Urbis Docklands Rental Market Report

RESTRICTED SUPPLY & CONTINUED DEMAND POINTS TO RENTAL GROWTH AROUND 3% P.A. Insights We have forecast rental growth using a regression based approach to historic population growth and rental performance in Docklands. Historic rental growth considerations • Over the last 15 years, median weekly rent in Docklands has grown by 3.2% annually. Supply considerations • Approximately 5,000 apartments are in the pipeline for Docklands and could potentially complete between 2020 and 2024. However, taking into account the current probability of completion within the timeframes estimated by developers, this drops to 2,310 (580 per year). Assuming 70-80% of this stock goes to renters, around 1,620 to 1,850 apartments would be additional rental stock. Population driven forecast considerations • There is a strong correlation between the population renting and rent over the past 20 years in this area. • Population forecasts indicate an additional 4,800 people renting from 2019 - 2024 (8% p.a. growth). This equates to a requirement of 1,820 to 2,010 additional rental dwellings. • Calculations based on this relationship indicate median weekly rent of $705 in 2024 (across all product types). This is growth of 2.8% per annum. Forecast rental growth at 2.5-3.5% per annum • Taking into consideration the volume of forecast rental additions compared with the requirement of the population, with a continued shift in better quality apartments driven by the Better Apartment Design standards, historic and forecast growth, we estimate growth of 2.5% to 3.5% p.a. over the next five years. • It is noted that the current global pandemic (COVID- 19) has widespread economic implications and may push out these growth forecasts to a later period. Rental growth forecast - Docklands 14/04/2020 Report prepared for Lendlease Page 22 Supply forecast (2020-2024) Population driven rent forecast ESTIMATED RENTAL GROWTH – NEXT 5 YEARS 2.5% - 3.5% P.A. Considerations for estimate Rental Requirement Dwelling Est. 1,820 – 2,010 Rental Addition Dwelling Est. 1,620 – 1,850 Population Driven Rental Forecast 2.8% p.a. Historic 15 Year Rental Growth 3.2% p.a. Historic 10 Year Rental Growth 1.7% p.a. Historic 5 Year Rental Growth 3.6% p.a. 2005 – 2010 Rental Growth 6.7% p.a. Source: ABS, DHHS, Forecast.id, Urbis Source: Local Councils, Cordell, Urbis Source: ABS, DHHS, Forecast.id, Urbis Project Status % Probability of Completion Unit Completions Under Construction 100% 1,310 Presales & Pending 50% 130 Development Approval 30% 700 Development Application 15% 170 Grand Total 2,310 Total Rentals 70 – 80% 1,620 – 1,850 2006 2011 2019 2024 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 $350 $450 $550 $650 $750 Population ('000) Median Weekly Rent 2019-24: 2.8% p.a.