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LINTON APARTMENTS KANGAROO POINT PREPARED EXCLUSIVELY FOR: QUANTUM GROUP

INVESTMENT OPPORTUNITY ANALYSIS

DATE: JUNE 2015

The information outlined within this document represents a subjective interpretation of the development based on plans, pricing and other information provided to us by the developer and/or their representatives. This information should not be relied upon for investment decisions. Interested parties should undertake independent inquiries and investigations to satisfy themselves that any details herein are true and correct. No forecasts are being made by Resolution Research & Marketing Pty Ltd about potential capital gains. Past information contained within this document about capital gains or price growth does not imply that such gains or growth will be made in the future. Resolution Research & Marketing Pty Ltd accepts no responsibility for reliance on this information. This information is current for twelve months from June 2015. BRISBANE OVERVIEW & POPULATION BRISBANE OVERVIEW underpin demand for new dwellings throughout the city. Located on the eastern seaboard of Australia, Brisbane enjoys the closest proximity to Asia than Brisbane has an extensive public transport network any other Australia capital city. Consequently trade, of buses, trains, CityCats and ferries that connect investment, cultural and tourism links between Asia all corners of the city and key community spots. and Brisbane are the strongest in Australia. Quality rail infrastructure provides commuters with access to a network of 10 lines, more than Brisbane offers its residents an enviable life with a 130 stations, and direct links to key destinations climate which affords its population a unique, year including the city heart, the Brisbane Convention & round alfresco lifestyle. Exhibition Centre and South Bank. With 400 bus routes, more than 12,600 stops, a modern fleet of buses and several dedicated busways, Brisbane’s bus network forms an essential component of the city’s public transport infrastructure mix.

Brisbane City Council has delivered several important infrastructure projects in recent years, ONE OF AUSTRALIA’S including the Clem Jones Tunnel, Go Between Bridge and Airport Link. The Legacy Way Tunnel FASTEST will open in June 2015 and will be the next GROWING REGIONS major infrastructure project to be completed. Collectively, these projects represent one of the largest infrastructure initiatives ever undertaken in Australia. This significant investment has ensured The city is one of the fastest-growing regions in that the area’s rapidly growing population base Australian and the third most populous city in have sufficient infrastructure in place to support Australia. Brisbane is the largest of Australia’s six access to the city’s major employment, education capital cities by geographic area and the third and retail nodes. largest in the world. The region is set to continue to be one of Australia’s fastest-growing with the Queensland Government forecasting Brisbane’s population to grow from 2.1 million to nearly 3 million by 2031.

BRISBANE OFFERS ITS RESIDENTS AN ENVIABLE LIFE WITH A CLIMATE POPULATION WHICH AFFORDS TO GROW FROM ITS POPULATION A 2.1 MILLION TO UNIQUE, YEAR ROUND 3 MILLION ALFRESCO LIFESTYLE.

Much of Brisbane’s population growth is driven by overseas and interstate migration which are both key factors which have, and will continue to,

INVESTMENT OPPORTUNITY ANALYSIS 3 BRISBANE APARTMENT MARKET OVERVIEW BRISBANE APARTMENT MARKET demand for apartments within Brisbane.

AFFORDABILITY With a continuation of escalating demand, growth The latest data provided by the Real Estate in median values will follow suit with the Brisbane Institute of Australia shows that as at the March median expected to climb to the $400,000 mark Quarter 2015, Brisbane ranked as the second most by December quarter 2015. affordable apartment market in Australia with a median price of $385,0001.

According to this data, Brisbane’s median apartment price is $98,300 lower than the national median. # When compared with Sydney’s median apartment 2 values, Brisbane apartments are $162,100 cheaper MOST and $114,000 lower than Melbourne’s median. AFFORDABLE MARKET IN The affordable position of Brisbane apartments AUSTRALIA is a key driver underpinning increasing levels of interstate migration which is resulting in uplifts in

AUSTRALIAN CAPITAL CITIES – MEDIAN UNIT PRICES – MARCH QUARTER 2015

$600,000

$547,100 $525,000 $499,000 $500,000 $483,300

$445,000 $445,000 $424,000

$400,000 $385,000

$300,000 $277,000

$200,000

$100,000

$-

HOBART BRISBANE CANBERRA ADELAIDE PERTH AUSTRALIA MELBOURNE DARWIN SYDNEY

Source: Resolution Research Real Estate Institute of Australia – June 2015

1 Real Estate Institute of Australia – June 2015

INVESTMENT OPPORTUNITY ANALYSIS 5 BRISBANE INNER CITY APARTMENT MARKET BRISBANE INNER CITY across both underlying values and rental returns. APARTMENT MARKET Inner City Residential Apartment Market Property Clock – Sydney vs. Melbourne vs. Brisbane Brisbane’s inner city apartment market is comprised of 21 suburbs which sit within a Over the ten years to March 2015, the median 5-kilometre ring of the CBD. apartment price across the inner city has grown by an average of 2.9% per annum to reach a median Across the past two years we have seen a value of $477,000. Over the medium term (5 large volume of new development completions years) growth in median values across Brisbane’s throughout the inner city which are servicing the inner city have performed largely in line with the long term underlying demand for new dwellings long term averaging at 2.6% per annum. in inner urban locations. Our analysis of the current future supply landscape across Brisbane’s OUR ANALYSIS OF THE inner city indicates that, based on the long term CURRENT FUTURE demand performance of the market, the market SUPPLY LANDSCAPE remains in a state of undersupply. ACROSS BRISBANE’S

Brisbane’s inner city apartment market currently INNER CITY INDICATES occupies an opportune position on the property THAT, BASED ON THE clock, sitting at 7 o’clock. The market has LONG TERM DEMAND entered its next growth phase with underlying PERFORMANCE OF THE fundamentals in place for a continuation of MARKET, THE MARKET improving levels of demand in the face of what REMAINS IN A STATE OF remains an undersupplied market. Opportunities UNDERSUPPLY. to capitalise on the market’s upswing are apparent

INNER CITY RESIDENTIAL APARTMENT MARKET PROPERTY CLOCK – SYDNEY VS. MELBOURNE VS. BRISBANE

INVESTMENT OPPORTUNITY ANALYSIS 7 8 INVESTMENT OPPORTUNITY ANALYSIS

solid growth is demonstrative of a market, which VALUES UP has a strong acceptance of values attributable to 2.9% P.A new product as it is injected into the market place. More recently, over the 12 months to March 2015 Both long term (10 year) and short term (5 year) the median apartment price across Brisbane’s demand has remained relatively stable at 3,800 inner city recorded an increase that was higher and 3,400 apartments respectively. During than both the long and median term averages at the market’s peaks in 2007 sales volumes rose 3.6%. to sit at 5,100 in line with introductions of new apartment developments into the inner city clearly demonstrating the market’s capacity and willingness to absorb new apartment supply as it VALUES UP enters the market. 3.6%

Substantial rises in median price corresponded IN THE PAST with this lift in demand with an annual growth rate YEAR of 11.8% recorded between 2006 and 2007. This

BRISBANE INNER CITY APARTMENT MARKET PERFORMANCE – MAR 2006 TO MAR 2015

$600,000 6,000

$500,000 5,000

$400,000 4,000

$300,000 3,000

$200,000 2,000

$100,000 1,000

$- - 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sales Volumes Median price

Source: Resolution Research, State of Queensland – June 2015 BRISBANE INNER CITY DEMOGRAPHICS 10 INVESTMENT OPPORTUNITY ANALYSIS

BRISBANE INNER CITY2 the inner city’s working population were employed DEMOGRAPHICS in a professional or managerial capacity, which is significantly higher than that recorded throughout Around one third of all residents of Brisbane’s Queensland of 31%. inner city are aged between 20 and 35 years of age, which is significantly higher than that recorded across Queensland. This demographic YOUNG trend is consistent with all inner urban markets AFFLUENT whose populations are predominantly comprised of Gen Y and Gen X residents who have a strong POPULATION lure towards the lifestyle and convenience on offer in high-density, mixed use locations within close proximity to major employment nodes. Following on from this occupational profile is a typically affluent population earning higher median weekly incomes on personal, household and family levels when compared with POPULAR GEN Y Queensland. At the time of the 2011 Census, the ADDRESS median weekly family income of Brisbane’s inner city residential population was $270 per week higher; the median weekly personal income was $890 per week higher; and the median weekly household income was recorded as $530 per week It follows suit then, that the dwelling landscape higher. throughout Brisbane’s inner city is dominated by apartments, which account for almost half of all Reflective of an area populated by those working dwelling types located throughout the inner city, in high income occupations is a population paying which is more than four times the proportion of more for housing costs. Median weekly rents, at apartments recorded throughout Queensland. the time of the 2011 Census were $175 per week higher than the Queensland and median monthly Given the popularity of Brisbane’s inner city with mortgage repayments were $1,300 per month younger residents, the proportion of households higher. occupied by couples with children is lower than the Queensland trend at the expense of higher instances of dwellings occupied by lone persons and share households.

Consistent with this is a preeminence of smaller BRISBANE’S INNER dwelling types comprised of one and two CITY IS DOMINATED BY bedrooms. These dwelling types account for APARTMENTS, WHICH 46.5% of all dwellings throughout the inner ACCOUNT FOR ALMOST city which is more than double that recorded HALF OF ALL DWELLING throughout the State. TYPES LOCATED

Support for this type of built form and THROUGHOUT THE INNER accommodation is strong across all tenure types, CITY. particularly the rental market which account for almost half of all occupied households in the area.

At the time of the 2011 Census, more than half of 2 Brisbane Inner City – SA4 KANGAROO POINT LOCATIONAL ANALYSIS 12 INVESTMENT OPPORTUNITY ANALYSIS

B=Kangaroo Point is located less than 2 kilometres The multi-award winning Riverlife Brisbane is from the Brisbane CBD and occupies a prime located in the suburb within the heritage-listed position on a peninsula around which the Brisbane Kangaroo Point Naval Stores along the banks of River flows. The geographic attributes of the the Brisbane River. Riverlife offers a diverse range suburb offer a range of river and city views of experiences, adventures, events and function unmatched in Brisbane. It is traversed by the iconic spaces which has seen the venue voted as one of Story Bridge and home to one of Brisbane’s most Brisbane’s top 4 attractions. Amongst Riverlife’s revered natural assets – the Kangaroo Point Cliffs. most popular adventures are abseiling and rock climbing the Kangaroo Point Cliffs, kayaking and stand up paddle boarding along the Brisbane PRIME River and cycling.

A-GRADE South Bank Parklands, within walking distance LOCATION of Kangaroo Point, is Brisbane’s premier public space, tourist destination and recreational, entertainment and business precinct. The 42 RECREATIONAL & LIFESTYLE hectare site is visited by more than 10 million AMENITY people each year. The Parklands is separated into three main precincts including the 17 hectare open Parklands including Streets Beach and the The high level and nature of recreational amenity Wheel of Brisbane; the revered retail and dining on offer within Kangaroo Point and its immediate street – Little Stanley and the Grey Street cultural surrounds offers the resident population a unique, boulevard including the Queensland Performing high quality of life. The popular Captain Burke, Arts Centre, the Queensland Art Gallery, the Raymond and Count White Parks are all located Gallery of Modern Art and the State Library of within the suburb providing popular bbq and Queensland. picnic spots for social and family gatherings. Kangaroo Point Park is considered one of Running along the banks of the Brisbane River is Brisbane’s best parks home to a sculpture park the Kangaroo Point Bikeway which joins with the and lengthy riverfront boardwalk. Upper River Goodwill Bridge at the southern end of Southbank Terrace is also a popular bbq spot, sitting atop the providing a direct link with the Queensland Kangaroo Point cliffs with panoramic views across University of Technology’s Garden Point Campus Brisbane’s river to the CBD. and the CBD. The Bikeway joins up with the South East Bikeway running to Macgregor in the south Kangaroo Point is one of Brisbane’s premier and the Bicentennial Bikeway running to Toowong tourist destinations. The Story Bridge Adventure in the west. Climb ranks as one of the top tourist experiences in Brisbane and draws local, interstate and international tourists. Additionally, the Kangaroo Point Cliffs are widely acknowledged as Brisbane’s most picturesque location for abseiling and rock climbing.

THE HIGH LEVEL AND NATURE OF RECREATIONAL AMENITY ON OFFER WITHIN KANGAROO POINT AND ITS IMMEDIATE SURROUNDS OFFERS THE RESIDENT POPULATION A UNIQUE, HIGH QUALITY OF LIFE. 12

RETAIL AND DINING running from the University of Queensland to Northshore Hamilton stopping at 18 locations Kangaroo Point is home to two of Brisbane’s along the way including South Bank Parklands, most famous pubs – The Story Bridge Hotel and QUT Gardens Point and New Farm Park. the Pineapple Hotel. Both Hotels have long-held reputations as being amongst the finest steak restaurants in Brisbane. A number of other venues are located within the suburb including The Cliffs Café, the Dockside Comedy Club and the Brisbane Jazz Club. Naturally, being adjacent to South Bank Parklands the residential population of Kangaroo HIGHLY Point has immediate access to Brisbane’s ACCESSIBLE most revered restaurants including River Quay, Stokehouse, Dell’Ugo and Era Bistro.

The everyday shopping needs of Kangaroo Point’s The population is also afforded access to the CBD population are well serviced by a selection of via TransLink’s bus network which takes around convenience stores and supermarkets including 15 minutes. TransLink bus services also link the the IGA X-press Kangaroo Point, Foodworks, suburb with the Woolloongabba Bus Station which Coles Woolloongabba and Woolworths Spring is a major station on the South Eastern Busway. Hill. Just over five minutes by car is the From the Woolloongabba Station, high frequency Coorparoo Shopping Precinct home to a full line bus services operate between Mater Hill, South Coles Supermarket and a variety of supporting Bank Parklands, the Cultural Centre and the CBD. convenience retailers. The South Eastern Busway connects with each of Brisbane’s major busways in the CBD providing Just over 4 kilometres from Kangaroo Point is access to the capital’s major employment, the landmark Gasworks Precinct at Newstead. education, retail and lifestyle nodes. Gasworks is home to an array of cafes and restaurants together with a Woolworths Supermarket and the Standard Market Company gourmet food and delicacy store. RESIDENTS OF TRANSPORT KANGAROO POINT ARE CONSIDERED SOME OF Residents of Kangaroo Point are considered some THE MOST FORTUNATE of the most fortunate in Brisbane with unmatched IN BRISBANE WITH access to Brisbane’s ferry and CityCat services. UNMATCHED ACCESS TO There are three ferry terminals located at Thornton BRISBANE’S FERRY AND Street, Holman Street and Dockside. In fact, more CITYCAT SERVICES. residents use the ferry as their principal mode of transport to work than any other suburb in Brisbane.

Both the Cross River Ferry and the CityHopper services operate from the Holman Street, Thornton Street and Dockside terminals to Eagle Street Pier in the CBD’s golden triangle in a journey taking approximately 5 minutes. At Eagle Street Pier the services link with the broader CityCat network

INVESTMENT OPPORTUNITY ANALYSIS 13 KANGAROO POINT POPULATION & DEMOGRAPHICS POPULATION AND DEMOGRAPHICS 60% According to the latest data provided by the State RENTERS Government, Kangaroo Point was home to 7,527 persons in 2011. Moving forward, the population is projected to grow by more than 3,850 persons The area is particularly popular with Gen-Y’s by 2036. Our research reveals that this is likely to who accounted for just over 40% of the area’s translate into demand for more than 2,000 new population, which was double that recorded dwellings. across Brisbane at the time of the Census. More than half of Kangaroo Point’s resident population were employed in professional and managerial 3,850 occupations, with more than 30% attending NEW RESIDENTS tertiary institutions. Congruent with these trends is a demographic earning significantly higher median weekly incomes when compared to the Brisbane, Queensland and national medians.

Demand for rental properties within Kangaroo The residential landscape of Kangaroo Point Point is particularly high with 60% of all dwellings is similar to all major inner urban suburbs. At occupied by tenants at the time of the Census. the time of the 2011 Census the suburb was This is significantly higher than when compared overwhelmingly dominated by medium and high with 33% recorded throughout Brisbane. density developments which accounted for almost 80% of all dwellings within the suburb. This is in stark contrast to greater Brisbane wherein apartments accounted for around 11% of all dwellings.

DEMAND FOR 2,000+ NEW DWELLINGS

Further mirroring the trend observed throughout inner urban areas, couples with no children and lone person households are the dominant household types. Consistent with this dwelling and household composition is a pronounced demand for smaller dwelling types with 63% of all homes comprised of two or fewer bedrooms. This dwelling profile of smaller dwelling types is more than three times that recorded throughout Brisbane at the time of the 2011 Census.

The resident population of Kangaroo Point is typified by young, affluent working professionals.

INVESTMENT OPPORTUNITY ANALYSIS 15 KANGAROO POINT EMPLOYMENT & EDUCATION EMPLOYMENT

Given Kangaroo Point’s immediate proximity to 73,000 the CBD it is not surprising that an extraordinary TERTIARY level of demand for residential dwellings stems STUDENTS from the CBD’s workforce, currently estimated to sit at almost 157,000 persons. By 2031, an 7KLM RADIUS additional 65,000 new jobs are forecast to be created in the CBD resulting in a total workforce in excess of 222,000 persons. EDUCATION

Additional dwelling demand is underpinned by There are around 73,000 tertiary students the significant volume of professional medical and all studying at institutions located within a 7 supporting health workers at the state’s largest kilometre radius of the Kangaroo Point/South medical precinct (Mater Hill) in neighbouring Brisbane and Woolloongabba precinct who are Woolloongabba. The precinct is home to the a key contributor to demand for rental dwellings Mater Medical Centre, the Mater Private Hospital, throughout the precinct. These institutions the recently opened Lady Cilento Children’s include: Hospital, the Mater Mother’s Hospital and the Mater Private Clinic. • The Southbank Institute of Technology which is the largest Vocational Education and Training educator in Queensland with more than 30,000 students enrolled across more than 110 courses. • The Griffith University South Bank with more than 3,360 students enrolled contains the Queensland College of Art, Griffith Film School 107,200+ and the Queensland Conservatorium. • The Queensland University of Technology NEW JOBS TO BE Gardens Point & Kelvin Grove campuses which CREATED collectively have 39,000 students enrolled and more than 3,500 professional and academic staff employed. Around 19,500 new jobs are anticipated to • The University of Queensland’s St Lucia be created over the coming years within Campus is easily accessible by a number Woolloongabba. This major expansion of the of bus routes running through the area and suburb’s workforce will inevitably underpin the CityCat ferry service. The University demand for dwellings within the riverside precinct is the largest university in Queensland and of Kangaroo Point. ranked in the top 100 universities worldwide. The St Lucia Campus currently has student South Brisbane has established itself as a major enrollments totaling 35,150 and the city fringe employment hub only 4 kilometres from University’s Herston Campus has more than Kangaroo Point. The suburb was estimated to 1,500 students enrolled. employ more than 22,700 people in 2011, forecast • The International Language School of to more than double to reach just under 46,500 Shafston International College is also located people by 2031. within Kangaroo Point and is a contributor to demand for residential accommodation within Kangaroo Point.

INVESTMENT OPPORTUNITY ANALYSIS 17 KANGAROO POINT RESIDENTIAL APARTMENT MARKET FUNDAMENTALS 19 INVESTMENT OPPORTUNITY ANALYSIS

APARTMENT MARKET of product situated throughout the area. Over FUNDAMENTALS the past three years, consistent with broader residential apartment market trends throughout Kangaroo Point’s apartment market supply has the inner South, the average annual rate of growth been relatively constrained principally due to a has lifted to a healthy 3.4% per annum suggesting lack of available land for redevelopment within the market has entered its next growth phase. the area. 2014 saw the release of a handful of new developments that recorded rapid rates of absorption. At the time of undertaking this research, there was less than seven months of supply within the market.

An analysis of long term (10 year) median price performance reveals an average annual lift in VALUES UP values of 2.7%. This rate of growth has been 3.4% P.A heavily influenced by the older, secondary nature

KANGAROO POINT IN THE CONTEXT OF BRISBANE’S INNER CITY – YEAR ENDED MARCH 2015

Newstead $747,000 New Farm $586,000 Bulimba $560,000

West End $555,000

Hamilton $542,000

Herston $516,000

Highgate Hill $515,000

Milton $510,000

Brisbane CBD $495,000

Brisbane Inner City $495,000

Kangaroo Point $490,000

South Brisbane $480,000

Fortitude Valley $475,000

Kelvin Grove $459,000

Auchenflower $458,000

East Brisbane $442,000

Toowong $435,000

Spring Hill $430,000

Albion $420,000

Bowen Hils $420,000

Dutton Park $405,000

Wolloongabba $401,00

$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000

Source: Resolution Research - Queensland Government – June 2015

INVESTMENT OPPORTUNITY ANALYSIS 19 20 INVESTMENT OPPORTUNITY ANALYSIS

OVER THE PAST THREE YEARS, CONSISTENT WITH BROADER RESIDENTIAL APARTMENT MARKET TRENDS THROUGHOUT THE INNER SOUTH, THE AVERAGE ANNUAL RATE OF GROWTH HAS LIFTED TO A HEALTHY 3.4% PER ANNUM SUGGESTING THE MARKET HAS ENTERED ITS NEXT GROWTH PHASE.

KANGAROO POINT IN THE RENTAL MARKET CONDITIONS - CONTEXT OF BRISBANE’S INNER APARTMENTS CITY As detailed earlier in this report, Kangaroo Point Despite recording a strong lift in median values is a particularly popular address for Gen Y renters over recent years, Kangaroo Point remains an who are fundamentally seeking to occupy one and affordable apartment market in the context of the two bedroom apartment types within the suburb. 21 suburbs which make up Brisbane’s inner city.

The suburb’s median price of $490,000 is largely HIGH GROSS in line with the inner city median of $495,000 and RENTAL YIELD is one of the most affordable riverfront suburbs 6.5% within inner Brisbane.

Given the suburb’s relative affordability, a number The area’s popularity as a rental address is of attractive purchasing propositions remain in underpinned by its immediate proximity to place within the local market – across both new the CBD and major employment nodes at (off-the-plan) and established markets. neighbouring Woolloongabba and South Brisbane, together with its close proximity to some of the state’s largest tertiary institutions.

Over recent years, median weekly rental growth throughout the suburb has been particularly THE SUBURB IS ONE OF strong. The median weekly rent of a one bedroom THE MOST AFFORDABLE apartment has grown by an average of 4.1% per RIVERFRONT SUBURBS annum over the past 3 years (or $10 per week) and a two bedroom apartment by 3.6% per annum WITHIN INNER BRISBANE. over the same time period.

Accordingly, given this strong rate of growth, the suburb’s apartment market is currently achieving a particularly healthy gross rental yield of 6.5% making it the highest yielding suburb within inner Brisbane.

YIELDING INNER CITY SUBURB