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Cameron Atfield | SMH | The Age | The Courier Mail | Feb 1, 2012

Brisbane is growing faster than any comparable city in the world, according to a new report.

Brisbane will grow faster than any other ‘mature’ world city over the next eight years, according to an international study compiled by market analysts Jones Lang LaSalle.

The only other Australian city to make the list, which comprises of cities with a “mature property market” and a population of more than 1 million, was eighth-placed Perth.

The study, A New World of Cities: Redefining the Real Estate Investment Map, ranked Brisbane number one for expected gross domestic product growth from 2012 to 2020.

Sixteen of the top 20 cities were in North America.

The list ignores developing cities, which grow at a much faster rate.

JLL Brisbane-based research and consulting director Leigh Warner said it was not surprising the Queensland capital had come out on top, primarily due to the strength of the state’s resources sector.

A similar boom in Western Australia also contributed to Perth’s strong showing, he said.

“Not only is it creating investment that drives GDP, but it’s also driving population growth in both those markets, which is the ultimate driver of property demand across all property sectors,” Mr Warner said.

While Brisbane’s strong showing came as no surprise to Mr Warner, he conceded public confidence may not reflect the city’s strong showing.

“Even in the middle of the GFC, we put out a couple of papers on coal seam gas and the resources sector more generally and the impact it could have on this region,” he said.

“I’m certainly not surprised, but I guess it is a surprise to some when we’re seemingly doing so poorly in the residential property market at the moment and other visible aspects, like our retail property market.

“But certainly the office market is already a major beneficiary of the resources sector and has been recovering very strongly for over 12 months now.

“Usually the office market lags in economic activity, but in this case it seems to be leading because there’s a lot of up-front jobs creation through the resources sector.

“Hopefully that will flow through to broader jobs growth and lift other areas of the economy like retail, which is suffering at the moment.”

Mr Warner said emerging cities, such as those in the boom economies of China and India, were not included on the list.

If they were, he said they would dominate world growth.

“For property investors, a lot of them don’t want the direct exposure to an emerging market because there’s fundamental risks associated with investing in countries where there’s not even the basic security of property rights and you’re at the whim of an unpredictable central government with a lot of power,” Mr Warner said.

“So there’s a lot of risk inherent in direct investment in emerging countries, so looking at where to invest – and this is something that a lot of investors coming through our office are doing – they’re looking for the markets that have the exposure to those (emerging) markets, like Perth and Brisbane.

“… There’s a lot of investors looking for those mature cities that are more secure as an investment, but with an indirect exposure to the Asian growth story.”

However, Mr Warner said there were challenges associated with such growth.

“If we don’t keep up in terms of infrastructure delivery and accommodating a large population, then there is a real risk that the cost of living would go up quite significantly,” he said.

“But in the end, it all comes down to how well we manage it. There’s also magnificent opportunities in how we capitalise in terms of state revenue from this mining boom, so if we use that wisely and spend it wisely then we can all benefit from it.”

Lord Mayor Graham Quirk said he was “delighted” with JLL’s assessment of Brisbane’s commercial growth opportunities.

He said the report showed Brisbane was on track to be one of the world’s most prosperous cities.

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Last week the International Monetary Fund (IMF) updated its ‘World Economic Outlook’ reporting a cut to their world growth forecast for 2012. They expect Europe will fall into a mild recession which will affect other parts of the world including the USA, emerging markets, and developing countries. Projected growth in the advanced economies has been revised down to 1.2 percent this year and 1.9 percent in 2013.

Never Let The Truth Get In The Way Of A Good Story

Different people/groups may ‘spin’ these figures in a variety of ways… but let’s simply take an objective and sober look at the facts.

• For all the talk this report has incited of ‘another global recession’… the same report says global economic growth in 2012 will be 3.3 percent! Dissecting the differences between individual regions and countries paints a positive outlook for Asia… and those countries tied to it.
• 2012 – 2013 growth in emerging and developing economies is expected to average 5.75 percent; down from the 6.75 percent growth in 2010 – 2011
• Despite a 0.75 percentage point downward revision, developing Asia is still projected to grow most rapidly at 7.5 percent on average in 2012 – 2013
• Economic activity in the Middle East and North Africa is expected to accelerate in 2012-13
• Most oil-importing countries in the region face muted growth
• The impact of the global slowdown on sub-Saharan Africa has to date been limited to a few countries, most notably South Africa, and the region’s output is expected to expand by about 5.5 percent in 2012

When reading editorials or listening to TV programs that report on what the IMF said… it’s important to be mindful of what their report actually contained. The points above should be comfort enough for those fortunate to be living in this great country we call Australia; but here’s some more nonetheless:

• “The adverse spillover effects are expected to be the largest for central and eastern Europe, given the region’s strong trade and financial linkages with the euro area economies”
• “The impact on other regions is expected to be relatively mild, as macroeconomic policy easing is expected to largely offset the effects of slowing demand from advanced economies and rising global risk aversion. For many emerging and developing economies, the strength of the forecasts also reflects relatively high commodity prices”

Like me you want to navigate your way through these challenging times and come out the other side better off. I see MORE opportunity to progress financially than in years gone by – we’re facing the perfect storm!

1. Sections of our property market have bottomed and are just beginning to rise – that’s a buying opportunity
2. Interest rates are low and dropping – this will increase demand for property and push prices higher
3. Australia’s population is growing yet new housing numbers consistently fall short – limited demand MUST result in higher prices

I’ll stop there although I could go on.

Swimming is great but care needs to be taken to avoid drowning… so too with investing. At mrd we only recommend the responsible use of the right kind of debt. Don’t make avoidable mistakes… talk to us first!

The Downside Of A Buyer’s Market

In a buyers market when prices are down… so too are valuations. In my experience this is when valuers are at their ‘worst’, making it difficult to access and use existing equity. For those in a position to take advantage of a buyer’s market… DO IT – THERE’S NO BETTER TIME!

Your Next Step

Step one is to have your current position assessed by someone whose motives are not self-centered. NB: Don’t pay to have this done – you don’t need to! For those with the borrowing capacity, buying conditions and some buying opportunities make now a great time to be considering your next investment.

• Heather from mrd finance… along with one of our property mentors will happily (and professionally) assess your current position before discussing your options with you. To request this support simply complete a “My Starting Point” assessment form >>>here.
• Alternatively… contact us with your question(s) on ‘anything property’ >>>here

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The New Year is a time of reflection and goal setting. I’d like to use a parable to share the truth that “There Is No Such Thing As Standing Still”. Happy New Year by the way; I trust you and your family had a pleasant Christmas break and are looking forward to an exciting and prosperous 2012.

Many people have heard of the parable of the talents but for those who haven’t it is essentially the story of a man preparing to leave on a journey who entrusts his wealth to three servants; dividing it on the basis of their abilities. The first receives five (units of currency), the second two and the third one. In modern terms we could say he apportioned $500,000, $200,000 and $100,000 respectively.

Servants one and two set about investing and doubled his money while the third, motivated by fear, simply hung on to the $100,000 (dug a hole in the ground and buried it actually). Inflation reduces the real value of money over time… hence the expression ‘if you’re not moving forward you’re going backwards’; there is no such thing as standing still.

Ponder these:

• Fear is nothing more than faith in a bad outcome
• Optimists and pessimists both hold expectation for a future they can’t yet see
• By definition you cannot overcome if there was no chance of defeat
• Every winner was a possible loser

I hold the view that long-term success (at anything) is ONLY enjoyed by those who push through the tough times. I’m not impressed by the ‘overnight success’ but I am by those who pass the test of time; still standing! Single parents, athletes, business people, accident victims and everyday ordinary people face adversity in the pursuit of their goals. Subject to attitude; the very same obstacles become stepping-stones for some but ‘tomb stones’ for others.

Throughout the 10 years of mrd’s existence I have attempted to evenly split my teaching between (1) the nuts ‘n bolts of (safely and responsibly) investing in property and (2) helping people stay the course when the going appears to be getting tough… the biggest battle is often in a person’s mind!

The Global Financial Crisis (GFC) and now the situation in Europe are classic examples. Doomsayers and fear mongers have repeatedly warned us of an imminent property crash. These self-appointed experts (NB: from other industries) were wrong; time and time again. I’m not suggesting sticking your head in the sand and thinking nothing can go wrong… just that if you are an investor you are ‘playing in the big league’ and you need to be a professional in what you do. Any athlete, musician, parent, CEO (or whatever) that acts from fear rather than responds from knowledge will never be the best they could have been.

Seasons & Cycles

There are four seasons in a year (or in Melbourne in a day); so it is with life. Tough times (in a marriage, the economy, a business or a career etc) pass. The ‘trick’ as I once heard Pat Mesiti say is “When you’re going through hell; don’t stop”!

In the parable I referred to above, slave # 3 reacted to (was gripped by) fear, resulting in a strong rebuke and being called “evil and lazy” by his master. He had the original $100,000 taken from him and given to the servant who had turned $500,000 into $1,000,000. Bob Brown and the Australian Greens would not be happy about that. They’d rather penalise the successful risk taker (via higher taxes) to reward the person controlled by fear. Good luck lifting the living standards of the whole (and by default individuals) by incentivising mediocrity and laziness.

Where To From Here?

In 2012 you are faced with exactly the same decisions as you were in January 2007, 2008, 2009, 2010 and 2011. Will you will turn on the six o’clock news, hear of  the challenges in Europe and sit on the sidelines for another year… or you will look for knowledge and opportunity and take action? Whether with property or not… I sincerely hope you do ‘something’ because there is no such thing as standing still!

For a complimentary financial health check and the opportunity to have your potential borrowing capacity assessed, complete an mrd ‘My Starting Point’ assessment form >>>here

To speak with a property mentor about property opportunities (including Federal or State Government grants), leave your question(s) >>>here

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Australia  experienced one of the strongest housing markets in the world during 2010, new research shows.

But likely interest rate hikes will slow the market in 2011, the Global Real Estate Trends report predicts. The report, released by Canada’s Scotiabank, tracked the housing markets in 12 advanced economies throughout 2010. Home prices increased in Australia, Canada, France, Sweden, Switzerland and the United Kingdom. They remained flat in Germany and the United States, and fell in Ireland, Italy, Japan and Spain.

Australia led the pack, thanks to relatively low unemployment and tight housing supply. But interest rate hikes and a cut to the first homeowners grant slowed a “red-hot” property market in 2010 to some degree, the report said .Economist Adrienne Warren anticipates the Reserve Bank of Australia will lift interest rates by an additional 75 basis points in 2011. Australia’s close trade ties with Asia and resource wealth would continue to underpin a solid pace of domestic activity. ” Higher interest rates will worsen already strained affordability,” Ms Warren said in a statement. Canada’s market also fared well, but was “one of the most volatile” expected to be tempered by more moderate employment and income growth in 2011. The UK property market staged a strong early-year recovery while Germany’s decade-long housing slump also came to an end. But it was a different story in Spain, Ireland and Italy, where the market continues to fall. Japan’s two-decade long property slump continued in 2010, and is expected to slump further in 2011 on the back of a weaker economy.

The surprise result came from the US where the housing market stabilised.That trend is expected to continue, with the report predicting the US Federal Reserve to maintain its record-low 0.25 per cent rate through the end of 2011.

via Australian housing market strongest in the world | Courier Mail.

Jessica Elder | December 20th, 2010

THE city’s tourism industry will begin 2011 in its best shape for almost three years with 2.8 million tourists expected to visit the Gold Coast during the Christmas-New Year holiday period.

The Gold Coast’s “comeback” figures, revealed last week, showed the city had broken the 10 million visitor mark for the first time since 2008.

Mantra Group, the biggest accommodation provider on the Gold Coast, has reported increased bookings for December and January.

Mantra marketing manager Susan Sullivan said the holiday season was a welcome relief.

 read more….

The Psychology Of Investing

The way our attitudes and emotions play a role in how we invest and what we buy is of great interest to both psychologists and economists. Known as behavioural finance and behavioural economics, the theory is that investors and consumers don’t behave rationally.

Human foibles, bias, irrationality and inconsistency all affect our success as individual investors and the movement of markets as a whole. In one recent study, only 22% per cent of respondents were described as ‘rational’ when it came to money matters.

read more.

Our Record Run Continues

Australia’s remarkable run of economic growth – 19 years – makes it a member of a very elite club. In fact, says CommSec Chief Economist Craig James, you’d be scratching your head to find any other countries that can lay claim to the same performance.

The current economic expansion began in the September quarter of 1991. The nineteenth year of the expansion was completed in the June quarter 2010 and the twentieth year of growth has begun with the Australian economy expanding by 0.2 per cent in the September quarter. While growth was only modest in the latest quarter, arguably Australia is still in the strongest position of any global advanced economy, says James.

read more.

TREASURY briefings to Population Minister Tony Burke advocate a high migration rate being used to offset the impact of Australia’s ageing population and help maintain economic growth.

But Treasury remains concerned the states are unprepared for a population boom, with housing shortages and infrastructure bottlenecks across the nation.

The April briefs for Mr Burke, obtained by The Australian using Freedom of Information laws, give a frank assessment of population trends and future challenges. Net Overseas Migration — permanent migrants and long-term temporary migrants — is a key driver of population growth and within 10 years is expected to equal the natural increase.

While Treasury forecasts NOM nonetheless falling to 180,000 by 2020, before plateauing, it warns a further fall to 100,000 and lower fertility would be enough to slow growth to 2.3 per cent, and slash gross domestic product by 17 per cent by 2050.

“Population growth ameliorates the ageing of the population,” the ministerial brief states.

“Migrants tend to be younger on average than the resident population, boosting the labour force.”

With Australia’s population expected to surpass 29 million within 20 years, Mr Burke has been told NSW, Queensland, Western Australia and the Northern Territory have no population policies. Queensland — which will accommodate more new residents in regional centres, compared with mainly capital city increases in other states — also lacked reliable population projections but was still “attempting to plan for current and future needs”.

Mr Burke, who was given the portfolio specifically to develop an overarching population strategy, said yesterday the forecast NOM reduction was “simply a projection; not a target . . . not a policy”.

“Much of the public discussion on population is about total national figures and ignores the different needs of different parts of Australia,” he said. “The truth is, if Australia only contained 10 million people, we would still be overcrowded if they lived in Sydney.

“What the debate needs now is to look materially at the differences between those parts of the country where infrastructure and carrying capacity is being stretched and those areas that are crying out for more workers.”

Aakifah Suleman, 21, migrated from Zimbabwe with her family in 1989, her parents expecting their children to benefit from an Australian education and then return home. But they enjoyed their experience so much they stayed, with Ms Suleman recently graduating as an occupational therapist and working with the Multicultural Development Association in Brisbane.

“When people come from other countries, they bring so many different skills and elements of their own culture and it makes Australian culture much richer,” she said.

The permanent skilled migration program, the government’s main policy lever to influence NOM, is reviewed annually within a budgetary context. The government has set a preferred band of 150,000 to 230,000.

Immigration Minister Chris Evans last week heralded a 20 per cent drop in NOM,saying it would hit between 230,000 and 250,000 by the end of 2009-10.

via Treasury push for big migration boost to offset population ageing | The Australian.