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real estate
Olympics to create a $1M median house price in Brisbane
FroM The DeSK oF The ChIeF eCoNoMIST
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We SECURED THE 2032 OLYMPICS - GO BRISBANE!!!
Those words were shouted by the many people who crowded Southbank on Wednesday 21 July, followed by fireworks popping and the Story Bridge lighting up in the Olympic colours.
The days after, saw a slew of congratulations, comments (both supportive and critical), and questions about 'what will this mean? for Brisbane'. For the real estate industry, the question is clear: What will hosting the Olympics mean for our property market? How far will prices go?
It is key to observe how median house prices have travelled on two distinct occasions:
International sporting events held in other capital cities within Australia
International events held in Brisbane and South East Queensland
SYDNeY oLYMpICS 2000
The 2000 Sydney Summer Olympics was one of the largest sporting events ever hosted in Australia. It required one of the largest recreational, cultural, and residential developments in Sydney’s history; with the total cost estimated at $6.6 billion. Since then the Olympic Park has undergone over $2.7 billion worth of development to continue the success of the area.
The athletes’ accommodation was reconfigured to offer 900 townhouses and 700 apartments. Newington and surrounding suburbs sales activity rose by 58.0% between 2000 and 2001 (the year after Olympics), and median house prices grew by 13.4% in the same period.
Median house price growth was not limited to the year after the Olympics. It grew by 38.5% two years after, and 66.4% three years after.
WorLD Expo 1988 and G20 Summit 2014 were key international events that were deemed to have “put Brisbane on the map” and paved the way for “world-class city Brisbane”.
We have compared median house prices for the 11 years prior to each actual event and quoted the 12 years growth to include the year after the event. This allows for a fairer comparison to Olympics 2032 timings.
Both events were located in Southbank and South Brisbane, thus we have included not only Brisbane local government area / council (LGA) median house prices but also data for impacted surrounding suburbs, as property transactions will also occur in nearby areas.
KeY FINDINGS:
Between 1977 and 1989, which captures the 11 years prior to Expo 1988 and the year after, Brisbane LGA median house price grew by 278.8%
During this timeframe, median house prices in South Bank and its surrounding suburbs grew by an average 335.3%
Between 2003 and 2015, which captures the 11 years prior to G20 Summit 2014 and the year after, Brisbane LGA median house price grew by 112.7%
During this timeframe, median house prices in South Bank and its surrounding suburbs grew by an average 111.6%
In the year after Expo 1988 Brisbane LGA median house price grew by 29.7%, South Bank and its surrounding suburbs grew by an average of 19.1%.
In the year after G20 Summit 2014 Brisbane LGA median house price grew by 6.0%, South Bank and its surrounding suburbs grew by an average of 10.3%.
It is clear from the above key findings that hosting both Expo 1988 and G20 Summit has served the Brisbane property market well. That is both in the short term of one year after the event, and the long term throughout the 12 years time frame of preparation, hosting, and post-event.
Brisbane Median house Projection Moving forward
BrISBaNe LGA median house prices have travelled upwards for the past 46 years, recording $810,000 as of 30th June 2021, breaking the $800,000 mark for the first time.
Brisbane LGA median house price grew exponentially after Brisbane World Expo in 1988, and even more so after G20 Brisbane Summit 2014.
In the 12 years between 2003 and 2015, median house prices grew by 112.7%. This takes into account the timeframe for G20 that is equivalent to now and 1 year after Olympics 2032. Applying this level of growth will result in a $1.7M median house price by 2033.
That said, data shows property price growth move at different speeds. There was higher growth in the 12 years between 1977 – 1989, the timeframe for Expo 1988, of 278.8%, versus 2003 – 2015, the timeframe for G20, of 112.7%.
Because of this difference, there is a potential that Brisbane’s median house price will not travel as far. That said, even if we go at “half strength”, metaphorically speaking 56.0% (112.7% divided by 2), that still takes us to $1.2M by 2033.
If we were to take historical data from the Sydney Olympics 2000, median house prices in Newington and surroundings grew by an average of 13.4% in the year after the Olympics were held. Applying 13.4% to the current median house price of $810,000 gives us $918,540.
Bearing in mind Olympics 2032 is still 11 years away and based on how the Brisbane market is travelling, the potential to eclipse this price point is high. Regardless of the calculation method, the conclusion points us to Brisbane becoming a $1M median house price city sooner rather than later.
As seen in previous international events there is a multiplier effect to the property prices in surrounding suburbs. Olympics 2032 events will be held in various suburbs throughout Brisbane, as well as on the Gold Coast and Sunshine Coast.
The year after the Sydney Olympics 2000, Newington and surrounding suburbs’ median house prices grew by 13.4%. The year after Expo 1988, South Bank and its surrounding suburbs grew by an average of 19.1% and grew by 10.3% after G20 Summit 2014.
Taking a simplified average approach between all three events gives us an average median house price growth of 14.3%. Applying this to 2021 median house prices results in many suburbs becoming $1M areas, such as Tennyson, Woolloongabba, and Herston.
Between 2003 and 2015, which captures the 11 years prior to G20 Summit 2014 and the year after, median house prices in South Bank and its surrounding suburbs grew by an average of 111.6%. If we were to apply this growth to suburbs where Olympics 2032 events will be held, we will see suburbs such as Hamilton and Chandler breaking the $3M median price mark, and currently extremely affordable areas such as Ipswich, Redland Bay, and Coomera breaking the $1M median price mark.
Again, going metaphorically at “half strength” due to different market speeds, and applying a 56.0% growth rate (111.6% divided by 2), creates many $1M and close to $1M suburbs: Tennyson ($1.5M), Redland Bay ($994K), Herston ($1.4M), Coomera ($865K), and Broadbeach unit market ($973K).
In conclusion, not only will we see immense price growth for Brisbane LGA as a whole, we will also see extraordinary markets in specific Olympic 2032 suburbs and surrounds.
As always, the correct policy and strategy are key.
At present, there are still many debates surrounding hosting the Olympics 2032, on a myriad of issues: cost to the tax-payers (and whether there is a better allocation for this), how well the Olympics will be managed (considering what happened at the Commonwealth Games 2018 in the Gold Coast), and whether or not it will have real long-term benefits for Brisbanites.
In the real estate world, a key question is whether or not Olympics 2032 will make Brisbane, from a purchasing power perspective, as unaffordable as Sydney. At present, local buyers do have an advantage, as we are still sheltered from international demand (borders closed). But the Games is 11 years away – this gives time for the world to re-open, economies to recover – and already we are seeing record-breaking property sales.
The Northshore Hamilton Priority Development Area (aka The Village) has been confirmed as the site of the Athlete’s Village for the Brisbane 2032 Olympic and Paralympic Games. More than 15,000 athletes will be residents over the course of both Games.
Once the Games are finished the Village will be repurposed to provide a diverse residential offering including: retirement living, aged care, social and affordable housing, student accommodation, Build-to-Rent, and market accommodation. It is predicted in total this new land supply will catalyse $500M in private investment and create 1600 construction jobs.
Whilst this sounds promising, there needs to be a clear and detailed execution strategy, including an intensive consultation process with key stakeholders.
The 2032 Olympic Games provides a golden opportunity for our three levels of Government to work together to create crucial infrastructure and unlock land supply. Increasing supply is key to housing affordability, given the potential demand the Games will attract.
The prospect of a $1M median house price for Brisbane is a real possibility.
We know we have 11 years. So no matter where or what your property journey may be, now is the time to weigh up your options and formulate a strategy.
combined capital city preliminary auction clearance rate rises as volumes remain steady
There were 2,077 homes originally scheduled to go to auction this week across the combined capital cities, however this has revised down to 1,806 auctions as a portion are rescheduled to a later date. Of the 1,466 results collected so far, which equates to an 81.2% preliminary collection rate, 79.2% were sold results. This week’s preliminary clearance rate is higher than last week’s 74.8% preliminary clearance rate, which later revised down to 73% at final results on Wednesday. Final results last week saw a total 1,728 auctions held. One year ago, a lower 1,154 auctions took place with a final clearance rate of 58.7%. In Melbourne, 679 homes were taken to auction this week, recording a preliminary auction clearance rate of 77.1%. This was considerably higher than the 71.9% preliminary figure last week when the city was in lockdown. The final clearance rate came in at 70.8% last week across 772 auctions. One year ago, 357 auctions took place and a final auction clearance rate of 55.1% was recorded. Sydney has remained rather resilient despite the prolonged lockdown currently faced. The city has seen over 500 properties taken to auction each week. This week 685 homes proceeded to auction, returning a preliminary auction clearance rate of 80.8%.This week’s results are an improvement on the 74.8% preliminary clearance rate recorded last week. The final results last week came in at 72.8% across 585 auctions. Of the results collected so far this week, 14% were withdrawn, which is lower than last week’s final of 21%. Of the sold results, 64.5% were sold prior the auction event this week, which is higher than the 58.1% of sold priors last week. Canberra was the best performing of the smaller auction markets this week, with a preliminary auction clearance rate of 92.1%. Following this was Adelaide with a preliminary clearance rate of 82.5%.
Geocon Group doubles down on canberra market following bumper financial year in sales
CaNBerra Founded in 2007 by Managing Director, Nick Georgalis, Geocon Group has grown to become Canberra’s largest and most prolific property developer, having built over 4000 apartments, with an annual company turnover of $500 million.
Leading the transformation of Canberra into a worldclass, cosmopolitan capital city, Geocon’s hallmark is architecturally stunning buildings that deliver a new standard of contemporary apartment living.
Setting the benchmark for real estate development and sales, Geocon builds design-led lifestyle precincts which are close to town centre, connected to public transport, schools, universities and retail and dining amenities.
A key contributor to the vibrancy of Geocon’s mixeduse precinct is the select hotel and hospitality brands created by Iconic Hotels by Geocon, the hotel division of Geocon. With a portfolio of brands spanning mid-scale to premium accommodation offerings, Iconic Hotels by Geocon designs and delivers unparalleled hotel and hospitality offerings in Canberra, its surrounds, and the NSW South Coast. Canberra’s largest property developer, Geocon Group has recorded a bumper year in residential property sales, exchanges and settlements, despite Covid-19, bolstering the Group’s confidence in the Capital’s property market, particularly for investors, for years to come.
The Group reported over 1000 sales for the 20/21 financial year, totalling $438.5 million. Additionally, the company achieved over 840 Settlements at a value of $385 million
Included in the bumper sales were 850 Exchanges in off-the-plan apartments sales to the value of $372 million which will be settled by 2024.
With total transactions in the last 12 months equalling an impressive $823 million, it’s a balance sheet that would be the envy of most developers.
Geocon Group’s Managing Director Nick Georgalis, who founded the company in 2007, said the Group was tremendously pleased with the sales results which indicates the strength and appeal of the Canberra market, particularly with investors who made up 70 per cent of sales.
“Our sales team averaged 20 sales and 16 settlements per week which is pretty fantastic in any standard year let alone during a pandemic where state-wide lockdowns were occurring regularly,” Mr Georgalis said.
“We have seen record sales in the past 12 months for apartments and the market should see the same increases in value for apartments over the next 12 months that we have seen in housing over the past 12,” he said.
“It is difficult to be consistent in the best of times, let alone the turbulent 12 months that we have all just navigated. These numbers are a team effort from a dedicated, consistent group of property professionals of who I am incredibly proud.”
Mr Georgalis said he put down Geocon’s success to several key factors, apartment pricing being attractive to investors, strong rental yields in Canberra’s stable rental market and strong capital growth.
“Canberra is currently the strongest performing market nationally, returning rental yields and capital growth of eight per cent, respectively,” he added.
This was up from 325 apartments worth $141 million the previous financial year – despite enduring the pandemic and the various patches of statewide lockdowns across the country in that period.
Geocon will focus this new financial year on sales at its multi-staged masterplanned community, WOVA which comprises 797 apartments built across four buildings ranging in height from two 12-storey building, one 16-storey building to a landmark 24-storey tower.
The development will also incorporate a 53-room hotel, 2415 sqm of retail space, lap pool and sauna, resident’s private cinema, co-working spaces, contemplative rooftop terrace, fitness studio, bar club lounge, and Chef’s kitchen and dining room.
The precinct amenity will further include alfresco restaurants and cafes, 3,370 sqm of landscaped gardens and a four-level basement carpark for 1000 car spaces.
Sales at the development has been strong with 255 sold in stage one since launching recently to the market in March 2021.
Geocon currently has in excess of 963 active apartments currently or soon to be constructed with further projects in future planning. Current projects include: WOVA (797 apartments) in Woden Valley, Nightfall (334 apartments) in Belconnen, Aspen Village (622 apartments), Metropol (552 apartments), The Establishment (290 apartments) and High Society (542 apartments) which recently settled. Grand Central Towers (430 apartments) which recently settled.Total of 2,595 apartments are due to be delivered by late 2024. Apartments at Geocon’s landmark WOVA residential community, selling successfully to both investors and owner-occupiers alike, start from $299,900 for a one-bedroom apartment. For more information, please visit www.geocon.com.au.
Associate Secretary of GOPIO International Jaswant Mody Dies in Accident
NeW jerSeY, Jaswant Mody, 83, an Indian American community leader and former vice president of the Federation of Indian Associations died when his car collided with a freight train on July Fourth in Piscataway, New Jersey on July 4th.
The entire Indian American community is shocked at this sudden death. Dr. Thomas Abraham, Chairman of GOPIO International stated; “It is a great loss for the whole Indian Diaspora community. He was the sincerest volunteer I have ever worked with. He is currently Associate Secretary of GOPIO International and was at our Zoom meeting of GOPIO on Friday late in the night.
Jaswant Bhai was such a great volunteer, at the First Global Convention in 1989, he was at the welcome/ registration desk for 7 days. When we had a convention in Delhi at the Ashok Hotel In 2009, he just came and stayed at the hotel for 3 days at his own expense, just to take care of the registration.
That was his commitment for GOPIO. We will miss a lot in our activities. May his soul Rest In Peace.”
He died in a tragic car accident and was the only one affected,” the family said in an email from son Neil Mody, to community members. “Thanks to all for being a part of his life, he is deeply missed already,” said the note. Jaswant ‘Jay’ Bhailal Mody, an Environmental engineer, a Piscataway civic leader, long active with Indian cultural organizations, passed away suddenly on the Fourth of July 2021 in his hometown of Piscataway, NJ at the age of 83.
Jaswant was born in Mumbai, India on May 20, 1938. After attending the University of Bombay, he followed his dream to come to the United States of America for freedom and opportunity. Jaswant worked and saved for the fare, and after 1 months of traveling by passenger ship, he arrived in New York. He then began his American Dream. Jaswant attended universities in Utah, Ohio, and New Jersey. Jaswant married and settled down in New Jersey and worked as an engineer for over 5 decades. He retired in 2012 from the DEP of NYC after working there for over 25 years.
Jaswant lived his life as a public servant. He volunteered his time to the Indian community through various organizations and was awarded a Lifetime Service Award by the Association of Indians in America. Jaswant was also very active in the Piscataway community, where he’s lived for the past 47 years.
He was a Committeeman for over 20 years, with the Piscataway Democratic Organization. He served on the Piscataway Township Zoning Board. He helped organize the first India Day Parade in Piscataway. Jaswant is survived by his wife Chandrika, son Neil, daughter Lena, daughterin-law Sheetal, son-in-law Rupal, 4 grandchildren, 2 sisters, 3 brothers, and several nephews and nieces.
