Original article by Adelaide Now
EIGHT months after the final phasing out of stamp duty on commercial property in South Australia, better communication is needed to make more overseas buyers aware of the opportunities on offer says a leading, institutional fund manager based in Adelaide.
And the requisite improvements are not just outside the state says Inheritance Capital Asset Management (ICAM) managing director Freddy Bartlett. Better collaboration between the private and public sectors is a must he told a Property Council of Australia (SA) audience last week.
“A lot of funds are looking on paper at Adelaide as somewhere to park their money, the yields are very compelling.
“In the last 12 to 18 months there has been significant investment from Hong Kong and Singapore into Adelaide primarily because we are one year on from the stamp duty cut. But it is not known much beyond SA, it should be a lot bigger drawcard,” he said.
Mr Bartlett is adamant that a SA transaction rush will happen soon.
“Wine and agriculture and defence are starting to come through, at some stage it will translate to confidence and move ahead. Asia is familiar with Sydney and Melbourne but it doesn’t really know about Adelaide (yet).”
A constant hammering on the Singapore front door by a couple of Adelaide commercial property “super agents” – CBRE and Knight Frank were particularly active last year – is paying dividends Mr Bartlett said.
“The more they can market Adelaide the better it is for us, they have started to tap into the institutional market in Singapore and build Asian clients”
Yet it won’t happen quickly without more infrastructure and, crucially, a greater awareness of what is going on within SA and a collective willing to make it happen said Mr Bartlett who has experience of both sides of the coin as a former deputy chief executive of SA’s Motor Accident Corporation (MAC). “Infrastructure spend is critical to SA. The more that happens the better for attracting capital from overseas. Lot Fourteen (the old RAH site) from a state point of view is a good thing. It’s going to attract different groups to spur activity.”
But there is a caveat from the man who was pivotal in ICAM buying a 50 per cent stake in Adelaide’s tallest building, Westpac House, in 2016. “There needs to be a better process between government and the private sector. The (proposed sale) State Admin Centre still comes up as an issue, it was not well handled.”
Equally the MAC sale might have attracted a much higher price than happened with more consultation between private and public interests.
“With the SAC, because it’s the Government, it has a process it needs to go through,” he said, albeit not always an efficient affair. But the private sector, which is better at executing transactions, doesn’t understand the process has to be gone through.”
A fear factor sometimes put paid to the best transactions.
”There needs to be a more open and transparent dialogue between private and public sector,” he said.
Despite administrative flailings, Mr Bartlett is upbeat.
“The change of (state) government has changed sentiment and leads to change. There are so many macro factors, employment, a growing defence sector in SA’s favour. There are funds management looking to move money into property in SA.
“Defence has a positive momentum, the space agency is in the early stages and is a topic of conversation. The Elon Musk interest gives an identity to Adelaide. These are all positive factors that will draw people over here.”
It’s not just the commercial sector that can be optimistic. “The drop in house prices in Sydney and Melbourne is going to be a lot worse than people expect. AMP economist Shane Oliver is calling for a rate cut, Sydney household debt is very high and SA more affordable.”