Brainfood

2022 WITH STEVE HUNT | MEDIAHUNT.COM.AU MARKET UPDATE

SUPPLY & DEMAND

The Gold Coast apartment market continues to attract local and interstate interest.

SOUTHEAST QUEENSLAND appears to be entering a new phase in the property cycle.

While the prestige sector continues to shine with record sales – highlighted by a record $11 million plus off the plan penthouse sale for Brisbane in Azure Property Group’s luxury One Five Six Oxlade Drive – there has certainly been a slowdown in market activity, particularly the launch of new apartment projects.

This is actually a good thing.

What we have seen in the last couple of months is a more realistic release of new projects to the market – not the frenetic, fast paced, almost weekly release of new apartments flooding the marketplace.

Rising construction costs impacting on the feasibility of developments has been the catalyst for a slowdown, as has the spectre of rising interest rates, a looming federal election and global uncertainty.

Industry insiders say market demand from local downsizers for product close to the water and the beach is still very strong, and a slowdown in new supply will only prevent any oversupply issues that have created troubles in the past.

According to Urbis in its latest available research, new apartment sales cracked an alltime high well before the year ended.

The number of apartment sales for the September quarter surged to 690, bringing the total of new apartments sold on the Gold Coast in the first nine months of the year to 1,882.

This figure has already eclipsed the previous full-year record of 1,556 sales in 2016. The apartment buying spree has also led to a record low supply of apartments, according to the Urbis Apartment Essentials report.

Based on the September sales rate, only 2.2 months’ supply of new apartments remain available on the market should no new projects be released.

This is the lowest supply level ever recorded by Urbis for the Gold Coast and is down from 4.2 months’ supply recorded in the June quarter. (Three major projects with more than 2000 apartments were released in the last quarter of 2021).

“What we are seeing across our workbook is continued strong demand for premium apartments but an intensifying lack of supply in the middle market; new apartments in desirable locations that are priced between around $600,000 and $1,500,000,” says Matt Schneider, head of the Property Council of Australia’s Gold Coast branch.

“The apartment market has certainly stratified over the last few years with different opportunities and challenges now facing each of the market segments.

“We have also seen the emergence and intensification of pressure on project feasibilities because of the escalation in construction costs, and increasingly acute pressure on access to labour and materials.

“Whilst those forces are creating challenges for some projects, it is encouraging that they are not the impact of a lack of demand or an oversupply of product but rather on other elements of project feasibilities.

“Should those forces result in some of the projects approved across the city over the last few years not being constructed, we expect to see a further strengthening of the market fundamental on the supply side into 2023.”

This view is supported by two of the Gold Coast’s most active project marketers – who have been behind some of the city’s best performing apartment projects.

Jayde Pezet and Todd Matheson, who have re-branded their KM Sales and Marketing (KMSM) to Pezet Matheson, say market forces delaying some projects will continue to drive the market to new heights.

“There has been a lot of industry talk about the impacts of rising costs and supply chain issues, but we are seeing the continuation of a very strong downsizer market similar to what we saw in 2021,” said Jayde.

“If there are issues that delay new projects coming to market, we believe this is only going

Chalk Awaken Penthouse Athena

Matthew Schneider Jayde Pezet Nina

to create a situation where there is less stock on the market and therefore more demand.

“2021 was a watershed year for the city and we are well and truly anticipating this momentum to accelerate into 2022,” he said.

“With interstate and international borders now open and lockdowns behind us, the Gold Coast property market will begin to transition into a new phase driven predominantly by southern buyers or local downsizers who want the appeal of coastal living.

“Despite the boom we’ve witnessed in recent years, the city remains considerably undervalued compared to the likes of Melbourne and Sydney.”

Both Pezet and Matheson have witnessed the highs and the lows of the city’s economy, having sat at the helm of the property marketing landscape through the GFC and its subsequent rebound in recent years.

The opening of international borders is also likely to give the sector a shot in the arm, with foreigners and expats expected to continue to drive demand for property over the coming year.

Another factor driving the Gold Coast economy is the number of large institutional investors who spent 2021 buying sites.

Colliers Gold Coast recorded the biggest year in its history, with more than $2 billion in commercial transactions.

The result is almost double the average transaction total recorded annually for each of the past five years.

Colliers Director in Charge Steven King also says the office vacancy rates of approximately 10 per cent are around the healthiest in Australia, driven by businesses wanting to operate from the Gold Coast rather than the major capital cities.

“After a strong 2021, we anticipate the Gold Coast office market to maintain its momentum throughout this year with a possible further tightening of the city’s overall office vacancy due to the modest construction pipeline,” said Mr King.

A number of new projects have or are about to enter the market.

The southern Gold Coast is certainly one of the most active areas for luxury beach apartments, and Marquee Development Partners is set to embark on its 10th Gold Coast project in four years as it cements its position as one of the premium ‘downsizer’ developers.

Marquee is set to launch ‘Monterey’ at Kirra – its second project in the southern enclave which is undergoing a major transformation.

Joining the southern resurgence is Melbournebased heavy hitter BeckDev’s $130 million ‘Palais’, which is currently before council.

Paul Gedoun, head of S&S Projects, has carved out his own reputation as the renaissance man of Rainbow Bay, nearing his third sell out in as many years following the success of Flow Residences, Awaken and Esprit.

On the central Gold Coast, Gallery Group has launched a stunning new residential collection, touted as one of the most spacious apartment offerings on the coast in recent years, with an average apartment size exceeding the average sized Australian home.

Iris Capital’s V&A project at Broadbeach continues to be the premium central Gold Coast offering and has been well taken up by both local and interstate buyers wanting a slice of luxury in the cosmopolitan heart of the city.

Macquarie York has claimed Chevron Island as its own as the suburb undergoes a transformation driven by the emergence of the Home of the Arts (HOTA) precinct, with more than 20 sales in less than eight weeks on its Nina apartments.

This follows on from the success of its Allure project which is all but sold out.

Further north, Aniko Group’s George Mastrocostas has become synonymous with the epic Hope Island transformation, celebrating a third sell-out with his Athena project.

We certainly see another positive year ahead for the region.