Michmutters

West Melbourne, Melbourne city, Docklands and Southbank all posted record-breaking annual rental growth of 34 per cent, 33.6 per cent, 33.2 per cent and 32.6 per cent respectively.

Median unit rents across inner Sydney suburbs Ultimo, Haymarket, Pyrmont and Zetland also rose sharply, jumping by 20.5 per cent, 20 per cent, 19.5 per cent and 18.6 per cent respectively.

At the height of the pandemic lockdowns, apartment rents across inner Melbourne had dropped by up to 25 per cent as tenants avoided high-density housing for fear of catching the virus. Demand was further dented by the lack of foreign students who normally rented in these areas.

“We did see demand fall sharply in inner Sydney and inner Melbourne in particular at the onset of the pandemic, and now they’re bouncing back extraordinarily quickly to well above pre-COVID-19 levels, simply because they were very affordable for starters, and we’re starting to see capital cities becoming more vibrant as workers move back to the office,” Mr Lawless said.

“Now that’s probably being amplified by more migrants coming back, which we know will be a key area where a lot of that overseas migration lands.”

Strong demand for freestanding houses lifted median rent by more than 21 per cent in Brighton-le-Sands in Sydney and by a similar amount in inner Brisbane suburbs Hendra and Ascot.

The trend in rising rents is also evident across each of the capital city and broad rest of state markets with median rental value rising by more than 10 per cent nationally.

Mr Lawless said rising rents and falling home values ​​would fuel a rapid recovery in rental yields and attract more investors into the market.

“Even though investors are generally mostly motivated by capital gains, you’d have to think that the stronger buying conditions, opportunities for higher yields and then positioning for medium to long term capital gains will be quite appealing for the next six to 12 months or so,” he said.

Sydney-based buyer’s agent Jack Henderson of Henderson Advocacy said the number of investors looking to buy had risen since the RBA started rising rates.

“We just had our biggest month ever in signing up new clients and 90 per cent of those are planning to invest,” Mr Henderson said/

“Many of them have built up a lot of equity in their owner-occupied homes over the last two years and have since refinanced to access that equity. Now they want to use that money to buy. Investors are also motivated by the rising rents and yields.”

Across the combined capital cities, the gross yield has increased from a record low of 2.96 per cent in February this year to 3.2 per cent in July. Sydney rose to 2.8 per cent, Melbourne to 3 per cent, Brisbane 3.6 per cent, Adelaide 3.7 per cent and Perth 4.4 per cent. Hobart rose to 3.8 per cent, Darwin 6.1 per cent and Canberra 3.8 per cent.

What Gandhi calls prudence – disappearing the proceeds of new shares into operational expenditure – is more commonly known as capital ill-discipline, though investment bankers just call it a dream client.

The placement’s co-underwriters, Citi and JPMorgan, know each other well, having performed the same roles on ANZ Banking Group’s $2.5 billion placement in 2015 – subject of the ACCC’s blockbuster cartel case only abandoned in February. It’s fair to say the two ECM desks will be choosing their words very carefully if any demand shortfall leaves them with surplus Orica stock.

Languishing through a bull run

Orica bussed more than 40 analysts and fund managers to the Hunter Valley last week for a site tour of its technical center in Kurri Kurri to beguile them with the company’s (age-old) technology narrative. That lucky crew learned on Wednesday morning there’s no such thing as a free lunch.

On completion of the latest raising, there will be 19 per cent more Orica shares on issue than there were in October 2019, and over the same period (based on consensus for FY22) earnings before interest and tax will have failed by 19 per cent. Dividends are down 38 per cent. What are these outputs if not fundamental to the underlying business?

From the global financial crisis to COVID-19 and beyond, Orica has languished right through the bull run in Australian equities and the corresponding boom in resources investment. It’s some feat when your only real job is to deliver explosives to mine sites.

It was the legendary bully Ian Smith who privately described Orica as a blancmange; the harder you try to beat it into shape, the more resolutely it wobbles back to its original form – namely sprawling and unfocused.

Smith’s predecessor, Graeme Liebeltbought mining chemicals company Minova from a British private equity group for $857 million in 2006 and bolt maker Excel for $775 million the following year.

Minova and Excel were folded into a new ground support division and in August 2015, Orica impaired the carrying value of that division by $850 million. In December, Orica finally managed to sell it to German asset manager Aurelius for just $180 million.

And yet here Orica goes again!

In recognition of his magnificent record of capital allocation, Liebelt was appointed to the board of ANZ Banking Group in 2013, where he remains, contributing to the dissolute oversight of Shayne Elliott‘s own era of value destruction. How good is Australia?