Savills Global Placement
Location: Sydney, Australia
Dates: July 2013
Name: Hugo Lear
Graduate Scheme: Sociable Surveyors
Hugo headed over to join the Sydney team for a 2 week placement after winning the Savills Sociable Surveyors placement. Hugo's blog is below, so do have a read to find out more about his experience and the Australian property market.
The project management team were created at Savills through acquisitions of Colin Ging & Partners in 2006 and Incoll in 2010 and operates as a separate entity in the Savills structure. In addition to Sydney, there are now project management teams located in Melbourne, Brisbane, Canberra, Perth and throughout Asia.
The business operates over many sectors and offers a variety of consulting services in addition to project management such as acquisition due diligence and asset repositioning advice among other services.
My day in Project Management began with a tour of 161 Castlereagh, which is soon to be completed. I viewed 2 floors which will be occupied by BCG when it is fully fit out.
In the afternoon I was given a tour of the landmark building 5 Martin Place, which is being redeveloped to be completed in early 2015. There is due to be an additional 9 levels of premium office accommodation providing a further net internal area of 1,090 sq m (11,733 sq ft). The heritage component of the building (ground floor to 10th floor) will be extensively modernised, but will also retain its distinctive features including marble lobbies, interconnecting staircases and the natural 'light well' which is being reinstated to form a central atrium.
Tuesday -Project Management/Office Leasing
I attended a meeting where NSW government department 'Health Infrastructure' are part of a joint venture with RPA hospital, Sydney local health district and the University of Sydney to provide a $67 million development for a purpose built mental health unit. I then headed off on a site visit to review the current development stage.
I spent the afternoon with the Office Leasing department. I was given a tour of AMP owned buildings 50 Bridge Street and Angel Place, which Savills are the appointed leasing agents. I got a good insight into what asset management strategies have been used to attract tenants to the building and an interesting overview to what is happening in the market.
Following this I carried out some site viewings with potential tenants at 92 Pitt Street and it was interesting for me to see how a leasing agent must show enthusiasm, understand the market and know the figures including floor areas and tenant incentive packages.
Wednesday- Capital Transactions
I joined the team in giving a tour to UBS who were keen to learn and possibly gain exposure to the Sydney office market. The tour included visiting the top floor of 50 Bridge Street to identify the key premium and grade A towers as well as giving details on the investment market, rents, yields and typical lease lengths etc.
Following this, I attended a site viewing with Ben Adler for a strata floor sale on Pitt Street. Strata sales are uncomment in the UK. Strata sales are the process of split up a building into several freehold owners. This can be on whole floors or certain parts of a floor.
I took a train to Macquarie Park to meet Tom Merrett, where together we met Asset Managers from Goodwood, a large AREIT primarily focused on industrial property. We viewed a warehouse in a nearby business park. The tenant would soon be vacating the property, therefore we were looking to gain an understanding of the requirements to facilitate a re-let. We drove around the northern suburbs of Sydney visiting office properties in Epping and Chatswood. I was given a useful insight in to the industrial market and office market outside the CBD. Parramatta is apparently a hub for industrial buildings.
I shadowed a meeting with Capital Corporation, a development company in Sydney and was interested to hear of past projects such as the highly successful Norwest business park and where the potential new opportunities were in Sydney.
In the morning I attended a meeting at the Randwick racecourse concerning a possible joint venture between the racecourse and AREIT Mirvac. I feel like I got a grasp of how a joint venture might work but now appreciate that it can be a very long process.
I was also fortunate to attend a meeting with the Sovereign Wealth Fund, Government of Singapore Investment Corporation Private Ltd (GIC). I found it really interesting to hear about their real estate investment strategy in Australia and their intentions moving forward.
It seems investment appetite in the industrial sector is currently very high as a result of long leases with stable income and good yields.
In summary, the two weeks has gone very quickly and I have thoroughly enjoyed my time here. I think I have learned as much about the Australian economy and property market as I could have in the period I have been here. It has been a pleasure to meet everyone over here. I would like to thank Savills for giving me this opportunity and I look forward to the internship in London.
Upon arriving at Savills Australian head office in Sydney, I was immediately greeted by Cate Stuart from HR. I spent the first 3 days of my placement with the Residential Sales department. I have been working on a market analysis of house prices in Mortlake, an inner-west suburb of Sydney, on behalf of a client. This has required me to search for new housing on the market, which is comparable to the new development and compiling a report, with details including address, number of bedrooms, internal area and price. I was fortunate enough to do a site visit of Kiah development scheme in Willoughby, where the team have been appointed to sell the housing.
I have also worked on piecing together a tenancy schedule for the recently sold 207 Kent Street building. I was required to contact leasing agents to establish information concerning the vacancy, anchor tenants and what if any capital expenditure is likely to occur or already happened.
I have done market research for Sydney CBD office sales to report back to a member of the team and have been helping with cash flow models and tenancy schedules on excel.
On Friday, due to it being the end of the financial year, there was a meeting with the whole company looking at the segmental analysis of the business, which was followed by company awards. We then went for drinks in a bar overlooking the harbour in Circular Quay, where I got to meet many people from the different departments and it rounded off a great first week.
This week has been a great learning experience and I have gained an insight into the Australian economy since arriving. The Chinese economy slowing has resulted in reduced mining investment and commodity exports towards China. This will mainly affect mining cities; Perth and Brisbane with more office supply coming onto the market and reduced occupancy in hotels as overseas workers in the mining industry carry out less business visits. The government has decided to drop interest rates in an effort to stimulate growth in non-mining sectors.
The Aussie dollar is weakening; down 13% to the US dollar and will likely lead to increased overseas capital into real estate which will result in more transactions. Furthermore, it will reduce the cost for education and therefore the number of overseas students is likely to rise.
Furthermore, I have had an insight into the high-end housing market in Sydney in locations such as Vaucluse and Point Piper, which recently recorded the record house sale price of $55 million.
In summary, everyone has been very welcoming and helpful in the departments I have been in. There has obviously been a bit of chat about UK dominating sport at the moment, which they hate!! I look forward to spending time with Project Management, Investment, Industrial Sales and possibly Office Leasing next week.