MARKET OUTLOOK FORTITUDE VALLEY Fortitude Valley has achieved 20% growth in rental contracts per annum in the past five years, driven by ongoing population growth and shifting preferences towards the inner-city lifestyle.

01 Walkability & Accessibility 02 Infrastructure & Employment 03 Population & Demographics 04 Residential Market 05 Rental Market

Prepared exclusively for Vicland August 2017 Top: The Wickham; left: James Street Shopping Precinct; right: Barbara E ROAD NAM

WALKABILITY & ACCESSIBILITY

Fortitude Valley has continued to evolve as one of ’s most commercial and culturally significant suburbs. Situated within walking distance of the Brisbane CBD, the suburb has a range of lifestyle amenity including the Fortitude Valley entertainment precinct, James Street retail and dining, the Fortitude Valley Emporium, and Brisbane’s Chinatown, and offers easy access to the Gasworks precinct located in nearby Newstead. There are markets every Saturday and Sunday in the Brunswick Street Mall and surrounding laneways, while the arts are also represented with Fortitude Valley boasting the 16 30 majority of Brisbane’s art galleries, as well as numerous performing arts and music venues. 10 mins 6 Fortitude Valley is centrally located to several of 13 Brisbane’s leading tertiary institutions, including QUT 8 mins 14 New Farm Gardens Point and Kelvin Grove 2.5km away, and the University of Clinical School 2km away at the Royal Brisbane Hospital. Furthermore, some of 7 Fortitude Valley Brisbane’s most prestigious primary and secondary schools are nearby including Brisbane Girls Grammar School, Brisbane Grammar School, All Hallows’ School and St Joseph’s College. Despite the inner-city location, Fortitude Valley is 8 surrounded by several different parklands. City Botanic 6 mins Gardens, Roma Street Parklands and New Farm 9 Park are all within proximity to Fortitude Valley and together provide over 50 hectares of open space. Other 4 recreational options to explore include Victoria Park Golf Course, the Valley Pool, and Brisbane’s Riverwalk and integrated bike path network. Fortitude Valley is well-serviced by rail and bus networks, providing public transport connectivity to the Brisbane CBD and other key destinations. The Blue CityGlider, one of the highest frequency bus services in Brisbane, links Fortitude Valley to West End, Newstead and the CBD. It runs every five minutes during peak times and ENTERTAINMENT, RETAIL & DINING 10-15 minutes off peak, 18 hours a day from Sunday to 01 Chinatown Mall Thursday and 24 hours a day on Friday and Saturday. 02 Brunswick Street Mall Recent investment in transport infrastructure has also improved linkages within the already well-connected 03 King Street Retail & Dining Precinct Fortitude Valley, with projects such as the Airport Link, 04 Homemaker The Valley Inner City Bypass and Clem 7 tunnel linking Fortitude 05 (Under Construction) Valley to the Gold Coast, Sunshine Coast and Airport. 06 Proximity to amenity, paired with major public and private 07 James Street Retail & Dining Precinct infrastructure and transport connectivity, have seen 08 Emporium Dining Precinct the Fortitude Valley Study Area become an increasingly 09 popular inner-city location for urban living. Gasworks Plaza 10 The Tivoli 11 Bakery Lane

2 Market Outlook Fortitude Valley Fortitude Valley’s apartment market is supported by strong amenity, proximity to the Brisbane CBD and extensive education and employment opportunities.

The Coterie

South Brisbane 25 15 Brisbane CBD 29 19 28 5 21 24 Spring Hill 23 22 18 1 20 11 2 Fortitude Valley 26 4 mins

10 3 mins 17 3 27 Bowen Hills

12

RECREATION & PARKS 24 Brisbane Central State School 12 (RNA) 25 QUT Gardens Point 13 Brisbane Riverwalk 26 QUT Kelvin Grove 14 New Farm Park HEALTH 15 27 Royal Brisbane and Women’s Hospital 16 28 St Andrew’s War Memorial Private Hospital 17 The Valley Pool 29 Brisbane Private Hospital 18 Victoria Park Golf Course 30 Mater Hospital 19 Parkland Boulevard, Roma Street Parklands Train station 20 Centenary Aquatic Centre and Health Club Bus station EDUCATION 21 All Hallows’ School 22 St Joseph’s College 23 Brisbane Grammar School & Brisbane Girls Grammar School

Prepared exclusively for Vicland 3 Fortitude Valley has the ability to leverage INFRASTRUCTURE off significant infrastructure projects in the & EMPLOYMENT pipeline.

INFRASTRUCTURE Herston Quarter Cross River Rail Redevelopment $5.4 billion (Construction $1.1 billion (Under commencing late 2017) construction)

A five-hectare site that will be redeveloped to include: A new 10.2km rail line between Dutton Park and Bowen • 132 bed specialist centre Hills, featuring: • A new private hospital • 5.9 kilometres of tunnel under the and CBD • Residential and student accommodation • Five key station locations: Boggo Road, • Aged care and retirement living Woolloongabba, Albert Street, Roma Street and • Research and commercial space Exhibition Showgrounds • Childcare facilities • Retail and restaurant facilities Brisbane Showgrounds • Delivering 700 full time jobs annually over the 10-year $2.9 billion (Under construction period construction)

Howard Smith Wharves $100 million (Under Located in Bowen Hills, the regeneration project will construction) include: • A 22-hectare new mixed use urban village precinct • 340,000 sq.m of new residential, commercial and A vibrant waterside destination to include: retail buildings • 2.7 hectares of public open space • Creating more than 2,000 jobs • A boutique five-star hotel • $300 million per annum in economic benefits to • An exhibition centre and restaurants and cafes Queensland. • Potential for a new ferry terminal

EMPLOYMENT 2016 2036 New Jobs The commercial employment nodes in and surrounding the Fortitude Valley are part of the Brisbane fringe office Fortitude Valley 25,195 33,672 8,477 market, which is the largest non-CBD office market in Australia. The precinct is supported by strong existing Newstead, Bowen and future infrastructure, convenient access to amenity Hills and New 24,731 35,021 10,290 Farm and high accessibility, making it a prime area for continued commercial development. Herston 21,985 32,058 10,073 As new high-profile firms are attracted to this location their workforces will form a major driver for the local Spring Hill 18,418 23,372 4,954 residential market. The combination of these major employment nodes will offer more than 333,000 jobs by 2036. This equates to employment growth of 40% over Brisbane CBD 148,399 209,242 60,843 the next 15 years or almost 95,000 new jobs all within walking distance of Fortitude Valley. Total 238,728 333,365 94,637

Source: Urbis

4 Market Outlook Fortitude Valley POPULATION & Households in the Fortitude Valley Study Area earn 15% more than the Brisbane DEMOGRAPHICS LGA average.

HISTORICAL AND PROJECTED POPULATION Fortitude Valley Study Area 2006 - 2026

35,000 31,519 30,000

25,000

20,000 15,895 15,000 11,837 10,000

Resident projected population 5,000

0 2017 2011 2014 2012 2015 2013 2016 2018 2019 2021 2022 2024 2010 2025 2023 2026 2007 2020 2008 2009 2006

Source: Statistician’s Office 2015 AGE BREAKDOWN Fortitude Valley Study Area Attracted by the area’s proximity to major employment 60 precincts and social hubs, the majority of residents within Fortitude Valley Study Area Brisbane LGA the Fortitude Valley Study Area (comprising the suburbs 50 of Fortitude Valley, Bowen Hills and Newstead) belong to Gen Y. 51% of residents are aged between 20 and 34 years 40 – around 28% greater than the Brisbane LGA population proportion. 30

The demographic makeup of Fortitude Valley is dominated 20 by couple families without children, known as DINKS

(double income no kids), registering 73% of the population. Population(%)Proportion of 10 This demographic, paired with a large proportion of 0 residents employed as professionals, has contributed 0 to 19 20 to 34 35 to 44 45 to 64 65 to 79 80+ to a significant rental market within the Study Area. Age Distribution The average household income for the Fortitude Valley Source: ABS Census 2016 Study Area is $114,990, which represents a premium of $14,956 when compared to the Brisbane LGA. There WHO LIVES IN THE FORTITUDE VALLEY Fortitude Valley is a large number of high earning residents within the Study Area Brisbane LGA Study Area with 19% of households earning $182,000 per STUDY AREA? annum or more. This allows residents to pay a premium Average to rent selected product and generates long-term rental Household $114,990 $100,034 demand. Income Between 2006 and 2016, the Fortitude Valley Study Area Gen Y Residents (aged 20-34) 51% 23% population increased by approximately 400 residents per annum. Looking forward, the Fortitude Valley Study Couple Family 73% 37% Area is expected to increase by 7.1% per annum over the No Children next 10 years to 2026. In comparison, the Brisbane LGA is Employed as 38% 23% only expected to grow by 1.0% per annum over the same Professionals period. Fortitude Valley’s prime location and proximity Apartment to large employment nodes is a key driver for long-term Dwellings 89% 12% population growth, as the demand for inner city living Renters continues. 65% 34%

Source: ABS Census 2011, 2016

Prepared exclusively for Vicland 5 RESIDENTIAL Off-the-plan dwellings are achieving a premium of MARKET 51.1% over established stock.

The Brisbane apartment market is rapidly maturing and was $420,750. During that same time frame, the Teneriffe when compared with Sydney and Melbourne represents median apartment sale price was $600,000, Newstead an opportunistic market. An analysis of major capital was $597,200, New Farm was $575,000, Brisbane CBD cities for the year to March 2017 identifies the relative was $490,000 and Bowen Hills was $448,780. affordability of the Brisbane apartment market. Brisbane The Urbis Brisbane Apartment Essentials is a quarterly has a median apartment price being $41,800 and publication providing independent research into $256,800 more affordable than Melbourne and Sydney unconditional sales for the off-the-plan apartment market respectively. within Inner Brisbane. For the year to March 2017, the Due to CBD proximity and a wealth of lifestyle and weighted average sale price for off-the-plan apartments employment amenity, there has been an increasing within Fortitude Valley was $587,731. This demonstrates demand for apartments within Fortitude Valley. This a sale price premium of 51.1% (or $166,981) for new demand is evident through the long-term sale price apartments over established apartments in the suburb. growth of 2.2% per annum over the 10-year period to Looking forward, residential demand is expected to be March 2017. supported by significant infrastructure plans, established When compared with surrounding suburbs, Fortitude lifestyle amenity and proximity to employment in the Valley presents a more affordable option. For the year to Brisbane CBD. March 2017, Fortitude Valley’s median apartment price

CAPITAL CITY COMPARISON – YEAR TO MARCH 2017 MEDIAN APARTMENT PRICE – YEAR TO MARCH 2017

Median Apartment Price Fortitude Valley Savings Fortitude Valley Brisbane LGA Melbourne SD $448,200 $490,000 $420,750 More Affordable Bowen Hills + $41,800 $448,780 $28,030 Brisbane CBD

$490,000 $69,250 New Farm

$575,000 $154,250

Sydney SD Newstead $705,000 $597,200 $176,450 More Affordable Teneriffe Source: APM PriceFinder + $256,800 $600,000 $179,250

Source: APM PriceFinder

OFF-THE-PLAN APARTMENT SALES Fortitude Valley Study Area – Year to March 2017 All Stock New Stock Median Sale Price Weighted Average Sale Price $420,750 $587,731

Premium Over Existing Stock Source: APM PriceFinder, Urbis Brisbane Apartment Essentials $166,981

6 Market Outlook Fortitude Valley RENTAL Applications for one-bedroom apartments have grown at an annual rate of 22.8% over the five years MARKET to March 2017.

Brisbane recorded the highest return for investors for the premium for apartments within the Study Area highlights March 2017 quarter at an indicative 4.5% gross rental the value that potential tenants attach to the premium yield. Brisbane has also shown strong long-term median location and lifestyle amenity. rental price growth at 3.1% annually over the past decade. There has been strong bond lodgement growth in the These measures have promoted greater market interest Fortitude Valley Study Area over the past five years to from interstate and international investors. March 2017, with bond lodgements for one- and two- Proximity to the Brisbane CBD and major employment bedroom apartments increasing by 22.8% and 19.7% nodes has been driving residential demand within the per annum respectively. The consistent number of new Fortitude Valley Study Area (comprising the suburbs of or renewal rental applications being lodged per quarter Fortitude Valley, Bowen Hills and Newstead). Based on indicates a steady demand for apartments. This trend is Residential Tenancies Authority (RTA) data, over the past expected to continue as new apartments enter the rental 10 years to March 2017, apartments within the Fortitude market. Valley postcode 4006 have demonstrated average annual The combination of increased volume and rental growth growth between 2.3% and 3.3%. demonstrates that additional rental stock continues to be Apartments in the Fortitude Valley Study Area are absorbed by the market. achieving rental price premiums of between 4.3% and 25.0% over the wider Brisbane LGA benchmark. The

RENTAL PRICE GROWTH – APARTMENTS RENTAL BOND LODGEMENTS – APARTMENTS Fortitude Valley Study Area - March 2017 Fortitude Valley Study Area – March 2017 22.8% growth p.a. 1 Bedroom 900 788 19.7% growth p.a. 3.1% p.a. 800 700 668 600 2 Bedroom 500 2.3% p.a. 400 282 272 300 3 Bedroom 200 Mar-12 3.3% p.a. New Bonds Lodged in Quarter 100 Mar-17 0 One-bedroom Two-bedroom Source: Residential Tenancies Authority (RTA) *Fortitude Valley Study Area based on 4066 postcode (comprising the suburbs Source: Residential Tenancies Authority (RTA) of Newstead, Herston, Fortitude Valley and Bowen Hills) *Limited sample of three-bedroom product

PREMIUM OVER BRISBANE LGA – APARTMENTS INDICATIVE GROSS RENTAL YIELD Fortitude Valley Study Area - March 2017 March 2017

Fortitude Valley Study Area Brisbane LGA

One-bedroom $365 Premium $350 4.3%

Two-bedroom $460 Premium $420 9.5% Three-bedroom $650 Premium $520 25.0% Melbourne SD Sydney SD Brisbane LGA 4.1% 3.8% 4.5%

Source: Residential Tenancies Authority (RTA) Source: Residential Tenancies Authority (RTA)

Prepared exclusively for Vicland 7 BRISBANE GOLD COAST MELBOURNE This publication is prepared on the instruction of Vicland and is not suitable for use other than by the party to whom it is addressed. As the publication involves projections and assumptions it can be affected by a number of unforeseen variables. The forecasts and assumptions are a PERTH prediction and whilst Urbis has made every effort to ensure that the forecasts and assumptions are based on reasonable information, they may be affected by assumptions that do not necessarily eventuate or by known, or unknown, risks and uncertainties. It should be noted that past SYDNEY performance is not necessarily a reliable indication of future performance. 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 CISTRI — SINGAPORE 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. This study has been prepared for the sole use of Vicland and is not to cistri.com be relied upon by any third party without specific approval from Urbis. This publication is subject to copyright. Except as permitted under the Copyright Act 1968, no part of it may, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) be reproduced, stored in a retrievals system or transmitted without prior written permission. Enquires should be addressed to the publishers. 0493 PER