Opteon winter newsletter

T: 1300 786 022 F: +61 3 5223 2309 E: [email protected] W: www.opteonproperty.com.au

New brand, same valuesThe beginning of July not only signals the start of the new financial year but also the culmination of a process that began in 2005; the creation of Opteon Property Group (Opteon). Six independent valuation companies from around Australia saw the need for a national network in order to discuss ideas, industry changes and share data. The member companies, including Landlink and Market Line, showed further commitment to the Opteon vision in 2009 by co-branding with Opteon and in doing so took another step towards the future goal. The merger of Landlink-Opteon and Market Line-Opteon to form Opteon Victoria was paramount in creating the largest property valuation and advisory firm in Victoria and to better service our clients over a larger geographic location, providing a professional balance of local expertise and national reach. In recent years the valuation industry has evolved at an increased rate and a number of clients who were significant users of valuation services started to look for larger, national service providers. These demands drove a rationalisation within the industry and as a result, Opteon pursued a strategy of growing its membership. Today, Opteon comprises 25 of the most respected and established valuation firms in Australia, is wholly Australian owned and, uniquely, services all populated areas across all states.

Continued page 2

Outlook The Victorian Perspective

Opteon Newsletter July 2011

Value made visible

Welcome to the winter edition of Outlook. The new financial year is an exciting time for us because it signals the launch of the company’s re-branding to Opteon.

Andrew NosedaChief Executive Officer

As we move toward a new era I’d like to take this opportunity to thank our valued clients most sincerely for their past support and also reinforce Opteon’s commitment to delivering a superior range of valuation and property advisory services under the new banner. You have my assurance that we place enormous value on each client relationship and will leave no stone unturned to provide even better service and communication in the months and years ahead. Our national presence was expanded in May with the opening of the Opteon office in Darwin headed by experienced valuer Johanna Baldwin who is committed to delivering the exemplary standard of service the company has become renowned for. Finally, as we’re now heading into tax time I’d like to remind anyone with investment property that Opteon can assist with depreciation schedules to help you obtain the maximum legitimate taxation advantage. Until the next edition, good reading and best wishes.

Spotlight on Alexandra King Page 2

Independent valuations give buyers and sellers an edge Page 2

Regional Updates Page 3

Rural and agribusiness Page 6

Test your knowledge Page 7

An important message for investment property owners Page 8

Presentation for Geelong business community Page 8


New brand, same values Continued

Opteon is evolving to meet the expectations of our customers – lenders, owners and buyers of all types of property – by providing added value through size, coverage and market knowledge, and a partnership solution to deliver the best outcomes.

With this we are pleased to announce that, along with all the other shareholding firms in Opteon, we have adopted the use of the single trading name; Opteon.This is the continuation of a very exciting journey for us and our staff. The decision to join Opteon reflects our commitment to being part of a leading National Property Valuation and Advisory business. “A leader in its field, Opteon will operate in a structured and well managed manner to deliver a range of consistently high quality property services based on local knowledge in each geographical region it operates in,” said Opteon Victoria CEO Andrew Noseda, “We share this vision and are committed to being a part of the Opteon group. “ The new entity will bring its clients the best of both worlds; on one hand they will be the beneficiaries of superior service, extended geographic coverage across Australia, shared knowledge and expertise, and state-of-the-art systems. On the other, these expert services will still be based on local knowledge (our knowledge) by professional staff who live and work within the regions they service. All of our customers will be able to contact the same people in the same way, no change for the sake of change; just new options and enhanced services; more ‘business as usual’ but better. To mark this exciting change Opteon will have a new look; the distinctive new branding of Opteon symbolises an exciting new era in national valuation and property advisory services which encapsulates wider resources, superior systems and processes, reduced risk, greater transparency and improved communication, and increased focus on quality assurance programs. Although the Opteon branding is new to the market, the companies remain the same. Twenty-five Opteon member companies with 61 offices and more than 350 qualified valuers around Australia have been meeting the property-related needs of thousands of clients for years and will continue to do so.

Opteon has the ‘raw materials’ to lead in this new market environment, and our re-brand is a further critical step in the journey towards our vision to be ‘Australia’s Property Advisors’ who stand for innovation, change and progress. We see that taking on our new brand, Opteon, is ‘Value Made Visible’.

Knowing the true market value of a property puts vendors and potential purchasers in a much stronger position to negotiate. Vendors have a starting point on which to make comparisons with the sale of other properties in the area and set their selling price or auction reserve while purchasers are far less likely to pay over the market value for the property they have set their heart on. A valuation is vastly different from a market estimate which is an opinion – provided by a real estate agent – based primarily on recent sales in the area. In contrast, a valuation is an independent written assessment of a property’s current worth by a Certified Practising Valuer who takes many factors into consideration. Valuers assess a property by making a comparison with other properties that have sold in the immediate area and making adjustments for size, quality, additional improvements, aesthetic appeal and location, among other factors. A separate calculation, which involves assessing the underlying land value and adding the value of improvements to the dwelling, is then undertaken. Improvements such as motor vehicle accommodation, pergolas, garden setting and sheds are taken into consideration. This is normally conducted on a value per square-metre basis for each different improvement. Because Opteon Victoria’s valuers have extensive experience analysing current building approvals and contracts, they have comprehensive knowledge of cost for the different styles and quality of improvements. Opteon Victoria’s inexpensive pre-sale and pre-purchase valuations eliminate much of the stress associated with buying and selling property, and significantly enhance the prospect of a satisfactory outcome. Valuations can also be provided for matters such as family law, taxation, deceased estate and mortgage. An impartial and non-motivated opinion of value incorporating full disclosure in reporting helps the client to get the full picture.

OutlookOpteon NewsletterJuly 2011Page 2

Value made visible

Alexandra King, joined the team at Opteon Victoria in January 2011 as a Leading Valuer in the Residential Division, was Australian Property Institute (Victoria) Achiever of the Year in 2009.

A Certified Practising Valuer with a Bachelor of Business (Property) degree from RMIT University and an REIV Agents Representative Certificate, Alexandra commenced her career with Lethlean Property Consultants in 2003. After completing her Supervised Professional Practice she remained with the firm and gained experience in a variety of specialised valuations such as businesses, golf courses, hotels and motels. In 2007, Alexandra moved to Hay Property Consultants where she worked predominantly in the residential field but was also exposed to a mix of industrial and other non-residential valuations including acquisitions. In her role with Opteon Victoria Alexandra specialises in residential valuations in Melbourne’s CBD and inner suburbs. “As well as carrying out valuations on a daily basis I manage queries and peer review reports, attend monthly leading valuer meetings and ensure my team is kept fully updated on all aspects of market activity, company policy and procedures.” Commenting on Alexandra’s appointment, Opteon Victoria CEO, Andrew Noseda, said, “A real asset to our team, Alexandra is not only a highly qualified and competent valuer but also dedicated to maintaining the exemplary standards our clients have come to expect from Opteon Victoria.”

Independent valuations give buyers and sellers an edge

Regional Updates


The real estate industry had been hopeful that the early months of 2011 would see an improvement to the somewhat suppressed market conditions experienced during the second half of 2010. But while at times there have been localised indications that the market was ready to take off, overall activity has remained weaker than hoped for. Properties not priced correctly have remained on the market for longer periods and there have been instances of advertised price reductions as vendors endeavour to entice buyers to act. Properties that represent the upper value range in their market segment have been – and remain – more difficult to move. It is inevitable that the market will improve and prospective purchasers who do not act now could find they miss out on the opportunities that are available in what is currently a buyer’s market. Bayside and inner suburbsThe broader market in Bayside is trending towards a slight correction in values; however, local agents report a moderate upswing in activity over recent weeks. Demand from investors and first home buyers continues, especially in better regarded areas. Prices in secondary residential areas, particularly those not adequately serviced by transport and/or shopping precincts, are expected to remain unsettled. There appears to be a lack of buyer demand above $1 million. Buyers seem prepared to pay market price for a property that meets their requirements in most respects but those that don’t are attracting little interest. Agents report healthy supply, but slower numbers of sales in the family home and prestige brackets. Off-the-plan projects appear to be well subscribed, however, there are fewer projects commencing than two years ago, indicating a possible future shortage in new property. The overall expectation is for prices to remain static for some months with the rider that softening demand in lesser areas will likely see continued minor correction.

Eastern suburbsThe 2011 residential market has experienced a very subdued start in comparison with last year. Auction clearance rates have generally reduced to between 60 and 70 percent compared with between 80 and 90 percent in 2010. There has been a significant swing in consumer sentiment and buyer behaviour with purchasers becoming more cautious in their decision-making, consequently vendors need to adjust their price expectations. The situation provides a further indication of the more subdued market conditions this year. Entry-level properties – suitable for investors, those down-sizing, the elderly and first home buyers – in prime locations close to services are in demand while the medium to upper price brackets have stabilised. Overall, expectations are for a subdued market, which favours purchasers rather than vendors, but affordability remains an issue.

Mornington Peninsula House values on the Peninsula are expected to remain flat over the next twelve months but keenly priced quality properties are expected to continue to attract interest. The lower end of the market has cooled as a result of the reduction in the number of first home buyers although summer saw good prices and volumes, including the lower end. Upper end properties continue to be selectively traded, however, quality homes with extensive views of the coast, the bay and city skyline have been bringing good prices. The Peninsula Link project, which is due for completion in 2013, will significantly reduce travel times and is expected to be a driver of property values on the Peninsula. Frankston and Carrum Downs continue to be dominated by sales of new units with developers on the lookout for larger established properties suitable for subdivision and redevelopment. The final stages of the Sandhurst Estate, a lifestyle precinct with community and golfing facilities, have been released with small allotments starting at $300,000 and larger ones with golf course views priced up to $480,000.


Value made visible

Regional Updates Continued


Northern suburbsAgents have continued to report mixed results and say “properties that tick all the boxes” are still selling well although if a property is not finished, lacks presentation, or has an unusual feature buyers are showing resistance. Evidence suggests there is still healthy competition among buyers but there appears to be a balance between supply and demand. In general, the outer metropolitan suburbs remain steady. The established dwelling market appears consistent at present with agents reporting a cooling in the top end of the market. Vacant land continues to be buoyant with good demand reported in outer northern areas such as Wallan and Kilmore where land prices are continuing to rise. Sales results are mixed in the Macedon Ranges. Established townships such as Gisborne, Woodend and Kyneton, which have witnessed strong growth over the previous 12 months, are exhibiting signs of slowing enquiry at the upper end. Conversely, vacant land prices continue to escalate with selling agents reporting good demand and limited supply in these areas. South-eastern suburbsThe median price of an established home in Cranbourne Central decreased during December, rose slightly in February then declined to a 12 month-low of $289,500 (rpdata.com). Allotments of 400m² are selling for around $195,000 in The Grove, a new estate located off the C404 motorway. Prices in Cranbourne North increased in December, before declining the following month. Eve, a highly regarded estate, has seen a rise in values with 600m² lots selling for as much as $295,500. Cranbourne East continues to be popular with home buyers in the area. Vacant land in the final stages of the Hunt Club appears to be selling well while blocks in Cascades on Clyde are also in demand. Land in Lyndhurst with water views is bringing top prices while activity in Clyde North has been limited mainly to Selandra. Prices in Officer have risen significantly: one lot of approximately 535m² sold for $173,950 in November and another of 519m² brought $218,000 in January. In Caversham Waters vacant land sold in May last year for around $165,000 but slightly larger allotments have since been selling for close to $228,000.

Western suburbsThe frenetic buying that characterised the land market from mid-2009 through to late 2010 has softened slightly and values appear to have peaked. Developers seem less keen to test the market, however, values are holding firm as a result of demand for vacant land. Compared with the greater metropolitan area, land in the west remains relatively affordable. Demand for homes under $450,000 is firm although agents report that buyers are more selective and selling periods extended. There is interest from first home buyers and investors in this range as well as owner-occupiers but homes above this range are susceptible to fluctuating demand. Properties priced at more than $1 million are thinly traded and are showing signs of easing. There is no indication of a correction at present: some sectors are under pressure but overall levels appear to be holding due to reasonable demand. Developer activity appears to be gaining momentum in the urban growth corridor but holdings of less than 20 hectares are difficult to move.

BallaratThe Ballarat market was slow but steady in the first quarter. Demand is easing across all sectors, reducing activity. Market sentiment is echoed in the overall economy but has not affected prices which are firming albeit at a steadier rate than previously. Supply of land remains an issue, as does the shortage of rental properties, both of which continue to support underlying values. Rural lifestyle and township sales have remained steady with demand in the popular tourist towns easing as increased fuel prices have started to impact. Overall, the outlook for the region appears sound with steady but slower growth expected.


Value made visible

Regional Updates Continued


BendigoThe Bendigo market has plateaued over the last three months consolidating the strong growth of previous quarters. The main increase in the Central Victorian area has been in the townships BendigoThe Bendigo market has plateaued over the last three months consolidating the strong growth of previous quarters. The main increase in the Central Victorian area has been in the townships along the Calder rail and freeway corridors. Kyneton and Castlemaine are appreciating strongly in value with growth of up to 20 per cent in the last six months. Sales volume has also remained strong as demand from Melbourne and interstate buyers continues to drive the market. Commercial markets are emerging from hibernation with good quality stock becoming available and yields remaining strong

GeelongThere appear to be no dark clouds on the horizon and activity around the region is expected to sustain the market during the cooler months. The Armstrong Creek development between Geelong and Torquay, which contains 10 years of regional land supply, has now commenced with substantial infrastructure works currently underway and in excess of 300 blocks sold. Construction of the first homes will commence within six months and the area is expected to develop quickly. At around $200,000 a block land is affordable. Along with other regional centres, Geelong is performing well with greater affordability and a more relaxed lifestyle continuing to attract Melburnians. With a steady market and healthy but moderate growth, Colac, the Surfcoast and Bellarine Peninsula are likely to experience continuing activity. MilduraSupply and demand have remained steady with the residential market relatively static. Rental returns have increased in the past 12 months and higher yields are attracting investors. Since the first home buyers grant was reduced the volume of valuations for construction loans has decreased dramatically. Market conditions can be attributed to the ongoing difficulties the horticultural industry is experiencing in the Sunraysia region. The surrounding agricultural sectors of dry land and pastoral farming have had a relatively good 12 months and the outlook appears positive. Last year’s grain harvest produced above average yields of low grade cereal while the livestock market – particularly sheep – has produced record prices.

WarrnamboolDemand from first and second home buyers for homes under $350,000 continues to be solid but there has been minimal increase in value. Sales of suburban stock above $350,000 decreased during the last quarter of 2010 with no improvement so far this year although values appear to be holding. This sector has moved little over the past couple of years. Several sales of coastal properties during the past six months have set new value levels for this category. Central property has been tightly held with the few properties offered producing solid results. Vacant allotments continue to trade strongly with increased values for popular estates in the mid to low price range. Estates priced at a higher-than-average level in relation to location continue to trade moderately.


Value made visible

Rural and agribusiness


The rural market has experienced a 360-degree change in some areas due to the devastating unseasonal weather conditions over summer. This has caused significant crop losses after what was promising to be a major recovery year for so many primary producers. As a result, demand for rural holdings remains subdued despite most agricultural commodities achieving record prices, particularly in the livestock sector. There are still some major hurdles for the agricultural sector to resolve as a result of the extended drought including high debt levels, the strong Australian dollar, market manipulation by the supermarket duopoly, low cost imports and tight lending. However, the outlook appears more positive with strong returns in the livestock sector, recovering markets for wool and dairy sector are healthy – although volatile – prices for cereal. Water storages are at an all time high and soil moisture is indicating the best start to a season in 15 years. Recent developments in the main property markets covered by the Opteon Victoria Rural Agribusiness Division have been:

Irrigation Water Mitchell Rowe FAPI AAPI CPV API Accredited Specialist Water Valuer

Market Outlook: volatile Most irrigators are expecting 100 per cent allocation as all systems have experienced strong inflows. In the northern part of the state – particularly the deliverable irrigation districts – as the rain has fallen, so too has the price of both permanent transferable water and temporary water. The volatility of water as an asset illustrates why lenders are cautious when using water assets as a security. In the southern part of the state where the majority of the irrigation water comes from groundwater, the price is still around the $1,000 to $1,500 per mega litre of an irrigation “take and use” water licence. This is an interesting trend as the authority actually owns the water, not the farmer, and this water asset cannot be mortgaged. We recommend that, if you have an irrigation water issue, you contact one of Opteon Victoria’s Australian Property Institute Accredited Specialist Water Valuers for advice.

Agro Forestry Andrew Bray AAPI CPV API Accredited Specialist Water Valuer

Market Outlook: over supplied News in the agro forestry industry still centres around the Bluegum industry despite the market offering of South Australian Government-owned softwood plantations as the now defunct Managed Investment Schemes are being progressively wound up. Large-scale sell downs of the Environinvest and Great Southern estates have attracted private consortium investment. In essence, this sector has two markets with large scale estates selling to mainly overseas private forestry interests while smaller plantations are offered to the market. The results are much the same with a significant discount to grazing and arable farm values. There remains the sale of many smaller hardwood forestry assets in Victoria by overseas interests and receivers which continue to cause much conjecture in the marketplace with few interested parties prepared to reclaim the land and a slight oversupply emerging in some districts. Recent sales activity is showing some volatility and is dependent on the value of the standing timber, if any. Demand fluctuations are caused by demand for pulp timber, mainly by the Japanese market, export capabilities and recent announcements regarding the carbon market. This market is still emerging and will remain volatile until the demand for pulp timber firms, all the MIS structures are liquidated and government policy on carbon trading and sequestration is finalised.


Value made visible


Rural and agribusiness Continued

Sunraysia Horticultural / Viticultural Market Nigel Gibbins AAPI CPV API Accredited Specialist Water Valuer

Market Outlook: weak In recent years Sunraysia’s horticultural and viticultural industries have experienced issues with water allocation plus a continuing easing in prices. Unseasonal rainfall in early 2011 has caused downy mildew problems with the wine grape harvest, culminating in major losses. In contrast, the table grape industry has had varying results but could be described as receiving average prices. The citrus sector experienced relatively good prices last season but yields were reduced. Next season is expected to see an improvement for citrus yields; however, returns are expected to be subdued due to a fruit fly problem, the strong Australian dollar impacting on the large US export market and competition from other large markets such as Chile. Of significant importance in this market is the pricing effect of irrigation water. As allocations return to maximum levels the trading of water has eased significantly with prices substantially reduced. Recent trades of high security water are in the vicinity of $1,600 per mega litre with little interest for water on the temporary market.

Market Garden Industry in the South EastWayne Walden AAPI CPV API Accredited Specialist Water Valuer

Market Outlook: good The market garden industry south east of Melbourne, centred around Cranbourne South, Clyde, Pearcedale, Devon Meadows and Boneo, has been growing strongly in recent years. There has been some expansion onto the Koo-Wee-Rup Swamp but this has been somewhat limited due to the heavy soils restricting crop types and the growing season. Expansion has been driven by the increasing popularity of salad vegetables and the increasing availability of “A” class recycled water with access to the main Melbourne markets also a key factor. Urban development around Cranbourne South and Clyde is reducing the land available. Values vary considerably with undeveloped land with sandy soils making $50-$70,000 per ha and fully developed land (drained and with sprinklers) with a source of water making in the vicinity of $70,000 per ha. A large sale at Boneo of fully developed land with water made about $120,000 per ha. On the Koo-Wee-Rup Swamp values are generally between $20-$30,000 per ha with prime asparagus land with water bringing up to $45,000 per ha.


Value made visible

Test Your Knowledge1. What do the letters SBS in the TV channel’s call sign stand for?

2. What is Big Ben?

3. Which country is ranked number two in terms of its land content?

4. What is the surgical term used in Australia for removal of the appendix?

5. In which year was Facebook launched?

6. What was the name of the USA space shuttle that lifted-off on 16 May 2011 on its final flight?

7. What is the name of the island situated in Western Port Bay?

8. Which grape varieties are used in the manufacture of Penfolds Grange?

9. What is the name of Melbourne’s largest reservoir?

10. Australia is home to the most venomous snakes in the world, what is its name?

Experience has revealed that 70 per cent of property investors are paying more tax than they need to. If you are one of thousands of investors who has not yet received the benefits associated with a depreciation schedule, or have valued clients in this position; read on. Owners of income-earning investment property are permitted to offset some of the tax they pay through the depreciation of assets. Opteon Victoria’s tax depreciation schedules, which are prepared by fully qualified quantity surveyors who are registered tax agents, provide investors with up to 20 years of claims. (Quantity surveyors are the only people approved by the Australian Taxation Office to complete depreciation schedules). You will be pleasantly surprised at the size of the first year’s benefit: it will certainly be significantly greater than our fully tax deductible fee. Call 1300 786 022 or email [email protected] to arrange an obligation-free quote.

Opteon Victoria’s Research Manager Richard Jenkins and Director of Commercial Services Todd Devine were official guest presenters at the Geelong Chamber of Commerce President’s luncheon held at The Pier on the waterfront on Friday 15 April. The purpose of the event, which was attended by state and local government representatives, industry groups, developers, landlords, tenants, consultants and Opteon Victoria’s major banking clients, was to provide an independent assessment of the status of the Geelong CBD in the wake of intense media scrutiny. In his presentation Richard Jenkins provided an overview of the economic conditions in Australia and then followed with an analysis of the tenancy mix in the Geelong CBD, vacancy statistics and rents and yields as well as the outlook for the remainder of 2011 and beyond. If you’d like a complimentary copy of Richard’s report please email: [email protected]

Disclaimer: The information contained in this report is provided in good faith and has been derived from sources believed to be reliable and accurate. However, the report is not intended to be comprehensive or render advice and therefore Opteon Pty Ltd does not accept liability for its contents.

An important message for investment property owners


Value made visible

Answers - Test your knowledge1. Special Broadcasting Service

2. The hour bell of the clock in the British Houses of Parliament, not the clock itself

3. Canada

4. Appendicectomy, not appendectomy as commonly thought

5. 2004

6. Endeavour

7. French Island

8. Shiraz and Cabernet Sauvignon

9. The Thomson

10. The Inland Taipan or Fierce Snake

Opteon (Victoria) Pty Ltd trading as Opteon ACN 140 547 600

222a/757 Bourke st, Docklands, Vic 3008 T 1300 786 022 F 03 5223 2309 E [email protected] W www.opteonproperty.com.au

Presentation for Geelong business community