PROPERTY INSIGHTSAugust 2017

www.lmw.com.au

From the CEO – Chris Coonan

It has been two months since LMW announced the merger and acquisition of MVS National. The merger formed part of LMW’s larger expansionand acquisition strategy and has seen us grow to be the largest ASX listed valuation services business and the 4th largest property valuationservice provider in Australia. Our newly combined professional staff numbers has increased to 300+ valuers and our locations across the countryhave expanded to over 40 offices. Our valuers are without doubt some of the best in the country and this increase in capacity has greatlyimproved our ability to meet our clients needs across both the residential and commercial markets.

This newsletter will provide our subscribers with a broad overview of the national residential markets across major cities and as well as providesome commercial market indicators. While the headline results across the housing market remain strong, recent regulator policy announcementscould contribute to a slowdown in what have been exuberant housing market conditions in some regions. Lenders are now required to reducethe proportion of interest only loans to less than 30% of new mortgage originations. Along with several other policy announcements, marketfactors are also likely to contribute to a slowdown in housing market conditions. Mortgage rates are starting to edge higher, rental yields arefinding new record lows each month, concerns of oversupply in some inner city unit markets is heightened and affordability constraints arepreventing some prospective buyers from participating in the housing market.

*Source: CoreLogic 2017

RESIDENTIAL SNAPSHOT

NATIONAL OVERVIEW

Median AVM House & Unit Prices

HOUSES YoY% UNITS YoY%

Sydney $1,045,253 9.4% $743,435 5.8%

Melbourne $732,732 11.2% $517,231 4.9%

Brisbane $525,901 4.3% $392,769 -0.4%

Adelaide $449,177 3.4% $327,606 -3.5%

Perth $522,803 -1.3% $423,815 -7.3%

Canberra $633,820 6.1% $424,402 2.4%

Hobart $378,380 6.3% $292,681 4.1%

Darwin $574,171 -5.6% $409,034 -6.7%

National $607,780 4.2% $441,371 -0.1%

Source: CoreLogic 2017

DID YOU KNOW?

Despite an increase in auction activity over the June quarter, clearance rates across the combined capital cities have fallen by 3.1%.

Source: CoreLogic

Houses

Units

2014 2015 2016 2017

Sydney 13.4 11.5 16.7 4.5

Melbourne 8.4 11.7 15.1 5.6

Brisbane 5.2 4.3 4 1.7

Adelaide 4.5 -0.3 4.5 1.5

Perth 2.1 -3.8 -4.4 -2.7

Hobart 3.3 -1.6 11.7 3.5

Capital city avg (houses) 8.4 7.8 11.6 3.4

2014 2015 2016 2017

Sydney 8.3 11.3 9.6 1

Melbourne 1.1 6.9 1.7 -2.7

Brisbane 1.2 1.8 -0.2 -1.8

Adelaide 2.5 1.4 1.1 0.7

Perth 1.9 -3.5 -3.2 -3.8

Hobart 5.9 8.6 6.7 0.6

Capital city avg (houses) 5.1 7.9 5.9 -0.8

Percentage Change

Source: CoreLogic 2017

Data obtained from the 2016 Census shows a growth in housing stock between 2011 and 2016, highlighting the changing type of housing being developed in capital cities across Australia.

From 2011 to 2016, the latest Census has recorded an increase in denser housing stock within our capital cities. Although it may seem as if higher density units are dominating the inner city housing scene, data shows that in most Australian cities, medium density housing numbers have actually seen the greatest growth. In Sydney (17.9%), Melbourne (61.0%), Brisbane (29.6%), Adelaide (46.5%), Perth (49.4%) and Canberra (36.9%) it was medium density housing types which recorded the largest increase in stock over the five years. In each of these cities, except for Adelaide and Perth, separate house stock saw the smallest increase of the three housing types over the five years. From this data, it is evident that the landscape of the housing market in capital cities is ever changing.

10 years ago in Sydney, 61.7% of housing stock was separate houses, in the latest Census 55.7% of housing stock was separate houses. If this trajectory continues by the 2026 Census

less than half of Sydney’s housing stock will be separate houses.

This increase in medium and high density housing means that home buyers looking for detached housing closer to city centres must be prepared to pay a premium. The limited supply of land in these areas has also contributed to this increase. Although approvals for these types of properties has slowed recently, it is anticipated that construction of medium and high density dwellings will remain elevated relative to historic levels. The shift towards a greater proportion of capital city housing being medium and high density is expected to continue over the coming years.

*Source: CoreLogic 2017

PROPERTY FEATUREResidential Market

COMMERCIAL SNAPSHOT

INDUSTRIAL INDICATORS

INDUSTRIAL INDICATORSMAJOR CITIES

SydneyBrisbane

Melbourne Perth

Economic Indicator & Forecast* Jun Qtr-17 Sep Qtr - 17

GSP growth QLD 1.70% ↑

Industrial Production QLD 2.20% ↑

International Exports QLD 13.20% ↑

LMW Brisbane Industrial indicators** Jun Qtr-17 Sep Qtr - 17

Prime Grade Net Face Rent ($/sq m) $97-$125 ↑

Secondary Grade Net Face Rent ($/sq m) $65-$100 ↔

Prime Grade Yield 6.25%-7.50% ↔

Secondary Grade Yield 8.00%-9.50% ↔

Economic Indicator & Forecast* Jun Qtr-17 Sep Qtr - 17

GSP growth NSW 1.90% ↑

Industrial Production NSW -2.50% ↓

International Exports NSW 6.00% ↑

LMW Sydney Industrial Indicator** Jun Qtr-17 Sep Qtr - 17

Prime Grade Net Face Rent ($/sq m) $90-170 ↔

Secondary Grade Net Face Rent ($/sq m) $70-120 ↔

Prime Grade Yield 5.50%-7.25% ↓

Secondary Grade Yield 6.50%-8.50% ↓

Economic Indicator & Forecast* Jun Qtr-17 Sep Qtr - 17

GSP growth WA 0.60% ↑

Industrial Production WA 1.60% ↓

International Exports WA 8.10% ↓

LMW Perth Industrial indicators** Jun Qtr-17 Sep Qtr - 17

Prime Grade Net Face Rent ($/sq m) $70-$100 ↔

Secondary Grade Net Face Rent ($/sq m) $50-$80 ↔

Prime Grade Yield 6.0%-7.0% ↔

Secondary Grade Yield 6.9%-9.0% ↔

Economic Indicator & Forecast* Jun Qtr-17 Sep Qtr - 17

GSP growth SA 0.80% ↑

Industrial Production SA -1.40% ↓

International Exports SA -0.40% ↓

LMW Adelaide Industrial Indicator** Jun Qtr-17 Sep Qtr - 17

Prime Grade Net Face Rent ($/sq m) $95-$125 ↔

Secondary Grade Net Face Rent ($/sq m) $70-$90 ↔

Prime Grade Yield 7% - 8.5% ↔

Secondary Grade Yield 9% - 12% ↔

Adelaide

Source: *Deloitte Access Economics, Q2 2017 & **LMW Research

Economic Indicator & Forecast* Jun Qtr-17 Sep Qtr - 17

GSP growth VIC 3.00% ↔

Industrial Production VIC 1.10% ↓

International Exports VIC 6.60% ↓

LMW Melbourne Industrial Indicator** Jun Qtr-17 Sep Qtr - 17

Prime Grade Net Face Rent ($/sq m) $75-$90 ↔

Secondary Grade Net Face Rent ($/sq m) $55-$75 ↔

Prime Grade Yield 6.00%-7.0% ↔

Secondary Grade Yield 6.5%-8.0% ↔

COMMERCIAL SNAPSHOT

OFFICE INDICATORS

OFFICE INDICATORSMAJOR CITIES

Brisbane CBD Brisbane Fringe Sydney CBD North Sydney

Melbourne CBD St. Kilda

Perth CBD West Perth

PCA Office Vacancy Jan-17 Jul-17 Jan-17 Jul-17

PCA Vacancy 15.30% 15.50% 12.60% 12.20%

Brisbane Office Indicators Jun Qtr-17 Sep Qtr-17 Jun Qtr-17 Sep Qtr -17

White Collar Employment Qtrly Growth* -0.20% 0.75% 0.84% 0.50%

A Grade Gross Face Rent $600-$700 ↑ $515-$610 ↑

A Grade Incentive 25%-38% ↔ 34%-41% ↔

A Grade Initial Yield 6.25%-7.25% ↓ 6.50%-7.25% ↔

PCA Office Vacancy Jan-17 Jul-17 Jan-17 Jul-17

PCA Vacancy 6.20% ↓ 7.10% ↔

Sydney Office Indicators Jun Qtr-17 Sep Qtr-17 Jun Qtr-17 Sep Qtr-17

White Collar Employment Qtrly Growth* 0.50% 0.81% 0.39% 0.74%

A Grade Gross Face Rent $900-$1,200 ↑ $740-$940 ↑

A Grade Incentive 12%-18% ↓ 20%-25% ↓

A Grade Yield 4.75%-5.5% ↓ 5.50%-6.50% ↓

PCA Office Vacancy Jan-16 Jul-16 Jan-16 Jul-16

PCA Vacancy 22.50% ↔ 17.90% ↑

Perth Office Indicators Jun Qtr-17 Sep Qtr - 17 Jun Qtr-17 Sep Qtr - 17

White Collar Employment Qtrly Growth* 1.02% 0.30% na na

A Grade Gross Face Rent $700-$800 ↓ $450 - $550 ↓

A Grade Incentive 30%-40% ↔ 30%-40% ↔

A Grade Initial Yield 7.5%-8.0% ↔ 7.75%-8.25% ↔

PCA Office Vacancy Jan-17 Jul-17 Jan-17 Jul-17

PCA Vacancy 14.10% 15.80% 7.60% 10.20%

Adelaide Office Indicators Jun Qtr-17 Sep Qtr-17 Jun Qtr-17 Sep Qtr -17

White Collar Employment Qtrly Growth* 1.12% 0.69% na na

A Grade Gross Face Rent $450-$600 ↔ $300-$400 ↔

A Grade Incentive 15%-20% ↔ 10%-15% ↔

A Grade Initial Yield 6.50%-7.50% ↔ 6.75%-7.75% ↔

Brisbane Sydney

Adelaide Perth

Melbourne

Adelaide CBD Adelaide Fringe

Source: Property Council of Australia (PCA) & LMW Research. *Deloitte Access Economics, Mar Qtr and Jun Qtr 2017 na – not available for this region

PCA Office Vacancy Jan-17 Jul-17 Jan-17 Jul-17

PCA Vacancy 7.80% 7.00% 8.80% 4.60%

Melbourne Office Indicators Jun Qtr-17 Sep Qtr-17 Jun Qtr-17 Sep Qtr-17

White Collar Employment Qtrly Growth* 1.37% 1.20% na na

A Grade Gross Face Rent $680-$955 ↑ $460-$535 ↔

A Grade Incentive 20%-30% ↔ 19%-24% ↓

A Grade Initial Yield 4.75%-5.75% ↔ 6.0%-6.5% ↓

COMMERCIAL SNAPSHOT

RETAIL INDICATORS

RETAIL INDICATORSMAJOR CITIES

SydneyBrisbane

Melbourne

PerthEconomic Indicator & Forecast* Jun Qtr-17 Sep Qtr-17

GSP growth QLD 1.70% ↑

Retail Turnover QLD 1.10% ↓

Private Consumption QLD 2.70% ↔

LMW Brisbane Retail Yields (%) Jun Qtr-17 Sep Qtr-17

Regional Shopping Centre 5.00%-6.00% ↓

Sub Regional Shopping Centre 6.00%-7.00% ↓

Neighbourhood Shopping Centre 5.75%-7.75% ↓

Large Format Retail Shopping Centre 6.75%-8.25% ↓

Economic Indicator & Forecast* Jun Qtr-17 Sep Qtr - 17

GSP Growth NSW 1.90% ↑

Retail Turnover NSW 1.60% ↑

Private Consumption NSW 2.60% ↑

LMW Sydney Retail Yields (%) Jun Qtr-17 Sep Qtr - 17

Regional Shopping Centre 4.75%-7.25% ↓

Sub Regional Shopping Centre 5.25%-7.25% ↓

Neighbourhood Shopping Centre 5.00%-7.50% ↓

Large Format Retail Shopping Centre 6.25%-8.00% ↓

Economic Indicator & Forecast* Jun Qtr-17 Sep Qtr - 17

GSP growth WA 0.60% ↑

Retail Turnover WA -0.40% ↑

Private Consumption WA 1.00% ↑

LMW Perth Retail Yields (%) Jun Qtr-17 Sep Qtr - 17

Regional Shopping Centre 5.50%-6.00% ↔

Sub Regional Shopping Centre 6.00%-8.00% ↔

Neighbourhood Shopping Centre 6.00%-8.00% ↔

Large Format Retail 5.5%-9.00% ↔

Economic Indicator & Forecast* Jun Qtr-17 Sep Qtr - 17

GSP growth SA 0.80% ↑

Retail Turnover SA 2.40% ↓

Private Consumption SA 2.50% ↓

LMW Adelaide Retail Yields (%) Jun Qtr-17 Sep Qtr - 17

Regional Shopping Centre 6.00%-6.50% ↔

Sub Regional Shopping Centre 6.50%-7.00% ↔

Neighbourhood Shopping Centre 5.75%-7.75% ↔

Large Format Retail Shopping Centre 6.75%-8.25% ↔

Source: *Deloitte Access Economics, Q2 2017 & **LMW Research

Economic Indicator & Forecast* Jun Qtr-17 Sep Qtr - 17

GSP growth VIC 3.00% ↔

Retail Turnover VIC 2.70% ↓

Private Consumption VIC 2.80% ↓

LMW Melbourne Retail Yields (%) Jun Qtr - 17 Dec Qtr - 17

Neighbourhood Shopping Centre 5.0%-7.5% ↓

Large Format Retail Shopping Centre 6.5-8.0% ↓

Adelaide

LMW has offices across Australia

To find out more, please visit www.lmw.com.auor phone us on 1300 882 401

The Information provided in this newsletter has been extracted from market data received from CoreLogic © and is provided in good faith. It is general information only and should not be considered as a comprehensive statement on any matter and should not be relied upon as such. Neither LandMark White nor any persons involved in the preparation of this report accepts any

form of liability for its contents. All forecasts and estimates made are based on one set of assumptions, which may change.