New apartments to dry up
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.”