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MAY 2015

AUSTRALIAN RESIDENTIAL MARKET

OVERVIEW PROSPECTUS REPORT

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TABLE OF CONTENTS

URBIS AUSTRALIAN RESIDENTIAL OVERVIEW - FINAL

Introduction ................................................................................................................................................... i

1 Australian Residential Property Market – Overview .................................................................... 2

1.1 Australian Residential Market Assessment ....................................................................................... 2 1.1.1 Population Growth ............................................................................................................................. 2 1.1.2 Economic Growth .............................................................................................................................. 3 1.1.3 Interest Rates .................................................................................................................................... 4 1.1.4 Housing Affordability and Consumer Confidence .............................................................................. 4 1.1.5 Median Household Income (ABS) ..................................................................................................... 6 1.1.6 Real Wage Growth (ABS) .................................................................................................................. 6 1.1.7 Employment (ABS) ............................................................................................................................ 7 1.1.8 Capital Cities Median Residential Property Prices ............................................................................ 9 1.1.9 Investment Yields ............................................................................................................................ 10 1.1.10 Construction Costs .......................................................................................................................... 12

1.2 Residential Industry Activity ............................................................................................................. 13 1.2.1 Purchaser Assessment .................................................................................................................... 14 1.2.2 Government and Regulatory Policy ................................................................................................. 14

2 Australian Residential Property Market – Key Markets ............................................................. 15

2.1 Sydney, New South Wales .............................................................................................................. 16

2.2 Melbourne, Victoria .......................................................................................................................... 17

2.3 Brisbane, Queensland ..................................................................................................................... 18

2.4 Perth, Western Australia .................................................................................................................. 19

2.5 Adelaide, South Australia ................................................................................................................ 20

3 Inner Brisbane Apartment Market – Focus ................................................................................. 21

3.1 Inner Brisbane Off-The-Plan Apartment Market .............................................................................. 22

3.2 Future Pipeline and Proposed Supply ............................................................................................. 26

3.3 Rental Vacancy Rate ....................................................................................................................... 28

3.4 Infrastructure Investment ................................................................................................................. 29

3.5 Newstead, Fortitude Valley and South Brisbane Focus– Demand Analysis ................................... 31 3.5.1 Population Growth – Projected Settlements .................................................................................... 33 3.5.2 Population Growth – Government Forecasts .................................................................................. 34

3.6 Fortitude Valley ................................................................................................................................ 35

3.7 Newstead ......................................................................................................................................... 36

3.8 South Brisbane ................................................................................................................................ 38

4 Australian Apartment Market Findings & Outlook ..................................................................... 40

Disclaimer .................................................................................................................................................. 41

URBIS AUSTRALIAN RESIDENTIAL OVERVIEW - FINAL INTRODUCTION i

Introduction

Urbis has been commissioned to provide a high level overview of the Australian residential market, specifically reviewing key Capital City markets of Sydney, Melbourne, Brisbane, Perth and Adelaide. The overview includes a focus on the Inner Brisbane Apartment Market, drawing on primary and secondary data to analyse its strength and depth

2 AUSTRALIAN RESIDENTIAL PROPERTY MARKET – OVERVIEW


1 Australian Residential Property Market – Overview The following section provides an overview of the Australian residential property market, including:

A brief insight into key market drivers (population growth, economic growth, investment yields andconstruction costs etc.) affecting the national residential market.

A brief assessment of the wider Australian residential market, identifying the size of the Brisbane,Sydney, Melbourne, Adelaide and Perth markets. These markets have been assessed on the basis ofa Greater Capital City Statistical Area (GCCSA).

Overview of the competitive residential landscape from home builders/developers across each capitalcity.

1.1 AUSTRALIAN RESIDENTIAL MARKET ASSESSMENT

1.1.1 POPULATION GROWTH

Population Growth Components AUSTRALIA – SEP-84 – SEP-14 CHART 1.1

Although having slowed from peak levels, population growth continues to be at historically highlevels. The key driver for this has been increased overseas migration which now accounts for 60per cent of population growth.

URBIS AUSTRALIAN RESIDENTIAL OVERVIEW - FINAL AUSTRALIAN RESIDENTIAL PROPERTY MARKET – OVERVIEW 3

State Population Growth

State Population Growth SEP-84 – SEP-14 CHART 1.2

On a state by state basis, mining states are seeing a significant slowing whilst Vic and NSW haveseen growth in population. However, the national slowdown in migration means that the rate ofpopulation growth has peaked in these states for now.

1.1.2 ECONOMIC GROWTH

Australian Gross Domestic Product DEC-84 – DEC-14 CHART 1.3

National growth has slowed from the last peak level in 2012 but at 2.5 per cent is still atinternationally strong levels.



1.1.3 INTEREST RATES

Interest Rates AUSTRALIA - DEC-79 – DEC-14 CHART 1.4

Interest rates are now at their historically lowest level. Market expectations that the RBA’s nextmove could be a further cut were founded, with April 2015 registering a historic low of 2.0 percent. Low interest rates are fuelling property markets across the country, particularly in the non-mining states.

1.1.4 HOUSING AFFORDABILITY AND CONSUMER CONFIDENCE

Housing Affordability AUSTRALIA BY STATE - DEC-04 – DEC-14 CHART 1.5


Affordability levels are deteriorating in non-resource state capitals and improving in resourcestate capitals. Falls in interest rates and relatively low levels of price growth in Brisbane and Perthhave seen an improvement in affordability.

Housing Affordability AUSTRALIA - DEC-04 – DEC-14 CHART 1.6

Consumer Sentiment Index AUSTRALIA - JAN-05 – JAN-15 CHART 1.7

The Westpac - Melbourne Institute Consumer Sentiment Index is the most widely quotedbarometer of consumer sentiment in Australia and its monthly results over the past two decadesare illustrated below. A score of greater than 100 means that optimists outnumber pessimists,with readings of below 100 indicating that pessimistic consumers are in the majority.

70

80

90

100

110

120

130

Jan-

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Nov

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Feb-

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Period (Half Yeary)Source: Reserve Bank of Australia; Westpac; Melbourne Institute of Applied Economic and Social Research



Consumer confidence is a key driver of demand for residential property. Consumer confidencetends to provide an indicative outlook taking into account factors such as the prevailingmacroeconomic environment for interest rates, employment and real wages as well as currentresidential property prices. Consumer Confidence has trended down since late 2013 beforerebounding to a neutral level in early 2015.

1.1.5 MEDIAN HOUSEHOLD INCOME (ABS)

The median household income for the five Australian capital cities ranges from approximately $1,100 to $1,550 per week. Perth has registered the highest weekly household income of $1,459 with Adelaide recording the lowest at $1,106 per week.

1.1.6 REAL WAGE GROWTH (ABS)

Real Wage Growth – State Comparison MAR-05 – MAR-15 CHART 1.8

Real wage growth has been at historically low levels in all states with growth at below 1% perannum. It has been noted however that growth has been cycling upwards since early 2014.

Household Income (2011)BRISBANE, PERTH, SYDNEY, MELBOURNE & ADELAIDECapital City Median Weekly Household IncomePerth GCCSA $1,459Sydney GCCSA $1,447Brisbane GCCSA $1,388Melbourne GCCSA $1,333Adelaide GCCSA $1,106Prepared by Urbis; Source: ABS Census 2011


1.1.7 EMPLOYMENT (ABS)

Employment Growth AUSTRALIA – MAR-00 – MAR-15 CHART 1.9

From a national perspective, employment growth has increased steadily over the last 12 months;however it currently represents a paused state.

Employment Growth (%yoy) AUSTRALIA – SELECTED STATES – JAN-12 – JAN-15 CHART 1.10

The increase in employment growth is being driven by Victoria and Western Australia. Theslowdown in Queensland has hit its employment market harder and this has had an effect onemployment growth.



Unemployment Rate (% Trend) AUSTRALIA – SELECTED STATES – MAR-80 – MAR-15 CHART 1.11

The unemployment rate, despite its upward trend is below the long term average rate. Whilst thebulk of the states indicate similar rates, Northern Territory and Western Australia indicate thelowest rate of unemployment.


1.1.8 CAPITAL CITIES MEDIAN RESIDENTIAL PROPERTY PRICES

Capital Cities Median House Prices - December 2000 – December 2014 BRISBANE, SYDNEY, MELBOURNE, PERTH & ADELAIDE CHART 1.12

An analysis of major capital cities for the December quarter 2014 identifies the growth in the Sydneyhousing market since late 2012, and the comparable affordability of the Adelaide market. Key to noteis the similarity in median price trend within Brisbane, Melbourne and Perth, with only $55,000separating these cities as at the December quarter 2014.

Capital Cities Median Apartment Prices - December 2000 – December 2014 BRISBANE, SYDNEY, MELBOURNE, PERTH & ADELAIDE CHART 1.13

Similar to the trends found in the housing market, Sydney recorded the highest median apartmentprice over the December quarter 2014 at $610,000, with Adelaide recording the lowest medianprice of $340,000. Brisbane is also registering a relatively affordable apartment market recordinga steady median sale price of $420,000 over the last two quarters.



1.1.9 INVESTMENT YIELDS

Over the last 12 months the five Australian capital cities have recorded indicative gross rental yields for houses of between 3.6 per cent and 4.4 per cent. Slightly higher rental yields were recorded in the apartment market with yields of between 4.2 per cent and 5.2 per cent. The highest rental yield for houses was registered in Adelaide and Brisbane at 4.4 per cent, followed closely by Perth at 4.3 per cent. Brisbane also recorded the greatest return on investment for apartments with a 5.2 per cent indicative gross rental yield. Melbourne recorded the lowest gross rental yields for both houses and apartments a 3.6 per cent and 4.2 per cent respectively.

House Rental Yields - March 2010 – December 2014 BRISBANE, SYDNEY, MELBOURNE, PERTH & ADELAIDE CHART 1.14

On the back of the highest median house price, Sydney is recording the lowest rental yield of 3.3per cent as at the December quarter 2014. Both Perth and Adelaide are achieving the highestrental yield of 4.3 per cent over the same period.

Indicative Gross Rental Yields - December 2014BRISBANE, PERTH, SYDNEY, MELBOURNE & ADELAIDE

Capital City 12 Months Quarter (3 Months) 12 Months Quarter (3 Months)

Brisbane LGA 4.0% 3.9% 5.0% 5.1%Perth GCCSA 4.3% 4.3% 5.1% 5.1%Adelaide GCCSA 4.4% 4.3% 4.7% 4.6%Sydney GCCSA 3.6% 3.3% 4.4% 4.2%Melbourne GCCSA 3.6% 3.5% 4.2% 4.1%

Prepared by Urbis; Source: RPData Suburb Scorecard December 2014

Indicative Gross Rental Yield (House) Indicative Gross Rental Yield (Apartments)


Apartment Rental Yields - March 2010 – December 2014 BRISBANE, SYDNEY, MELBOURNE, PERTH & ADELAIDE CHART 1.15

Melbourne has consistently recorded the lowest apartment rental yield of all capital cities over the10 year period between March 2010 and December 2014. During the quarter ending December2014, Melbourne registered a yield of 4.1 per cent, followed closely by Sydney at 4.2 per cent.Both Brisbane and Perth recorded the highest rental yield of 5.1 per cent over the same period.

House Yields vs. Mortgage Rate - March 2010 – December 2014 CAPITAL CITIES WEIGHTED AVERAGE CHART 1.16

The charts above and over the page compare the weighted average rental yield of both housesand apartments across the five major capital cities (Sydney, Melbourne, Brisbane, Perth andAdelaide) against mortgage rates over the past five years. While yields can vary significantlyacross sub-markets and product types, the figures indicate that generally the spread between therental yield and mortgage rate for both apartments and houses have decreased substantiallysince 2011.



Apartment Yields vs. Mortgage Rate - March 2010 – December 2014 CAPITAL CITIES WEIGHTED AVERAGE CHART 1.17

1.1.10 CONSTRUCTION COSTS

Based on figures collated at December 2014, the Sydney residential market registers the highestconstruction costs when compared across the key capital cities.

For a residential development of between 21 and 40 storeys, Sydney construction costs areanywhere from $250 to $800 per square metre greater than Brisbane, which currently represents themost affordable construction market for developments of this scale.

For higher density development over 41 storeys, the construction affordability of the Brisbane marketis again noted ($2,700-$3,500/sqm), with a number of capital cities registering dollar per squaremetre premiums of $550/sqm (Melbourne), $1,045/sqm (Perth) and $1,150/sqm (Sydney).

Australian Construction Building Costs - December Qtr 2014 BRISBANE, PERTH, SYDNEY, MELBOURNE & ADELAIDE

Cost Range Per Gross Floor Area ($/m2) Low High Low High Low High Low High Low HighResidentialSingle and Double Storey Dwellings (Custom Built) $1,500 $3,400 $1,650 $3,200 $1,365 $2,700 $1,420 $2,263 $1,500 $4,150Residential UnitsWalk-up 85 - 120 Sqm $1,750 $2,750 $1,450 $3,050 $1,465 $3,050 $1,745 $2,803 N/A N/ATownhouse 90 - 120sqm $1,800 $2,600 $1,400 $2,600 $1,415 $2,650 $1,585 $2,613 N/A N/AMulti-storey UnitsUp to 10 Storeys with LiftUnits 60 - 70sqm $2,150 $2,950 $2,000 $2,750 $2,250 $2,900 $2,280 $2,975 $2,500 $3,100Units 90 - 120sqm $2,100 $2,850 $1,900 $2,600 $2,400 $3,250 $2,230 $2,880 $2,250 $2,90011 - 20 StoreysUnits 60 - 70sqm $2,350 $3,150 $2,300 $2,800 $2,530 $3,235 $2,725 $3,375 $2,650 $3,400Units 90 - 120sqm $2,300 $3,100 $2,250 $2,650 $2,500 $3,250 $2,655 $3,275 $2,500 $3,25021 - 40 StoreysUnits 60 - 70sqm $2,750 $3,500 $2,300 $3,050 $3,000 $3,500 $3,405 $3,830 $3,400 $4,100Units 90 - 120sqm $2,700 $3,450 $2,200 $2,900 $2,800 $3,400 $3,335 $3,780 $3,250 $3,75041 - 80 StoreysUnits 60 - 70sqm N/A N/A $2,800 $3,500 $3,350 $4,000 $3,810 $4,475 $3,850 $4,600Units 90 - 120sqm N/A N/A $2,700 $3,350 $3,200 $3,900 $3,665 $4,395 $3,750 $4,500P repared by Urbis ; So urce: R ider Levett B ucknall (R LB ) R ider D iges t 2015

Adelaide Brisbane Melbourne Perth Sydney


1.2 RESIDENTIAL INDUSTRY ACTIVITY This section provides an insight into the competitive landscape within the homebuilder and residential developer industry across Australia. Data has been utilised from the HIA Housing 100 report (2013/14), which reviews Australia’s largest 100 residential builders/developers. It was noted that main housing activity was driven by the detached house market, making up 72 per cent of total activity within the group, despite a growing share of medium and high density dwelling starts. Overall, the 2012/13 and 2013/14 years will represent the first period since 2002/03 – 2003/04 when there has been two consecutive financial years of growth in housing starts, with 2013/14 marking the second highest level of housing starts on record.

The table below indicates the top 5 homebuilder and residential developer in each state, as well as their dominant activity, whether this be in detached housing or multi-unit developments.

Dwelling Starts - By State2013/14 - TOP 5 BY STATE

RANK COMPANY DWELLING STARTS (2013/14) DOMINANT ACTIVITY

NEW SOUTH WALES

1 Meriton Apartments 7,586 Multi-unit Developments2 Eden Brae Group 958 Detached House3 Masterton 908 Detached House4 McDonald Jones Homes 859 Detached House5 Mirvac Group 655 Multi-unit Developments

VICTORIA

1 Simonds Group 2,238 Detached House2 Brookfield Multiplex 1,875 Multi-unit Developments3 Metricon Homes 1,579 Detached House4 Porter Davis Homes 1,339 Detached House5 L.U. Simon Builders Pty Ltd 1,179 Multi-unit Developments

QUEENSLAND

1 Henley Properties 673 Detached House2 Tamawood1 534 Detached House3 Sandsky Developments 500 Multi-unit Developments4 Metricon Homes 478 Detached House5 GJ Gardner Homes2 459 Detached House

WESTERN AUSTRALIA

1 BGC (Australia) 5,004 Detached House2 Alcock Brown-Neaves Group 3,340 Detached House3 JWH Group 1,425 Detached House4 Pindan Pty Ltd 1,334 Multi-unit Developments5 Redink Homes Pty Ltd / 101 Residential Pty Ltd 1,175 Detached House

SOUTH AUSTRALIA1 Hickinbotham Group of Companies 1,309 Detached House2 Rivergum Homes 501 Detached House3 Longridge Group 285 Detached House4 Rossdale Homes 263 Detached House5 Metro Property Development Pty Ltd 242 Detached House

Total 36,698

1. Some dwellings built under franchise2. All dwellings built under franchiseSource : HIA - Colourbond Steel Housing 100; Urbis



This table highlights the level of competition across these five key markets, with a number of dominant operators in specific markets including New South Wales, Western Australia and South Australia. Whilst a number of developers/builders may be dominant in a particular region, this competition is fragmented, with no entity heavily prominent across all markets.

1.2.1 PURCHASER ASSESSMENT Across the key national markets, our qualitative insight has noted the general buyer trend being high levels of investment activity within the Inner ring apartment markets, with owner occupiers dominating the outer ring markets.

With a focus on the Inner Ring markets, Sydney, Melbourne and Brisbane all register high levels of investor interest; with Sydney and Melbourne’s markets driven by international interest, with a slowly increasing proportion of developments being targeted at the local owner occupier market – this typically is in premium locations/developments. Brisbane observes its dominant investor profile being interstate, with a lower proportion of international and local purchasers. Sydney, Melbourne and Brisbane middle ring apartment markets share similar dynamics, with a higher proportion of local purchasers (both investors and owner occupiers).

The Perth Inner ring market has a different dynamic to both the Melbourne and Brisbane markets, with the primary focus on the local market. The buyer mix is noted to be quite even, with a higher owner occupier proportion in premium areas. Interstate interest follows the local market, with the international market making up just 7 per cent of all transactions in the December 2014 Quarter of the Urbis Perth Apartment Essentials.

Across Melbourne and Brisbane, outer ring new developments are dominated by detached housing, with a lower proportion of townhouse and semi-detached product. Both the Melbourne and Perth outer ring markets are primarily owner occupier driven, with Brisbane’s outer ring registering investor presence, particularly in townhouse and semi-detached product. The Sydney outer ring market differs in that this market is registering an emergence of apartment living amongst largely established housing. The emergence of this market has been driven by local interest, and represents a shift towards the lifestyle that density living provides.

1.2.2 GOVERNMENT AND REGULATORY POLICY Specific government and regulatory policies to stimulate or temper investment in housing have a direct impact on demand. Often policies are designed to target a specific type of buyer such as first home owners, investors or overseas buyers.

Examples of current and past policies include:

- First home owner grant: state-based schemes that vary across states and territories whereby aone-off grant or stamp duty tax concession is provided to first home buyers that satisfy certaincriteria (owner-occupier purchases only)

- New home grant: state-based schemes that vary across states and territories whereby a one-offgrant or stamp duty tax concession is provided for the purchase of new homes, homes off theplan and vacant land on which a new home will be built

- Negative gearing: income tax concessions for investors that generate income losses based onassessable deductions associated with residential property

URBIS AUSTRALIAN RESIDENTIAL OVERVIEW - FINAL AUSTRALIAN RESIDENTIAL PROPERTY MARKET – KEY MARKETS 15

2 Australian Residential Property Market – Key Markets

The following section provides an overview of the five largest capital city residential markets including Sydney, Melbourne, Brisbane, Perth and Adelaide and the key fundamentals, including median price, investment yields, population growth, affordability and any state based investment concessions and incentives. The table below provides a residential market snapshot and proportion of apartment sales by capital city at the period ending December 2014.

Sydney’s house and apartment market have registered the highest median price in both marketswhich is approximately apportioned into 62 per cent housing and 38 per cent apartment dwellings.Brisbane (36%) has registered the next highest proportion of apartments with Melbourne apartmentsrecording approximately 28 per cent of the residential market.

The chart below provides an overview of the median house and apartment price at the period ending December 2014.

Capital City Apartment Market – Median Sales Price DECEMBER QUARTER 2014 CHART 2.1

From a median price gap standpoint, Brisbane has recorded the largest difference between houseand unit registering a median price gap of $185,000. Sydney ($130,000), Perth ($113,000) andMelbourne ($102,500) have followed, with Adelaide providing the tightest range between house andunit median price at $81,000.

Australian Residential Market OverviewCAPITAL CITY - DECEMBER 2014

House Median Price Median Price Gap Apartment Median Price Housing Market Apartment Market

Dec 2014 (3 Month Period) House vs Apartment (3 Month Period) Dec 2014 (3 Month Period) Proportion (%) Proportion (%)

SYDNEY $740,000 $130,000 $610,000 62% 38%

MELBOURNE $577,500 $102,500 $475,000 72% 28%

BRISBANE $605,000 $185,000 $420,000 64% 36%

PERTH $550,000 $113,000 $437,000 83% 17%

ADELAIDE $421,000 $81,000 $340,000 76% 24%

So urce: R P D ata, Urbis

16 AUSTRALIAN RESIDENTIAL PROPERTY MARKET – KEY MARKETS


2.1 SYDNEY, NEW SOUTH WALES The following section provides a snapshot of the Sydney Greater Capital City Statistical Area (GCCSA), with reference to a residential market summary, population projections and median weekly income.

Residential Market Summary - December 2014SYDNEY GCSSA

House Apartment

Number Sold (12 months) 58,847 37,763

Median Sales Price (12 months) $750,000 $580,000

Change in Median Price (12 months) 12.80% 8.40%

Median Asking Rent (12 months) $520 $490

Indicative Gross Rental Yield (12 months) 3.60% 4.40%So urce: R P D ata; Urbis

Population Projection 2012-2036SYDNEY GCSSA

Year No. of People New Residents Per Annum (5 Year Period)

Growth Per Annum (5 Year Period)

2012 4,672,619 - -

2016 4,986,714 78,524 1.6%

2021 5,398,481 82,353 1.6%

2026 5,805,642 81,432 1.5%

2031 6,206,843 80,240 1.3%

2036 6,599,601 78,552 1.2%P repared by Urbis ; So urce: A B S 3218.0; SA F I

Median Weekly Income - ABS CensusSYDNEY GCSSA

Greater Sydney New South Wales Australia

Personal $619 $561 $577

Family $1,683 $1,477 $1,481

Household $1,447 $1,237 $1,234So urce: A B S C ensus ; Urbis

People aged 15 years and over


2.2 MELBOURNE, VICTORIA The following section provides a snapshot of the Melbourne Greater Capital City Statistical Area (GCCSA), with reference to a residential market summary, population projections and median weekly income.

Residential Market Summary - December 2014MELBOURNE GCSSA

House Apartment






Population Projection 2012-2036MELBOURNE GCSSA



2012 4,248,344 - -

2016 4,605,993 89,412 2.0%

2021 5,070,416 92,885 1.9%

2026 5,530,901 92,097 1.8%

2031 5,984,219 90,664 1.6%


Median Weekly Income - ABS CensusMELBOURNE GCSSA

Greater Melbourne New South Wales Australia

Personal $591 $561 $577

Family $1,576 $1,460 $1,481





2.3 BRISBANE, QUEENSLAND The following section provides a snapshot of the Brisbane Local Government Area (LGA), with reference to a residential market summary, population projections and median weekly income. The Brisbane LGA has been assessed as its geographic spread is comparable to the GCCSA catchments of the other key capital cities.

Residential Market Summary - December 2014BRISBANE LGA

House Apartment






Population Projection 2012-2036BRISBANE LGA



2012 1,110,332 - -

2016 1,176,418 16,522 1.5%

2021 1,246,841 14,085 1.2%

2026 1,310,033 12,638 1.0%

2031 1,378,728 13,739 1.0%

2036 1,440,223 12,299 0.9%P repared by Urbis ; So urce: A B S 3218.0; OESR

Median Weekly Income - ABS CensusBRISBANE LGA

Brisbane (C) Queensland Australia

Personal $696 $587 $577

Family $1,873 $1,453 $1,481




2.4 PERTH, WESTERN AUSTRALIA The following section provides a snapshot of the Perth Greater Capital City Statistical Area (GCCSA), with reference to a residential market summary, population projections and median weekly income.

Residential Market Summary - December 2014PERTH GCSSA

House Apartment






Population Projection 2012-2036PERTH GCSSA



2012 1,899,999 - -

2016 2,181,194 70,299 3.5%

2021 2,531,727 70,107 3.0%

2026 2,888,637 71,382 2.7%

2031 3,248,550 71,983 2.4%


Median Weekly Income - ABS CensusPERTH GCSSA

Greater Perth Western Australia Australia

Personal $669 $662 $577

Family $1,781 $1,722 $1,481





2.5 ADELAIDE, SOUTH AUSTRALIA The following section provides a snapshot of the Adelaide Greater Capital City Statistical Area (GCCSA), with reference to a residential market summary, population projections and median weekly income.

Residential Market Summary - December 2014ADELAIDE GCSSA

House Apartment






Population Projection 2012-2036ADELAIDE GCSSA



2012 1,278,432 - -

2016 1,340,503 15,518 1.2%

2021 1,419,500 15,799 1.2%

2026 1,495,341 15,168 1.0%

2031 1,566,929 14,318 0.9%


Median Weekly Income - ABS CensusADELAIDE GCSSA

Adelaide South Australia Australia

Personal $554 $534 $577

Family $1,403 $1,330 $1,481



URBIS AUSTRALIAN RESIDENTIAL OVERVIEW - FINAL INNER BRISBANE APARTMENT MARKET – FOCUS 21

3 Inner Brisbane Apartment Market – Focus The Inner Brisbane area was established to provide a benchmark to examine the trends and differences across key regions. The Inner Brisbane area reflects an approximate five kilometre circumference around the Brisbane CBD and incorporates around 45 suburbs (as reflected in the following table and map).

The GIS map below illustrates the Inner Brisbane Catchment by precinct.

Prepared by Urbis; Source; Urbis Apartment Insights December 2014

Inner Brisbane Catchment AreaBY PRECINCT

BRISBANE CBD INNER EAST INNER NORTH INNER SOUTH INNER WEST NORTHSHORE

Brisbane City Balmoral Bowen Hills Dutton Park Ashgrove AlbionBulimba Fortitude Valley Highgate Hill Auchenflower Ascot

Coorparoo Herston South Brisbane Bardon HamiltonEast Brisbane New Farm South Bank Kelvin Grove Eagle Farm

Hawthorne Newstead West End MiltonNorman Park Spring Hill Woolloongabba Newmarket

Camp Hill Teneriffe Annerley PaddingtonMorningside Wilston Fairfield Red HillSeven Hills Windsor Greenslopes St Lucia

Kangaroo Point Yeronga ToowongTaringa

22 INNER BRISBANE APARTMENT MARKET – FOCUS


3.1 INNER BRISBANE OFF-THE-PLAN APARTMENT MARKET This section provides an analysis of active off-the-plan apartment supply within Inner Brisbane for the December Quarter 2014. The breakdowns outline findings regarding estimated sales conducted, product type, and project stage and associated price points. Information is sourced from the Urbis Brisbane Apartment Insights, which is a quarterly publication providing independent research into the off-the-plan apartment market within Inner Brisbane. Urbis surveys active developers within Brisbane to collect the number of unconditional sales each quarter.

The Off-the-Plan Apartment Projects by Precinct chart illustrates the proportion of active apartment projects within Inner Brisbane by Precinct at the conclusion of the December 2014 quarter.

Inner Brisbane Off-the-Plan Apartment Projects by Precinct DECEMBER QUARTER 2014 CHART 2.2


Key points to note in regard to the December Quarter 2014 results for the Brisbane off-the-plan apartment market are:

In the December Quarter 2014, Urbis identified a total of 1,540 unconditional sales from the surveyedprojects. This is 139 more sales than the September Quarter 2014. Within the sample of projects,there are a total of 3,105 apartments remaining for sale, with 5,781 apartments being sold to datewithin the active projects.

The most preferred apartment type was one bedroom product (including one bed no car), equating to770 unconditional sales over the quarter, or 50 per cent of the market share. The high proportion ofone bedroom product has occurred across previous quarters, with the high activity within the onebedroom apartment market being supported by a significant investor market purchasing within InnerBrisbane. This product has appealed to investor purchasers due to a lower initial capital outlay whencompared to other product while maintaining attractive potential rental yields.

The second preference of new apartments within Inner Brisbane has been for two bedroom twobathroom apartment product, which accounted for 546 unconditional sales during the quarter,equating to 35 per cent of total sales. Two bedroom two bathroom apartments have been a strongmarket over recent quarters despite registering a small decline in unconditional sales within theDecember Quarter 2014.

Within the December Quarter 2014, the weighted average sale price within Inner Brisbane was$565,276, representing a $10,027 increase on the previous quarter. This increase is influenced by therecord breaking sales within the CBD which registered higher than average one bedroom sale pricesdue to premium views and amenity.

The largest proportion of unconditional off-the-plan transactions within Inner Brisbane were within theCBD, recording 427 unconditional sales, equating to 27 per cent of the Inner Brisbane total. The InnerSouth recorded 370 unconditional apartment sales (24%) while the Inner North recorded 314 (20%)unconditional apartment sales during the December Quarter 2014.


The Total Sales by Status chart illustrates the proportion of active apartment stock within Inner Brisbane that is either in presales, under construction or completed and yet to settle. Key points to note in regard to this are:

A number of Inner Brisbane projects have now begun construction as at the end of the December2014 quarter, registering 53 per cent of the active apartment market indicating that the buyer marketare displaying a preference for purchasing within projects that are more secure.

Despite the number of transactions within presales still registering the highest proportion of the off-the-plan sales, the proportion of these transactions against projects under construction havetightened toward the back half of 2014.

Inner Brisbane Off-the-Plan Apartment Sales by Status DECEMBER QUARTER 2014 CHART 2.3


The Total Stock Sold and Remaining graph illustrates the stock volumes within Inner Brisbane and the volume of stock still remaining for sale. Key points to note in regard to the current supply of apartments in Inner Brisbane are:

The largest volume of stock remaining is two bedroom two bathroom apartments with 1,276apartments unsold, equating to 27 per cent of remaining stock within Inner Brisbane. The highproportion of two bedroom two bathroom apartments remaining to sell reflects older active product, inless appealing locations and at mismatched price points.

The continued strong proportion of sales for two bedroom two bathroom apartments has largely beendriven by the flexible option this product offers, with interstate investors in particular seeing value inthis product due to potential yields and proximity to the Brisbane CBD.

Inner Brisbane Off-the-Plan Total Stock Sold and Remaining DECEMBER QUARTER 2014 CHART 2.4




One bedroom stock has shown a comparable proportion of remaining stock within the sample, with1,379 one bedroom apartments (including one bed no car) remaining for sale. This equates to 29 percent of the total active available market within Inner Brisbane. Sales within one bedroom apartmentshave been supported through the use of domestic and international sales channels, which haveincreased the rate of sale for investor targeted projects when compared to a retail sales strategy.

The graph below illustrates the volume of stock transacted across all product types within Inner Brisbane for the December Quarter 2014 as well as the incremental change in transactions by quarter since June 2012 (when the survey commenced). Key points to note in regard to the total volume of stock sold by quarters in Inner Brisbane are:

Inner Brisbane Total Volume of Stock Sold by Quarter DECEMBER QUARTER 2014 CHART 2.5


The December 2014 quarter has recorded the largest number of sales in any quarter since theinception of the Urbis Apartment Insights in June 2012. Similarly, the level of remaining stockavailable after December 2014 is also the highest it has been. The increased level of sales is in linewith the increasing number of developments surveyed, which has increased periodically to register atotal of 80 surveyed projects in December 2014.

As a number of the established and completed apartment projects begin to settle, so too will thenumber sold prior to the quarter which has on average increased by more than 100 per month overthe past twelve months ending December 2014.


The graph below illustrates the total stock sold by price point and product mix for all unconditional contracts within Inner Brisbane for the December Quarter 2014. Key points to note in regard to the total stock sold by price point in Inner Brisbane are:

The price points for off-the-plan unconditional sales within the December Quarter 2014 in InnerBrisbane for each product type are shown below. This chart provides an overview of market activitywithin the quarter, highlighting the price ranges for each product type, as well as the price point wherethe majority of sales have occurred.

The peak market depth per product highlights the market price range where the largest volume ofeach product type has transacted. This provides insight into the proportion each peak marketdemands out of the total market for that product.

The most preferred apartments were one bedroom product (incl. car). This product type has a broadprice range and a ‘sweet spot’ at the $400,000 to $499,999 price point. The one bedroom, no carstock is tighter recording a sweet spot between $400,000 and $449,999. With the one bedroommarket being largely targeted at investor purchasers, this purchaser profile is especially pricesensitive, seeking apartments that maximise value for money through a lower purchase price andstrong potential yields.

The second preference of apartments was for two bedroom, two bathroom apartments which hasshown a much wider price range with a slight skew toward the bottom end of the range, between$550,000 and $599,999, despite ranging between $450,000 and $1M. This product type’s broad pricerange is linked to a diversity of product variables, including size, location, apartment layout and viewsthat differ across projects.

Total Stock Sold by Price Point and Product Mix INNER BRISBANE – DECEMBER QUARTER 2014 CHART 2.6




3.2 FUTURE PIPELINE AND PROPOSED SUPPLY The following section provides an overview of the future pipeline and proposed development for the Inner Brisbane precinct.

It must be noted that while this analysis takes into consideration all development applications and approvals lodged, the possibility that all developments will enter the active apartment market is unlikely. It is important to understand that the projects in this analysis that have entered presales are recorded in the active apartment analysis and are only removed from the future supply once construction is underway.

Of the 89 projects across Inner Brisbane that have received development approval, 18 per cent are located within Fortitude Valley and/or Newstead and 10 per cent are located within South Brisbane. Similarly, of the total projects across Inner Brisbane currently in the development application stage, Fortitude Valley and Newstead hold the larger proportion with 21 per cent compared to South Brisbane at 10 per cent.

Of the 208 apartment projects that have submitted development applications, 43 per cent have received approval yielding a total of 13,761 apartments. 5,884 apartments have entered presale which signifies approximately 19 per cent of the 31,802 apartments that will likely enter the Inner Brisbane Apartment market.

Development applications in Fortitude Valley and Newstead have recorded 25 per cent of the Inner Brisbane precinct, of which 20 per cent are currently in presales and yet to begin construction.

A further 31 projects have lodged development applications, with 16 (2,987 apartments) of these receiving approval. Interestingly the 31 projects that have lodged development applications that are yet to enter presale average approximately 205 apartments per project, larger than current off-the-plan apartment projects in Newstead and Fortitude Valley.

Inner Brisbane Future SupplyINNER BRISBANEStatus Projects Yield Percentage (%)

Presales 40 5,884 19%

Approval 89 13,761 43%

Application 72 10,097 32%

Deferred 7 2,060 6%

TOTAL 208 31,802

P repared by Urbis :;So urce: B risbane C ity C o unc il - P D Online

Fortitude Valley and Newstead Future SupplyFORTITDUE VALLEY AND NEWSTEADStatus Projects Yield Percentage (%)

Presales 8 1,596 20%

Approval 16 2,987 38%


Deferred 0 0 0%

TOTAL 39 7,960


South Brisbane Future SupplySOUTH BRISBANEStatus Projects Yield Percentage (%)

Presales 10 1,465 31%

Approval 9 1,585 34%


Deferred 0 0 0%

TOTAL 26 4,689



Development applications in South Brisbane have recorded only 14 per cent of the Inner Brisbane precinct, of which 31 per cent are currently in presales and yet to begin construction.

A further 16 projects have lodged development applications, with nine (1,585 apartments) of these receiving approval. Interestingly, the 16 projects that have submitted development applications that are yet to enter presale average approximately 201 apartments per project, comparable to the figure registered for the Newstead and Fortitude Valley precincts.

Following a similar trend to the active apartment market, the majority of Inner Brisbane’s futuresupply is made up of one bedroom and two bedroom products. The four per cent of proposed three-bedroom stock is primarily located in fringe suburbs including Hamilton and Kangaroo Point.

Looking closer at the suburbs of Fortitude Valley/Newstead and South Brisbane, their proposedfuture supply is heavily dictated by the density and demographic profiles of their respective areas.Due to the large proportion of younger professional couples inhabiting these suburbs (ABS Census2011), Fortitude Valley, Newstead and South Brisbane are reporting a higher proportion of onebedroom stock at 51 per cent compared to the Inner Brisbane benchmark of 46 per cent.

Fortitude Valley and Newstead are expected to supply, approximately 3,375 two bedroomapartments to the market. Representing 47 per cent of the suburbs future, this figure is in line withthe Inner Brisbane future supply of 48 per cent for two bedroom products. South Brisbane’s twobedroom apartment supply is slightly lower at 43 per cent.

Associated density levels are influencing Fortitude Valley/Newstead and South Brisbane’s futuresupply of three bedroom products, with the suburbs proposed to deliver a combined total of only 290three bedroom apartments. At an average of 2.5 per cent this is lower than the Inner Brisbanebenchmark of 4 per cent.

Due to the high proportion of potential supply (51 per cent), pricing for one bedroom apartmentproduct is expected to remain relatively stable within Fortitude Valley, Newstead and South Brisbanemoving forward. Two bedroom apartments will continue to register slight variations in price,particularly where design, aspect and amenity differ greatly.

Future Supply by Product TypeFORTITUDE VALLEY, NEWSTEAD, SOUTH BRISBANE AND INNER BRISBANE

Studio 1 0.0% 162 4% 476 2%

One Bed 3,659 50.9% 2,321 51% 12,658 46%

Two Bed 3,375 46.9% 1,960 43% 13,246 48%

Three Bed 147 2.0% 143 3% 1,170 4%

Four Bed 2 0.0% 2 0% 84 0%

Penthouse 7 0.1% 0 0% 22 0%

Total 7,181 4,424 27,074P repared by Urbis :;So urce: B risbane C ity C o unc il - P D Online

Fortitude Valley and Newstead South Brisbane Inner Brisbane



3.3 RENTAL VACANCY RATE The table below illustrates the rental vacancy rate in the three year period between March 2011 and December 2014 across Brisbane.

Vacancy Rate – Inner Brisbane, Brisbane City & Brisbane SD DECEMBER QUARTER 2014 CHART 2.7

Since June 2011, the Brisbane residential vacancy rate remained consistent, ranging between 1.5per cent and 3.0 per cent to the quarter concluding September 2013. In December 2013, a numberof apartment projects settled, thus providing supply of rental product to the market, and subsequentlyincreasing the rental vacancy rate temporarily due to a natural lag between when apartments settleand are first able to be tenanted. This was rectified in the March quarter (3.1 per cent) before afurther 15 projects launched in the Inner Brisbane market in June 2014 resulting in a marginalvacancy increase to 3.4 per cent at the close of the quarter.

Typically a ‘normal’ rental market, one that has competitive levels of supply and demand, is indicatedby vacancy rates of between 3% and 3.5%.


3.4 INFRASTRUCTURE INVESTMENT Additional to the infrastructure investment in the commercial, residential and retail sectors, the Inner Brisbane precinct is positioned to benefit from a range of mixed use, healthcare and transport orientated investment. Key infrastructure projects that will benefit Inner Brisbane and the Metro focus suburbs that have recently been completed; currently under construction or pending have been highlighted in the table below.

Infrastructure Investment INNER BRISBANE PRECINCT Project Type Location

Proximity to Metro Focus Suburbs Est. Value ($) Description

Queens Wharf Mixed Use Brisbane CBD Adjacent $4b

The Queens Wharf project is expected to offer a mix of new uses such as six star hotels, retail, restaurant and entertainment zones, theatre and convention facilities and new open spaces within the Brisbane CBD

Royal Brisbane Hospital Health Herston Adjacent - The Royal Brisbane and Women’s Hospital is the largest tertiary referral hospital in Queensland encompassing 53 buildings and covering 17.7 hectares

Brisbane Showgrounds Mixed Use Bowen Hills Adjacent $2.9b

The Brisbane Showgrounds will be one of Brisbane’s largest inner city renewal projects when complete. Staged over a development period of 15 years, the completed development will offer a wide range of uses including open space, retail, residential living, commercial office, convention facilities and hotel accommodation.

Airportlink M7 Transport Transport Infrastructure Connecting $4.8b

Airportlink was built to relieve congestion in Brisbane’s northern suburbs and improve public transport. It provides connectivity to the Clem7 Tunnel, the Inner City Bypass, northern arterials and the International and Domestic Airports.

Inner City Bypass Transport Transport Infrastructure Connecting $220m

Completed in 2002, the 4.5 km bypass provides a connection between the northern suburbs and the entrance to the Pacific Motorway and Go Between Bridge, bypassing the Brisbane CBD.

Howard Smith Wharves Public Space Brisbane CBD Adjacent $100+m

Howard Smith Wharves is set to be redeveloped as a waterside destination across a 3.4 hectare site. Located under the northern end of Brisbane's Story Bridge, the Wharves precinct is expected to incorporate commercial elements such as five-star hotel, exhibition space, restaurants, retail and community facilities with 80 per cent of the site being publically accessible open space.

Gasworks Mixed Use Newstead Within $1.1b

When complete, the $1.1 billion Gasworks development will provide retail and commercial activities. It is proposed to include 60,000 sqm of commercial space and 20,000 sqm of retail space, further expanding the existing retail offering.

Queensland’s Lady Cilento Children’s Hospital

Transport Transport Infrastructure Connecting $1.2b

Opened in November 2014, the new Queensland Children’s Hospital, adjoining the Mater Hospital is a combination of the Royal Children’s and Mater Children’s Hospitals. The LCCH provides specialist paediatric care for children.

Mater Private and Public Hospitals Health South Brisbane Within -

The Mater Private Hospital is a leading acute medical and surgical private hospital, offering 320 beds and a range of general and specialised services. In addition, the Mater Public offers more than 125 beds, whilst further beds are offered by the Mater Mothers’ Hospital, Mater Children’s Private Hospital and smaller specialty clinics.

Go Between Bridge Transport South Brisbane/West End Within $338m

Completed in 2010, the Go Between Bridge was Inner-Brisbane’s first car-accessible bridge in 40 years. The Bridge acts as a link between South Brisbane, the Brisbane CBD and northern suburbs

QLD Cultural Centre Redevelopment Masterplan

Entertainment South Brisbane Within $1.15b

Located in South Brisbane, this multi-venue centre encompasses the Queensland Art Gallery, Gallery of Modern Art, Queensland Performing Arts Centre, Queensland Museum and State Library of Queensland. A 20-year Cultural Precinct Strategy is currently being developed to ensure the success of this key tourism, events and cultural destination

South East Busway Transport Transport Infrastructure Connecting $426m

The South East Busway is an at-grade bus-only corridor running from the Brisbane CBD to Eight Mile Plains. The first stage was completed in 2000, with additional extensions occurring in 2001 and 2014.

$16.3b

Prepared by Urb is; Source: QLD Govt Department of State Development, Queensland Health, RNA Queensland, BrisConnections AirportlinkM7, Leighton Contractors; Queensland Government, Brisbane City Council - Howard Smith Wharves Revitalisation Project, AVEO Gasworks,Queensland Government - Children's Health Queensland, Mater Health Services, Brisbane City Council - Go Between Bridge, Queensland Government - Arts Queensland, Queensland Government - Department of Main Roads and Transport



At the period ending December 2014, the Inner Brisbane precinct had upward of $16b worth of investment across a number of projects in the pipeline, ranging from transport infrastructure investment, mixed use master plans and public space projects.

Of the projects listed above, a number will directly benefit the suburbs that Vital Property Group has identified as their focus suburbs, including the Newstead Gasworks, Mater Private and Public Hospitals, Go Between Bridge (complete), and Cultural Centre Redevelopment. Additional initiatives by local and state government including the Kurilpa Riverfront Renewal and Southbank Riverfront Renewal will also assist to positively shape South Brisbane and West End.

Whilst not only benefitting the Metro focus suburbs, the AirportLink M7, Inner City Bypass and South East Busway will all work to improve transport corridors and increase connectivity within the Inner Brisbane precinct and surrounding suburbs.

Proximity Definitions:

Within – Infrastructure located within the boundaries of the Metro focus suburbs.

Adjacent – Infrastructure located in suburb that shares a boundary with Metro focus suburbs

Connecting – Infrastructure that may have an element that is either located within, or provides a connection to the Metro focus suburbs.


3.5 NEWSTEAD, FORTITUDE VALLEY AND SOUTH BRISBANE FOCUS– DEMAND ANALYSIS

Outlined below is the active apartment market based on a quarterly period ending Q4 2014 within selected suburbs of Fortitude Valley, Newstead and South Brisbane. These suburbs have been highlighted in this assessment upon instruction by the client, representing three of the most markets in Inner Brisbane for new apartment (off-the-plan) activity.

Information that will be covered in this section includes a broad overview of average price, size of apartment and gross dollar per quarter metre rate with reference to the number of off-the-plan apartment sales registered in the December 2014 quarter, as well as the level of remaining stock for sale in comparison to the number which have already transacted.

Urbis Apartment Insights –Metro Focus Precinct Summary DECEMBER QUARTER 2014

Urbis Apartment Insights – Stock Available and Sold by Precinct DECEMBER QUARTER 2014 CHART 2.8


NUMBER OF SALES (Q4 2014)

WEIGHTED AVERAGE SALE PRICE

AVE. GROSS SQM AVE. $/SQM

FORTITUDE VALLEY 85 $646,765 94 $6,880

NEWSTEAD 81 $506,481 71 $7,134

SOUTH BRISBANE 202 $557,178 80 $6,965

INNER BRISBANE 1,541 $564,909 80 $7,061

P repared by Urbis ; So urce; Urbis A partm ent Ins ights D ecem ber 2014



The tables below highlight the active apartment market based over an annual period taking in Q1 to Q4 2014 within the selected suburbs of Fortitude Valley, Newstead and South Brisbane.

The key data that we have highlighted in these tables includes a high level overview of the weighted average price points and the product types that have transacted within these suburbs over the twelve month period.

Urbis Apartment Insights – Stock Sold by Precinct by Price 2014 CHART 2.9


Urbis Apartment Insights – Stock Sold by Precinct by Price 2014 CHART 2.10



3.5.1 POPULATION GROWTH – PROJECTED SETTLEMENTS The table below displays the monitored number of settlements based on data derived from the Urbis Apartment Insights (December 2014). These projected settlements display the Fortitude Valley, Newstead and South Brisbane suburbs between 2014 and 2019 with an average settlement per year figure extrapolated to 2019 to inform the projected future settlements of Fortitude Valley, Newstead and South Brisbane.

Urbis Apartment Insights – Projected Settlements and Population Projections DECEMBER QUARTER 2014 CHART 2.11

Prepared by Urbis; Source; ABS, Urbis Apartment Insights December 2014

The above settlement figures have assisted Urbis project the estimated resident population increase across the suburbs of Fortitude Valley, Newstead and South Brisbane using the average residents per household figure of 1.9 persons per dwelling. This average resident per household figure has been derived from Urbis primary research and its understanding of the focus suburbs.

Using this information, as well as the information gathered via the quarterly publication of the Urbis Apartment Insights, the following population increases can be projected to 2019 based on the anticipated settlement figures recorded in the table above, including Fortitude Valley (2,281 or 573 per year), Newstead (3,482 or 871 per year) and South Brisbane (4,094 or 819 per year).

Urbis Apartment Insights – Projected Settlements and Population Projections DECEMBER QUARTER 2014 CHART 2.12


The chart above displays the anticipated population growth in the Fortitude Valley, Newstead and South Brisbane suburbs spurred by the projected apartment settlements over the period to 2019.

Number of Settlements

Population Increase (p.a.)

Projected Population







2014 5,872 6,253 4,267

2015 289 549 6,421 214 407 6,660 507 963 5,230

2016 796 1,512 7,934 1,218 2,314 8,974 534 1,015 6,245

2017 423 804 8,737 984 1,870 10,843 1,093 2,077 8,322

2018 783 1,488 10,225 1,066 2,025 12,869 879 1,670 9,992

2019 573* 1,089 11,314 871* 1,655 14,524 1,081 2,054 12,046

TOTAL 2,291 3,482 4,094

AVERAGE 573 871 819

*Assumed 5yr Average

Fortitude Valley Newstead South Brisbane



3.5.2 POPULATION GROWTH – GOVERNMENT FORECASTS

Newstead, Fortitude Valley and South Brisbane Government Population Projections 2014 - 2018 CHART 2.13

The above chart demonstrates the population growth for Newstead, Fortitude Valley and South Brisbane based on Queensland Government population projections (2013 edition).

The total population of Metro’s key target market (Newstead, Fortitude Valley and South Brisbane) is expected to grow from approximately 18,000 as at the beginning of calendar year 2015 to 23,300 as at the end of calendar year 2018, representing a compounded annual growth rate (CAGR) of 6.7 per cent.

On average, 1.851 people reside in an apartment dwelling which implies a total of 3,076 new apartmentswould need to be completed between 2015 and 2018 to accommodate this forecast increase in population alone (assuming all new residents move to apartment dwellings).

1 – The figure of 1.85 persons per household has been based on the ABS Census (2011) average household size for attached dwellings in this catchment.


3.6 FORTITUDE VALLEY The following table classifies the new apartment projects within Fortitude Valley that Urbis have identified to settle in the coming years to assist in forming the apartment future supply between now and 2019. This process has been completed by identifying apartment projects that have recently launched, are under construction, completed or expected to enter the market in the coming twelve months.

Active and Pending Projects - Summary FORTITUDE VALLEY

Urbis Apartment Insights – Stock Available and Sold by Product Type FORTITUDE VALLEY - DECEMBER QUARTER 2014 CHART 2.14


Historically, Fortitude Valley has recorded strong sales within the one-bedroom apartment market. Inthe December 2014 quarter, the two bedroom two bathroom market emerged as the primary market,with remaining one bedroom and two bedroom product registering similar sales transactions

Fortitude Valley has witnessed a continued preference for two bedroom two bathroom product,equating to 40 unconditional sales over the quarter. This product has appealed to both investorpurchasers and owner occupiers (albeit not the majority), due to the flexible nature of a product thatcan product stable yields yet has the added internal space over a one bedroom product.

PROJECT NAMELAUNCH

MONTH

SETTLEMENT

YEARDEVELOPER STATUS

1 SOLD AS AT

DEC 2014YIELD

WEIGHTED AVG

PRICE2

Cambridge Towers - Central Village Nov-12 2014 Metro Property Development COMPLETED 156 161 $525,000

Mosaic Nov-10 2014 Leighton Properties COMPLETED 205 213 $641,667

M & A Jul-10 2014 Laing O'Rourke COMPLETED 234 234 $591,667

Oxford Towers - Central Village May-13 2015 Metro Property Development COMPLETED 119 158 $400,000

Brooklyn on Brookes Oct-11 2015 Metro Property Development COMPLETED 216 216 $506,250

Alex Perry Residential Jan-14 2016 Chrome Properties CONSTRUCTION N/A 131 N/A

Canterbury Towers - Central Village3

Aug-14 2016 Metro Property Development CONSTRUCTION 195 195 $471,429

Belise Sep-12 2016 Group Kildey CONSTRUCTION 208 228 $555,000

Broadway on Ann3

Sep-13 2016 Metro Property Development CONSTRUCTION 247 247 $555,000

FV - Flatiron4Jul-14 2016 Gurner PRESALES N/A 354$ -

The James Apartments4Feb-15 2017 Portfolio Pty Ltd PRESALES N/A 79$ -

Elixir4Oct-14 2017 HGW Projects PRESALES N/A 126$ -

FV - Valley House4

Jul-14 2017 Gurner PRESALES N/A 297$ -

Central Village Stage 6 2018 Metro Property Development PENDING 199

FV - No.1 2018 Gurner PENDING 261$ -

188 Wickham Tce 2018 Twin Ocean Group PENDING 522$ -

Central Village Stages 4 & 5 2018 Metro Property Development PENDING 345

1. Project Status as at May 20152. Weighted Average Price based on most recent transaction period for the project in the Urbis Brisbane Apartment Insights3. Project Sales Data provided as at May 20154. Projects not particpating in the Urbis Brisbane Apartment InsightsSource : Urb is Brisbane Apartment Insights



Urbis Apartment Insights – Sales by Development Status and Product FORTITUDE VALLEY - DECEMBER QUARTER 2014 CHART 2.15


From the surveys collected through the Urbis Apartment Insights, zero sales were transacted in thepresales market over the December 2014 quarter. Whilst Urbis are aware of a small number ofprojects in presales within Fortitude Valley, transaction information was not available.

Apartment projects under construction recorded the largest proportion of sales over the December2014 quarter with five projects currently under construction, yielding 959 apartments.

3.7 NEWSTEAD The following table classifies the new apartment projects within Newstead that Urbis have identified to settle in the coming years to assist in forming the apartment future supply between now and 2019. This process has been completed by identifying apartment projects that have recently launched, are under construction, completed or expected to enter the market in the coming twelve months.

Active and Pending Projects - Summary NEWSTEAD

PROJECT NAMELAUNCH

MONTH

SETTLEMENT

YEARDEVELOPER STATUS

1 SOLD AS AT

DEC 2014YIELD

WEIGHTED AVG

PRICE2

Kurv Nov-12 2014 Cavcorp COMPLETED 55 55 $625,000

Riverstone Apartments Nov-13 2015 Drew Group CONSTRUCTION 72 72 $575,000

Lumira Apr-14 2015 Lancini CONSTRUCTION 74 75 $475,000

Y43 Sep-13 2016 Cavcorp PRESALES N/A 52 N/A

Casa Newstead - Stage 1 Jun-14 2016 Dibcorp Pty Ltd CONSTRUCTION N/A 62 N/A

1 Oak Jul-14 2016 Cavcorp CONSTRUCTION N/A 91 N/A

Newstead Central Stage 1 - Aqua3Nov-14 2016 Metro Property Development PRESALES 149 149 $500,000

Mode Apartments Aug-14 2016 Devine PRESALES 110 157 $525,000

Skyring Jun-14 2016 TDD PRESALES N/A 263 N/A

Unison May-14 2016 Mirvac CONSTRUCTION 223 279 N/A

Newstead Towers (1 & 2)3

Apr-14 2016 Metro Property Development CONSTRUCTION 314 314 $507,000

Le Bain - Newstead Nov-14 2017 Cavcorp PRESALES N/A 98 N/A

La Vida Jan-15 2017 Bekka Group PRESALES N/A 187 N/A

Newstead Central Stage 2 - Laguna3Mar-15 2017 Metro Property Development PRESALES 121 193 N/A

Newstead Central Stage 3 - St Tropez3Mar-15 2017 Metro Property Development PRESALES 191 231 N/A

Casa Newstead (Stages 2-4) 2018 Dibcorp Pty Ltd PENDING N/A 94 N/A

Newstead Series - Stage 1 2018 JGL Properties PRESALES N/A 130 N/A

Haven Newstead 2018 HCAP Developments PRESALES N/A 246 N/A

20 Festival Place 2018 Cavcorp PENDING 366$ -

Newstead Central Towers 4 & 5 2019 Metro Property Development PENDING 374



Urbis Apartment Insights – Stock Available and Sold by Product Type NEWSTEAD - DECEMBER QUARTER 2014 CHART 2.16


Newstead has generally provided a range of apartment product. In the December quarter 2014, asthe number of available stock continues to increase by product type, so too has the number oftransactions recorded. During this quarter, one bedroom, one bathroom product registered thehighest number of transactions.

From a supply standpoint, the one bedroom, one bathroom apartment product provides the largestnumber of available product, followed by two bedroom two bathroom and two bedroom one bathroomapartments.

Urbis Apartment Insights – Sales by Development Status and Product NEWSTEAD - DECEMBER QUARTER 2014 CHART 2.17


In terms of development status, the majority of sales in Newstead were transacted in apartmentsunder construction over the December 2014 quarter. Consisting of six projects currently underconstruction between 62 and 314 apartments, Newstead is expected to see a large number ofsettlements from the end of 2015 until 2017.



3.8 SOUTH BRISBANE The following table classifies the new apartment projects in South Brisbane that Urbis have identified to settle in the coming years to assist in forming the apartment future supply between now and 2019. This process has been completed by identifying apartment projects that have recently launched, are under construction, completed or expected to enter the market in the coming twelve months.

Active and Pending Projects - Summary SOUTH BRISBANE

Urbis Apartment Insights – Stock Available and Sold by Product Type SOUTH BRISBANE - DECEMBER QUARTER 2014 CHART 2.18


South Brisbane has generally been driven by investor apartment product. In the December quarter2014, the number of sales has generally aligned with the level of remaining stock in the activeapartment market. This being said, one bedroom apartments have visibly registered a higher take upover the quarter when compared to the secondary two bedroom two bathroom market.

PROJECT NAMELAUNCH

MONTH

SETTLEMENT

YEARDEVELOPER STATUS1 SOLD AS AT

DEC 2014YIELD

WEIGHTED

AVG PRICE2

Edge - South Brisbane Oct-12 2014 Sanchi Manning Pty Ltd CONSTRUCTION 46 46 $625,000

Austin Jan-14 2014 Aria Property Group CONSTRUCTION 140 140 $513,929

Canvas Jun-12 2014 Pradella COMPLETED 133 141 $525,000

The Plaza Aug-12 2014 Metro Property Development COMPLETED 168 168 $497,222

Basse Apartments Feb-14 2015 Centracorp CONSTRUCTION 56 68 $575,000

Arena - Building One Jan-13 2015 Galileo COMPLETED 94 94 $544,892

Arena - Building Two Mar-13 2015 Galileo COMPLETED 97 97 $545,000

Botanica Oct-13 2015 Aria Property Group CONSTRUCTION 182 182 $523,056

Peak - South Brisbane Jul-14 2016 Horan Group CONSTRUCTION 38 40 $493,750

Fleet Lane Jul-14 2016 HCAP Developments CONSTRUCTION 49 66 $562,500

Soda Nov-13 2016 GDL Group COMPLETED 131 131 $560,305

Opera Oct-14 2016 Kaias Family PRESALES 60 180 $627,083

Verde South Brisbane 2017 VCP Developments PENDING 81$ -

234 Vulture Street 2017 Aria Property Group PENDING 84

Spice Apartments (South Tower) Jun-14 2017 Abacus Property Group / Kilcor Properties PRESALES 106 124 $491,667

Spice Apartments (North Tower) Mar-14 2017 Abacus Property Group / Kilcor Properties PRESALES 122 150 $546,429

Art House Sep-14 2017 Mirvac PRESALES 79 189 $533,544

The Melbourne Residences Sep-14 2017 Aria Property Group PRESALES 195 195 $588,333

Southpoint Mar-13 2017 Anthony John Group CONSTRUCTION 198 221 $1,484,091

220 Vulture Street 2017 Aria Property Group PENDING 242$ -

Southpoint - Stage C 2018 Anthony John Group PENDING 192$ -

35 Merivale St 2018 Backshall Group PENDING 239$ -

Brisbane Casino Towers 2018 Metro Property Development PENDING 376

54 Manning Street 2019 Long Ze International Development Group PENDING 245$ -

1 Cordelia St 2019 R & F Properties PENDING 600$ -



From a supply standpoint, the suburb of South Brisbane has been absorbing new apartment stock ata relatively fast rate, with one bedroom one bathroom product (109 transactions) only slightly lessthan the total one bedroom one bathroom stock remaining (117 apartments).

Urbis Apartment Insights – Sales by Development Status and Product SOUTH BRISBANE - DECEMBER QUARTER 2014 CHART 2.19


When compared to the northern focus suburbs of Fortitude Valley and Newstead, South Brisbane hasregistered a lower proportion of both completed apartments, and apartments under construction. Thisis in part due to the fact that a large proportion of off-the-plan apartment project in South Brisbanehave sold out prior to construction, while the remaining projects that have had apartments remainingat construction only require a few sales in order to reach sell out.

As such, the presales market has historically been the strongest in South Brisbane, with theDecember 2014 quarter registering 103 and 53 transactions for one bed one bath, and two bed twobath apartments respectively.

The low proportion of three bedroom apartments in South Brisbane is largely due to the majority ofapartments being readily targeted at the investor and young professional market – taking advantageof the regions immediate proximity to both large scale cultural and lifestyle amenity, paired with theclose relation to the Brisbane CBD, Queensland’s largest employment node.

40 AUSTRALIAN APARTMENT MARKET FINDINGS & OUTLOOK


4 Australian Apartment Market Findings & Outlook The key factors influencing the Australian residential market in the short to medium term include:

The level of developer competition across the five capital city markets, refer to a number of dominant operators in specific markets including New South Wales, Western Australia and South Australia. Whilst a number of developers/builders may be dominant in a particular region, this competition is more broadly fragmented, with no entity heavily prominent across all markets.

The key factors influencing the capital city residential market in the short to medium term include:

From a capital city standpoint, Brisbane has recorded the most affordable median price based on the difference between house and apartment prices, registering a median price difference of $185,000 at the period ending December 2014.

In the 12 months to December 2014, the five major capital cities have recorded indicative gross rental yields between 3.6 and 4.4 per cent for houses. Slightly higher rental yields were recorded in the apartment market with yields between 4.2 and 5.2 per cent.

The highest rental yield for houses was registered in Adelaide and Brisbane at 4.4 per cent, while Brisbane has recorded the greatest return on investment for apartments with a 5.2 per cent indicative gross rental yield. Melbourne recorded the lowest gross rental yields for both houses and apartments at 3.6 per cent and 4.2 per cent respectively.

The key factors influencing the Inner Brisbane apartment market from a product, location and price perspective in the short to medium term include:

An increased number of off-the-plan apartment projects within the Inner Brisbane precinct have now begun construction, equating to 53 per cent of the active apartment market at December 2014.

Despite the number of transactions within presales still registering the highest proportion of the off-the-plan sales, the proportion of these transactions against projects under construction have tightened in Q4 2014.

Population estimates derived from Queensland Government population projections across the Metro focus suburbs indicate that population could increase on an annual basis by 573 residents in Fortitude Valley, 871 residents in Newstead and 819 new residents in South Brisbane. This projection assumes 1.85 persons per dwelling (ABS Census Data) and is a reflection of the anticipated number of settlements in each of these suburbs to 2019 based on findings reported from Urbis Apartment Insights and based on 100 per cent occupancy.

DISCLAIMER

This report is dated 05 May 2015 and incorporates information and events up to that date only and excludes any information arising, or event occurring, after that date which may affect the validity of Urbis Pty Ltd’s (Urbis) opinion in this report. Urbis prepared this report for the purpose of Prospectus (Purpose) and not for any other purpose or use. To the extent permitted by applicable law, Urbis expressly disclaims all liability, whether direct or indirect, to the Instructing Party which relies or purports to rely on this report for any purpose other than the Purpose, and to any other person which relies or purports to rely on this report for any purpose whatsoever (including the Purpose).

In preparing this report, Urbis was required to make judgements which may be affected by unforeseen future events, the likelihood and effects of which are not capable of precise assessment.

All surveys, forecasts, projections and recommendations contained in or associated with this report are made in good faith and on the basis of information supplied to Urbis at the date of this report, and upon which Urbis relied. Achievement of the projections and budgets set out in this report will depend, among other things, on the actions of others over which Urbis has no control.

In preparing this report, Urbis may rely on or refer to documents in a language other than English, which Urbis may arrange to be translated. Urbis is not responsible for the accuracy or completeness of such translations and disclaims any liability for any statement or opinion made in this report being inaccurate or incomplete arising from such translations.

Whilst Urbis has made all reasonable inquiries it believes necessary in preparing this report, it is not responsible for determining the completeness or accuracy of information provided to it. Urbis (including its officers and personnel) is not liable for any errors or omissions, including in information provided by the Instructing Party or another person or upon which Urbis relies, provided that such errors or omissions are not made by Urbis recklessly or in bad faith.

This report has been prepared with due care and diligence by Urbis and the statements and opinions given by Urbis in this report are given in good faith and in the reasonable belief that they are correct and not misleading, subject to the limitations above.

The information in the publication does not represent financial advice and should not be regarded as such. It has been prepared without taking into account your financial situation or investment objectives. You should consider the appropriateness of the information in regards to your current financial situation or needs. Urbis accepts no responsibility for the accuracy or completeness of any such material. The information is subject to change without notice and Urbis is under no obligation to update the information or correct any assumptions which may change over time.

BRISBANELevel 7, 123 Albert StreetBrisbane QLD 4000t 07 3007 3800f 07 3007 3811

SYDNEYTower TwoLevel 23, 201 Sussex St Sydney, NSW 2000t 02 8233 9900f 02 8233 9966

MELBOURNELevel 12, 120 Collins StreetMelbourne VIC 3000t 03 8663 4888f 03 8663 4999

PERTHLevel 1 55 St Georges TerracePerth WA 6000t 08 9346 0500f 08 9221 1779

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