Newcastle – Beware Media Distraction

From the outside, things are looking pretty good in the Lower Hunter. In the city we have a new court house coming to fruition, we have work started on the new University building and whilst the design has created controversy, it is a statement for our time. It’s different and that’s what we need. We got a glimpse of what might be coming with a video on the interchange. We have had the Mayor of Newcastle and head of planning travel overseas with Urban Growth to study cities in the USA and we have had the Property Council doing a similar study tour.  Looking outside the square is a good thing; broadening the horizons on which you can draw is always a refreshing approach.

I too recently traveled and went through the town of Bordeaux in France. Look it up! This is a city where the Mayor has captured rate payer’s imagination through his direct intervention by tidying up the city. The similarities between Newcastle and Bordeaux are striking. With a 700,000 regional population, 220,000 of whom live in or close to the city. It’s also on a river but we have much more going for us such as our climate our scenery our beaches and our industry base. Yet Bordeaux’s Mayor – Alain Juppe, managed to (as his locals say) – “get his hands into the bowl of spaghetti that is government funding” and produce something that’s green efficient, functional and safe. He didn’t accept second best.

He removed the graffiti, installed lighting, made it difficult and expensive for cars to come into the centre, and built the A, B and C line – 43.9km of light rail tramway system that is used by hundreds of thousands of passengers annually. All the time, retaining the look of the city and its heritage, and making it people friendly.

Local Employment Statistics

On the work force front we are still bleeding jobs.  The employment statistics provide a perspective as to where we stand in comparison with the rest of the state. In June, our two regions were ranked with the other 28 regions in NSW:

You are considered employed if you pass this test.  “All persons age 15 years and over who, during the reference week worked for ONE hour or more for pay or worked for ONE hour or more without pay in a family business or on a farm” Courtesy of the Australian Bureau of Statistics.

Industrial Market

The very small shed market is showing strong activity. These are units and buildings up to 400m2. The larger you go, the more competitive you have to be with your rent and or incentives. There are a number of transport companies looking for midsize buildings with yards. The owner-occupiers are buying buildings using Self-Managed Super Funds. They get a strong investment with a good tenant and a friendly landlord.

Commercial Market

Small offices and retail spaces are showing positive signs with plenty of small leases under
way, but the market is still very competitive. A tidy clean presentation is a must along with
aggressive rents. Activity in the gym and coffee market is a worry. Larger space will become available on paper as businesses start to plan the next wave of moves into Honeysuckle. The opportunity to buy in the commercial sector is limited, however, the commercial operators do not seem as switched on to the idea of buying in their Self-Managed Super Fund as their industrial brethren.

Investment Market

If you are considering selling, well – now’s the time! I haven’t seen a market as strong as it is now for income producing property. Yields are dropping due to the increase in demand. This is caused by nervousness in the share market and the fact that term deposit interest rates / bond market are showing returns that barely keep pace with inflation. Call if you want to sell!

Residential Market

Are we in a bubble or not? Well when our unemployment is rising like it is, why then is our
local residential market rising with unprecedented strength? My take is Yes – Bubble. Part of the cause could be Channel 7 & Channel 9. We have lost our media independence and as a result our news is coming out of Sydney along with the reality TV shows. Sydney’s market is strong and heated but it deserves to be, with low unemployment, strong migration, the Asian influence and years of under development.
So next time you hear positive news feeds on real estate try and analyse where it’s coming from and let’s hope our Mayors and the Minister for the Hunter can get their hands into the “Bowl of Spaghetti!“

Steven Dick
Commercial Director

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