The Australian economic growth continues to follow a steady growth path with the unemployment rate falling to its lowest point since July 2013. Key points affecting the Australian economy include: • Negative rates overseas encouraging a new wave of inbound capital • China’s transition to a consumption economy emerges in domestic economic activity with: • Hotel investment volumes underpinned by a severe supply shortage, increased by 157% since 2013 • National growth results exceed expectations with service led growth crystallising • Australian major commodity export prices bounce back

1. Monthly Economic Report
April 2016
By Sas Liyanage
The Australian economic growth continues to follow a steady growth path with the unemployment rate falling to its lowest
point since July 2013. Key points affecting the Australian economy include:
 Negative rates overseas encouraging a new wave of inbound capital
 China’s transition to a consumption economy emerges in domestic economic activity with:
o Beef export values to China increased by 589% since 2012
o International student numbers grew by 22.9% since 2013
o Inbound tourist visitors climbing by 16.16% since 2013. Last year, inbound tourism contributed an
estimated $94.5 billion to local economy
 Hotel investment volumes underpinned by a severe supply shortage, increased by 157% since 2013
 National growth results exceed expectations with service led growth crystallising
 Australian major commodity export prices bounce back
Negative rates to push a new wave of inbound capital
Major global economies trekked into uncharted waters with negative rates and have, so far, emerged undeterred. The
Japanese central bank followed its European counterparts and ventured into negative interest rates, in a bid to stimulate its
economy. Squeezed by negative rates, the Japanese and Norwegian based funds will be forced seek higher returns
abroad. Australia’s comparatively higher relative yield offer will likely lure foreign investment. Japan, one of the world’s
largest savers, has a weapons chest of over $US14 trillion in household savings.
A service based economy
In Australia the non-mining sectors have gathered momentum, with economy growing assured with business confidence
and healthy employment figures. Domestic growth in the December Quarter exceeded expectations, ending on 0.4% for
the quarter and 2.5% for the year. This was 50 pts above RBA forecasts. Figures pointed towards a transition towards non-
mining growth, with the greatest contributors to growth coming from consumer spending and an increase to inventories.
Reflecting this, the non-resource based states did much of the heavy lifting. Victoria’s growth was the nation’s fastest for
the year at 4.6%; almost doubling its 2014 result of 2.4%.
Australia’s new era of services dependent growth is currently dominated by the sectors of property services, retail,
information technology, healthcare, education and the finance. Despite being fuelled by a lower interest rate, growth in
these sectors has been restrained by a stubbornly high dollar. Inbound tourism and international education, in particular,
will climb on the tailwinds offered by a softer dollar.
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
NSW VIC QLD SA WA
StateFinalDemand(%)
State Final Demand - 2015
Source: Colliers Edge/ ABS State Final Demand, Seasonally Adjusted (March 16)

2. Monthly Economic Report
April 2016
[Colliers Monthly Economic Report – April 2016 | P. 2]
A stubborn dollar
To the irritation of the RBA, the Australian Dollar has remained resiliently high. Since last month’s interest rate decision,
the local dollar surged by over 7% against the greenback, breaching US77 cent mark at the end of trade yesterday. This
12% rise since January has caused fresh headaches for the RBA. This did not justify a further cut, however. Still, domestic
growth remains stable, commodity prices have recovered, and the global markets have stabilised. The price of Australia’s
major export commodities; Iron Ore and Coal, has climbed by approximately 7% in the last month. The Australian dollar is
forecast to fall below US$70 cents; with the caveat of a RBA rate cut or a raise in US Federal Rate, however. Expectations
of relief from a US interest rate rise in April were scotched with Janet Yellen, the Federal Reserve Chair, urging caution
over a premature rate rise; dampening any probability of June rate rise. In Australia, the local dollar is under renewed
pressure as the spot iron price rebounded to $US52/t, from a low of $US38/t in December. Given the recent stability in the
Australian economy, it is unlikely the RBA will employ another cut. Thus, in the interim, the stubbornly high dollar will
persist.
Stable labour market
The unemployment rate decreased to its lowest point since July 2013, sitting 5.7% in April’s results. The rate has now
declined away from its peak of 6.3%, in July 2015. Meanwhile, the total persons employed since March 2015 has
increased by 235,288 according to the ABS. In its most recent Monetary Policy Statement the RBA reiterated a confidence
with the underlying conditions in the labour market in the near term. Unemployment rates in all the major States but South
Australia have fallen; facing headwinds caused by the legacy of the manufacturing shutdown.
-6
-4
-2
0
2
4
6
8
10
12
14
AnnualGrowth(%)
Growth Rate by Industry - 2015
Source: Colliers Edge / ABS Gross Value Added by Industry, Seasonally Adjusted (Dec-2015)
5.00% 5.50% 6.00% 6.50% 7.00% 7.50%
NSW
VIC
QLD
SA
WA
Unemployement Rate
Mar-15 Mar-16
Source: Colliers Edge / ABS Unemployment Rate, Seasonally Adjusted (April-16)

3. Monthly Economic Report
April 2016
[Colliers Monthly Economic Report – April 2016 | P. 3]
China’s shift to a consumption
China’s transition from an industrial to a consumption based economy has gathered pace. This will change the nature of
Australia’s relationship with its biggest trading partner. Indeed, the value of beef exports to China has increased by 549%
since 2012. International student numbers have increased by 22.9% since 2013, too.
Meanwhile, in this same period, inbound tourist number numbers have climbed by 16.16%. In 2015, inbound tourism
contributed an estimated $94.5 billion to local economy according to Tourism Research Australia (TRA).
Elsewhere, Marriot International and Starwood completed a $12.4 billion deal to create the world’s largest hotel company.
This came after the Chinese insurance giant, Anbang, withdrew its offer of US$14 billion. In Australia, meanwhile, the hotel
landscape continues to shift as room supplies varies across the state capitals. Chinese Investment in the Australian market
has surged 15% since 2013. This was in line with wider investment growth in the market, with volumes increasing by a
staggering 157% in the same period. Chinese developers have increased their participation in the development pipeline,
moreover. The $1 billion Jewel project by the Wanda group, by example, is one of many Chinese led developments in the
hotel pipeline.
$0
$200
$400
$600
$800
$1,000
$1,200
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
ExportValuestoChina(millionA$)
ExportValue(millionA$)
Australian Beef Exports
Total Beef Exports Exports to China (RHS)
Source: Colliers Edge/ Meat & Livestock Australia (Apr-16)
0
100
200
300
400
500
600
700
800
900
1000
4500
5000
5500
6000
6500
7000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
ChineseVisitors('000)
InternationalVisitors('000)
Inbound Tourist Numbers
Total '000 Visitors from China (RHS)
Source: Colliers Edge / Austrade Statistics (Apr-16)

4. Monthly Economic Report
April 2016
[Colliers Monthly Economic Report – April 2016 | P. 4]
Investment appetite remains dominated by foreign groups, with Asian high net wealth individuals targeting the sub $100m
category. Indeed, this growing investor profile have a prefer Sydney, Melbourne and Gold Coast. In Sydney, a constrained
room supply is imposing downward pressure on market yields. In a city of only 19,000 rooms at 88% occupancy, the
outlook for existing hotels is a positive one. The dearth of stock may shine the spotlight in a negative light from a long term
tourism sustainability point of view, however. This shortage will be further compounded by the opening of ICC, where
capacity conferences of 10,000 and more are slated for 2017.
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
YTD
InvestmentVoluems($Billions)
Hotel Investment Volumes
Chinese Investment Investment Volume
Source: Colliers Edge/ RCA