Table of Contents
1.0. Executive Summary1
3.0. Subject Property2
3.1 Location Description and Parcel Details2
3.3 Current Land Use2
3.5 Amenities (Proximity)3
3.6 Positive Factors3
3.7 Site Particulars3
3.8 Building Description4
4. Tenant and Financial (rental income) Summary4
5. Market Analysis5
5.1 Historical market analysis5
5.2 Current market analysis6
5.3 Supply analysis and demand6
5.4 Impact on investing the property6
6.0 Future prediction6
6.1 Vacancies and Absorption rates7
1.0. Executive Summary
This report is a requirement of Assignment 1 of the subject MMP 212 (Property Investment) produced by in understanding the process of compiling relevant sources to form an industry standard report on the property located at XXXXXXXXXXBlackburn Road, Mount Waverly VIC 3149.
Thorough analysis of the local office market along with relevant information on global and national market trends have affected the commercial property market within Australia. These trends are to have major affects in attracting offshore investors to the commercial property market.
This research will form a building and market report of the previously mentioned property in assisting the client in his decision on investing in the mentioned property. The client is an overseas investor and is interested in claiming investment towards the property mentioned earlier.
The client requesting the document is unfamiliar with the Melbourne property market. Therefore, the report must be easily understood by the client in finalizing his decision on the investment.
Australia is one of the growing, most competitive, strong and flexible economies globally. The great economy in Australia is followed by a low inflation in the cost of commodities and services and over the last fifteen years the economy has been deemed stable. The unemployment rate is as low as 5.7 percent and the workforce is highly skilled and professional (doing business in Australia; An introductory guide, XXXXXXXXXXThe workforce is also diverse with over 15 percent speaking other languages apart from English. Many multinational companies are making investments in Australia and targeting a dynamic Asia Pacific region with Australia as the capital headquarters.
As businesses expand, the need for a larger work space is a crucial aspect in performance of the developing companies. Commercial properties can be a great investment for an investor in seek of cash flow as the growth in business will increase its demand of commercial working space. Higher and desirable rates of rental returns on commercial office spaces are shaping the commercial property investing market to be strong in comparison to other property markets.
Overseas investors are showing interest in owning office spaces within Australia in achieving desirable cash flows and rental return. This report will consist of a thorough analysis of the A grade office space available at XXXXXXXXXXBlackburn Road, Mount Waverly VIC 3149 as instructed by the overseas investor. An analysis of the surrounding market will also be conducted in guiding the client in explaining whether the office space is worth the investment.
Research must be conducted to meet the clients’ needs therefore, information in support of this report will be taken strictly from recent and reliable sources. Historical figures will also be included in demonstrating the past market trends. Main search will be conducted online through google and other materials such as journal articles may be referenced if required in establishing supportive evidence.
3.0. Subject Property
241 – 243 Blackburn Road, Mount Waverly, VIC 3149
(Leased Office at XXXXXXXXXXBlackburn Road, Mount Waverley, VIC XXXXXXXXXXrealcommercial n.d.)
3.1 Location Description and Parcel Details
The office space is located in the suburb of Mount Waverly under the Monash Council of Victoria. The property under study is listed as
Title Volume 10652 Folio 536 being Lot 4 on Plan of Subdivision No. 06415A.
3.3 Current Land Use
The building is leased to two tenants that is the Australia Wide Engineering Recruitment and J&W Investment Group.
The building is close to amenities which is very important and crucial to its location. The neighborhood in the suburb consists of Chadstone shopping center and the Glen Shopping center, restaurants, the Monash hospital, and Mount Waverley Secondary College among other amenities.as
3.5 Amenities (Proximity)
Closeness to amenities are crucial in the matter of finalizing a location of an office building. This property is close to the Syndal Railway station which has access to the major arterials in Melbourne. The building is accessible via Blackburn Road and also has access to ample parking.
· Syndal station is 167 M away
· Glen Waverley station is 1.4 km away
· Mount Waverley station is 3.9 km away
3.6 Positive Factors
The building is located in a pleasant and busy environment with well-maintained gardens. Melbourne is known to be quite leafy and exquisite but well maintained. The property is close to ample parking spaces on Blackburn Road.
3.7 Site Particulars
The zoning of the building is commercial 1. The building has been built and improved to the best taste with lifts access and foyers that definitely will leave a permanent impression on the clients and staff. There are 4 car parks in the area therefore parking will not be a problem. The building has ample natural lighting saving power during the day. The building is self-contained with a fully fitted tenancy with a bathroom and kitchenette.
3.8 Building Description
The building has a total area of 2,412 square meters with the ground floor having 560m2, first level 957m2 and second level having 895m2.
External walls:Concrete and glazing
Window frames:Aluminum framed
Internal Ceilings:Suspended acoustic tiling and plasterboard
Floor coverings:Carpet, ceramic tile and concrete
As shown in the photos the quality of the build is evident. The construction of the building is in terms with a Grade A office. The layout and the interior are fabulous and are occupied by known companies.
4. Tenant and Financial (rental income) Summary
As provided, the current rental income of the building is shown below:
The following outgoings are estimated for the period XXXXXXXXXXfinancial year. All the rental contacts will be "Gross Lease", so not expenses should be passed on to tenants.
5. Market Analysis
5.1 Historical market analysis
The housing price from 1996 – 2004 sharply increased in metropolitan Australia and the whole nation at large; then a decline was experienced after 2004. An evaluation is done by Wegman and Jiao XXXXXXXXXXon homeownership and household incomes in both metropolitan and metropolitan areas in Australia showed that house prices are likely to increase in areas where income polarisation increased or raised. This consequently forces people to move or migrate from metropolitan areas to non-metropolitan areas due to lower housing prices in non-metropolitan areas (Parry XXXXXXXXXXThis accounts for the drop in metropolitan occupancy from XXXXXXXXXXThis same scenario is repeating its self in all subnational levels except Darwin state as a result of increased immigration into the states, increased residential density, and the favourable geographical factors that have led to increased state occupancy.
In order for equilibrium to be attained, convergence and divergence of prices should be checked. Property is immobile; therefore, it cannot be moved from one location to another, which leads to a divergence of prices. This is an indicator that the value or price of the property is weakening, thus lower prices in the future. Convergence of property occurs due to economic growth; population growth increased the immigration of people into the area. Through positive convergency, the prices are set back to equilibrium, offsetting disparities. The population range between 2011 and 2016 was 4.8%, with the majority of the occupants being 40-48 years of age. This age group is non-dependent and productive, thus increasing the labour force for states and Australia as a whole.
5.2 Current market analysis
Sydney, Melbourne and Canberra sustain the Australian commercial property market. The commercial property market generates huge returns through commercial property investing, thus playing a significant role in the investment market (Parry XXXXXXXXXXThe current market state in Australia is substantial as compared to other markets globally, thus attracting international investors.
Office occupancy in Melbourne (CBD) is increasing drastically. In December 2020, an increase of 13% was realised, followed by a 31% increase in January 2021. In February 2021, a drop of 24% was witnessed and a sharp rise of 35% in March. An increase is expected to continue throughout the year (Li et al., XXXXXXXXXXCompared to other regions such as Darwin Sydney, Adelaide, Canberra and Hobart, Melbourne has the lowest occupancy but the leading in the rate of immigration for the last three months. This is a clear indicator of increased office occupancy in CBD, thus driving an increase in business activity in the area.
The reactivation of Melbourne CBD growth is due to government support and stimulus after the coronavirus pandemic. During the pandemic outbreak, business was closed, and the majority of the population relocated to rural areas reducing business in the CBD. As the country recovers from the pandemic, the government is supporting businesses throughout the country in order to reactivate the economy. Reopening of business has led to an increase in the employment rate, forcing people to move into the CBD to work.
5.3 Supply analysis and demand
The high immigration rates into Australia by students and other people looking for job opportunities has increased the demand for housing. As a result, more houses have been constructed in the middle, urban and inner areas to cater for the growing population. An increase in investment interest since 1978 has also led to increased housing demands (Zhou et al., XXXXXXXXXXMost investors are focused on financing the construction of rental housing. The investment rate has increased by 40% over the past few years. Factors increasing housing demand are increased interest rates, increased investment, low government taxes and economic growth.
5.4 Impact on investing the property
The property under demand is located within Melbourne CBD; therefore, in relation to supply and demand and strategic location, a prediction can be made. The current market trends promote a positive future for office property within Melbourne. The availability of social amenities and population growth within Melbourne CBD will positively impact property price and business.
6.0 Future prediction
The future market trends for the property are likely to increase as a result of priorities given to business in the CBD by the government and local authorities. Since December 2020 to date, high immigration rates into Melbourne have been reported, thus increasing the occupancy rates in the CBD. The gradual increase of occupancy rates is an indicator that drastic occupancy rates are expected throughout the year. An 11% increase rate was realised between February and March 2021. The increase in occupancy is a motivator for investors who wish to invest in Melbourne's property (Pallico XXXXXXXXXXThis increase does not only benefit Melbourne but the country as a whole to gain or restore its economic momentum.
The government has launched a global book entitled "reimagine our economic powerhouses by turning CBD into central experience district". The book is aimed to influence the marketing of properties in subnational CBD. The report encourages the government, landlords and workers to work in unison to ensure people return to the CBD (Pallico XXXXXXXXXXThe following measures are to be implemented, free public transport for employees, giving free packing space two or three days a week, taking up unused space to turn it into something useful, promoting greener up by recycling waste; through these interventions, the economic challenges experienced during the coronavirus pandemic will be reduced thus boosting the economy. With all these interventions, the property market in Melbourne is likely to increase, thus causing it to be independent.
6.1 Vacancies and Absorption rates
Melbourne vacancy rates are expected to continue reducing as the supply levels continue to increase as per the demand of the market. The supply rate in 2018 was 92,400 and that of XXXXXXXXXX,7600. The vacancy is expected to increase in the future, creating space for investors. Gross supply was at a moderate rate through 2019 and 2020 (Lenaghan 2018).
A rich and detailed report has been developed by XXXXXXXXXXBlackburn Road, Mount Waverley, VIC 3149 building in Melbourne. Through this report, the investor is in a position to understand commercial property markets in both the national, local and global contexts.
The report reveals a substantial market for the building of interest due to population growth in Melbourne and also due to support from the government after the coronavirus pandemic. The location of the building and its surrounding social amenities and infrastructure indicate a strategic location to warrant investment. The current market trend is favourable for investment for both international and local investors. The client should consider taking up the building as a long-term investment. With the reported population increase, the demand for the property will increase with time.
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pwc XXXXXXXXXXdoing business in Australia; An introductory guide. [online] Available at: https://www.pwc.de/de/internationale-maerkte/assets/doing-business-in-australia.pdf [Accessed 16 April 2021].
Boeing, G., Wegmann, J. and Jiao, J., 2020. Rental housing spot markets: how online information exchanges can supplement transacted-rents data. Journal of Planning Education and Research, p.0739456X XXXXXXXXXX.
Lenaghan, N XXXXXXXXXXA wave of supply to hit the Melbourne office market by 2020. Financial Review.
Li, T., Shiran, S.J. and Dodson, J., 2021. Metropolitan migration and spatial housing markets: A geographical study in Melbourne. Applied Geography, 129, p.102414.
Pisco, M XXXXXXXXXXSydney and Melbourne offices will be best-performing property investments over the next five years: report. Commercial Property & Real Estate News.
Parry, S., 2020. Notice is hereby given that an ordinary meeting of the Gore District Council will be held in the Council Chambers, James Cumming Wing, 10C Ardwick Street, Gore, on Tuesday 10 March 2020, at 4.00 pm. Agenda.
Zhou, W., Xu, Z. and Zavadskas, E.K., 2019. A bibliometric overview of the International Journal of Strategic Property Management between 2008 and 2019. International Journal of Strategic Property Management, 23(6), pp XXXXXXXXXX.