Sunday, February 25, 2018
Saturday, February 24, 2018
Thursday, February 22, 2018
Wednesday, February 21, 2018
Attracting good tenants
Attracting good tenants would have to be one of the main challenges that any property investor faces. First impressions of the property not only help to get potential tenants interested enough to submit an application, but it also helps to get you the top rental price available for your suburb of choice.
Many investment properties are bought at the lower end of the market as is to be expected, with investors looking to capitalise on returns in the long run.
The problem here is that it often brings with it a lower quality of property that looks and sometimes smells like a rental property, not one that someone would pay top dollar to call home.
Your ideal tenant is going to be one that takes pride in your property and will take care of it as their home.
Of course, this doesn’t necessarily mean that you have to spend thousands on the property before you start to see any returns but it does mean taking an objective look to see what improvements could be made towards making the house someone’s home.
Ask yourself if you would live in the property in its current state and if not, what basics would need to change before you could call it home.
Fresh paintwork
Keeping the paintwork fresh and current is not too costly and it makes a huge impact. It’s a clear sign that minimal work has been done to the property when floral wall paper and bright pink walls dominate the bedrooms.
A fresh coat of paint in a relatively neutral tone will not only make the rooms appear airier but will make a positive impression on potential tenants. This is also one area of the property that should be maintained so if you have any periods of vacancy over the years, take the time to freshen up the paintwork.
Clean bathrooms and kitchen
It should go without saying that the kitchen, as the heart of any home, is going to be a room that will make or break the ability to rent your property.
The kitchen and appliances need to be in good working condition and of course be clean. This is after all where your tenants will make their meals each day. If you wouldn’t cook in it, could you really expect them to?
The bathroom likewise conjures up all kinds of things in the imagination when it’s unclean. The bathroom in your property should be sparkling clean, fresh smelling and show no signs of dirt or mould, especially in the grout.
Clean and odour free carpets
Carpet, especially in older properties, can retain a lot of dust and odour in the house. Not exactly the homely welcome you were hoping to inspire for your potential tenants and it’s not likely to make them love the property like it’s their own.
Steam cleaning the carpets is a must if the carpets are in good condition.
Be sure to let the carpets fully dry to eliminate any odours that the cleaning may have stirred up before holding your property inspections.
If the carpet is in poor condition or is a garish throwback to the 1970s, this is going to one area where spending money to update them will not go astray.
New carpet, fresh smells and fresh paint will make the property feel almost brand new, just what any tenant wants.
Enough lighting
When it comes to property, insufficient lighting is a key culprit in making a house seem unappealing and dingy. When older houses come into the equation, darker hallways and not enough lighting seems to be a common complaint.
Take the time to install additional lighting and consider adding skylights to darkened hallways, bathrooms and kitchens.
Repairs and maintenance
Lack of maintenance is something easily spotted by the astute tenant. Not only can it deter them from applying for the property as they don’t want to live in a home where the landlord won’t fix any issues, but it can also have an affect on the tenants you do get.
These tenants may subconsciously think that if the landlord doesn’t care about these things, why should they?
Once a tenant heads in this direction, it can be difficult to turn things around. Things requiring repair may go unreported and snowball into larger issues.
Do yourself a favour and fix the general repairs needed and schedule in regular maintenance for things like the gutters, re-staining decks and painting the exterior. It will be well worth it in the long run when you secure a tenant who treats the property with care like it was their own.
Tuesday, February 20, 2018
Monday, February 19, 2018
Men and women in economics have different opinions
MEN may hail from Mars and women from Venus. But economists, surely, inhabit planet Earth, surveying it dispassionately. Alas, a new paper suggests that even dismal scientists divide on gender lines. Ann Mari May and Mary McGarvey of the University of Nebraska-Lincoln and David Kucera of the International Labour Organisation surveyed economists from 18 European countries, and found that differences in the wider population can survive even an economics education. Male economists are more likely than female ones to prefer market solutions to government intervention, are more sceptical of environmental protection, and are (slightly) less keen on redistribution (see chart).
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A similar study of American economists by Ms May and others also found men more sceptical of government regulation, more comfortable with drilling in the Arctic National Wildlife Refuge, and more likely to believe that a higher minimum wage would cause unemployment. Women were 14 percentage points less likely to agree that Walmart generates net benefits, and 30 points more likely to agree that American openness to trade should be tied to higher labour standards abroad.
Perhaps the divergence does not matter. Good economics should, after all, involve using theory and data to quell prejudices. But some evidence suggests that ideology seeps into economists’ work. Zubin Jelveh of the University of Chicago, Suresh Naidu of Columbia University and Bruce Kogut of Columbia Business School parse the language used in economics papers to identify the authors’ predilections, and confirm that they match their participation in political petitions. They find that right-wing economists tend to produce estimates that fit their anti-interventionist views. Other data crunched by Mr Naidu confirm that women use more left-leaning language than men.
The differences in opinion are cause for concern when the overwhelming preponderance of men in the economics profession is taken into account. Ms May and her co-authors found that men in their sample were twice as likely to be full professors as women. If economists’ senior ranks are skewed in favour of men, then the profession’s output might also be biased towards results they find appealing.
A final difference that Ms May and her co-authors uncover suggests one reason why economists might dismiss gender differences as a problem. Male economists are relatively likely to think that men and women face equal job opportunities generally, and that pay gaps are largely explained by differences in skills and choice. By contrast, women are more likely to perceive unequal opportunities, both in general and specifically within academia.
If women hold different views to men, then that could put them at odds with the profession’s more senior gatekeepers. And if men are more likely to have faith in markets to nudge women to the best jobs, then they could be more resistant to the idea that the gender imbalance is a problem that needs solving. Men were also more sceptical than women that greater gender balance in research teams would improve economic knowledge.
Of course, some differences of opinion need not necessarily reflect well on women. It might be that they suffer from “motivated reasoning”, believing that their lack of promotion is because of the system rather than their own shortcomings, or that economics would benefit from more people like them.
Alternatively, their personal experiences could give them information that men do not have. It seems plausible that men are susceptible to motivated reasoning too. It is easier to attribute one’s success to hard work than to unfair privilege.
Even the most brilliant of economists can be blind to their own biases. In 1960 George Stigler, a late Nobel laureate and dogged empiricist, bemoaned the “deleterious” effects of economists’ policy desires on their theory, but maintained that overall, as a positive science, economics was ethically and politically neutral. Yet some of his own views fell short of this ideal. Susan Brandwayn, one of his former graduate students and now an independent economist, remembers Mr Stigler telling her that the day the University of Chicago’s economics faculty hired a woman was the day that he would leave.
Friday, February 16, 2018
Wednesday, February 14, 2018
Tuesday, February 13, 2018
Monday, February 12, 2018
Wednesday, February 7, 2018
Mirvac profit falls on lower property revaluations, settlement timing
Diversified property group Mirvac said it is on target to deliver its planned earnings growth with most of its earnings skewed to the second half of the year, but has suffered a profit decline from a lower number of property revaluations.
The developer and landlord's revenue for the six months to December fell 28 per cent to $984 million from $1.36 billion a year earlier, while operating profit fell a smaller percentage of 8 per cent, the company said on Thursday.
The discrepancy in revenue is captured on its balance sheet as unearned revenue and inventories as it awaits skewed residential settlements in the next half of the year. Skew aside, Mirvac's residential earnings performance is in line with its full year target.
The main cause of the diversified group's decline in operating profit is lower property revaluation gains in its investment portfolio, mostly in offices, compared to the prior year.
"In line with guidance provided at our FY17 results, there will be a strong skew of earnings to the second half of the financial year due to the timing of residential settlements. We remain confident in our ability to deliver operating earnings growth of between 6 and 8 per cent in FY18," Mirvac chief executive Susan Lloyd-Hurwitz said.
Mirvac has reaffirmed an operating earnings per share guidance for the full year of between 15.3 cents and 15.6 cents a stapled security, representing growth of between 6 and 8 per cent and a distribution guidance of 11 cents a stapled security, also representing growth of 6 per cent.
The group also said it's gearing range is 23.8 per cent, within the target range of 20 to 30 per cent. Confident of its capital position, the group has also commenced a share buyback.
"Given our strong capital position, and as part of our disciplined capital allocation strategy, we have also announced plans to initiate an on-market buy-back program for up to 2.6 per cent of Mirvac securities on issue," Ms Lloyd-Hurwitz said.
The buyback is expected to commence on February 23 and will last 12 months.
Defaults in its residential business remained below 2 per cent, in line with historical averages.
In the first half of the year, the business achieved $2.9 billion in pre-sales of dwellings, up from $2.7 billion last year. It released a fresh batch of 1100 lots for sale and will offer another 1100 lots in the second half.
It also settled sales of 1164 lots and is eyeing 3400 by the end of the year.
Despite a quieter market compared to previous years, as demand, while still strong, eases down, Mirvac says well-located properties sell well and plans to continue to roll out more dwellings over the next four years.
"Although sales activity has moderated to more normalised levels in Sydney and Melbourne, we are still seeing consistent demand for well-located, quality product, particularly in our masterplanned communities," Ms Lloyd-Hurwitz said.
"A number of our forward-looking projects in Sydney are also set to benefit from new transport infrastructure, and our ability to buy at the right time has ensured we can release approximately 13,000 lots over the next four years, while taking a prudent approach to restocking our pipeline."
Gross margins for the residential business sit at 22.5 per cent, in line with the group's target of between 18 and 22 per cent.
Capital gains or (upward) revaluation of Mirvac's office portfolio is lower this year, at $169 million this half year, compared to $230 million last year, trickling down to the group's lower overall profit.
Indicators show the portfolio continues to perform well with an occupancy of 98 per cent, and there was over 50,250 square metres of space leased in the first half of the year.
Eighty-four per cent of its new offices including 664 Collins Street and 477 Collins Street in Melbourne, and Australian Technology Park in Sydney have been pre-leased.
Mirvac's industrial occupancy is not dissimilar to other periods, at 99.3 per cent and over 44,000 square metres of space was leased.
It also formed the Mirvac Industrial Logistics Partnership with Morgan Stanley Real Estate Investing with two seed assets in Victoria.
The group's retail sales productivity grew to $10,149 a square metre, up from $9,864 a square metre in the same time last year, and it leased another 29,000 square metres. Occupancy is 99 per cent.
Its retail portfolio has grown from increased ownership in East Village, Zetland and the proposed South Village Shopping Centre, Kirrawee, both in Sydney. In contrast it has sold a 50 per cent interest in Kawana Shoppingworld on the Sunshine Coast, QLD to ISPT for $186 million.
mirvac blogTuesday, February 6, 2018
Asian stocks poised to mirror Wall Street's sharp sell-off
- Asian shares closed sharply lower on Tuesday, tracking massive losses posted by U.S. stocks.
- The sell off in U.S. stock markets was a continuation of Friday's weakness as investors rushed for the exits in the wake of rising interest rates.
- Australia's central bank held interest rates steady.
Asian indexes closed sharply lower and U.S. stock indexes declined on Tuesday following massive losses seen stateside in the last session.
Japan's Nikkei 225 closed down 4.73 percent, or 1,071.84 points, at 21,610.24 as stocks across sectors pulled back. Still, that was off lows touched by the index earlier in the day, when it had seen losses of some 1,600 points. Automakers, financials and technology names were lower on the day, with Toyota down 2.87 percent.
Among other blue chips, SoftBank Group tumbled 4.9 percent and Fanuc Manufacturing lost 4.55 percent. Fast Retailing sank 5.46 percent.
Across the Korean Strait, the Kospi declined 1.54 percent to close at 2,453.31. Blue chip technology names were lower, with Samsung Electronics down 1.04 percent by the end of the day. Rival chipmaker SK Hynix closed flat. Among automakers, Hyundai Motor traded briefly in positive territory, but later slipped 0.94 percent.
Down Under, the S&P/ASX 200 declined 3.2 percent to finish the session at 5,833.3 on broad-based selling across sectors. The energy sub-index was among the worst-performing during the session, falling 4.49 percent as energy-related stocks declined following oil prices' move lower. Santos fell 4.44 percent and Oil Search lost 3.26 percent.
The heavily weighted financials sector was also sharply lower, with Australia's "Big Four" banks closing in the red. ANZ was down 2.99 percent and Westpac tumbled 3.13 percent by the end of the day.
The Hang Seng Index was down 4.39 percent by 3:31 p.m. HK/SIN as stocks sold off across sectors. Among financials, heavyweight HSBC fell 2.96 percent and China Construction Bank lost 5.99 percent ahead of the market close. Tech giant Tencent tumbled 6.17 percent by 3:36 p.m. HK/SIN. Energy-related stocks also extended declines on Tuesday, with CNOOC tumbling 5.17 percent.
Mainland stocks, which had risen in the last session, followed the region lower on Tuesday. The Shanghai composite slid 3.38 percent to close at 3,369.71 and the Shenzhen composite lost 4.44 percent to end at 1,726.09.
The blue chip CSI 300 index, which tracks large cap names listed in Shanghai and Shenzhen, finished the session lower by 2.94 percent, with telecommunications and energy the worst-performers on the day. China's start-up Chinext index recorded steeper losses to close lower by 5.32 percent.
Other market indexes in the region also took a beating on Tuesday: Taiwan's Taiex lost 4.95 percent, Vietnam's benchmark VN Index fell 4.81 percent and Malaysia's KLCI tumbled 2.22 percent at 3:33 p.m. HK/SIN.
New Zealand markets were closed for a public holiday.
US futures point to slightly lower open
Dow futures were down 210 points, and S&P 500 futures were lower by 8.5 points as of 3:38 p.m. HK/SIN. That was compared to steeper declines seen earlier in the day when the implied open for the Dow, based on the futures, was a decline of more than 1,200 points.
The sell off in U.S. stock markets on Monday was a continuation of Friday's weakness as investors rushed for the exits in the wake of rising interest rates.
The Dow Jones industrial average tumbled 1,175.21 points, or 4.6 percent, to close at 24,345.75, breaking below the 25,000 level. The 30-stock index briefly declined more than 1,500 points on Monday and traveled more than 5,100 points during the session.
"There was no specific catalyst outside of stops being triggered at 25,000 and when that happened, the Dow briefly plunged below 24,000, but concerns about the negative impact of rising yields have been the primary driver of the sell-off that began on Friday," Kathy Lien, managing director of FX strategy at BK Asset Management, said in a note.
Correspondingly, U.S. government bond prices rose overnight on safe-haven demand. The yield on the benchmark 10-year U.S. Treasury note last stood at 2.7489 percent after rising as high as 2.88 percent on Monday.
Meanwhile, on the economic front, Australia's central bank on Tuesday kept interest rates unchanged at 1.5 percent. In a statement, the Reserve Bank of Australia also said it expected a gradual pick-up in inflation in the economy.
In currencies, the dollar index, which tracks the U.S. currency against a basket of rivals, was a touch softer at 89.546. Against the yen, the greenback was mostly steady at 109.05, after falling as low as 108.43 earlier in the session.
The Australian dollar was softer at $0.7861.
On the energy front, oil prices extended losses after declining in the last session on the firmer dollar. U.S. West Texas Intermediate crude fell 0.83 percent to trade at $63.62 per barrel and Brent crude futures lost 0.84 percent to trade at $67.05.
— CNBC's Fred Imbert contributed to this report.
Monday, February 5, 2018
10 sec rate decision guide
Your 10-second guide to today's RBA interest rate decision
The Reserve Bank of Australia’s (RBA) February interest rate decision will be released later today.
While there’s little chance the bank will move interest rates at the conclusion of this meeting, there’s still likely to be plenty of interest on the February monetary policy statement.
First, this is the first time we’ve heard from the RBA board in two months. During that period, we’ve received a raft of important data releases, including Australia’s weak December quarter consumer price inflation report at the end of January.
Second, ahead of this Friday’s quarterly RBA Statement on Monetary Policy (SoMP), it will likely contain fresh clues as to what changes — if any — the bank will make to its forecasts for inflation, the unemployment rate and GDP growth.
So while there is little chance that rates will move today, there’s a good chance the RBA will provide some clues as to whether there’s likely to be moves in the foreseeable future.
Are the markets right in pricing in the likelihood of a 25 basis point rate increase by November, or have they jumped the gun in betting on a rate rise this year?
We may be about to find out.
Here’s the state of play:
- If interest rates do change today, it will surprise almost everyone. All 23 economists polled by Bloomberg expect the cash rate will be left at 1.5%. Financial markets are equally unenthusiastic about a potential move in either direction, ascribing a 100% chance that rates will be left unchanged.
- Given those not-so-lofty expectations, it means all interest will fall on the accompanying monetary policy statement, particularly what the bank has to say about the Australian dollar, along with the outlook for inflation, wage pressures and the broader Australian economy.
- Of all the areas mentioned above, there’s likely to be plenty of scrutiny on the bank’s assessment on the recent strength in the Australian dollar, including the implications for inflation and economic growth.
- When the RBA last met on December 5, it said: “the Australian dollar remains within the range that it has been in over the past two years”, adding the warning that “an appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast”.
- Since that date, the AUD has rallied by 3.6% against the US dollar, and by a smaller 0.6% in trade-weighted terms.
- While the Aussie has weakened in recent days, the bank could use this opportunity to express greater concern as to what this could mean for economic growth and inflation should it continue to strengthen.
- Along with the Australian dollar, there’s likely to be more discussion on inflation given Australia’s December quarter CPI report was released in late January.
- In December, the bank said: “inflation remains low, with both CPI and underlying inflation running a little below 2%”, an outcome that was again seen in the Q4 CPI report.
- While soft, annual growth in underlying inflation, at 1.9%, was above the RBA’s year-end forecast for 1.75%. That suggests it will retain the view that inflation will begin to “pick up gradually as the economy strengthens”.
- Ahead of Friday’s quarterly SoMP, the RBA will likely provide some clues as to whether or not its GDP growth forecasts have been changed.
- When it last met in December, it said: “the central forecast is for GDP growth to average around 3% over the next few years”. That’s likely to remain much the same given recent economic data.
- If there is to be a change in the bank’s commentary on the Australian economy, it could come from its assessment on household spending.
- “One continuing source of uncertainty is the outlook for household consumption,” the bank said in December, adding that “household incomes are growing slowly and debt levels are high”.
- While little has changed in relation to the latter, recent Australian retail sales reports have come in well above market expectations. Consumer confidence, whether measured by ANZ or Westpac, has also risen to the highest levels seen in more than four years.
- On balance, that suggests the concern towards households may ease a touch in today’s statement.
- The bank’s commentary on the labour market is also likely to be much the same given ongoing strength in official and private sector surveys.
- Employment growth remains “strong” and accompanied by a “rise in labour force participation”. Various forward-looking indicators are also continuing to point to “solid growth in employment over the period ahead”. It will likely repeat that “wage growth remains low”and the view that “stronger conditions in the labour market should see some lift in wage growth over time”.
- There’s also likely to be few changes in the bank’s view on the housing market given many of the same trends seen in late 2017 have continued in early 2018. Price growth is still softening, led by the once high-flying Sydney property market.
- On the international economy, there’s likely to be a few changes reflecting the recent lift in global bond yields and financial market volatility. Other than that, the February statement will likely paint a rosy picture on the state of the global economy.
- Putting it all together, it’s highly likely that the RBA will keep the final paragraph of the statement unchanged, providing a neutral stance on the outlook for interest rates.
- To recap, in December it said: “the low level of interest rates is continuing to support the Australian economy”, adding that “taking account of the available information…holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.”
- Any change to this outlook would be seen as a major surprise, and would almost certainly lead to speculation that the RBA may be prepping markets for an earlier-than-expected rate increase.
The February monetary policy statement, including the interest rate decision, will be released at 2.30pm
LJ Gilland RE