1. VIEWPOINT Volatile pricing in mining towns September 2015 CBRE Research1 Jacob Fong Senior Research Analyst Australia Research © CBRE (AUS) Pty Ltd | Australian Regional Residential Markets Figure 1: Isaac Regional Council median house price and commodity prices Source: CBRE Research; Reserve Bank of Australia; RP Data, August 2015. CBRE Research highlighted the risks of investing into mining towns in 2013 in the Viewpoint entitled Resource sector and residential markets: strong gains but where does the risk lie? Transient populations that are almost solely reliant on resource project employment experience large swings in demand. We are now seeing the flipside of the cycle as resource spending declines and there isn’t a clear growth driver to replace it. CBRE Research has undertaken a review of recent transactions to show the degree of pricing volatility in mining towns. Sam Reilly Senior Research Manager Australia Research -66.1% Q4 2012 to Q2 2015  73.4% Q1 2012 to Q1 2015  70.6% Q3 2010 to Q2 2015  36.7% Dysart Moranbah Clermont Peak to current house sales

2. VIEWPOINT Queensland and Western Australian mining towns sharing similar price falls Isaac Regional Council in Queensland has been highly exposed to resource spending. It covers many of the coal mines within the Bowen Basin and the residential market has experienced substantial price volatility as demand levels have increased rapidly and then contracted very quickly. Recently, mining companies have been scaling back employment requirements (e.g. Isaac Plains coal mine with 300 workers closed in 2014 and sold for $1 in 2015). Rental demand, previously fuelled by resource employment has now fallen and plunging rental returns have seen capital values contract 70% from those achieved at the peak of the market in 2012 (Figure 1). Mining towns in Western Australia have seen similar price reductions (Figure 2), Karratha Council recorded median house prices at $810,000 in 2012 but have since declined 44% to $450,000 (31% fall in past year) as resource employment levels continues to slow. The construction led jobs boom in resource rich areas of Australia has passed. $65 billion in mining projects across Australia have been completed over the past two years and have now transitioned to the export phase which is far less labour intensive. As global economic conditions drive commodity prices down 40% from 2012 levels, the chances of a rapid rebound in new resource projects being commenced is low and therefore the outlook for residential markets in mining towns is unlikely to enter a new growth cycle over at least the medium term. September 2015 CBRE Research© CBRE (AUS) Pty Ltd |2 Australian Regional Residential Markets Figure 2: City of Karratha median house price and commodity prices Source: CBRE Research; Reserve Bank of Australia; RP Data, August 2015. -44.4% Q1 2011 to Q2 2015  51.4% Q2 2008 to Q1 2015  46.3% Q1 2010 to Q2 2015  40.1% Millars Well Port Hedland Baynton

3. Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE. VIEWPOINT Australian Regional Residential Markets For more information regarding this ViewPoint, please contact: Jacob Fong Senior Research Analyst, Australia Research Level 3, 1 Eagle Street Brisbane, QLD 4000 T 61 7 3833 9800 jacob.fong@cbre.com.au Sam Reilly Senior Research Manager, Australia Research Level 3, 1 Eagle Street Brisbane, QLD 4000 T 61 7 3833 9739 sam.reilly@cbre.com.au To learn more about CBRE Research, or to download our reports visit cbre.com/research CBRE Global Research This report was prepared by Australia Research team which forms part of CBRE Global Research—a network of preeminent researchers who collaborate to provide real estate market research and econometric forecasting to real estate.