Mid Year Market Update 2018

Mid Year Market Update 2018

Mid Year Market Update 2018

with Matt Ciallella

This year has certainly been an interesting one thus far, with businesses being sold at market multipliers between $3.50 - $4.00 in the Sydney metropolitan area. Western Sydney has been a little quieter with noticeably less transactions. However, speaking to rent roll valuers multipliers in Western Sydney are still holding between $3.00 - $3.30 with some occasional internal buy ins registering close to $3.50.

RENT ROLL MULTIPLIERS Transactions we’ve been working on as well as taking to exchange and settlement is pointing towards anywhere up to $4.00 in the Inner West. The Lower North Shore is still experiencing strong demand from buyers wanting to make a purchase anywhere from Mosman, Neutral Bay through to Chatswood. Multipliers are still being transacted at $4.00 and in some cases north of $4.00. Meanwhile, Inner City and Eastern Suburbs is still a well sought-after area for rent rolls and real estate businesses. We believe this part of Sydney which is in demand the strongest will maintain $4.00. There have been reports of some sales exceeding these levels in excess of $4.20.

South-West of Sydney and Western Sydney we can report early threes to mid-three is the magical range, and transactions we’re working on puts this exactly where buyer sentiment is.

FLIGHT TO RETIREMENT We are experiencing a greater number of retirees wanting to exit their businesses with a softening sales market, but these businesses are strong, resilient and robust businesses with solid rent rolls. As the property market throughout metropolitan Sydney softens, we expect more of these types of transactions. These are the best businesses to buy in our opinion. Culturally strong, financially strong and selling for the right reasons!

BANKS The banks have not changed their lending criteria. More so they are wanting to tighten their grip on market share of real estate businesses and rent rolls, as good financial real estate businesses with strong rent rolls will withstand a softening sales market. Conversely, banks without a strong market share will most likely detract from this space and open up opportunities for other specialist rent roll lending institutions. Importantly, cash flow is king more so than ever, and the banks are looking for surplus cash flow businesses to do deals with.

The rest of the year will be interesting to watch with the Spring period about to begin, and even more businesses and rent rolls expected to enter the market before the Xmas and holiday period begins.