Detailed Analysis of the Real Estate Industry in Melbourne, Australia

This report provides a detailed analysis of the real estate industry in Melbourne, Australia. It begins with an introduction to Melbourne's demographics, history, and climate, highlighting factors that contribute to the city's real estate demand. The report then describes the different types of real estate and the factors influencing the market, including population growth, infrastructure, and the local economy. It presents data on the growth of the Melbourne real estate market, including recent trends and key factors driving its performance. Furthermore, the report includes information on key players in the industry, with a detailed overview of Charter Hall, its business strategies, and its role in the Melbourne real estate landscape. The analysis also covers the market's performance, recent developments, and future prospects, making it a comprehensive resource for understanding the current state and potential of Melbourne's real estate sector.

Running head: REAL ESTATE INDUSTRY
REAL ESTATE INDUSTRY
Name of the Student
Name of the University
Author Note

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Introduction
Victoria is the most populated state of Australia which falls in the south-east corner of
the largest Island country of the world. Its capital is Melbourne and which is considered as
the most developed and populous city of Victoria. Melbourne is a massive metropolitan area
comprising of thirty one municipalities. The most populous city of Victoria lies mostly on
along the coastline of Port Philip and lies between the Dandenong and the Yarra Valley. It
comprises of five million people which is nineteen per cent of Australia’s population roughly.
It was the part of the British colony- New South Wales since 30 August 1835. It has served as
a host to numerous sporting events like the Australian Open, Summer Olympics in 1956,
Melbourne cup, Australian Grand Prix, ICC Cricket World Cup and numerous matches of
bilateral and triangular series. Melbourne experienced an extensive growth post mid-1851
owing to discovery of gold in Victoria.
Melbourne served as major port of Victoria and by 1865 it surpassed Sydney in terms
of population owing to this gold rush. This Gold Rush era saw the construction of major
public buildings in Melbourne like the Old Melbourne Goal, the Parliament House, General
Post Office, Victoria Barracks, St. Patrick’s Cathedral, Customs House, University of
Melbourne, Treasury Building, Melbourne Town Hall and many more. Melbourne
experiences a temperate Oceanic type of climate where there is mild winter and warm
summers. This wonderful type of climatic condition along with numerous places of attraction
pulls a considerable volume of tourists every year. With the advent of massive number of
tourists every year, the demand for hotels, lounges, bars, restaurants and many more are
increasing day-by-day which can be considered as positive signs for the real estate industry in
Melbourne.

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Melbourne has a rich architectural history since ages and modern age is no exception.
The modern architecture were built between nineteenth and the early twentieth century. Some
of the architectural masterpieces that forms the part of Melbourne’s lush history are Royal
Exhibition Building which has also got its listing as a world heritage site, Neo Gothic
Building, Old Stock Exchange, the Parliament House, Flinders Street Station, St. Paul’s
Cathedral and many more. Melbourne is also known for its famous war memorial “Shrine of
Remembrance”, which was constructed in memory of the valiant men and women who lost
their lives in the World War 1. Melbourne which is considered to have the tallest skyline in
the entire country has an aggregate of seven hundred and fifty high rise buildings out of
which forty three are skyscrapers. Melbourne has the fourteenth highest residential building
in the world, The Eureka Tower as of 2014. Melbourne is characterized by lesser volume of
public housing provided by the Housing Commission of Victoria and there exists an ever
increasing demand for private rental properties and some of which are quite expensive. This
public housing is a part of the Common-Wealth State Housing Agreement.
Description
Real Estate in truest sense signifies a particular property encompassing a piece of land
with immovable property constructed on it. Real Estates are of four basic types namely,
residential, commercial, industrial and land mainly of vacant nature. Dealing in Real Estates
means construction of immovable properties on land or buying and selling of already
constructed properties. The market for Real Estate primarily depends on the market demand
properties which subsequently depends on numerous factors like the demographic structure
of the area, economy of the area and many more. Melbourne in recent years has been going
through a phase of rapid increase in population and this has resulted in increased demand for
houses in the most populous city in whole Australia. Melbourne has been the home for over
4.82 million population and which if tallied in national context, accounts for 19.05% of the

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total national population1. Melbourne is considered as the fastest growing city in the whole
Island country in terms of population with an annual increase of 2.4%. This annual increase
in population consists both natural increase as well as foreign migrations and this foreign
migration mainly creates an additional demand for houses in Melbourne. The following graph
depicts the annual growth in population over the years up to December, 2018.
(Population growth)
(Source:2)
Apart from the rapid increase in population, this increasing demand for Real Estate in
Melbourne is due to numerous factors. The important factors are as follows:
1 Realestate.Com.Au. "Melbourne Property Market, House Prices, Suburb Profile &
Investment Data". Realestate.Com.Au, 2020,
https://www.realestate.com.au/neighbourhoods/melbourne-3000-vic. Accessed 11 Mar 2020.
2 propertyupdate.com.au. "Property Investment In Melbourne - Suburbs Analysis & Expert
Advice". Property Update, 2020, https://propertyupdate.com.au/property-investment-
melbourne/. Accessed 11 Mar 2020.

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Layout of Melbourne: Melbourne is the most well decorated and planned city in the whole
island country. It has a wide range of public transport options to avail from. Melbourne is
segregated into east and west where the east side is considered more developed than the west.
West is relatively less populated and there is ample scope of getting newer properties at
affordable prices. All these features of Melbourne is pushing up the demand for Real Estate
in this biggest city of Victoria.
Infrastructure of Melbourne: Melbourne has the most advanced network of roads and
railways in the whole country enabling its daily commuters a wide variety of options of travel
to choose from. These facilities given to the residents pull more and more people in the
capital which results in increase of demand in the Real estate market of Melbourne.
Economy of Melbourne: Melbourne being the most advanced city in whole Victoria is
cosmopolitan in nature. Owing to this nature, it has a wide number of industries which
employs a massive workforce. This advent of numerous number of people from different
parts of the country as well as from abroad requires a considerable amount of houses to stay
and at the same time requires offices to work. This provides an upward pressure on the
demand for house as well as office properties in Melbourne which in turn increases the
demand for residential, commercial as well as industrial Real Estate properties3. The
economy of Melbourne is considered at the boom stage and which is expected to grow even
further in near future give positive signs for the Real Estate Industry of Melbourne.
3propertyupdate.com.au. "Property Investment In Melbourne - Suburbs Analysis & Expert
Advice". Property Update, 2020, https://propertyupdate.com.au/property-investment-
melbourne/. Accessed 11 Mar 2020.

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The following chart depicts the GSP, State final demand, annual employment, rate of
unemployment, population post 2017 up to present time. Here, the average has been taken
over the last 25 years.
(Economic growth)
(Source:4)
Real Estate investments had been a consistent performer in the Australian market over
the years. It has made a great start since the beginning of 2020 and which can be considered
as knocking at the doors of an all-time high in the Real Estate market especially in
Melbourne. According to Corelogic Inc., the biggest financial and property analyst, the unit
price of a house property in Victoria has risen to an all-time high of $681,925 which is about
8.2% rise. The Real Estate market in Victoria is the highest grossing in the whole country
leaving behind Sydney with 7.9% and Hobart with 5%. As per the Hedonic Home Value
Index, Victoria only needs an additional 1.2% rise in value to bring the housing market at
breakeven post the market downturn within the time range of 2017 to mid-2019. According
4 propertyupdate.com.au. "Property Investment In Melbourne - Suburbs Analysis & Expert
Advice". Property Update, 2020, https://propertyupdate.com.au/property-investment-
melbourne/. Accessed 11 Mar 2020.

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to Corelogic Inc.’s top officials, the housing market in Melbourne is quite promising relying
on the data published by Real Estate Institute of Victoria stating the highest median house
price in Melbourne as on quarter ended December to be $859,500. According to National
Australia Bank (NAB), both houses as well as units in Melbourne has shown a 7.4%
aggregate rise.
The record turnaround from the downturn of the Real Estate market was due to three
main factors namely, Australian Prudential Regulation Authority (APRA) which made
structural changes in the credit policy making easy access of credit to a wider range of
people, the interest rates of loans reached a record low and the Federal Election. During the
last forty years, there has been a consistent rise in the price of house as well as price of unit
by 7.9% and 7.73% respectively. Post November 2017, this growth has shown a downturn
like all other markets where Real Estate market is no exception. However, the market has
shown a fast recovery rate. The growth were promising post mid-2019 and now it only a
matter of 1.2% to make the market achieve a breakeven condition. The last three months of
2019 were the most promising ever with a 5% rise fetching the median price of house
property to $901,951. This is a matter of few more Dollars to achieve an all-time high beating
the previous high of $908,734 relating to December 2017. The following chart shows the
downturn experienced by the Real Estate industry post 2017 till mid-2019 and also depicting
its rapid recovery.

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(Economic growth)
(Source:5)
The aggregate increase in the Real Estate market of Melbourne can be considered as
the highest annual increase since 2017 and is expected to rise even in near future owing to the
above discussed factors thereby portraying positive signs for the Real Estate market.
5 propertyupdate.com.au. "Property Investment In Melbourne - Suburbs Analysis & Expert
Advice". Property Update, 2020, https://propertyupdate.com.au/property-investment-
melbourne/. Accessed 11 Mar 2020.

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Charter Hall
Charter Hall is Australia’s one of the largest funds and investments management
company. It focusses on presenting sustainable solutions to business entities, deliver value to
its clients and is always committed in building and giving better results to its investors. It has
an unparalleled expertise in the Real Estate sector where it mainly focusses on four of its core
sectors namely, office, retail, industrial and social infrastructure6. In investment management,
it focuses mainly on the investors and partners and their demands and long-term goals. It
always looks forward towards securing properties that have a potential to yield good returns
in the long-run with the listed, unlisted and wholesale capital sources. In property leasing
they work up close with its clients in delivering better value in the form of customized
property solutions thereby fulfilling its dream of long-term leasing. In property development,
it mainly concentrates on developing and delivering quality Australian properties that
encircles innovation, sustainability and value delivering better value to its clients. In the asset
management field, it is considered as one of the best companies in the entire island country.
With its seamless experience in the asset management field, it tries to improve the properties
under management, enhance its value and drive towards its improvement in delivering better
environment to its clients. In the property management field as well it has an unparalleled
experience unlike any other Real Estate firms operating in Australia. It have the most
experienced team working with day-to-day management of properties for delivering
customized and tailor made services to its clients thereby committed towards the delivering
better value to them. Portfolio integration can be considered as one of the best services
provided by Charter Hall. It manages both retail as well as office space being the country’s
6 Charterhall.com.au. "About Us". Corporate, 2020, https://www.charterhall.com.au/About-
Us. Accessed 12 Mar 2020.

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biggest third-party portfolio manager. It has the most experienced team that is committed
towards proving integrated property solutions to its clients. It have a simple yet effective
business strategy of managing and deploying and also investing in Real Estate sector using its
unmatched expertise in this sector in creating better value and proving better returns to its
partners. Charter Hall is the believer of mutual success that is, they believe that in order to
gain a long-term success it’s important to invest along with its investors. Charter Hall is
committed to provide and enhance value to its partners. The principal partners are direct and
private investors, institutional and wholesale investors to whom it is committed to deliver
better value with transaction they make with it. Charter Hall always strives to be better with
every passing day and they want to achieve it smoothly by mutual reward with its clients.
They strive to provide better value to its clients in each and every association. In order to
deliver better value to its valued partners, it manages valuable commercial properties. It has
a professional team with more than 600 employees who with their professional expertise are
committed in delivering better value to its clients. It does not only concentrates on Real
Estate only, but also it has the capability of supporting clients in their business, helping the
clients with logistics and its distribution and point of sale in retail. Thus Charter Hall with
experience of more than 28 years in fund management and property investment can be
considered as Australia’s most trusted property group.
Funds of Charter Hall is divided into five main categories, namely:
Unlisted direct property funds: Unlisted direct property funds are the funds that are
invested in commercial property like industrial, office, retail and social infrastructural
properties. Such investment in property funds have a direct positive impact and at the same
time compliment all the other classes of assets in the investment portfolio. Currently, Charter
Hall have an income yield of around 5.40% with a total portfolio valuation of approximately
$2.21 billion in such Direct Office Fund (DOF). It also have an income yield of 6.10%,

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6.80%, 6.60% with a total portfolio valuation of approximately $640 million, $1.19 billion
and $177 million in DIF4, PFA and DCSF respectively.
Listed property funds: Listed property funds are such investment options that gives a
common investor to invest in commercial property assets which are also traded in stock
exchanges with daily liquidity benefit attached to it. Charter Hall Group has in all total of
1116 properties under its belt with 97.7% occupancy rate. It also have $38.9 billion
approximately under fund management and many other listed properties as well.
Unlisted Wholesale Property funds: Unlisted Wholesale Property funds are long-term
holding defensive investments which are mostly suitable for pension as well as
superannuation funds and is only available to institutional and wholesale investors. Charter
Hall Prime Office Fund (CPOF) is one such example of this type. Here, it has 27 properties
with 97.7% occupancy and a total portfolio valuation of approximately $6.9 billion. Apart
from the CPOF, there are other such funds that are available like CPIF and CPRF.
Property Securities Fund: This fund allows the investors to invest in a diversified portfolio
consisting an asset base that ranges across residential, retail, industrial, commercial and
social. Charter Hall Maxim Properties Securities Fund is the example of Property Securities
Fund that has a fund performance of 5.36% and a gross asset value of $135 million.
Realized Investment Funds: Charter Hall a strong history of managing Direct Property
Funds. Thus Realized Investment Funds are such funds that are already been wound up and
closed.
The main project of Charter Hall includes the buildings that it constructed the important of
which is Wesley Place. The main features are as follows:

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Wesley Place
Wesley Place is a well laid commercial area that have transformed into a cultural
landmark in Melbourne, Victoria, Australia. It is a precinct that effortlessly merges lifestyle
and business. Wesley Place is the combination of two A-grade commercial towers and one
premium tower namely, 130,140 and 150 Lonsdale Street. The towers are developed under
the light of world class technology, equipped with proper amenities that well suite corporate
needs and is characterized by diverse spaces that are distinct in all these three towers. Wesley
Place is equipped with childcare facilities for enhancing family time and also with wellness
Centre to ensure the workers have fit and healthy lifestyle7. It can be easily identified by lush
green surroundings and offers a multitude experiences that has transformed the conventional
way of working and connection between people. Wesley Place is characterized by 45% that is
green, being one of the five green spaces in the entire Central Business District (CBD). It is
one of the key business locations in the whole country that is equipped with best in class
technologies that have potential of being transformed as per the future business requirements.
Wesley Place has rich past history as well. It was earlier a collection of historical buildings
that were constructed in the late-19th century and the early 20th century. The finest example of
such rich history is the Wesley Church, which is considered as the magnificent masterpiece
of the “Gothic Revival Styling.” The Wesley Church, The School House and Nicolas Hall,
The Caretaker’s cottage and The Manse are among the heritage buildings that have been
restored by Charter Hall as a part of the Wesley Place development.
7Wesleyplace.Com.Au. "About ". Wesleyplace.Com.Au, 2020,
https://www.wesleyplace.com.au/about#charterhall. Accessed 12 Mar 2020.