New apart­ments to dry up

The Courier-Mail - Home - - Outlook - On Queensland’s Development Market -

NEW apart­ment stock on the Gold Coast will be­come in­creas­ingly scarce over the next few years as fund­ing con­straints put the brakes on new de­vel­op­ment, a lead­ing project mar­ket­ing agent has pre­dicted.

Ju­lian Suther­land di­rec­tor of Ray White Surfers Par­adise Group’s New Projects divi­sion, said res­i­den­tial de­vel­op­ments with fund­ing in place or cur­rently un­der construction present un­prece­dented op­por­tu­ni­ties for savvy in­vestors.

“There’s no doubt that fu­ture de­vel­op­ment on the Gold Coast has been sti­fled by the cur­rent eco­nomic con­di­tions and fund­ing is­sues for new projects,” Mr Suther­land said.

“We are in a dif­fi­cult cy­cle but a con­straint to de­vel­op­ment ac­tiv­ity also presents op­por­tu­ni­ties for buy­ers be­cause sup­ply lev­els of new prod­uct will slowly di­min­ish and will not be able to meet de­mand.

“This will then cre­ate op­ti­mum con­di­tions for cap­i­tal growth in ex­ist­ing projects.

“My ad­vice to buy­ers is to shop around in the new apart­ment projects and se­cure your po­si­tion at to­day’s prices be­cause there will be lower sup­plies of new prod­uct in­tro­duced to the mar­ket in the next few years.”

Mr Suther­land said the $650 mil­lion Sala­cia Wa­ters res­i­den­tial project at Par­adise Point and the $220 mil­lion Vic­to­ria Tow­ers high-rise re­tire­ment com­plex at Southport would pro­vide the bulk of new apart­ment sup­ply over the next three years.

“Other than th­ese de­vel­op­ments there are very few new projects on the draw­ing board and we ex­pect that it will be some time be­fore this sit­u­a­tion changes be­cause of var­i­ous con­straints,” he said.

“But those new de­vel­op­ments in­tro­duced in the next cy­cle will be con­sid­er­ably higher priced than cur­rent stock that is be­ing built at yes­ter­day’s construction prices.

“The de­vel­op­ers of to­day are able to pass on th­ese lower costs to the pur­chaser.

“His­tory will show that buy­ers who put their foot on prod­uct at to­day’s prices will ben­e­fit sig­nif­i­cantly when the sup­ply con­straints di­min­ish over the next year or two.”

Mr Suther­land said his un­der­ly­ing con­fi­dence was driven by strong fun­da­men­tals such as pop­u­la­tion growth, his­tor­i­cally low in­ter­est rates and de­creased lev­els of un­em­ploy­ment.

“The re­al­ity is a lot of peo­ple were hit hard last year and as a re­sult peo­ple are be­ing more cau­tious. But savvy in­vestors and pur­chasers have iden­ti­fied that there is a real op­por­tu­nity to pur­chase at to­day’s prices, be­fore the next rise in the prop­erty cy­cle,” Mr Suther­land said.

“Our pop­u­la­tion growth is un­re­lent­ing and with lim­ited dwelling ap­provals and construction ac­tiv­ity there will most cer­tainly be a sit­u­a­tion of un­der­sup­ply which will in­evitably put up­ward pres­sure on prices.”

Mr Suther­land said Sala­cia Wa­ters is one project which was well po­si­tioned to cap­i­talise on the dwelling short­age as well as a “down­siz­ing’’ trend which is see­ing buy­ers opt for apart­ment liv­ing over lux­ury homes.

“There is a def­i­nite in­crease in the num­ber of peo­ple opt­ing for apart­ment liv­ing as more peo­ple look to down­size from tra­di­tional homes to spa­cious mod­ern apart­ments,” he said.

“Many new lux­ury apart­ments have adopted a spa­cious and open-plan de­sign which makes the tran­si­tion from a tra­di­tional fam­ily-sized home rel­a­tively seam­less.”

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