Property clocks have been in existence for some time, explaining when a market is going up, in decline, or about to turn the corner. I think the idea started with the Doomsday clock which predicted when the world would end due to nuclear war. It worked like this:
Property has used the idea of clocks for some time, explaining where a market sits and where it is expected to go. With a fair degree of uncertainty starting to rise to the surface (do a search for Dr John Edwards and 8 possible interest rate rises over the next two years; great confidence builder for investors that one), I thought it worthwhile torun an analysis on what our clients are saying to us about their current and future recruitment needs.
Happy days is you are a developer with a strong land bank you purchased 10 years ago. Huge demand for anyone with virtually any land development experience. Limited resources available, with the effects of a significant shift of sub-30 year old candidates leaving land development to join apartment and townhouse developers (Truganina is not seen as cool and as funky as South Yarra or South Melbourne).
Lots of offshore money jumping into land, meaning securing new projects right now is very tough based on traditional market metrics. Good time to ask people like Christian Ranieri, Peter Sagar or Frank Nagle for a loan, as they are all making out like bandits.
Like Hansel, so hot right now. Appreciating land and housing prices have meant a large number of townhouse and low rise inner ring apartment developments have taken place, with planning amendments supporting greater density around transport and social infrastructure.
Look around any train station anywhere, it is all about to get a lot bigger and more heavily populated. Tough to find people, but not as tough as land.
If you missed the obituary, the CBD apartment market died about three months ago. Blame the following; governments and banks. Whilst there has been a lot of talk about oversupply of apartment markets and settlement risk, apartment projects have continued to settle with minimal fall-over and certainly in line with historical averages.
However, it has been decided by non-market forces that the risk of this occurring was too high, so changes in planning policy around design and banks’ appetite to lend on this product (particularly anything CBD or investor led) has crushed the market.
There are still projects happening but they need to fall into one of the following categories:
Lots of appetite for yielding property, from both local and offshore groups. Absorption of B and C grade office buildings being converted into apartment sites has helped, as well as a lack of supply. There are a number of big projects currently being delivered (CBUS at 447 Collins, Mirvac at 477 Collins, Walker Corp at Collins Square, QIC at 80 Collins St, Lend Lease at Melbourne Quarter/Victoria Harbour, etc.) and we are seeing a demand for employment resources, though team sizes in this space are generally quite small.
Not a lot of the next level down candidates (circa $150k) who possess both tenant leasing and strong development process skills.
Have you heard of ASOS, Style Tread and Boo Hoo? I have not, but Lauren in our office has a fleet of delivery men bringing her latest online purchase from these virtual retailers. And from where do these purchases originate; most likely a big shed in Laverton.
Lots of interest in the industrial property space but once again, a big shortage of candidates. Industrial is not as sexy as commercial from a candidate perspective, but is a very lucrative investment market with lots of money wanting to find somewhere to be parked. Extreme shortage of candidates wanting to work in the space who have the right balance of revenue-generating and development management skills.
See industrial property above. With news of the imminent arrival of Amazon, retail has taken a bit of a hit. I am not sure if it is ready to be written off just yet, but the vultures are circling. A Grade assets like Chadstone cannot produce more retail space fast enough, but a lot of secondary and neighbourhood spaces are feeling the squeeze.
All in all, the current market remains buoyant but we have been on an upswing for some time. Long may it continue and if there is a drop, hopefully it’s a soft landing.
Rohan Christie is Director of Delivery & Development at Collins Street-based Kingfisher Recruitment.