June, 2019

Ron Medich murder trial hears of divorce, wire taps, and expensive contract killings

Ron Medich allegedly baulked at spending $300,000 on a contract killing. Photo: Nick Moir Ron Medich arriving at the Supreme Court. Photo: Daniel Munoz
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Lucky Gattellari is the key Crown witness against Ron Medich. Photo: Daniel Munoz

Lucky Gattellari, the Crown’s star witness, sat in the witness box with a fixed smile on his face, twirling his reading glasses around with some vigour.

He had just listened to a phone tap. It was October 8, 2010 and Ron Medich’s son Peter was heard apologising to Gattellari that his father wasn’t going to be able to meet up at the Babylon massage parlour in Haymarket as arranged.

Gattellari explained to a Supreme Court jury hearing Mr Medich’s murder trial that he and Mr Medich needed to talk in person as they were sure their phone calls were being recorded.

Two days later Peter Medich again phoned to say his father “got caught up – he’s not coming”.

Asked if he saw Mr Medich again, Gattellari replied bitterly: “No, I didn’t. My observation was that he was avoiding me at all costs.”

Gattellari was right to be worried about the fallout of the murder.

On the evening of September 3, 2009, Haissam Safetli, then 45, and 19-year-old Christopher Estephan had driven to the Cremorne home of businessman Michael McGurk where they shot him in the back of the head as he was getting out of his car.

A Supreme Court jury has heard allegations that Mr Medich was enraged over a string of law suits in which he and McGurk were embroiled. It’s alleged that in late 2008 and early 2009, Mr Medich asked his then close friend Gattellari to organise McGurk’s murder.

Gattellari said that after initially baulking at the cost, Mr Medich had agreed to pay the $300,000 Safetli had demanded.

“F—, that’s a lot of money,” he is alleged to have said of the cost.

Gattellari responded saying, “If you don’t want to pay it, let’s forget about it.”

But Mr Medich brushed aside cost issues. “No, it’s all right. I want it done.”

It was now a year after the murder and the police were closing in. A number of those involved in the murder had been hauled before the NSW Crime Commission, the jury heard.

On September 15, 2010 Gattellari organised a meeting inside his lighting factory at Chipping Norton. He told the jury that he thought the noise of the machinery would make it impossible for police to overhear what they were saying.

He was mistaken. As the conspirators talked about the police closing in on them, and their concern that “the kid” [Estephan] would crack, Gattellari was heard urging Safetli to “put his hand up” to save the rest of them.

“If the shit hits the fan, I would like you to put something in your handwriting clearing everybody,” Gattellari instructed.

In return, he promised that Safetli’s family would be looked after and his legal expenses paid for.

The jury heard the only problem with this scheme was that the only man with money, Mr Medich, was making himself scarce.

What none of them knew was that someone had “cracked”. It was Safetli, who was now wearing a listening device.

In another conversation recorded on October 5, 2010, Gattellari expressed the conspirators’ common worry about the police. “I believe every time you go to the toilet they know … they’ve got every f—ing move we make.”

Safetli asked, “How’s the big boss?”

Gattellari replied that he was getting divorced and that he’d been called in twice by the Crime Commission.

“Is he panicking?” asked Safelti, to which Gattellari replied, “No, he’s calm.”

Gattellari told the jury that the “big boss” was Ron Medich.

In another conversation Gattellari told Safetli that the rule of British law was in their favour. “You’re innocent until you’re proven guilty beyond a shadow of a f—ing doubt.”

“You’ve done nothin’ f—ing wrong,” he assured the contract killer.

“I have, Lucky, I am sorry but I have,” replied Safetli. “You’ve got to understand that in my position time is running out.”

Time was running out. Eight days later, on October 13, Gattellari, his driver Senad Kaminic, Safetli and “the kid” Estephan were arrested and charged over the 2009 murder of Mr Medich’s former business partner Michael McGurk.

Gattellari received a substantial discount on his sentence for his role in the murder in return for giving evidence against Mr Medich.

The jury heard that Gattellari had met Safetli and his brother Bassam several years earlier when they were doing some debt collecting work for him.

On one occasion Bassam Safetli said: “If you guys want anything heavy done or even a final job done, we’d been more than happy to help you.”

With Medich allegedly determined to rid himself of McGurk, Gattellari said he organised a meeting with the Safetli brothers, saying: “That comment you made about going further with a job, is that still on the table?”

He said the brothers looked at each other, went to the corner of the room to talk in private and, when they returned, they said they would take the contract.

The following day they said they wanted $300,000 plus expenses for the murder.

But the months dragged on and still the murder, which the conspirators referred to in code as “the tyres”, had not occurred.

Medich, Gattellari said, was continually irritated by the delay. Gattellari had allegedly already collected $250,000 in cash from Medich’s Point Piper home.

Of that amount, $45,000 was given to the Safetlis as an advance on the murder. Gattellari used the rest for his electrical business.

In July he gave the brothers around $6000 in order to go to the snow to kill McGurk while he was on a skiing holiday. But the Safetlis didn’t get organised in time.

Gattellari later suggested that McGurk be killed by a drug overdose as he was “a current user of drugs”.

The murder was eventually done by Haiss Safetli, who was accompanied on the night by Estephan, a 19-year-old friend of his nephew’s. Both pleaded guilty to their roles in the murder.

The trial before Justice Geoffrey Bellew continues.


People power pushes council mergers to the brink

“The byelection was the last chance we had to make our voices heard”: Marj Bollinger. Photo: James Brickwood An anti-merger protest outside Bathurst MP Paul Toole’s office last year. Photo: Supplied
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It was a policy dictated from the heart of commercial Sydney; from government office blocks in Macquarie Street and Martin Place, and from consultants’ suites in Barangaroo. But if the state’s council amalgamations plans are defeated in the coming days, or at least pared back, it will owe to political power exercised from RSL clubs, town halls, and showgrounds on the other side of the Great Dividing Range. Decision-making tends to flow from east to west in this state: here the west may have reversed the tide.

“We are laid-back people,” says farmer Marjorie Armstrong, 73, who has led the grassroots revolt against mergers in Oberon. “But you try and take local government from small communities and, yes, we will revolt.”

When Mike Baird stood for election in March 2015, he had not articulated a policy on council mergers. Yet in some ways states are always looking at changing the rules around local government. Councils receive no mention in ‘s constitution. They exist only as creatures of state law, created because states needed to ensure local facilities such as roads and street lights, but would not pay for them directly. In the bush, particularly, they remain important sources of decent jobs.

For the past century, however, the trend has been to shrink their number: since 1906 the number of councils in the state dropped from 327 to 152. This is why so many state politicians are so often asked to rule out undermining their independence, mostly in local newspapers who also depend on councils for both advertising and stories. “A Liberals and Nationals government will also ensure there are no forced council amalgamations,” the Nationals candidate for Bathurst, Paul Toole, told his local newspaper prior to the 2011 election.

Under Baird’s predecessor Barry O’Farrell, the government started looking at local government reform in 2012. An initial report, prepared by a panel headed by Professor Graham Sansom, recommended multiple functional changes, including allowing councils to charge higher rates for apartment owners. It also recommended fewer local governments. “NSW simply cannot sustain 152 councils,” the panel’s final report in late 2013 said. “There are shortages of highly-skilled personnel. The shortage of engineers, for example, is a significant factor limiting the capacity of councils to deal with infrastructure backlogs.”

By the 2015 election, Baird had not signalled what he would do on the issue. But he also refused to rule out forced mergers. Soon after the election, councils were asked to submit proposals as to why they should continue to stand alone, or to consider aligning themselves with neighbours for voluntary mergers. The result was a frenzy of deal-making and, in places, the nascent signs of a resistance. In the eastern suburbs, for instance, Waverley and Randwick councils agreed to a merger, while Woollahra resolved to stand alone. In the inner west, Labor and Liberal councillors agreed to a merger between Ashfield, Leichhardt, and Marrickville, though the area’s Greens and independents said the councils should stand and fight.

Country men and women also started organising. “There were people from Oberon writing to politicians,” says Armstrong “Country people don’t do that. I was stunned we could even get people to rally.”

In October 2015, over 600 people packed the local RSL in Oberon for a community vote on the issue.

Oberon Shire, home to around 5000 people largely employed in farming and forestry, was facing the prospect of being merged with the much larger Bathurst Council. The RSL vote was emphatic: 94.3 per cent were against the merger. A few months later, it was standing room only as locals crowded into a second meeting at the Oberon showgrounds. The public meeting was open to comment, and 83 people registered to speak – all but one of them in opposition to the merger.

In Cabonne Shire, less than two hours’ drive away, a similar movement was afoot. In May 2015, community group Amalgamation No Thank You (ANTY) formed after 400 locals turned up to a meeting in Molong to protest the proposed merger with Orange and Blayney councils. In New England, which was expected to host a tough battle in the July 2016 election, federal Nationals leader and canny retail politician Barnaby Joyce started to campaign against any forced merger of the small Walcha council.

The result was that the eventual announcement of forced mergers in May 2016 was both a bombshell, yet only a partial job. Baird and Toole, the local government minister, announced the creation of 19 new bodies formed from the immediate sacking of 42 councils. But they didn’t touch Walcha because of Joyce’s intervention. And they didn’t create a further nine councils, to be formed from the sacking of 25 existing bodies, because some of those councils had signalled their intent to challenge their mergers through the courts.

But the announcement did not quell the opposition. In fact, the manner in which it was made only intensified the disquiet. Mayors and councillors were given little or no forewarning of their dismissal. Bob Stewart, Mayor of Bombala in the state’s Monaro region, was driving into town from his farm when he learned by ABC radio he and his colleagues had been sacked.

“We could never get a meeting,” says Marj Bollinger, a Molong-local and ANTY spokeswoman of her attempts to talk to the government. “They were invited to every rally, every meeting, everything we had. They were never available.”

Toole, who had once promised Oberon locals he would oppose mergers and was now in charge of implementing them, was not explaining himself to the community, Oberon mayor Kathy Sajowitz says.

“There is a general feeling in the community Mr Toole has let Oberon down,” she says. “The community has lost faith in their local member.”

Adding to the government’s troubles, it found it increasingly hard to sell the potential benefits of mergers in local media that had always had a close relationships with its councils and councillors. On the radio, Alan Jones was decrying Baird’s despotism. Those who had been agnostic or supportive of mergers found that the issue had been swept up in fast-surging anti-government sentiment. The narrative had been established: mergers were on the nose.

The opportunity to fight back emerged in November when a by-election was held in Orange to replace Andrew Gee, a National who had left for federal parliament. By this stage, regional community groups had become something of a network of anti-amalgamation activists. They crossed shire districts for rallies and protests, placarded Cabonne, and on election day, manned polling booths in Orange.

“The byelection was the last chance we had to make our voices heard,” says Bollinger.

The result, also influenced by Baird’s greyhound racing ban, was a crushing loss for the Nationals in a seat it had held by almost 22 per cent. The Shooters, Fishers and Farmers Party won its first ever lower-house position. An emboldened Robert Borsak, one of its two upper house MLCs, told Fairfax Media at the time preparations were under way for a lower house campaign for the 2019 election. The party, which has been consistent in its opposition to forced mergers, intends to take on the Nationals in eight to 10 seats.

For the Nationals, the loss precipitated a spill. The Member for Monaro, John Barilaro, claimed the leadership and the deputy premiership from Troy Grant, and started on trying to repair the party’s relationship with its bush base. In December, he met with the Oberon anti-amalgamation group that had previously failed to gain a meeting with Toole. Spokeswoman Marj Armstrong articulated to Barilaro a sentiment bubbling across the state’s pending council districts. “We won’t give in, and we won’t give up. And we will put the Liberals and Nationals last every time we vote,” says Armstrong of her message.

In the heights of government, the change in political sentiment has been rapid. When Baird stood down last month, Barilaro immediately insisted there would be no more forced amalgamations in country areas. And the day before the incoming premier, Gladys Berejiklian, was unanimously elected Liberal party leader, some of her closest confidantes and advisers met to discuss controversial policy areas that were ripe for dumping or overhaul. Council amalgamations was first on the list. Keith Rhoades, the president of industry group Local Government NSW, said he had hour-long meetings with both Barilaro and new Local Government Minister Gabrielle Upton on Wednesday. “I found them to be very receptive,” says Rhoades.

Even now, a third of the proposed new councils are still pending the resolution of legal disputes. While that drags on, 29 councils are in limbo. Many councillors and mayors who were elected on four-year terms and were due to face an election in September last year are now serving overtime. Late last year, the NSW electoral commission added another layer of complexity to the unfolding democratic debacle when it said it may not be able to hold elections until 2020 for councils whose disputes extend beyond August. Such a delay would expose the government to wrath of voters at the 2019 state election.

Yet the unravelling of the amalgamations policy may be as messy as the policy’s development. There is as yet no clear indication of what the government will do, though Fairfax Media has reported there is likely to be a halt for further forced amalgamations and mini-plebiscites to allow for communities to decide the future of their councils. It remains unclear what will happen to councils that have already been merged – though one suggestion is that they too could face plebiscites about the prospects of de-merging, potentially as late as 2020. Berejiklian said this week a decision was “imminent” and councils that have fought the proposal are sniffing victory.

“This is a win for democracy,” says Woollahra Mayor Toni Zeltzer. “Clearly the state government has listened and they have got the message loud and clear that local communities want to have a say on the future of their local areas.”

However Upton need look no further than her Vaucluse electorate for an indication of the complexities to come. Although Woollahra is firmly opposed to a merger (a position endorsed by Upton as recently as 2015), Waverley and Randwick remain keen. “To a certain extent Waverley has already had a plebiscite,” Waverley’s Mayor Sally Betts says. Surveys of residents and ratepayers showed strong support for the amalgamation in that area. “We’ve identified fantastic savings for all our residents, including Woollahra residents. It would be a pity. Our residents would lose out on some pretty good savings and funding to fix up all sorts of infrastructure.”

But the benefits were evaluated based on the three-council scenario, and should the government put a new proposition on the table – such as a merger just with Randwick Council – all bets are off. “We would need to go back and do a completely different assessment,” Cr Betts says, adding “If the government changes its policy we would prefer to stand by ourselves.”

And if Woollahra Council, which has already spent $850,000 on legal appeals, is allowed to remain independent while other mergers stand, that is sure to stoke questions of political equity. It would mean, for instance, there would be one council for Woollahra’s 60,000 residents (in the city’s most exclusive suburbs), and one council for Canterbury-Bankstown’s 360,000 residents. Hunters Hill, with its 15,000 residents, continues to fight to stand alone.

“It just stinks, it’s got politics written all over it,” says the former mayor of Parramatta, Paul Garrard, who says he will be campaigning for Cumberland Council to be de-merged.

“It’s like there’s two laws in this place. The inner city and west are being treated differently and now there’s a fear we are going to be treated from our country cousins as well,” says Garrard.

Unscrambling mergers that have proceeded would be its own nightmare. The government has already paid out hundreds of millions of dollars in incentive payments to merged councils, on top of the millions it spent on consultants such as KPMG to prepare reports into the mergers.

One issue is that if there were plebiscites would those plebiscites provide the opportunity for residents in the old council areas to vote? Or would the votes of the new combined council areas be tallied together? The results could point to very different outcomes.

There are myriad of other practical considerations. Administrator of the new Inner West Council, Richard Pearson, says reverting to three councils – Marrickville, Leichhardt and Ashfield – would involve unpicking the “very well advanced” integration process, and imbue the council’s functions with uncertainty.

“The prospect of a plebiscite means you would have to also be more conservative in your decision-making,” says Pearson, scheduled to be replaced by elected councillors in September. “You don’t want to be spending public money and then in six months time have to reverse your decisions.”

Long-term savings which underpinned the rationale of the merger process, and made largely from the retrenchment of staff, would immediately be jettisoned. Redundancy packages paid out to former general managers, and other senior management across the three councils would be sunk costs.

“You’d have to re-recruit a whole management layer,” he says. “You are reinstituting a cost that the merger was designed to save.”

Restoring the three councils management structures is expected to cost $4.5 million annually. While the councils await a clear decision from the Berejiklian government, the uncertainty is destabilising for council staff. “There’s a lot of people here who are saying ‘What’s going on?’,” Pearson said.

Greg Wright, the administrator of Bayside Council formed in September from the former Botany and Rockdale councils, said it would be increasingly difficult to pick apart functions that had started to come together. “We are starting to integrate systems and people and locations,” Wright said.

Another factor is that while a backdown on mergers might deliver some political reward, Berejiklian may also face a backlash within her own party.

Fairfax Media has been told many Liberal councillors who agreed to back mergers in their own areas to support the government are furious at the prospect of a plebiscite option. “After doing the right thing by the party and local government state wide, to let these recalcitrant councils off the hook is a betrayal of good councillors across the state,” said a senior Liberal local government source.

And then there is the business community, and the original arguments in favour of amalgamations. “Whatever they do will have consequences,” says Patricia Forsythe from the Sydney Business Chamber.

“The future of Sydney requires strong local government, it requires them to have adequate resources and infrastructure to manage the growth and none of that has changed,” says Forsythe, who would prefer Sydney’s councils reduced to only six.

More by-elections may nevertheless drive the changes. After the retirement of Baird and health minister Jillian Skinner, Berejiklian faces polls in the seats of Manly and North Shore – both areas where the mergers issue has been a flashpoint of community anger. Both seats have been historically vulnerable to strong independent candidates.

On the North Shore, Mosman mayor Peter Abelson says the anti-merge voice will be heard “loud and clear” at the ballot box. “There’s no doubt that if there were a by-election without this being sorted out there would be a very strong protest vote against the Liberals.”

According to sources, the Premier wants a resolution on the issue before Parliament returns on Tuesday, February 14.

Fixing the merger mess may be a daunting and costly task with its own political risks. But the prospect of a repeat of the Orange result in these two Liberal heartland seats could just be enough to convince Berejiklian it is worth it.


Suburban office market stirred by sales

Two interconnected buildings at 1100 Pascoe Vale Road next to the Broadmeadows Railway Station sold for an undisclosed price believed to be around $10 million. Photo: SuppliedPerth-based syndicator Property Bank is preparing to recycle two Melbourne office assets after successfully offloading a suburban building last year for $23.5 million at a peak point in the property cycle.
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Property Bank’s move follows the year’s first sale of another small office in Broadmeadows.

The syndicator has called for submissions from estate agents on a three-level office in the Richmond Corporate Park which it purchased seven years ago for $18.5 million.

A second suburban office asset in Market Street South Melbourne that the syndicator purchased in 2011 for $8.95 million is also likely to be offered to the market, said people familiar with the matter who didn’t want to be named.

Both assets have been held by the fund for more than six years and would see significant upside if sold in the present market.

Value estimates vary but both offices have been refurbished and are fully let.

The Richmond building at 8/658 Church Street could fetch in excess of $40 million, while the three-level South Melbourne office at 17-33 Market Street might go for more than $15 million.

Property Bank would need to get sign off from fund investors before putting the assets up for sale. The group was approached for comment.

The office that the fund manager sold at 630 Church Street in August last year transacted on a 5.1 per cent yield, highlighting the strength of one of Melbourne’s most sought-after inner-city pockets.

It was snapped up by Manny Stul and stepson Paul Solomon, the pair behind global toy powerhouse Moose Enterprises whose Shopkins Small Mart figurines are on the must-have list of millions of girls aged four to 11 around the world.

Meanwhile, an office owned and developed by Victorian Rail Track in Melbourne’s outer north was purchased by a private investor.

Agents Gray Johnson, Cushman & Wakefield and Kypa Real Estate transacted the two interconnected buildings at 1100 Pascoe Vale Road next to the Broadmeadows Railway Station for an undisclosed price believed to be around $10 million.

The building has a mix of 18 public and private sector tenants returning annual rental income around $1.2 million.

Tenants include Victorian Legal Aid, MIA, Wesley Mission Victoria and Campbell Page . oOh! Media and Vodafone have signage and telecommunications facilities on the building.

Gray Johnson director Matt Hoath said the building had an estimated net lettable area of 4238 square metres and rental potential of $1.35 million if fully occupied and leased.


One-third of NSW children prefer fine dining over fast food: OpenTable survey

Julia Lipari and her daughters, Isabella (left) and Lily (right) dig in at Otto in Woolloomooloo. Photo: Dominic LorrimerWhen it comes to children and food, fussy eating now has a whole new meaning.
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Kids are going gourmet, swapping fish fingers for lobster, sausages for wagyu beef and cordial for coconut milk.

One-third of NSW children prefer fine dining over fast food and 49 per cent have dined at a hatted restaurant at least once, a new survey for OpenTable has found.

Three-quarters of n parents say their children eat out more often than they did growing up, with 18 per cent taking their kids to a restaurant at least once a week. A quarter of parents are willing to spend over $26 on a meal for their child.

North shore mother Julia Lipari has always encouraged her four daughters to try different foods and said eating together was an important part of family life.

She said her middle children Lily, 8, and Isabella, 7, were “absolute foodies” with adventurous tastes, happily eating everything from curries and sushi to olives, anchovies and blue vein cheese. “They’ll basically try anything,” Mrs Lipari said.

Like 75 per cent of n parents surveyed, she said her kids preferred to order from the adult menu rather than the children’s menu when dining out.

“I often try to talk them into ordering off the kids’ menu because it’s cheaper, but then they get jealous of what we’re having,” she said. “If we go out to breakfast they’ll want the smashed avocado and haloumi. If I’m entertaining and I put out a platter … they come and eat half of it.”

Lily said she liked trying new foods. “If you don’t like it, you don’t have to eat it. But if you do, then it’s good.”

Mrs Lipari said that as a schoolboy in  her Italian husband was too embarrassed to take spaghetti to school for lunch. But in today’s multicultural society kids were open to all kinds of flavours and cuisines.

“Even at the school canteen they have hokkien noodles and sushi, so they are exposed to a really wide range of things,” she said.

The survey of 1250 people nationwide was conducted for OpenTable, the world’s leading provider of online restaurant reservations. “As a nation home to such a vibrant food scene, it’s exciting to see children are so engaged with emerging food trends and open to taste testing multicultural flavours,” said Lisa Hasen, vice-president of OpenTable, Asia Pacific.

John Fink, creative director with the Fink Group, whose restaurants include Bennelong and Otto, and the three hatters Quay and The Bridge Room, said he was seeing an increase in children of all ages – “from first day of kindy to last day of school” – eating at his establishments with their parents.

“It is more likely that the kids want to eat from the grown-up menu these days,” he said. “Young palates with grown-up tastes.”

Mr Fink said the popularity of MasterChef had “changed everything, hands down. Ever since MasterChef hit the small screens in living rooms across the nation young ns have developed a unique fascination with good food and restaurant dining.”

Attitudes to eating out were also changing, he said.

” has a growing culture of what I like to call ‘socialised sophistication’,” he said. “Years back, mum and dad going to a restaurant was a bit posh, and a bit of a deal. Babysitters and taxis got involved. Nowadays folk will head out for a meal with the kids. Dining in a restaurant is part of family life now.”

The 10 most popular gourmet choices for n children, in order of preference:



Smashed eggs on toast

Coconut water



Crème brûlée

Wagyu beef

Almond milk


Source: Galaxy Research for OpenTable


Trust sector looks to busy year ahead

Sydney commercial property is the most sought after by investors. Photo: SuppliedThe n real estate investment trust sector is the first cab off the rank in the upcoming reporting season with expectations the office and industrial managers will be popping the champagne corks, while the retailers will be on the chardonnay.
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The residential sector is resilient but with a slower rate of growth and affordability will remain the topic of discussion.

More takeover activity is predicted, with Mirvac and Investa Office Fund tipped to be the two big targets.

Giving the office landlords a boost were the latest Property Council of Office Market Reports, which showed that while there has been a small rise in vacancy levels, any excess space is likely to be snapped up this year.

Leasing agents agree, saying that telco, internet-related businesses and the new co-sharing enterprises are taking up any spare offices they can find.

And while there has been a lot of new developments, the continued desire to convert older stock in the apartments will help ease the pressure for C and D-grade properties, which are being left behind for the new buildings.

The same applies to the industrial market, where distribution centres are in high demand from the ever-growing e-commerce sector and expectations that will only get stronger.

Retailer are under pressure from overseas entrants, which puts pressure on landlords for rental increases, but investors are still willing to pay high prices for the malls.

CLSA head of real estate Sholto Maconochie says mergers and acquisitions will likely involve Investa Office, where he envisages three scenarios.

“One, it is taken private by Cromwell Property, which already own 9.8 per cent; Cromwell sells its stake to the Investa Commercial Property Fund, which already owns 19 per cent, and it will continue to manage IOF, or Cromwell sells its stake to CIC which then privatises IOF with Mirvac as manager,” he said.

Another is that GPT Group acquires Mirvac and spins off the residential division and Charter Hall Retail REIT merges with Shopping Centres Australasia, but led by Charter Hall.

Winston Sammut​, managing director of Folkestone Maxim Asset Management, has also earmarked IOF and Mirvac as two potential targets.

Mr Sammut’s Folkestone Maxim A-REIT Securities Fund has been reported as the No.1 performing fund over one, two and three years in the Mercer Investment Performance Survey of n Real Estate Securities (REIT) (Active Funds) at December 31, 2016.

He said the fund was focused on the social infrastructure sector such as childcare and medical, and its underweight position in the retail sector was driven by the view that retail is facing enormous headwinds from internet retailing, a competitive retail marketplace with a growing number of international retailers and ongoing margin compression.

Overall, CLSA, says for 2017, despite expectations of bond yields rising, the company has forecast capitalisation rates to compress and valuations to peak.

“We expect regional retail to outperform; large format retail to re-rate; residential to stay resilient but earnings to peak; and strong office fundamentals to finally show up in earnings, but more weighted to the second half of 2017-18 year,” Mr Maconochie said.

“We see a shift from yield to more growth-driven outperformance and expect a 9 per cent total shareholder return, with a preference for active A-REITS over passive.”

Mr Maconochie said he expects prime and secondary office to outperform again this year, but limited to Sydney, Melbourne and potentially Brisbane, due to favourable fundamentals, strong effective rental growth of 5 to 13 per cent, declining vacancy and investor demand.

With prime assets scarce and prime office capitalisation rates at lows of 5.8 per cent, investors are chasing secondary office or developing them to be premium grade, which will see them outperform other assets.