Morning Briefing: Commercial property set to reach $25 billion in sales over 2015

Investors are on track to sink in excess of $25 billion into the Australian commercial property market by 2015's end... NSW takes first step towards overhauling residential tenancy laws...

Commercial property set to reach $25 billion in sales over 2015
Investors are on track to sink in excess of $25 billion into the Australian commercial property market by 2015's end, according to an article in the Sydney Morning Herald.

New data from the CBA shows a record 48 per cent of sales by volume have been to offshore investors, including an upsurge in purchases from sovereign wealth funds.

The Australian Technology Park, said to be worth about $200 million, is set to be sold next and the announcement is expected to be released soon.

Brookfield's $680 million stake in the Southern Cross Towers complex in Melbourne's CBD is also to be sold, in which offshore private equity giant Blackstone is a preferred bidder ahead of global investment giant M&G Real Estate and joint partner ISPT.

CBA's Kevin Stanley, head of property strategy and research, Corporate Financial Services division said the data indicated NSW is still Australia's commercial property hotspot, attracting 47 per cent of sales in the first three quarters of calendar 2015.

"We are likely to see strong trading activity in the December 2015 quarter, with institutional vendors bringing almost $5 billion in commercial properties to market. That could see buyers push prices up to, and potentially beyond, previous peaks," Stanley said.

"However, there is a limit to the number of very large assets available to drive ongoing trading volumes. Following record trading levels from 2013-15, it's likely that limit will soon be met. That makes it probable sales volumes will decline in 2016 as the pricing cycle peaks."

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NSW takes first step towards overhauling residential tenancy laws
The New South Wales state government has taken the first step towards overhauling legislation covering residential tenancy agreements in the state.

NSW Fair Trading last week released a discussion paper looking at a number of areas of the state’s tenancy agreements and is calling for landlords, tenants and anybody else involved in the renting of residential properties to be involved in a statutory review of the Residential Tenancies Act 2010.

NSW Fair Trading commissioner Rod Stowe said the review was being carried out to ensure tenancy laws in the state meet the needs of all concerned.

“Whether you’re a renter or a landlord everyone needs residential tenancy laws that are balanced, modern and flexible,” Stowe said.

“Over 800,000 NSW households live in rental properties and it is important that the state’s tenancy laws are working as intended,” he said.

The discussion paper includes topics such as; starting a tenancy, rental bonds, rent and other charges, the rights and obligations of landlords and tenants, terminating a tenancy and resolving disputes and changes to some of those areas would be welcomed by a number of people in in the real estate industry.

Bernie Mitchell, principal of Focus Property Management, believes changes need to be made to a number of areas surrounding the termination of leases.

“When it comes to terminating leases, I think there needs to be some clarification of what needs to happen in terms of communication,” Mitchell said.

“At the moment tenants are emailing us to say they want to terminate a lease, but that means there’s no signature or anything to make it legally binding, so I think there needs to be a clear definition of what’s acceptable,” he said.

Mitchell also said there needs to be changes to the notice period given to tenants on month-to-month leases.

“If a tenant’s living in a building month-to-month, currently they need to be given 90 day’s-notice to before they have to move out.

“To me that’s just too long and it should be bought back down to 60 days.”

Michael Catalano, director True Property, which provides property management services, also said there is a need for changes to termination process to protect landlords from financial loss.

“The issue of rental arrears needs to be looked at. At the moment a tenant has to be 15 days in arrears before a termination notice can be issued and then it’s usually another 14 days or before anything happens,” Catalano said.

“That means the four-week bond is used up and the landlord is left with no other means of compensation to cover any cleaning or other damages,” he said.

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