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The Secret Agent Report – The Arden-Macaulay Plan

You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.
– Buckminster Fuller

Big infrastructure projects are of great interest to Secret Agent. These large scale projects have profound implications to the liability of our city. Much is at stake for home owners and investors seeking to take advantage of the remodelling of large inner city precincts.

For this report Secret Agent decided to investigate an urban renewal project that is not so talked about. The Arden-Macaulay Urban Renewal Project (AMURP) is currently in its planning and implementation stages. This project is unique in that it is not a single suburb being remodelled but rather a significant area that encompasses two inner city suburbs; Kensington and North Melbourne.

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The Arden Macaulay Plan

Excerpt:

By now you would have heard about the massive number of apartment buildings going up in and around Melbourne’s CBD. Inner city Melbourne is rapidly changing and its densification is an ongoing process we have been watching develop over a number of years. In fact it is so commonplace now in the lives of those living or working in the inner city that we rarely blink an eye when we walk past another construction zone, drive through road works, or see a crane in the sky.

Big infrastructure projects are of great interest to Secret Agent. These large scale projects have profound implications to the liability of our city. Much is at stake for home owners and investors seeking to take advantage of the remodelling of large inner city precincts.

Urban renewal is not a new phenomenon. Think of Port Melbourne, Docklands, South Wharf and the future Fishermen’s Bend.

Even South Yarra underwent urban renewal to bring it to the vibrant and dense suburb it is today. These are all widely talked about suburbs and many of us have experienced the changes urban renewal has brought about in these areas (except Fishermen’s Bend).

For this report Secret Agent decided to investigate an urban renewal project that is not so talked about. The Arden-Macaulay Urban Renewal Project (AMURP) is currently in its planning and implementation stages. This project is unique in that it is not a single suburb being remodelled but rather a significant area that encompasses two inner city suburbs; Kensington and North Melbourne.

What is Urban Renewal?

Melbourne has been experiencing a massive growth in population over the past few years and this is unlikely to stop anytime soon.  A majority of this growth is occurring in inner Melbourne as we have talked about previously in our “Urbanisation” feature and “From Rags to Riches” report.

The CBD alone experienced a record 23% increase in population in 2013 (ABS, 2013). To adapt to the huge increase in the number of people, densification needs to occur across Greater Melbourne in a distributed manner. This means that changes need to be made to make the most of limited land supply close to the CBD so that Melbourne can accommodate the growing population and its status as one of the world’s most liveable cities can remain.

To enable this growth to continue smoothly, the creation of efficient and sustainable communities and the renewal of urban areas is essential. The concept of urban renewal involves redeveloping areas in order to reach their full potential. This requires increasing the density of land use, encouraging mixed land use and creating an environment where people can live and work together.

Urban renewal is often associated with the removal of slums, gentrification and the establishment of wealth in a community. This is easy to see when you think of some of the most successful urban renewal projects in Melbourne (Port Melbourne and South Yarra) and what has become of these suburbs as a result.

Reference:

ABS. (2013). 3218.0 – Regional Population Growth, Australia, 2012-13. Retrieved November 19, 2014, from http://www.abs.gov.au/ausstats/[email protected]/Products/3218.0~2012-13~Main+Features~Main+Features?OpenDocument


The Secret Agent Report – From Rags to Riches

Cities have the capability of providing something for everybody, only because, and only when, they are created by everybody.”
– Jane Jacobs

The extraordinary changes to our inner cities and downtowns are unprecedented in modern times.

The movement to the inner city is not just a local phenomenon but a worldwide trend that can be observed whether you are in London, San Fransciso, New York, Sydney or Melbourne. It is important to realise that what is being discussed here is not a general movement to a city, rather, this trend is a movement to the real inner core of the city. As cities grow the density of their cores increase and at the same time the density falls in their peripheries. This story looks at the consequences of urbanisation. It is about the extreme premiums being paid to be in a position that is highly walkable, close to the commerce opportunities of the CBD, rich in transportation options and a way of avoiding traffic congestion.

Our cover image this month has been provided by one of Secret Agent’s own connections. The house pictured is in Drummond Street Carlton North. The rooftop pictures are also in Carlton North. The celebration is not with champagne – but with a found litre of rotten milk!

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From Rags to Riches Report

Excerpt:

The drastic changes in sale prices as a result of the urbanisation trend have been none larger than Melbourne’s very own CBD and surrounds. In the 90s and early to mid 2000s the focus of the property market was on the tremendous change in rezoned farm land on the fringes of Melbourne. People could buy property or land cheaply and chose to set up their dream homes in the outer suburbs. Now, the focus has shifted and has become more about the centre of each capital city as waves of foreign investment clashes with local resources to secure prime centralised real estate in the inner city regions. 

Let’s go back in time to the year 1969, when the Soviet Union launched Venera 6 towards Venus, Nixon became President of the United States of America and Rod Laver won the Grand Slam for a record-breaking second occasion. It was a simpler life. A time when the humble restaurant menu had three choices. When coffee was coffee, and not spoken about as if it were a tropical fruit, “…sweet and well rounded with hints of pineapple, apple and red berries, with subtle vanilla on the finish.” Many of Melbourne’s young and adventurous creatives, artists, and bohemians embraced living in the inner city suburbs, while others fled to escape the dirt and slums that had developed.

In 1969, you could buy a terrace like the one pictured above in Drummond Street Carlton North, for a modest $7,000. The surroundings were a little less comfortable back then and the neighbourhood was truly edgy. Edgy back then was more of a negative connotation rather than how we would use the term today as a positive description of many inner city pockets. This was a time when gentrification wasn’t even in the vocabulary.

To put the sale price for the property in perspective, consider the cost of a round the world airline ticket at that time. An airline ticket of this kind (like the one pictured above) could be purchased in 1967 for $567 – roughly a tenth of the value of the North Carlton terrace. The same type of airline ticket is now valued at four times the 1969 price.

On the other hand, the $7,000 terrace is now worth almost a million dollars which is 142 times the original price paid. Even after adjusting for inflation, the house has experienced an extremely large turnaround. $7000 in 1969 is approximately $76,000 in today’s dollars. In inflation adjusted terms a terrace in Carlton North would still be valued at over 13 times that of the one purchased in 1969. 

The cost of airline tickets is becoming cheaper and cheaper whilst house prices in the inner city continue to rise steadily.

The question on everyone’s mind is will this huge change in property value be repeated?


The Secret Agent Report – Property Seasonality

“To be interested in the changing seasons is a happier state of mind than to be hopelessly in love with spring”
-George Santayana

With the winter period finally coming to an end things are starting to look a lot brighter. The days are longer, the clouds are clearing and the real estate market is coming out of hibernation. It is well known that there is a seasonal cycle in the housing market. Sale volumes are higher in the warmer months and lower in the cooler months. This is a worldwide phenomenon. In this months edition of The Secret Agent Report we look at the data to test the theory.

Our cover image this month has been created by freelance illustrator and graphic designer Dan Vaughan. Dan pays respect to the four seasons by presenting fruits that come into season at the start of each of them. With a tip of his hat toward Eric Carle’s classic The Very Hungry Caterpillar, Dan’s energetic style presents the movement and change of the seasons.

George Santayana was a Spanish Born naturalist, philosopher, poet and essayist, and we identify with his viewpoint above when applied to the property market. Spring is know as an exciting time for the industry, but it’s not to say we should ignore the fruits of the other seasons.

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The Secret Agent Report

Excerpt:

With the winter period finally coming to an end things are starting to look a lot brighter. The days are longer, the clouds are clearing and the real estate market is coming out of hibernation. It is well known that there is a seasonal cycle in the housing market. Sale volumes are higher in the warmer months and lower in the cooler months. This is a worldwide phenomenon. In both the USA and the UK, the housing market experiences above trend results for both prices and transactions in the two warmest quarters of the year. According to one study, in the UK, the difference in annual growth rates for house prices between hot and cold seasons was 6.5%. (Tenreyro, 2009)

Secret Agent decided to investigate this cycle to quantify how much seasonality influences house prices in the inner city property market of Melbourne. In the first part of this report, we analysed the results of house and townhouse sales for the last ten years in the inner city suburbs of Melbourne. All two and three bedroom townhouses and houses were included in the study if they were sold between January 2004 and August 2014 and if information about the number of bedrooms, bathrooms and land size was accurately recorded.

At a glance, there seems to be a positive correlation between the amount of sales and the average sale prices during the period. This is consistent with the notion of “hot and fast” versus “cold and slow” periods in the housing market. However, the results do not seem to entirely match what would be expected in the different seasons.

Summer was the worst performing month in terms of number of sales and average sale prices. It would be expected that since the weather is warmest during summer, if warm weather positively influences house prices then, the average sale prices would be highest in summer. This was not the case. The turn of the seasons, autumn and spring performed the best with both the highest number of sales and highest average prices. Winter did not perform as badly as expected with a significantly greater amount of sales compared to summer and also a higher average sale price. However, if you compare winter to spring, the results appear as you would expect with the average number of sales picking up in spring and prices increasing quite significantly. Overall spring was the standout season which is consistent with the general perception that spring is the best season for real estate transactions.

There are many other factors that could be impacting house prices in different seasons that couldn’t be controlled for in this study. For example, spring not only brings warmer weather, but also a greater supply of stock to choose from. Owners with better properties tend to wait until spring to sell, and properties which have beautiful gardens will be listed during spring to showcase these at their fullest. It is interesting that even though supply and demand both go up as the weather gets warmer in spring, prices also rise concurrently. In general, properties being purchased equate with properties coming onto the market on the other side of the equation. This means that the supply of properties rises alongside the market demand (though slightly later). Since both supply and demand rise, basic economic theory would indicate relatively stable pricing but interestingly the market consistently experiences a price spike as the weather begins to warm up.


The East West Link – One Step Closer to Reality

The East West Link Project moves one step closer to reality. 
Secret Agent has paid careful attention to the upcoming East West link since releasing the East West Link Report. 
 
The Victoria State Government has today announced its selection of Lend Lease as the company responsible for building the project. This will create many opportunities/ disadvantages in Melbourne over the coming decade. 
 
Lend Lease today announced that is has entered into an estimated $5.3 billion Public Private Partnership with the Victorian State Government to finance, design and construct stage one of the East West Link in Melbourne. The project remains subject to financial close which is expected to occur during October.
Lend Lease Group Chief Executive Officer and Managing Director, Steve McCann, said, “Lend Lease is pleased to be announced as the Victorian Government’s partner to deliver this important infrastructure project. The East West Connect Consortium will leverage it’s international and local expertise to deliver an outstanding outcome for the people of Victoria.”
 
We encourage you to read the East West report to examine this in further detail. Property owners and aspiring property owners should try and get as much information as possible around this topic to optimise their financial decisions. 

 

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The-Secret-Agent-Report-September-2014-The-East-West-Link


The East West Link Report – It’s here.

On the 20th of August 1860, Burke and Wills led a 19 man expedition to cross the continent of Australia, beginning the journey from Melbourne. 23 horses, 6 wagons and 26 camels were the unsophisticated transport methods helping the 19 men navigate the Australian landscape that was previously uncharted by European descendants. 15,000 Melburnians gathered at Royal Park to cheer off the great explorers. Now 154 years later, the exact spot that Burke and Wills set off from has become the subject of controversy for many Melburnians.

Directly below the starting point of the expedition will sit the proposed East West Link tunnel. This new infrastructure is set to revolutionise transport in Melbourne. From camels to concrete tunnels, we explore the latest milestone soon to be added to Melbourne’s fabric. In this special report Secret Agent takes a look at the most recent road infrastructure project in Melbourne: The East West Link.

“Without deviation from the norm, progress is not possible” – Frank Zappa

Our cover image this month has been created by freelance illustrator Jasmin Neophytou. Frank would have been proud of Jasmin. Her works deviate from the norm by way of her playful use of colour, shape and proportion. Her cover brings a lightness to the serious topic of the East West Link project.

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The-Secret-Agent-Report-September-2014-The-East-West-Link


The Value of Apartment Views

Some have a ‘stunning view’ on the top of their priority list when searching for a property, and others have more of a subconscious desire. Secret Agent have looked at two prestigious apartment buildings in Inner Melbourne; The Melburnian and The Hallmark, to analyse the monetary value of the different views available.

“… as the fact of our success thrust itself more clearly into my mind, I felt a quiet glow of satisfaction spread through my body — a satisfaction less vociferous but more powerful than I had ever felt on a mountain top before.”
– Sir Edmund Hillary, atop Mount Everest

This month’s cover is inspired by the ultimate view – the view of the Earth from space, and it’s ocean and atmosphere that provides it’s majestic blue hue.

Bringing us back down to Earth (but not quite to sea-level!) is the quote above from Sir Edmund Hillary, the mountaineer from Auckland, who together with Tenzing Norgay became the first humans to reach the world’s highest peak: Mount Everest.

What an incredible view to be the first to experience!

The Secret Agent Report August 2014 - Apartment Views

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The Secret Agent Report – Car Parks

What is a Car Park actually worth in the Melbourne CBD and inner city? A very important question when searching for a property (residential or commercial) is; “Does it have a car space, and if so, how many?”  Value for the individual is decided by considering many variables and lifestyle needs.

The perceived value of a car space is undeniable – even renters without a car still enquire about parking for visitors, or for a possible car purchase in the future. The option to be able to acquire a car and have a place to put it is important to a lot of people. It’s about choice.

This edition of The Secret Agent Report is about using data to connect a monetary figure to the value we already know exists in car spaces. This kind of data is becoming more and more useful as the market becomes more competitive, and space becomes more scarce.

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The Secret Agent Report July 2014 - Car Parks


Gardens – The Secret Agent Report

“The need to create gardens – to fashion from nature places of order and retreat – connects us to the ancient civilizations of Sumer and Egypt, Greece and Rome.” – TERENCE CONRAN

This month, The Secret Agent Report investigates the potential value a landscaped garden can add to property prices in the inner city. Find out which Inner Melbourne suburb showed a 18% premium in sale value for sales including a notable garden. As always, we track how the Inner Melbourne market has been performing over the last 6 months. 

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The Secret Agent Report - Gardens


Downsizing. The Secret Agent Report.

2014 is the year of Downsizing. Jodie’s written a guide on how do it.
We also look at Offshore investment; just how much is the Australian market being influenced by the Chinese factor?Our Residential and Commercial Property wrap up reveals some surprising stats… which inner city location had a 54% increase in its housing market? You’ll have to read to find out.

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Downsizing

This months cover image is a slight tip of the hat to the wonderful film poster for Hitchcock’s Vertigo, created by the masterful Saul Bass.

Rather than using the ‘whirlpool of terror’ imagery, we’ve cleaned it up! Downsizing may seem daunting, but this special report
by our resident Investigator, Jodie Walker helps to clarify and promote new ways of thinking about the task.

Saul Bass (1920-1996) created imagery for many films, for great directors such as Alfred Hitchcock and Stanley Kubrick. His distinct typographic style has enjoyed many ‘revivals’ over the years, and the playfulness of his imagery is still celebrated today.

“DESIGN IS THINKING MADE VISIBLE.”
– Saul Bass