💸 Cromwell sells European business for A$457M

Morning. ☕

As always, it’s been a busy week in real estate. Here’s the agenda for today:

• Deals and Projects

• Investment Banking & Private Equity

• Economics & Data

• Policy

Lets dive in.

Deals and Projects

Residential

• The NSW government and Newcastle council have unveiled plans for a 20,000-home precinct in Broadmeadow, Newcastle. (TUD)

• JDH Capital is planning to redevelop the Sir Stamford Circular Quay hotel in Sydney, turning it into a 17-storey residential tower. (TUD)

• The Future Melbourne Committee has approved amendments for a skyscraper project on La Trobe Street in Melbourne. (TUD)

Retail

• Charter Hall's Retail REIT and TelstraSuper have sold the Rutherford Marketplace shopping center in New South Wales for A$49.75M. (RE Source)

• Saracen Properties plans a A$55M Woolworths-anchored mixed-use development in Perth, including a large self-storage component, retail, specialist residential units, and a 236-lot carpark. (TUD)

• Private equity firm GAW Capital is planning a mixed-use development on a long-dormant site at 27-31 Doody Street, Alexandria. (TUD)

• The owners of Eastwood Shopping Centre in Sydney are planning a A$322M redevelopment. (TUD)

• UBS and Kaipara Property Group are investing in redeveloping Melbourne's St Collins Lane mall. (AFR)

Office

• Mitsubishi Estate and AsheMorgan are investing in a major renovation of the 60 Margaret Street office tower in Sydney after purchasing it for A$779M. (TUD)

Industrial

• ISPT has successfully completed the A$190M Charles Sturt Industrial Estate in Adelaide's north-west, comprising 20 industrial tenancies across 91,000sqm. (TUD)

• ISPT is divesting three logistics assets in Sydney and Brisbane, valued at approximately A$250M, from its A$18B flagship fund to refocus on larger-scale industrial assets. (AFR)
  

Hotels & Pubs

• Accor and Melbourne Airport are completing a A$230M development featuring a Novotel and Ibis Styles hotel, along with the Aerofoil co-working hub. (AFR)

Alternatives & Land

• Sixty medical suites within the Parkway San Clinic in Wahroonga, Sydney, have been sold individually, totaling A$55M. (TUD)

• Centuria sold a Sydney CBD-fringe office known as the Biomedical Building for A$103 million (equal to book value). (AFR)

• Centennial has acquired a significant industrial development site in Ipswich at a 24.5% discount to its land value. (RE Source)

Investment Banking & Private Equity

Cromwell sells European business for A$457M

• Cromwell Property Group has sold its European funds management business for €280M (A$457M) in a deal facilitated by Citi and UBS. 

• The winning bidder, Geneva’s Stoneweg, advised by Deutsche Bank, secured the unit against interest from other Asian and European groups.

• Cromwell plans to use the sale proceeds to reduce its gearing to about 25% and exit offshore operations entirely, focusing solely on Australia and New Zealand.

• This shift towards a simplified business model might prompt a selldown on Cromwell's register, with particular interest from ESR, which holds a 30% stake in the company and recently received a takeover bid from Starwood Capital. (AFR)

Australian Unity Office Fund nears final stages of breakup

• Australian Unity Office Fund is in the final stages of its breakup, with exclusive due diligence underway for the sale of its St Kilda Road property, which is expected to be close to its A$70M book value.

• This move follows the fund's earlier exclusive due diligence for its Charlotte Street office tower in Brisbane, signaling a strategic shift to focus on Australia and New Zealand. (AFR)

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Economics & Data

Sydney homes are likely to cost 12.8x the median annual household income

• The Urban Land Institute's 2024 Asia Pacific Home Attainability Index indicates that Sydney homes are likely to cost 12.8 times the median annual household income, while apartments are likely to cost 6.4 times the income.

• In terms of renting, Sydney houses cost 32% of the median monthly household income, and apartments cost 30%. This highlights the significant affordability challenges in Sydney's housing market, necessitating interventions to improve accessibility and affordability for residents. (TUD)

Perth facing land supply crisis

• Perth is facing a significant housing supply crisis, with land supply hitting a record low in 18 years, according to data from the Urban Development Institute of Australia WA.

• Only 617 lots were available as of March 31, a 70% drop from the previous year.

• Despite increased demand and economic conditions, a shortfall of 30,000 homes is forecasted over the next five years, highlighting the need for more support from the government and private industry to address the housing shortage effectively. (TUD)

Overseas interest in Australian property remains high

• Overseas interest in Australian property has remained high according to PropTrack data.

• In April, overseas search volumes for renting were up by 32% compared to five years ago, and searches to buy were up by 20%.

• Year-on-year, overseas searches for buying properties remained strong, showing an increase of 0.8%, while rental interest slightly declined by 2.3%. However, rental search volumes saw a significant increase of 32% compared to the previous four-year period from 2019 to 2022. (TUD)

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Policy

QLD housing receives A$350M boost

• Queensland's housing density is set to receive a significant boost with a A$350M commitment to developments in strategic areas.

• The Incentivising Infill Development Fund, announced by state housing minister Meaghan Scanlon, will cover known infrastructure costs to prevent these costs from being passed on to homebuyers. (TUD)

Melbourne moves forward with sustainable building guidelines

• The City of Melbourne is progressing with its plan to incorporate sustainable building design guidelines into the Melbourne Planning Scheme.

• Amendment C376 has been referred to the Victorian planning minister after receiving unanimous support from the City of Melbourne’s Future Melbourne Committee. (TUD)

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