Great Deal! Get Instant $10 FREE in Account on First Order + 10% Cashback on Every Order Order Now

As a property analyst, youare required to carry out a ratio analysis report for your client who has anopportunity to purchase an income-producing commercial propertyin Sydney or any major city of...

1 answer below »
MKTG7023 Property Investment and Risk Management
Assignment 1 Due Date: 28th July 2023 by 11:00PM
Weighting: 40%
Assignment Details: As a property analyst, you are required to ca
y out a ratio analysis report for your client who has an opportunity to purchase an income-producing commercial property in Sydney or any major city of Australia. You must identify an income-producing commercial property that is still in the market or recently sold (as recent as June 2023 to date) and obtain the information for the property as follows:
a) Property Data - asking price of the property, acquisition costs including legal fees etc.
) Income Data - vacancy rate, cu
ent rent, operating expenses (outgoings) etc.
There are 5 major parts of this report:
Part 1: Introduction
You should provide the identification of the property. It includes descriptive information of the subject property.
Part 2: Property Market
Provide a review of market fundamentals and the property market. The review should be done at two levels covering the period XXXXXXXXXX.
i. The first level is a review of key market fundamentals of Australia such as cash rate, GDP, inflation/consumer price index, unemployment rate, and population growth.
ii. The second level is a review of key property parameters of the local market of the subject property such as Sydney, Melbourne etc., focusing on vacancy rate, demand, supply, price, rent, incentives, investment activity, and yield.
Part 3: Mortgage Requirements
i. You are also required to obtain mortgage information for your client. Identify the amount of loan that is required, term and repayment frequency and interest rate. Based on the information, calculate the loan/mortgage repayment.
ii. You should compare mortgage payment from at least 3 lending institutions from which you will recommend one to your client.
Part 4: Ratio Analysis
By utilising the collected data, conduct a detailed ratio analysis. A table consisting of all essential information is also expected.
Part 5: Conclusion and Recommendation
This section should provide a conclusion of the report. Your recommendation should be given.
Assignment Requirements
· The report is to be submitted through the Turnitin Link provided on vUWS.

· Although there is no page limit, this assignment should not exceed 1,000 words excluding tables, figures, references, and appendices using 12 points font size and 1.5 spacing.
· For the avoidance of doubt, although referencing and acknowledgements will be reflected in a marking schedule, failure to reference and acknowledge will lead to an automatic failure of the assignment with a 0 mark.
· There should be a minimum of five (5) academic references. Wikipedia, Investopedia, and anonymous amateur blogs should not be used as references.
· Late submission without any extension approval will be penalised in accordance with the Western Sydney University’s Assessment Polity at the rate of 10% of awardable marks per day or part of day late. Please refer to the learning guide for more details.
Unit Code: MKTG7023    Assignment 1    Quarter 1 2023

MKTG7023 PROPERTY INVESTMENT AND RISK MANAGEMENT
ASSESSMENT 1 MARKING GUIDE
QUARTER 3 2023
    DESCRIPTION
    MARKS POSSIBLE
    MARKS AWARDED
    Introduction
Is the subject property clearly identified?
    10
    
    Property Market
Does this section provide a full picture of the property market?
    20
    
    Mortgages Requirement
Is the client’s mortgage requirement clearly explained?
    10
    
    Ratio Analysis
Does the table exhibit essential information? Is the ratio analysis comprehensive? And accurate?
    35
    
    Conclusion
Are the key findings summarised? Is recommendation being made?
    10
    
    Citation of References and Sources
Are the sources of the information being referenced? Is the referencing Harvard styled?
    10
    
    Format
Is it as suggested?
    5
    
    Total
    100
    


CBRE Research_Australian Office_Figures_Q2 2022
1 CBRE RESEARCH © 2022 CBRE, INC.
FIGURES | AUSTRALIAN OFFICE | Q3 2022
Note: A
ows indicate change from previous quarter.
Key Points
‒ Labour market remains tight with unemployment at 3.5%, the lowest level in almost 50 years.
‒ Office demand was robust in H1 2022, with net absorption of 85,986 sqm. Over the last
twelve months, net absorption across Australia’s CBDs was 250,587 sqm, the highest level
since 2016.
‒ National CBD vacancy edged up to 12.0% in June 2022, from 11.3% at the end of 2021, as new
supply outstripped demand.
‒ Growth in face rents accelerated across some markets as construction cost pressures push
economic rents of new projects higher.
‒ Early evidence of incentives dropping as landlords are more focussed on income, given cap
ates have stabilised and will start to soften.
‒ Sales volumes were robust, although the expectation is that activity will soften in Q4 and
early 2023
‒ A lack of evidence has meant yields are largely stable, although will soften in the coming
quarters
FIGURES | AUSTRALIAN OFFICE | Q3 2022
Rental growth accelerates, off the back of
construction costs
38.0%
AUS Average Prime Incentives
$5.3
AUS Sales Volumes Q3 22
FIGURE 1: Australia CBD Prime Office Rents and Incentives
Source: CBRE Research
4.7% y/y
AUS Average Prime NER
4.93%
AUS CBD Prime Yield
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
100
200
300
400
500
600
700
800
900
1000
M
a
-1
0
Se
p-
10
M
a
-1
1
Se
p-
11
M
a
-1
2
Se
p-
12
M
a
-1
3
Se
p-
13
M
a
-1
4
Se
p-
14
M
a
-1
5
Se
p-
15
M
a
-1
6
Se
p-
16
M
a
-1
7
Se
p-
17
M
a
-1
8
Se
p-
18
M
a
-1
9
Se
p-
19
M
a
-2
0
Se
p-
20
M
a
-2
1
Se
p-
21
M
a
-2
2
Se
p-
22
$
sq
m
Incentive (RHS) Net Face Rent Net Effective Rent
2 CBRE RESEARCH © 2022 CBRE, INC.
FIGURES | AUSTRALIAN OFFICE | Q3 2022
Rents and Incentives
Rental growth continues to accelerate across some
markets
The rental recovery story is continuing across the Australian office
market. Upward pressure on construction prices has remained,
which is meaning new projects are costlier and are forcing
developers to increase their rents. This is flowing through to the
existing market where landlords are achieving higher face rents.
The Sydney CBD lead the way in Q3 with face rental growth of 3.2%
q-o-q and 4.0% y-o-y. The market has seen some improved leasing
activity lately. Brisbane has observed the highest face and effective
ental growth so far in 2022, with a significant amount of major
tenants either making leasing decisions or in the market considering
options.
Pressure coming on incentives given potential yield
softening
While face rents have been rising for a while, drops in incentives are
more recent. Perth and Brisbane have seen the largest drops, albeit
off the highest base, while Sydney is also seeing a tightening.
Owners appear to be more income focused given the interest rate
environment will cause yields to soften of the coming year. This has
meant they are trying to reduce the incentives being offered to
tenants. However, the higher construction prices are flowing
through to higher fit-out costs which are generally captured within
the incentives.
FIGURE 2: Australia CBD Prime Office Key Market Indicators & Forecast Direction – Q3 2022
A
eviation: R - Net Face Rent, I – Incentives, Y- Yield. Source: CBRE Research
WA Q3’22 q-o-q y-o-y
R $638 2.0% 4.7%
I 49.0% -100bps -183bps
Y 6.36% +10bps +9bps
SA Q3’22 q-o-q y-o-y
R $459 0.0% 0.8%
I 34.5% +11bps +58bps
Y 6.02% 0bps -29bps
VIC Q3’22 q-o-q y-o-y
R $689 0.6% 4.1%
I 40.3% -9bps 54bps
Y 4.66% 0bps -3bps
ACT Q3’22 q-o-q y-o-y
R $448 0.0% 2.5%
I 25.0% 0bps 0bps
Y 5.33% +7bps -4bps
NSW Q3’22 q-o-q y-o-y
R $1,323 3.2% 4.0%
I 32.8% -90bps -110bps
Y 4.50% Stable -6bps
QLD Q3’22 q-o-q y-o-y
R $701 2.5% 5.4%
I 41.1% -182bps -107bps
Y 5.38% 0bps +6bps
3 CBRE RESEARCH © 2022 CBRE, INC.
FIGURES | AUSTRALIAN OFFICE | Q3 2022
Figure 3: Net Absorption by Market (as % of total stock)
Source: PCA, CBRE Research
Demand and Vacancy
Net absorption remains positive across the country
Office demand has remained solid across Australia in H1 2022, with
total CBD net absorption of 85,986 sqm. Over the past 12 months,
net absorption reached 250,587 sqm which was the highest level
since 2016. Total occupied stock in Australian CBDs is now about 1%
higher than pre-COVID levels, which has meant that the office
demand recovery has been the second fastest (behind the GFC) of
the five major downturns since 1990 (see figure 8).
The Brisbane CBD saw the most significant rebound in demand,
mainly due to its largest private tenant, Suncorp, moving into its
new premises at 80 Ann Street, after a short period of not
occupying any space in the CBD. Perth also saw decent absorption
(13,302 sqm) off the back of robust economic conditions and some
centralisation of tenants. Sydney and Melbourne are seeing solid
leasing activity, yet actual tenant expansion has been less
pronounced, given large corporates are still looking at efficiencies in
esponse to hy
id working.
Vacancy rises off the back of new supply
Overall vacancy rose in H1 2022 across the Australian CBD market,
from 11.3% to 12.0%. The reason for this was net supply (237,331
sqm) outstripped net absorption (85,986 sqm). Key supply additions
were Quay Quarter Tower in Sydney (87,200 sqm) and 80 Ann
Street (59,000 sqm) in Brisbane. Every major market outside of
Adelaide and Perth have recorded higher vacancy over the past 12
months. However, the outlook for supply is less significant,
particularly in 2025, which should help the market to tighten over
the medium term.
Figure 4: Total Vacancy
Source: PCA, CBRE Research
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
Australia CBD Sydney CBD Melbourne CBD Brisbane CBD Adelaide CBD Perth CBD Canbe
a
H1 2021 H2 2021 H1 2022
12.0%
10.1%
12.9%
14.0% 14.2%
15.8%
8.6%
6%
8%
10%
12%
14%
16%
18%
Australia CBD Sydney CBD Melbourne CBD Brisbane CBD Adelaide CBD Perth CBD Canbe
a
Jun-21 Jun-22
4 CBRE RESEARCH © 2022 CBRE, INC.
FIGURES | AUSTRALIAN OFFICE | Q3 2022
Sydney
Net face rents for Prime Grade stock in the Sydney CBD averaged $1,323/psm in Q3 2022,
epresenting annual rental growth of 4.0%. Leasing activity appears to have risen in Sydney as
tenants better understand their future office requirements with H1 net absorption a robust
21,700 sqm in the CBD. Although prolonged decision-making is evident across the board, tenant
demand is expected to remain resilient as we continue to see larger occupiers with more
conviction. In the Sydney CBD, there are cu
ently six major developments expected to be
completed over the next three years. These developments will deliver circa 237,000 sqm with a
total pre-commitment of approximately 53% to date.
Melbourne
The Melbourne CBD continues to observe the slowest return to office of the major markets,
averaging 41% in September, although peak days reached 60% for the month. Given this slower
than expected return to office, major leasing decisions have taken longer than other markets,
yet activity does appear to be improving. Rental growth is starting to come through with face
ents up 4.1% y-o-y. This rental growth is most prevalent in key pockets of the CBD where
tenants are most active such as the Eastern Core. Leasing activity is expected to improve in Q4
2022 and early 2023 as corporates are more willing to make longer term decisions.
Brisbane
The leasing market in Brisbane has been the most active of any of the major markets in 2022.
This trend has continued with tenants such as Gadens (4,500 sqm) and Boeing (12,000 sqm)
committing to new space recently. Rental growth is also leading the country, with face rents up
5.4% y-o-y and effective rents up 8.3% y-o-y. Queensland has experienced some of the highest
construction cost impacts in Australia in 2022 off the back of the floods and strong population
growth driving housing construction. This has pushed economic rents higher for new
developments which is flowing through to higher rents for existing buildings. Landlords are also
able to push rents higher given the lack of supply, with no new developments due for
completion until early 2025.
Perth
Occupier activity has continued to be strong in Q3 2022 with new leasing deals over 500 sqm
amounting to approximately 68,000 sqm year to date to end of Q3, up 19% y-o-y. Physical occupancy in
the Perth CBD continues to improve with all COVID-19 restrictions now removed. Having fallen to 45%
physical occupancy in Q1, occupancy has recovered to 76% in September 2022, according to the
Property Council of Australia's latest office occupancy survey. During Q3 prime net face rents increased
to $638/sqm (+2.0% q-o-q and +4.7% y-o-y) Prime rent growth has been led by grade A+ and grade A
assets while rents in premium grade assets have been more muted due to supply headwinds.
Adelaide
The Adelaide office market has proven to be resilient throughout the COVID-19 pandemic. Physical
occupancy averaged 78% in September compared to pre-COVID levels
Answered 1 days After Jul 30, 2023

Solution

Nitish Lath answered on Aug 01 2023
30 Votes
SOLUTION.PDF

Answer To This Question Is Available To Download

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here