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Flawed Docklands vacancy rate theory exposed

04 Feb 2016

Flawed Docklands vacancy rate theory exposed Image

Prosper Australia’s flawed analysis of Docklands’ vacancy rate was exposed in December when it published its 2015 “Speculative Vacancies” report.

In a major turn around, Prosper Australia now says the “speculative vacancy” rate in Docklands is around 8.5 per cent after claiming just a year earlier that up to 27 per cent of Docklands apartments were empty.

Prosper Australia calculates vacancy rates by examining how many residences use zero litres of water per day (lpd) over a 12-month period. In addition, residences using less than 50lpd are considered to most likely be vacant and therefore are “speculative vacancies”.

The significantly lower vacancy rate in the 2015 report follows Docklands News’s close scrutiny of the 2014 report, which claimed the 27 per cent figure.

The investigation raised questions about whether water usage figures provided by City West Water to Prosper Australia for the report related only to residential properties or also included commercial properties.

Docklands News also found discrepancies between the number of residences analysed in the report and the actual number of residences in Docklands.

Report author Catherine Cashmore maintains there has been no change in Prosper Australia’s methodology between the two reports.

“It is not unusual for the speculative vacancy rate to vary quite significantly in a minority of suburbs in a 12-month period. This most frequently happens where there has been a heightened level of building activity,” Ms Cashmore said.

Ms Cashmore said Prosper Australia had seen this occur in inner city suburbs and some outer growth areas such as Cardinia, which she said halved its speculative vacancy rate between reports on one occasion.

In the case of Docklands, the number of residences using zero lpd decreased markedly from 489, or 17 per cent, in the 2014 report, to just 27, or 0.7 per cent, in the 2015 report.

In terms of speculative vacancies (properties using less than 50lpd), the number dropped from 779 (27 per cent) to 318 (8.5 per cent).

Following the release of the 2014 report, a City West Water spokesperson told Docklands News that the properties using less than 50lpd in 2013 were not limited to residences.

City West Water provided most of the Docklands data for the report and the spokesperson said the company’s data couldn’t distinguish whether properties using no water were residential or non-residential.

However, the spokesperson later back-flipped, saying he had been incorrect, and that the data provided to Prosper Australia related only to residential properties.

Prosper Australia also maintained at the time that it did not combine residential and commercial water usage figures in the report.

There are other discrepancies in both reports, including the number of properties assessed.

The 2014 report (which looks at water usage in 2014) only examined 2883 residences when, according to Places Victoria data, there were about 4058 residences in Docklands at the time.

Similarly, the 2015 report (which examines 2014 water usage) only analyses 3762 properties when according to Places Victoria there were approximately 4772 residences at the time.

In addition, the reports miss many properties in Docklands due to many towers sharing a single water meter.

Local real estate agents, who were up in arms about the 27 per cent vacancy figure publicised in 2014, maintain that the 8.5 vacancy rate reported in 2015 is also inaccurate.

While the vacancy figure is markedly reduced in the most recent report, local agents maintain it is still not low enough to reflect the reality in Docklands.

Lucas Real Estate managing director Glen Lucas said claim that up to 8.5 per cent of Docklands apartments were empty based on water usage was a “ridiculous assumption”.

Lucas Real Estate’s vacancy rate for Docklands rental properties is currently sitting at 1.9 per cent.

“Many factors could influence low water usage, particularly in Docklands where many people don’t live full-time in their properties, instead using them as a city base,” Mr Lucas said.

City Residential Glenn Donnelly said the Docklands rental vacancy rate was closer to two per cent, based on his experience.

“My experience is when an apartment is available for lease it is occupied almost straight away,” Mr Donnelly said.

Mr Donnelly said low water usage rates in Docklands could be put down to a range of lifestyle factors.

“A lot of owners in Docklands have apartments they may only use six months of the year,” Mr Donnelly said.

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