Cashed-up buyers waiting for property to plumb depthsTuri...

Cashed-up buyers waiting for property to plumb depths
Turi Condon, property editor | July 26, 2008
theaustralian.com.au

ONE of Australia's biggest commercial real estate agents has up to 100 wealthy private investors with between $10 million and $100 million to spend, but its clients are waiting for the faltering property market to deteriorate further before buying.

"No one wants to buy if the market will go down further," CB Richard Ellis private clients group managing director Scott Gray-Spencer said. "Everyone wants to buy on the bounce."

In the first half of this year, private investors bought 22 per cent of the buildings sold, up from 10 per cent the year before, according to research released this month by CB Richard Ellis.

In the same period, Australia's $75 billion cash-starved listed property trusts accounted for 7 per cent of turnover in the property market, a big drop from 24 per cent the year before.

The likes of billionaire developer Lang Walker, Brisbane property veteran Kevin Seymour and former Super A-Mart furniture baron John van Lieshout sold chunks of their empires at the top of the market.

Sitting on piles of cash, they are watching as the credit crisis and subsequent implosion of the listed property trust sector casts distressed real estate on the sales block.

"We have built a war chest in the past six months, but now is not the time to be buying unless something spectacular comes along," Mr Seymour said.

"But there will be opportunities in the next six to 12 months."

In the bull market early last year, Mr Seymour, who chairs Brisbane developer Seymour Group and builder Watpac, launched a $700 million equities-based investment fund. By then he had already sold about $250million of his property holdings.

"I have been selling shares for the past nine months. This is the lowest level the portfolio has had in 10 years," he said.

"We have cashed up, which is very important in times of uncertainty."

Mr Gray-Spencer said there had only been about 25 investment sales nationally this year, and only a couple in NSW.

This year's sales turnover was only a fraction of the activity in the bull market that ran until late last year.

Commercial property sales plummeted in the first half of 2008 to $3 billion -- 60 per cent below the year before.

Much of the sales activity this year has been in Queensland and Victoria, and that has been dominated by private investors.

The sales of Brisbane office buildings, one at $88 million to private investors, was evidence of the two-speed economy, Mr Gray-Spencer said.

"Western Australia and Queensland would laugh if you used the word recession," he said.

NSW, however, depended on financial services and had been hit hard by the credit crisis.

Analysts estimate that up to $20 billion of property has been offered for sale this year, with CBRE investments senior director Brett Burridge saying even more is expected to be tipped on to the market as the year progresses.

"All the evidence is that there will be more work coming through the receivers," Mr Burridge said said.

Many of the private investors had made their money selling at the top of the market. Many sold to listed property trusts, he said.

Lang Walker, Bob Ell's Sydney development company Leda, developer and yachtsman Syd Fischer's Cape Bouvard and Perth-based Ralph Sarich Investments all sold in the past three years as the market moved into overdrive, Mr Burridge said.

"They are all sitting there with cash," he said.

In the past month, both Mr Walker and Mr van Lieshout's Unison Projects said they were waiting for opportunities to emerge.

In 2006, Mr Walker sold part of his $1.25 billion portfolio to the Mirvac Group for almost $740 million.

At the time of the sale, Mr Walker, then 60, said he was probably too old to build another property empire, but now he felt there was an "incredible number" of opportunities landing on his desk each week and he was playing a waiting game as commercial prices fell.

Mr Walker has already looked at three Centro shopping centres and may buy at least one.

"There will be a lot of opportunities over the next 12 months, so we still have a way to go," he said.

Mr van Lieshout, who sold his Super A-Mart furniture chain two years ago for $500 million, has been scouring the Brisbane office market for bargains.

His Unison Projects has been an under-bidder on the recent sale of two Brisbane office towers, one of which sold for $123 million and the other for $88 million.

"We have looked at basically everything that has been listed," Unison general manager Jonathan Levy said.

The office market in Brisbane was close to hitting bottom and poor market conditions would persist for some time, he said.

"We are in for a bumpy ride. It will be more than months, perhaps a few years," he said.