After some green shoots began to burst through in 2013, the upturn in off-the-plan sales of inner Brisbane apartments is expected to continue to strengthen over 2014 and 2015. Conditions are ripe for off-the-plan demand to accelerate and provide an opportunity for developers to make hay while the Queensland sun shines.
From a fundamental perspective, the Brisbane market offers the best capital city outlook with the residential market downturn since 2008 setting the scene for the recovery. The collapse in new dwelling supply in this period has seen a growing underlying deficiency of dwellings emerge, while weak prices have meant that affordability has improved.
Moreover, rising rents and recent cuts to interest rates have narrowed the gap between rental income and mortgage repayments, increasing the attractiveness of the market to residential investors. With yields in inner Brisbane also above that of the southern state capitals and a view that the Brisbane market has bottomed out, the impetus to enter the market will increase.
Demand from interstate investors is also likely to rise and supplement local investor demand as decreasing affordability in Sydney and Perth, or the prospect of oversupply in Melbourne, encourage buyers from these markets to look elsewhere.
In previous market upturns, interstate investors have accounted for up to 40 per cent of off-the-plan sales in inner Brisbane. Investors from New South Wales are likely to increasingly find the value proposition for apartments in Brisbane more attractive compared to prices of apartments in inner Sydney. Interstate demand will add to local and overseas buyers to underpin a pick-up in inner Brisbane apartment prices, which in turn will attract more investors.
As a result, the window for developers to sell their apartment projects into the market is likely to be open at least into 2014 and 2015. Developments currently being marketed are likely to achieve sufficient pre-sales to obtain finance to commence construction, while more developments will also be brought to market to take advantage of the strengthening off-the-plan demand.
It is estimated that more than 4,000 apartments in inner Brisbane were under construction in November 2013, with these projects scheduled to be completed through to 2015/16. On BIS Shrapnel’s analysis, there is enough pent up demand and future demand for these apartments to be occupied upon completion.
Chart I: New apartment completions, Inner Brisbane
Source: BIS Shrapnel
However, the next round of projects will determine the outcome for the inner Brisbane apartment market. It is estimated that more than 3,000 additional apartments are currently pre-selling or far enough down the planning pipeline to potentially be completed by 2016 if they achieve sufficient off-the-plan sales to commence. If all were to go ahead, new apartment completions could rise from 1,300 dwellings in 2012/13 to more than 2,000 apartments in each of 2013/14 and 2014/15 and exceed 3,000 dwellings in 2015/16.
Over the three years, this would take new apartment completions to an average of around 2,700 apartments per annum – higher than the previous peak of 2,250 apartments in 2005/06, and presenting a risk that excess supply pressures will emerge in the inner Brisbane market by 2015/16. Together with interest rate policy likely to be well into a tightening phase by this point, this would signal the peak of the market and the window for developers will begin to close.
This level of supply also means that landlords of newly completed apartments will have to be more competitive with rents to attract tenants, being unable to command a premium over existing stock. Correspondingly, owners of older apartments would have to discount to attract tenants from neighbouring suburbs, which in turn will impact on prices.
The potential for an excess supply to develop will depend on the number of additional apartment projects that achieve pre-sales hurdles and are commenced through the upturn, as well as the number of National Rental Affordability Scheme (NRAS) apartments that end up being made available to qualified tenants (as opposed to being offered to the general market), and apartments taken up by serviced apartment operators, thereby reducing the supply of regular rental apartments into the rental market.
Despite the anticipated strength in off-the-plan demand, price rises are expected to be below the double digit growth that we have seen in previous upturns given the growth that has taken rents and prices to their current levels since the start of the 2000s. The higher yields (median rents compared to median prices are now in excess of five per cent) in the market now are also expected to become a staple for investor owners as an offset to the more moderate price outlook compared to the past 15 years.
Angie Zigomanis is the Senior Manager of Residential Property at BIS Shrapnel. More detail can be found in BIS Shrapnel’s Inner Brisbane Apartments 2013 to 2020 report which can be found at www.bis.com.au.
(Image: Soda Apartments, South Brisbane)
Brisbane apartment market in the spotlight: Media Hunt’s May update
The media veteran Steve Hunt has cast his eye over the Brisbane market and what’s happening in the Queensland capital
The Brisbane apartment market continue to show strength over May, posting 1.1 per cent gains, CoreLogic’s monthly Hedonic Home Value Index found.
The rolling quarterly apartment gains are now up to 3.2 per cent, with the median apartment price reaching $411,000.
The media veteran Steve Hunt, who founded the public relations and media strategy firm Media Hunt in 2005, has cast his eye over the Brisbane market and what’s happening in the Queensland capital.
Hunt mentioned The Fernery, which has been popular with local owner-occupiers
Urban recently spoke to Colliers residential director Andrew Scriven, who said most of the buyers have come from a couple of kilometre radius.
“There’s been overwhelming success since launch in April from the local market, looking to either downsize, invest or secure something for the children,” Scriven said.
“Locals have really embraced the project. They haven’t really had that offering ever.”
The project by the Townsville-based Honeycombes, in partnership with their financier MaxCap, will comprise the 82 apartment block The Fernery, as well as a 12,000 sqm retail centre set next to the Ferny Grove train station.
Article Source: www.urban.com.au
First look: S&S Projects lodge plans for mixed-use Coolangatta development Esprit
The crowning glory of the development in Club Esprit, a rooftop residents only rooftop and wellness space.
Fresh off the success of their nearby Flow and Awaken Residences, the Gold Coast developer S&S Projects has lodged plans for its latest coastal development.
They’re set to develop a mixed-use precinct at 217-227 Boundary Street Coolangatta, a few streets back from Rainbow Bay.
Above ground level retail will be two interconnected buildings designed by Cottee Parker Architects totalling 96 apartments.
The main residential tower will have 72-two bedroom apartments and 19-three bedroom apartments across 12 levels.
Located at the front of the precinct will be the more boutique tower of just eight levels, home to five three bedroom apartments and one four bedroom penthouse.
The crowning glory of the development in Club Esprit, a rooftop residents only rooftop and wellness space in the main tower.
The rooftop features a lap pool with day beds and spa and a full wellness centre with gym, sauna, steam room, ice bath and treatment room.
There’s a relaxation lawn, a communal kitchen with large dining space, bar, and private dining terrace with barbecue facilities which can be hired. There’s also two communal barbecue facilities next to a playground lawn.
S&S director Paul Gedoun says he has a fundamental belief in the southern Gold Coast, off the back of the exceptional success in Flow and Awaken.
“Our vision for our projects looks to enhance the community feel, creating dwellings that are in line with our liveable luxury trademark,” Gedoun says.
“We expect that this project will provide a positive impact in the local community with the amalgamation of several sites providing a master-planned approach to the area.
“We always strive to deliver high quality owner-occupier residences in prime locations, respecting the sense of community ownership and the surrounding environment and we’ve taken that vision to a new level with Esprit.”
S&S have seen great success at their nearby Awaken Residences at Rainbow Bay, where their recent $8.15 million sale of the two-level penthouse was the highest apartment sale recorded south of Mermaid Beach.
Only four of Awaken’s nine expansive whole floor apartments now remain, each set to go for upwards of $4 million each after more than $20 million in sales in the first five apartments to predominantly local and interstate buyers.
Flow Residences was named Australia’s fastest selling beachfront apartments following their $74 million sell-out in late October with apartments selling at an average $3.5 million. Construction is underway and is due for completion in 2022.
Esprit Design Statement
In the design statement submitted to the Gold Coast City Council, Cottee Parker Architects call Esprit “a unique architectural offering at Rainbow Bay, that is directly inspired by the rock pools and formations this part of the world is known for.
“The proposed development at 217-227 Boundary Street is a premium one of a kind development, comprising of two interconnected buildings across two street frontages.
“Surrounded by dramatic natural beauty, Esprit draws upon its context to create a design that encapsulates the desirable sub-tropical lifestyle of the Gold Coast. Boundary Street The building’s design is inspired by nearby Snapper Rocks and the pockets of tidal pools formed over time.
“Tinted glazing emulates the tranquil reflective waters, separated by striated layers of rock, represented by the facade’s horizontal banding. These horizontal elements layer across the building facade to form balcony edges that grow and build at the edges.
“Within these sheltered edges, landscaping grows to provide a small garden space to each unit, just like the pocket parks that are scattered throughout Coolangatta.”
Article Source: www.urban.com.au
Sammut Group Lodges $350m Cronulla Retail Precinct Plan
A bold $350-million plan to reinvigorate the northern end of Cronulla ’s CBD would transform a 5225sq m site into a mixed-use residential and retail precinct.
Sammut Group acquired the Northern Gateway properties between 3 and 23 Kingsway at Cronulla with venture capital partner Alceon Group.
Plans for initial demolition works plus a three-storey basement car park and two-storey retail and commercial podium have been lodged with the Sutherland Shire Council this month.
Ultimately the site would include residential, commercial and retail mixed-use developments, including 112 one-, two- and three-bedroom apartments, 885sq m of commercial space, restaurants, shops and a flagship Harris Farm Markets store.
It supersedes plans for a 21-storey boutique hotel mooted for the site in 2018.
Sammut Group director Allen Sammut said the block of land between Croydon Street and Abel Place was one of the largest commercial sites in the southern Sydney beachside suburb.
“This is a game-changing development that will provide the catalyst for the future revitalisation and growth of the Cronulla CBD,” Sammut said.
“It’s a pivotal project for the area, particularly the many businesses in Cronulla that have been struggling in recent years.
“We’re extremely excited and eager to see our vision for this iconic gateway site come to life, ushering in a new era of optimism and opportunity for Cronulla.”
Harris Farm Markets co-chief executive Luke Harris said they were “thrilled” to launch their flagship store as part of the development.
“Harris Farm Markets has been looking for an appropriate location in the shire for many years… ,” he said.
“The store would be the largest Harris Farm store in Sydney and will introduce new food concepts we haven’t explored before.”
Sammut Group has an extensive portfolio and impressive reputation in the New South Wales market bolstered by the success of developments including Banc, Loft, Breeze and Drift in Cronulla and its surrounds.
Sammut Group is also awaiting approval for a development application for a commercial and hospitality precinct, PARC, in conjunction with Alceon Group, opposite Cronulla’s train station.
Article Source: www.theurbandeveloper.com
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