WHAT’S HAPPENING IN OUR REGIONS?
Brisbane: Developers are responding this shift in the market and the urban form is changing rapidly in inner city Brisbane. West End, South Brisbane, Woolloongabba, New Farm, Teneriffe and Bowen Hills are in the grip of a wave of construction. Off the plan sales have been strong which encourages more developers to enter the market. Construction time for these high rise buildings is between 12 and 18 months so it will take 2 to 3 years to know for sure which buying group has responded to the sales campaign.
The composition of stock in the inner city has changed with a higher proportion of one bedroom units without car parks than in past cycles. Anecdotal evidence suggests that many off the plan sales have been made to offshore and interstate investors. If purchasers have been predominantly investors we will see a future possible oversupply of rental stock which could drive down rental rates. Oversupply of unsold apartments has the same effect keeping a lid on pricing and capital growth of existing apartments. At this stage there is no evidence of oversupply in buildings that have committed to begin construction.
In the outer suburbs smaller townhouse and low-rise projects have been readily taken up by the market. Shorter construction time frames for these projects reduce the market risk for developers and purchasers.
Gold Coast: The Gold Coast has begun its upward journey in apartment construction after an extended period of downturn. The oversupply of apartments that were ‘left over ‘from the previous market cycle have now been absorbed. New development projects are in planning and construction stages and are reportedly selling well. Precincts such as Robina / Varsity and Broadbeach and Southport have seen stable settlement rates particularly in the townhouse and attached home market.
Development Approvals granted by the Gold Coast City Council shows an upturn in High rise apartment projects in Southport, Surfers Paradise and Broadbeach and the first High-rise approved in Burleigh Heads for five years has begun its marketing campaign. Completion and construction starts in Southport in recent years have been in predominantly low-rise buildings. Meriton have been steadily building through the stages of its Sundale project. Larger scale very high density buildings approved in the Southport PDA have yet to begin construction.
There has been little evidence of price growth in the “off the plan” sales recorded in the past 6 months. However the margin between existing apartment resale prices and new stock is closing. I would expect that a number of developers will “push the button” on their approved projects when the price per square metre achieved for “off the plan” sales rises.
Sunshine Coast: The unit market on the Sunshine Coast is showing signs of improvement with total sales volumes rising to levels last seen in 2007. The majority of sales are below $500,000 , with rents rising conditions have been right for a number of new apartment projects to begin marketing. We are not yet seeing the return of the High-rise projects to beachfront locations. Most activity is in the smaller developments targeted at owner occupiers.
The University Hospital project has been a catalyst for residential apartment projects and also an emerging student accommodation market.
Toowoomba: Unit development activity has increased in Toowoomba over the past twelve months. Sales to investors have become evident as rental vacancy rates increase in the western suburbs of Glenvale and Kearney Springs. Apartments and units in the inner suburban zone are more appealing to owner occupiers and this market remains strong. New developments being considered in this region should proceed with some caution, particularly in the western suburbs. I would recommend due diligence on the real demand for the completed product be performed on prior to committing to new construction in some sectors.
Cairns: Far North Queensland is markedly different to the other regions. Similar to the Gold Coast, Cairns offers apartment buildings to the Tourist accommodation market. Downturns in tourism visitation effects return on investment in this type of apartment and reduces demand for new projects to be constructed. As tourism is a major employer in Cairns / Port Douglas the general market is also affected by reduction in confidence of residents in stable employment.
Residential apartment prices are still below those achieved at the peak of the market in 2010. Tourism apartment prices peaked in 2004 and have not yet recovered fully. Overall the apartment market has been improving since 2012. There are new projects announced in the Cairns CBD. Actual construction starts have not eventuated. The region seems to be on the edge waiting for the economic catalyst that will tip the developers in to ‘GO’ mode.
SSKB works with Developers across all three states on the eastern seaboard, our community managers are well versed in trends in their local communities. Kerrie Young and the Development Consulting team are available to meet with developers at the inception of a new community or apartment project to use our experience to assist with the due diligence process.
SSKB’s New Projects manager, Kerrie Young is experienced in both Property Market research and Project sales and marketing. She maintains an overview of trends in supply and demand in the property markets in which our clients operate.
Kerrie Young AAPI FDIA – Developer Consulting Team New Projects Manager
Mob: 0428916411 email@example.com