Generating Investment Income

Generating Investment Income

Disclaimer This presentation was prepared by SuperIQ Pty Ltd (ABN 27 147 105 164) ( SIQ ). Material contained in this presentation is a summary only and is based on information believed to be reliable and received from sources within the market. The information is believed to be accurate at the time of compilation and is provided by SIQ in good faith. However, the statements including assumptions and conclusions are not intended to be a comprehensive statement of relevant practice or law that is often complex and can change. It is not the intention of SIQ that this presentation be used as the primary source of readers information but as an adjunct to their own resources and training. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. SuperIQ does not guarantee the performance of any fund or the return of an investor's capital. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and SIQ will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded). Individual circumstances, in particular relating to self managed superannuation funds, may vary greatly. This presentation has been prepared for general information purposes only and not having regard to any particular person s investment objectives, financial situation or needs. Accordingly, no recommendation (express or implied) or other information should be acted upon without obtaining specific advice from an authorised representative.

Introduction 3 Month $10,000 Term Deposit Rates Source: RBA

Agenda Fixed Income Outlook Elizabeth Moran FIIG Equities Outlook Tim Bowers, Evans & Partners Break Property Outlook Paul Castran, Castran & Gilbert

Make your cash work harder Elizabeth Moran - Director Education and Research November 2014 FIIG Securities Limited 2014 ABN FIIG 68 Securities 085 661 632 Limited AFS www.fiig.com.au Licence No. 224659 FIIG. CREATING ACCESS TO INVESTMENTS YOU CAN TRUST

FIIG Securities Limited ( FIIG ) provides general financial product advice only. As a result, this document, and any information or advice, has been provided by FIIG without taking account of your objectives, financial situation and needs. Because of this, you should, before acting on any advice from FIIG, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If this document, or any advice, relates to the acquisition, or possible acquisition, of a particular financial product, you should obtain a product disclosure statement relating to the product and consider the statement before making any decision about whether to acquire the product. Neither FIIG, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice. FIIG, its staff and related parties earn fees and revenue from dealing in the securities as principal or otherwise and may have an interest in any securities mentioned in this document. Any reference to credit ratings of companies, entities or financial products must only be relied upon by a wholesale client as that term is defined in section 761G of the Corporations Act 2001 (Cth). FIIG strongly recommends that you seek independent accounting, financial, taxation, and legal advice, tailored to your specific objectives, financial situation or needs, prior to making any investment decision. FIIG does not make a market in the securities or products that may be referred to in this document. A copy of FIIG s current Financial Services Guide is available at www.fiig.com.au/fsg. An investment in notes or corporate bonds should not be compared to a bank deposit. Notes and corporate bonds have a greater risk of loss of some or all of an investor s capital when compared to bank deposits. Past performance of any product described on any communication from FIIG is not a reliable indication of future performance. Forecasts contained in this document are predictive in character and based on assumptions such as a 2.5% p.a. assumed rate of inflation, foreign exchange rates or forward interest rate curves generally available at the time and no reliance should be placed on the accuracy of any forecast information. The actual results may differ substantially from the forecasts and are subject to change without further notice. FIIG is not licensed to provide foreign exchange hedging or deal in foreign exchange contracts services. The information in this document is strictly confidential. If you are not the intended recipient of the information contained in this document, you may not disclose or use the information in any way. No liability is accepted for any unauthorised use of the information contained in this document. FIIG is the owner of the copyright material in this document unless otherwise specified. FIIG Securities Limited ABN 68 085 661 632 AFS Licence No. 224569 2014 FIIG Securities Limited www.fiig.com.au FIIG. CREATING ACCESS TO INVESTMENTS YOU CAN TRUST

Term deposit rates the past 9% FIIG All TD Maturities Index versus cash rate 8% 7% 6% 5% 4% 3% 2% Source: FIIG Securities AllMats TDIndex CashRate PAGE 7 2014 FIIG Securities Limited www.fiig.com.au FIIG. CREATING ACCESS TO INVESTMENTS YOU CAN TRUST

Cash rate versus BBSW future rate expectations 3.30% Australian BBSW/SWAP Yield Curve 3.20% 3.10% 3.00% 2.90% 2.80% 0.47% 2.70% 2.60% 2.50% 2.40% Source: FIIG Securities Forward 90 day bank bill yield Current Cash rate PAGE 8 2014 FIIG Securities Limited www.fiig.com.au FIIG. CREATING ACCESS TO INVESTMENTS YOU CAN TRUST

OECD Pension Fund Statistics - 2012 PAGE 9 2014 FIIG Securities Limited www.fiig.com.au FIIG. CREATING ACCESS TO INVESTMENTS YOU CAN TRUST

Bonds will improve your returns over deposits Earn more than cash for a small increase in risk Lock in higher returns for longer Three types of bonds provide protection no matter what happens to the economy Capture increases in rate expectations without having to shop around for term deposit rates by investing in floating rate bonds Interest payments are quarterly for Floating rate and Inflation linked bonds and half yearly for Fixed rate bonds providing greater scope for compounding PAGE 10 2014 FIIG Securities Limited www.fiig.com.au FIIG. CREATING ACCESS TO INVESTMENTS YOU CAN TRUST

What is a bond? Bonds Loan/IOU Banker vs Shares Shares bought in company Owner Interest repayments and principal at maturity Expectation of growth in share price and dividends Guaranteed by company unless they go into wind up No guarantee of dividend payment or return of capital PAGE 11 2014 FIIG Securities Limited www.fiig.com.au FIIG. CREATING ACCESS TO INVESTMENTS YOU CAN TRUST

Qantas bonds versus shares Qantas bonds Believe Qantas will survive $3bn in cash on balance sheet Circa $600m in undrawn bank facilities Many assets that it can sell Issued USD bonds Fixed rate 2020 paying around 6.1% available to retail Fixed rate 2021 and 2022 paying circa 6.5% available to sophisticated only Qantas shares Full year $646m underlying loss ($2.8bn statutory) - no growth Dividend has not been paid for three years Share price high of $1.70 and low 95 cents in last year Bonds provide known income and return of capital at maturity; shares do not have that certainty PAGE 12 2014 FIIG Securities Limited www.fiig.com.au FIIG. CREATING ACCESS TO INVESTMENTS YOU CAN TRUST

What gives analysts (and investors) confidence? Vast majority of bonds are investment grade Added protection of regulatory oversight of banks (APRA) and insurers Capital structure buffer of shares which take on first loss position in a wind-up As long as the company continues to operate, you will be paid $100 face value at maturity Companies will protect bondholders at the expense of shareholders Tip: FIIG has a dedicated fixed income research team. They are sector specialists and follow companies in their sector daily. Any change in view is reported to the Middle Markets Team who will then email or call you. PAGE 13 2014 FIIG Securities Limited www.fiig.com.au FIIG. CREATING ACCESS TO INVESTMENTS YOU CAN TRUST

About FIIG Australia s largest fixed income specialist - Over 15 years experience Over 5000 clients - SMSFs, Advisors, Middle Markets and Not for Profits, Super funds and Corporations Offices in Sydney, Melbourne, Brisbane and Perth - $11 billion funds under investment PAGE 14 2014 FIIG Securities Limited www.fiig.com.au FIIG. CREATING ACCESS TO INVESTMENTS YOU CAN TRUST

Next steps 1. Register to receive The WIRE Our weekly e-newsletter produced by the FIIG Research Team dedicated to fixed income 2. Learn more by: Requesting your free copy of Corporate Bonds Made Simple Attending a seminar or webinar Visit our website www.fiig.com.au 3. Start investing! Visit www.fiig.com.au PAGE 15 2014 FIIG Securities Limited www.fiig.com.au FIIG. CREATING ACCESS TO INVESTMENTS YOU CAN TRUST

Equity Markets November 2014 16

Evans & Partners Evans & Partners established in November 2007. Australian owned independent investment house We are 100% staff owned delivering a strong client focus. Our service is delivered via the design and monitoring of individually tailored investment strategies. We have a team of ~100 staff across Melbourne and Sydney Experienced professional staff; investment advisers average ~18 years / research analysts ~20 years. We prefer a direct approach to investing for income maximization / predictability, strategic flexibility, transparency, fee efficiency & tax efficiency. 17

Investing in Equities for Income $260,000 Investing For Income - Cash vs Dividends (pre-franking benefit) (Annual income from a $1.0mn investment in December 1996) $240,000 $220,000 $200,000 $180,000 $160,000 $140,000 10 stock equity portfolio. $100,000 in each stock as at 31 December 1996. $120,000 $100,000 Source: IRESS $80,000 $60,000 $40,000 $20,000 $0 1997 1998 1999 2000 200 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 BHP CCL RIO WES CSL CBA ANZ WOW ORI WBC CASH 18

Agenda 1. Considerations Prior to Investing 2. A quick look back 3. Where we are now 4. Outlook Where to from here 5. Investing in Equities for Income 19

Considerations Prior to Investing. 1. Return Objectives 2. Risk Profile 3. Time Horizon 4. Liquidity 5. Flexibility 6. Simplicity 7. Appropriate Entity / Structure Trust, Super Fund, Company 8. A strategic asset allocation framework - Diversification. 9. Tax 10.Seek Professional Advice 20

Unprecedented Monetary Stimulus 21

A quick look back 1. Unprecedented Monetary Stimulus from central banks Result of GFC 1. To drive growth / inflation 2. Most powerful driver investment performance in markets 2. Consequence: low global interest rates 1. Forced Investors up the risk curve 2. Equities (domestic & international) 3. Low growth environment 1. Focus on strong balance sheet / capital management 2. Cost out strategy 22

Earnings expectations and forward PE s: ASX200 & MSCI World Index ndex Jan 07=100 130 Rolling 12mth Forward EPS Expectations Weekly to 24 October 12 mth fwd PER 17 Australian and MSCI World Index Forward PE Ratios Weekly to 24 October 120 16 110 15 100 14 13 90 12 80 11 70 10 60 Source: IBES, Datastream, Evans & Partners 50 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 MSCI World ASX200 9 Source: Datastream 8 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 MSCI World Index - 12mth fwd PE Ratio S&P/ASX 200-12mth fwd PE Ratio 23

ASX Industrials PE Multiple ndex 24

1871 1876 1881 1886 1891 1896 1901 1906 1911 1916 1921 1926 1931 1936 1941 1946 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 Global Fixed Interest: Expensive (despite equity outperformance) Timing & pace of a tightening in US Monetary Policy a key marker % 16 US Long Government Bond Yield % (10 year T-Note post 1953) 200 190 Index Relative Performance: Global Equities vs Global Bonds (Monthly Data USD Terms) 14 180 170 12 10 160 150 Equities Outperform 140 8 130 6 120 110 4 100 2 0 Source: Robert Schiller, Yale University 90 80 70 Source : MSCI, JPMorgan 60 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 25

Outlook 1. Slow global growth environment to continue 1. But stronger in North America 2. Low interest environment for longer 1. QE in Japan & Europe 3. Central banks likely to continue to support asset price inflation 1. To support the financial system 2. The Mistake of 1937 26

Australian Equities Outlook Australian equities to provide high single digit total returns 1. Focus on quality companies in strong industries 2. Strong balance sheets and capital management focused companies. 3. Growth as opposed to cyclical industries 1. Health (HSO) 2. Regulated Monopolies (SYD/TCL) 3. International earnings (BXB) 4. Market Position (WES) 27

International Equities Preference for international equities, especially U.S. equities 1. Corporate quality & strategic opportunity is far superior offshore 2. Flight of capital into the US 3. Lower input prices Wages and energy 4. Long residential cyclical recovery in the U.S. 28

Global Equities: The case for international equity diversification Australia comprises only 1% of world GDP and a little over 3% of global equities by capitalisation. The Financials and Materials sectors comprise over 60% of our index; compared to 1% for the IT sector. The top ten Australian stocks by market capitalisation comprise over half our index. 29

Investing in Equities for Income 1. The hunt for yield continues 1. Cash returns are not material 2. Bond yields impacted by QE 3. Investors looking to equities generate returns capital & income 4. Inflation adjusted returns are critical Equities are a good inflation hedge. 2. Appropriate asset allocation allows for diversified income sources fixed income equities 3. Fully franked dividend yields 1. Benefit for zero tax payers 2. Low tax rate payers SMSF s 4. Key considerations 1. Sustainable and growing dividends 2. The quality of the industry 3. The quality of the company 4. Market position / competitive advantage 5. Absolute and relative valuation 30

Investing in Equities for Income $260,000 Investing For Income - Cash vs Dividends (pre-franking benefit) (Annual income from a $1.0mn investment in December 1996) $240,000 $220,000 $200,000 $180,000 $160,000 $140,000 10 stock equity portfolio. $100,000 in each stock as at 31 December 1996. $120,000 $100,000 Source: IRESS $80,000 $60,000 $40,000 $20,000 $0 1997 1998 1999 2000 200 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 BHP CCL RIO WES CSL CBA ANZ WOW ORI WBC CASH 31

Key Takeaways 1. Asset Allocation Critical risk management strategy 2. Ensure you understand what you want to achieve prior to investing 10 key points 3. Sustainable and growing cash flows over the long term are critical to investment returns 32

Current Representative Balanced Asset Allocation Tactical Tilt: Unchanged since April 2014 when we reduced to Neutral (Growth v Defensive Assets) Evans & Partners: Asset Allocation Strategy Tactical Tilt CASH 8.0% 16% 8% FIXED INTEREST 38% 30% -8% Government Debt 75% 29% 15% 5% -24% Corporate Debt 25% 10% 85% 26% 16% EQUITIES - Australia 34% 24% -10% Industrials 79% 27% 81% 19% -7% Resources 21% 7% 19% 5% -3% REITs 0% 0% 0% 0% 0% EQUITIES - Global 20% 30% 10% Currency Hedged 50% 10% 10% 3% -7% Currency Unhedged 50% 10% 90% 27% 17% 100% 100% Note: This is a generic portfolio. Please consult your Adviser for a benchmark appropriate to your individual circumstances. Source: Evans & Partners Strategic Allocation Tactical Allocation 33

Important Disclosures GENERAL RESEARCH DISCLAIMER, WARNING & DISCLOSURES This document is provided by Evans and Partners ABN 85 125 338 785, holder of AFSL 318075. The information is general advice only and does not take into consideration an investor s objectives, financial situation or needs. Before acting on the advice, investors should consider the appropriateness of the advice, having regard to the investor s objectives, financial situation and needs. If the advice relates to a financial product that is the subject of a Product Disclosure Statement (e.g. unlisted managed funds) investors should obtain the PDS and consider it before making any decision about whether to acquire the product. The material contained in this document is for information purposes only and does not constitute an offer, solicitation or recommendation with respect to the purchase or sale of securities. It should not be regarded by recipients as a substitute for the exercise of their own judgment. Investors should be aware that past performance is not an infallible indicator of future performance and future returns are not guaranteed. Any opinions and/or recommendations expressed in this material are subject to change without notice and Evans and Partners is not under any obligation to update or keep current the information contained herein. References made to third parties are based on information believed to be reliable but are not guaranteed as being accurate. This document is provided to the recipient only and is not to be distributed to third parties without the prior consent of Evans and Partners. EVANS AND PARTNERS DISCLOSURE OF INTERESTS Evans and Partners and its respective officers and associates may have an interest in the securities or derivatives of any entities referred to in this material. Evans and Partners does, and seeks to do, business with companies that are the subject of its research reports. EVANS AND PARTNERS CORPORATE RELATIONSHIP DISCLOSURE Company Nature of Relationship Company Nature of Relationship ANI Evans and Partners arranged, managed or co-managed a public offering of the company or its affiliates in the past 12 months. ASH Evans and Partners arranged, managed or co-managed a public offering of the company or its affiliates in the past 12 months. AUI The Issuer has appointed Evans and Partners as Broker to an on-market buy-back. Accordingly, Evans and Partners is unable to give Sellers advice in respect to a sale of this security. BEN Evans and Partners has arranged, managed or co-managed an offering of securities of the company or its affiliates in the past 12 months. DUI The Issuer has appointed Evans and Partners as Broker to an on-market buy-back. Accordingly, Evans and Partners is unable to give Sellers advice in respect to a sale of this security. Evans and Partners has been appointed as Placement Agent in respect of the company s renounceable rights issue and will receive fees for acting in this capacity. HSO Evans and Partners has arranged, managed or co-managed an offering of securities of the company or its affiliates in the past 12 months. IDR Evans and Partners has arranged, managed or co-managed an offering of securities of the company or its affiliates in the past 12 months. IMF, IMFHA Evans and Partners has arranged, managed or co-managed an offering of securities of the company or its affiliates in the past 12 months. MBLPA Evans and Partners has arranged, managed or co-managed an offering of securities of the company or its affiliates in the past 12 months. MQG A director of Evans and Partners Pty Ltd is a director of Macquarie Group Limited. NAB Evans and Partners has arranged, managed or co-managed an offering of securities of the company or its affiliates in the past 12 months. PGH Evans and Partners has arranged, managed or co-managed an offering of securities of the company or its affiliates in the past 12 months. PNC Evans and Partners has arranged, managed or co-managed an offering of securities of the company or its affiliates in the past 12 months. REG Evans and Partners has arranged, managed or co-managed an offering of securities of the company or its affiliates in the past 12 months. SAR Evans and Partners has arranged, managed or co-managed an offering of securities of the company or its affiliates in the past 12 months. SPO Evans and Partners has arranged, managed or co-managed an offering of securities of the company or its affiliates in the past 12 months. SWM A director of Evans and Partners Pty Ltd is a director of Seven West Media Limited DISCLAIMER Except for any liability which cannot be excluded, Evans and Partners, its directors, employees and agents accept no liability or responsibility whatsoever for any loss or damage of any kind, direct or indirect, arising out of the use of all or any part of this material. All information is correct at the time of publication; additional information may be available upon request. 34

RESIDENTIAL PROPERTY AS A SUITABLE ASSET PRESENTED BY PAUL CASTRAN, CEO OF CASTRAN GILBERT (AUST) PTY LTD

36 THE BIGGEST RISK IS NOT TAKING ANY RISK. MARK ZUCKERBERG

37 WHY INVEST IN REAL ESTATE? There is no reason why residential real estate should not be part of your superannuation portfolio. It is fundamental we all need water, food and shelter. It is a long term asset and the returns are compelling. Look BEYOND the headlines good news stories don t sell newspapers. Do your own research and look at cold hard facts.

38 WHY INVEST IN REAL ESTATE? Tangible Low Volatility Taxation Benefits Dual Investment Return Off-The-Plan Advantages

Thousands 39 HISTORICAL DATA Thousands $700 Median House Price 2008: GFC $600 $500 $400 2001: Tech Bust & 9/11 2000: Millennium Bug 1990: Asian Financial Crisis 1990: Pyramid Disaster $300 $200 1982: Major Recession 1987: Stock Market Crash $100 $0 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 Source: REIV

40 FACTORS THAT DRIVE THE MARKET Wages Interest Rates Australian Dollar Employment Population & Migration Auction Results Construction Costs & Land Value Overseas Demand

41 WAGES Wages growth is a driver of values In the twelve months to May 2014, Trend series Full-Time Adult Average Weekly Ordinary Time Earnings increased by 2.4% to $1,453.90 (ABS). The Full-Time Adult Average Weekly Total Earnings in May 2014 were $1,516.90, a rise of 2.3% from the same time last year (ABS). Higher Wages More Super

42 WAGES $1,540 Average Weekly Earnings Trend $1,520 $1,500 $1,480 $1,460 $1,440 $1,420 $1,400 $1,380 $1,360 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Source: ABS

43 WAGES Index 140 Wage Price Index Annual Growth 120 100 80 60 40 20 0 1997 2000 2003 2006 2009 2012 Source: ABS

44 WAGES TOTAL ASSETS IN SUPERANNUATION: $1,853.5 billion (approx.) (Source: APRA Statistics June Quarter 2014) TOTAL ASSETS IN SELF-MANAGED SUPER FUNDS: $550 billion (approx.) (Source: APRA Statistics March 2014)

45 INTEREST RATES & AUD Record low interest rates 2.5% for the 16 th consecutive month % RBA Cash Rate 16 14 12 10 8 6 4 2 0 Aug-90 Aug-93 Aug-96 Aug-99 Aug-02 Aug-05 Aug-08 Aug-11 Aug-14 Source: RBA

46 INTEREST RATES & AUD Source: Yahoo!7

47 INTEREST RATES & AUD 3 Interest Rates (%) 2.5 2 1.5 1 Interest Rates (%) 0.5 0 USA Europe Australia Britain Japan Source: global-rates.com

48 EMPLOYMENT Number of jobs in Australia rose by 24,100 to 11.59 million in the past month on a seasonally adjusted basis. (ABS) % Unemployment Rate 12 10 8 6 4 2 0 1992 1995 1998 2001 2004 2007 2010 2013 Source: ABS

49 POPULATION Australia s population is set to double to 46 million by 2075. (ABS) Driven by strong growth in Victoria and New South Wales

Millions 50 POPULATION 80 Australian Population Growth Forecast 70 Higher End Current Trends Lower End 60 50 40 30 20 10 0 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057 2062 2067 2072 2077 2082 2087 2092 2097 Source: ABS

51 MIGRATION Net Overseas Migration (NOM) is forecasted to continue to increase until 2016. 256,000 NOM Forecast 254,000 252,000 250,000 248,000 246,000 244,000 242,000 240,000 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Source: Department of Immigration and Border Protection

Millions 52 POPULATION 10 Capital City Population Growth 9 ACT Adelaide Brisbane Darwin Hobart Melbourne Perth Sydney 8 7 6 5 4 3 2 1 0 2012 2015 2018 2021 2024 2027 2030 2033 2036 2039 2042 2045 2048 2051 2054 2057 2060 Source: ABS

53 MIGRATION Interstate migration into Victoria at a record high National leader for interstate migration with a net 2,468 more residents moving to the state from other parts of Australia. (Property Observer, 27 th October 2014)

54 AUCTION RESULTS Strong auction results demonstrate strong buyer sentiment and healthy demand. % REIV Auction Clearance Rate 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 Source: REIV

55 AUCTION RESULTS Super Saturday 25 th October 2014 More Than 1500 Properties Went Under the Hammer Most Auctions Held on a Single Day Since The City s First Public Auction in 1837 75% Clearance Rate Source: The Domain Group

56 CONSTRUCTION COSTS & LAND VALUE The average cost of building a house in Australia almost quadrupled in the twenty years to June 2008, rising from $65,000 in 1987-88 to $236,000 in 2007-08. 250000 200000 150000 100000 VIC AUSTRALIA 50000 0 1987-88 1997-98 2007-08 Source: ABS

57 CONSTRUCTION COSTS & LAND VALUE Source: HIA

NON-RESIDENT APPETITE FOR MELBOURNE REAL ESTATE 58 Sixty-three million Chinese have sufficient wealth to purchase international property, including 2.8 million high-net-worth individuals. Over 60% of these high-net-worth Chinese are already engaged in overseas investment, immigration or education. Australia, United States & Canada are the most popular destinations for Chinese buyers. Melbourne properties receive more enquiry from Chinese buyers than properties in any other Australian city. Source: Juwai.com Melbourne Sydney Australia TOP 3 DESTINATIONS FOR CHINESE BUYERS Gold Coast Canada United States

NON-RESIDENT APPETITE FOR MELBOURNE REAL ESTATE 59 Overseas demand for Australian properties to rise: In February 2014, Canada axed a 28-year-old visa scheme designed to attract wealthy foreigners to the country. The United States has halted the popular EB-5 immigration visa program until October 2015. More Chinese expected to apply for Australia s Significant Investment Visa and buy Australian property. Falling Australian dollar makes Australia cheaper to invest in.

60 FACTORS THAT WILL DRIVE YOUR ASSET WAGES GROWTH, MORE SUPER LOW INTEREST RATES CONSTRUCTION COSTS & LAND VALUE EMPLOYMENT GROWING POPULATION HOUSING DEMAND OVERSEAS DEMAND

61 CASE STUDY 17 VALE STREET, ST KILDA 1 BEDROOM UNIT (SOLD BY CASTRAN GILBERT) Purchased in 1994 $69,000 Sold in 2014 $280,000 Held For 20 years Capital Growth $211,000 Percentage Growth Growth Per Annum Plus Rental Income 406% 20.3% p.a.

62 CASE STUDY 108 GREVILLE STREET, PRAHRAN 2 BEDROOM UNIT Purchased in 1995 $187,000 Sold in 2014 $650,000 Held For 19 years Capital Growth $463,000 Percentage Growth Growth Per Annum Plus Rental Income 348% 18.3% p.a.

Purchase Price $345,000 63 CASE STUDIES 305/ 1C Michael Street, Brunswick 1 BEDROOM UNIT IN A NEW BUILDING Date of Purchase 2/11/2012 Settled 7/5/2013 Current Value (RP Data) Med - High Financial Year 2013-14 $377,113 - $418,375 Income Received $18,247 (Rental - $380 pw) Cash Outgoings Management Fees $1,405.02 Water Rates $640.00 Council Rates $1,070.00 Owners Corporation $1,292.00 Total Outgoings $4,407.02 Cash Profit (Gross) $13,839.98 Depreciation Schedule Allowance (provided by landlord) $8,854.00 Taxable Profit (Net) $4,985.98

64 CASE STUDIES 305/ 1C Michael Street, Brunswick 1 BEDROOM UNIT IN A NEW BUILDING STAMP DUTY Off-The-Plan Purchase $1,820.00 Established $15,770.00 SAVINGS $13,950.00

65 THE LONGER YOU WAIT, THE MORE YOU PAY.

Paul Castran (CEO) 0418 313 038 pcastran@castrangilbert.com.au