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February, 2019

High society restaurant for sale in Bourke Street

Menzies Institute is selling 563 Little Lonsdale Street. Photo: SuppliedThe Bourke Street home of Society restaurant, in its heyday one of Melbourne’s best eateries, is about to hit the market with an asking price of about $8 million.
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The three-level building, listed as notable under city planning laws, has been owned by the Codognotto family since 1981.

The Italian-themed Society restaurant was first opened by immigrant Guiseppe Codognotto in 1924 when southern European food was still a novelty in Melbourne.

It continued to trade for more than 90 years under various owners at the top end of Bourke Street near other establishment venues Pellegrini’s and Grossi Florentino before closing last year.

Gross Waddell associate director Raoul Salter said few buildings under $10 million in the city centre had been offered for sale over the past two years.

“They are generally tightly held,” he said.

The property sits in a heritage overlay with a 15-metre height limit and backs onto the rear of the Hotel Windsor, itself undergoing a revamp and rebuild.

Mr Salter said recent volatility in equity markets was likely to spur more investors to focus on property. Commercial property strength

Another owner is also looking to take advantage of the strength of the commercial property sector, offering a similar-sized building with expectations of about $6 million.

The two-level brick building at 563 Little Lonsdale in the heart of the city’s legal precinct is being offered with vacant possession, CBRE’s Nick Lower said.

The building will be offloaded by an investment fund controlled by training and education group the Menzies Institute.

“There’s a really strong flow-on from 2016. There’s a lot of active buyers in the market,” he said.

Late last year, the heritage-listed Tavistock House in in Flinders Lane sold for $7.9 million at a well-attended auction.

Earlier in the year a building in Bourke Street occupied by the Spaghetti Tree restaurant changed hands for $9.8 million.

Society founder Guiseppe Codognotto was awarded an OAM for his culinary contributions to .

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Scope 2017 economic survey: Commodity run is probably done

Stephen Koukoulas predicts commodity prices will ease. Photo: Alex Ellinghausen China’s role in giving a boost to commodity prices is clear enough, but is it enough? Photo: Brendon Thorne
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One a one-trick pony or unicorn? Full resultsThree way tie for forecaster of the year’General glumness’ to keep shares flatHouse price will rise, don’t expect a crash

It is rare to find much unanimity among economists, but one of the few things they agree on is that the trough in commodity prices of 2016 will not be repeated.

But after the huge upswing in prices since then – particularly for bulk commodities such as coal and iron ore – the question is how far will prices retreat, especially after the March quarter, which often marks a cyclical high.

Stronger economic growth in most major economies worldwide, coupled with efforts to lift growth in China and changes to regulations there, saw prices of both bulk commodities along with a number of base metals, surge in the latter part of last year. Oil, likewise, has benefited from the move by key OPEC producers to limit production to help take pressure off prices.

“Prices may ease a little after the extraordinary rise during 2016, but they are likely to remain well above the early 2016 lows,” argues Stephen Koukoulas of Market Economics.

And the higher prices will boost supplies, which may also pressure commodity prices.

“Commodity fundamentals have improved,” said Michael Blythe of the Commonwealth Bank. “Demand and supply are closer together than they have been for a number of years. But not close enough to validate current commodity price levels. But the trough is now behind us.”

Giving added force to the impact of these forecasts was the record $3.5 billion trade surplus in December, with the prospect that the surplus could continue at high levels well into the June quarter, especially as the gas export trade begins to hit its stride after the $200 billion-plus investment boom in the sector. This is good news for the federal budget deficit but potentially bad news for the strength of the n dollar in foreign exchange markets.

China’s role in giving a boost to commodity prices is clear enough, but is it enough to help them maintain their gains?

“The [commodity price] rally was tied to Chinese authorities stimulus, which cannot be maintained indefinitely,” said Stephen Anthony of Industry Super. “The global cycle is turning higher into a rebound, led by China. This should support existing stronger commodity prices, provided Chinese authorities maintain existing levels of stimulus.”

Nick Hutley of Urbis Consulting said: “Much hinges on China and how far the Beijing government is prepared to underwrite economic activity – particularly its support for residential construction and infrastructure as well as its stockpiling strategy.

“On balance, prices are more likely to be softer in 2017.”

Then there is the US. Despite the undoubted importance of the US to the health of the global economy, will the plans of the new US government to boost infrastructure spending add to global growth?

“I doubt whether whatever the incoming Trump administration does on infrastructure investment will be enough, on a global scale, to have any material impact on prices of commodities that matter to ,” said Saul Eslake, of the University of Tasmania.

One complication here is the planned renegotiation of the North America Free Trade Agreement, between Canada, the US and Mexico, along with a move to revamp the US corporate tax code which could stall both its near term growth as well as hit capital spending. Added to that is residual concern that US President Donal Trump will impose import duties of a flat 20 per cent, which could hit US trade with China hard.

And, if the Chinese investors become concerned that the domestic stimulus being provided by the Chinese government is creating imbalances, this could trigger a renewed outflow of funds, irrespective of government controls, Industry Super’s Dr Anthony warned.

“This may run down official foreign currency reserves and so restrict the conduct of future stabilisation policy which up to now has seemed to present a limitless range of alternatives.”

One side effect of any renewed outflow of funds from China could be further buying of n residential property, he said.

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Scope 2017 economic survey: Stephen Anthony, Bill Mitchell; and Renee Fry-McKibbin tie for forecaster of the year

ANU Economic modeller Renee Fry-McKibbin put faith in the housing market. Photo: Elesa Kurtz Professor Bill Mitchell tipped correctly that wages would stay low. Photo: Simone De Peak
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Industry Super , chief economist, Stephen Anthony picked low growth. Photo: James Boddington

ANU Economic modeller Renee Fry-McKibbin got house prices pretty right. Photo: Elesa Kurtz

Professor Bill Mitchell picked very low wage growth. Photo: Murray McKean

 One a one-trick pony or unicorn? 2017 forecastsCommodity run is probably done’General glumness’ to keep shares flatHouse price will rise, don’t expect a crash

In most years there’s room for one forecaster of the year. But not in 2016. Hardly any of our panel picked the dive in ‘s growth rate to 1.8 per cent or the dive in the cash rate to a record-low 1.5 per cent. Wage growth was lower than all but the most pessimistic of the forecasts, and house prices ended the year far higher than the highest.

But at their best, three of our panel got just about everything right.

Stephen Anthony of Industry Super (a two-time forecaster of the year) was right about ‘s very low economic growth rate. He picked 2 per cent for the year to December. He was also right about the cash rate, one of only five who expected it to slip 1.5 per cent. And he was right about the timing. He predicted one cut in the first half of 2016 and one in the second.

But like most he was far too cautious on house prices (expecting growth of only 3.5 per cent in Sydney and 6.5 per cent in Melbourne), far too keen on a low dollar (expecting 62 US cents instead of 72) and pessimistic about commodity prices, expecting a slide in the iron ore price to $US33. In fairness, few people expected the late-year surge in commodity prices, and none of our panel.

The ANU’s Renee Fry-McKibbin got house prices pretty right. The typical forecast was for the CoreLogic measure of Sydney prices to climb 2 per cent and for the Melbourne measure 3 per cent. The year ended with prices up 15.5 per cent and 13.7 per cent. The Housing Industry Association and the property specialist BIS Shrapnel were as wrong as the rest of them, picking around 6 per cent and 3 per cent. Fry-McKibbin picked 10 per cent and 9 per cent, and she got housing investment pretty right as well.

She says with money cheap she could see nothing that would slow prices down. New home building was high but it takes a while, and a while to provide infrastructure to new suburbs. This year she is going for 12 per cent and 10 per cent.

Bill Mitchell of Newcastle University’s Centre of Full Employment and Equity is the third of this year’s three-pack. He was darn close on n economic growth, the closest on US economic growth, and the closest on record-low wage growth, picking an ultra low 2 per cent, close to the 1.9 per cent recorded in the year to September. He also hit the bullseye on the 10-year bond rate, picking 2.7 per cent, which is where it ended up.

He says low wage growth would have been obvious to anyone who wasn’t seduced by the fairly steady unemployment rate. Underemployment had been climbing, tens of thousands of people had left the workforce who would have once been in it, and what jobs growth there was had been concentrated in part-time jobs that were typically non-unionised where workers had low bargaining power. This year he is predicting wage growth of 1.8 per cent, less than the rate of inflation, meaning earning power will shrink.

He says the low bond rate was also obvious, given auction data showing queues of traders wanting to buy risk-free assets. For all the talk about the need to attract foreign capital, ‘s government finds it pretty easy.

There are three honourable mentions: Shane Oliver was also close on wages, Jakob Madsen was spot on in predicting an outsized fall in mining investment of 40 per cent, and Stephen Koukoulas had the highest iron ore price. At $US58 a tonne it was higher than anyone else’s, but still far short of what happened.

Arise Bill, Stephen and Renee, and may one of you not need to split the award next time.

Peter Martin is economics editor of The Age.

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Armando Lucas Correa: books that changed me

Armando Lucas Correa is editor-in-chief of People en Espanol, the top-selling Hispanic magazine in the US, and author of The German Girl. Photo: Hector O. TorresArmando Lucas Correa is editor-in-chief of People en Espanol, the top-selling Hispanic magazine in the US, and author of The German Girl (Simon & Schuster), a novel about a family who fled the Nazis for Cuba. Correa will speak at Perth Writers Festival (February 23-26), Adelaide Writers’ Week (March 4-9) and in Sydney at Woollahra Library on February 28.
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One Hundred Years of Solitude

Gabriel Garcia Marquez

I read it as a teenager. I was fascinated by the language, narrative, how he constructed the Buendia’s family tree. He completely influenced my formation as a writer. It’s one of the books that I’ve re-read the most in my lifetime. From there, I went on to his beginnings: Faulkner, etc.

Rayuela (Hopscotch)

Julio Cortazar

This was another book I discovered in my adolescence. I wanted to write like him, play with language, structure, alter grammar and paragraph orders. I wanted to live in exile in Paris and fall in love with La Maga.

Paradiso

Jose Lezama Lima

In college, I read Paradiso, written by Jose Lezama Lima, the most erudite of Cuban writers. Lezama was banned in Cuba. There was an edition with a chapter that was censored because it had erotic, homosexual content. We all wanted to read chapter 8. I was dazzled by his mastery. Lezama was the architect of novels. Reading Lezama was like participating in a sacred act. You had to re-read them with care, decipher the different levels of interpretation.

Nineteen Eighty-Four

George Orwell

Growing up in Cuba – under a dictatorship where the government censors all and decides what can be read – makes you thirsty for information and whatever is being put out at a literary level around the world. Orwell’s novel was a banned book in Cuba. When a well-worn copy made its way to me, I was amazed. I understood why the government had banned it and felt even more claustrophobic on that island.

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