recreation and health clubs, a community use space catering for local exhibitions, performances and other community activities, a long day childcare centre and eight two and three bedroom apartments with generous outdoor areas. Provision for 214 visitors, commercial and residential parking bays is provided largely underground to reduce the visual impact of vehicles, as are bicycle parking and change rooms.

It is envisaged that on completion the 'rural village' will act as a destination for local residents and benefit from the passing traffic (estimated in 2005 at 24,739 vehicles per day) accessing this growth node. On completion the entire development will generate significant full time, part time and contractor employment and provide high calibre services to the growing local population. Demographic analysis reflects a resident population in the Local Government Area located in a drive time of approximately fifteen minutes as earning a median weekly income as 62% above the NSW average (based on the as of 2011 census figures).

For further information, contact Phillip Hoare on (02) 9432 7866.

 
four
Palladium welcomes new property development analyst

Palladium Property is pleased to welcome Brian Mooney to our team, who joined us in October 2013 as a property development analyst.

Brian brings to Palladium Property extensive research, analysis and reporting experience gained over a five-year career as a commercial valuer at a mid-sized firm in Denver, Colorado (Commercial Valuation Consultants, Inc.). During his valuation career, Brian specialised in a range of markets from the upscale resort markets of Aspen and Vail to the Denver CBD. He also specialised in the valuation of income-producing investment properties, including shopping centres, office buildings and proposed mixed-use developments.

Brian focuses on the investment and acquisition side of real estate, and is currently completing his final semester in the University of New South Wales’ Master of Property Development program, articulating his skills with a degree specialisation in property investment and development.

He is also a member of the Australian Property Institute, which has advanced his knowledge of the Australian property market through the regular attendance of API seminars and other industry conferences.  This background and continuing educational pursuit provides Brian with an excellent research and analytical skillset enabling him to objectively evaluate potential development projects, as well as assist in capital budgeting and transaction management.

Palladium Property - www.palladium.net.au
Palladium Property is a property advisory and development consultancy firm with a strategic asset management and development management capability.

We identify optimum solutions and deliver tangible benefits for our clients through analysed research, independent advice, diligent and rigorous management; ensuring the maximum return on our Client’s time, investment funds and property development projects.

Our client base comprises high net worth individuals, private investment trusts, global banking institutions and the NSW Government.

Palladium Property is a founding Member of the Gravitus Group.
 
Contact
For further information regarding current trends and opportunities, contact
Phillip Hoare (Director) on 02 9432 7888


Disclaimer
The information contained in this newsletter is understood to be accurate and is based on sources deemed reliable. Any comment and analysis is of a general nature only and should not be interpreted to provide any form of guarantee or project financial returns as regards the potential of any property asset class, geographical region or particular project. Investors should rely on their own investigations and due diligence prior to making any acquisition, divestment or development decisions.