Boom shows no signs of bust – GC Property Report
WORDS: Steve Hunt, Media Hunt PHOTOGRAPHY Supplied by Media Hunt
While the Gold Coast has endured its fair share of boom and bust real estate cycles in the past, we haven’t seen the end of the city’s thriving property era just yet.
AFTER every boom there’s a bust, right? While that’s been the case in most property cycles, particularly on the Gold Coast over the years, there are a lot of positive signs the dreaded ‘boom-bust’ cycle that has afflicted us in the past may no longer experience the dreaded peaks and troughs of years gone by. Stick with me here!
There are more than a few factors at play that justify my optimism. The first is population growth. In June 2020, the Gold Coast’s population stood at some 635,000 people and was growing at almost two and a half per cent (some 15,000 people). Brisbane’s was 2.4 million, and growing at almost two per cent (some 45,000 new people). Rental vacancy rates are also a good place to start. In the Southeast, vacancies are less than two per cent. In some areas like the Gold Coast, they are less than one per cent.
Fast forward to 2022 and as we exit the Covid lockdowns, unemployment nationally is expected to dip below four per cent as we recalibrate the loss of stock and supplies brought about by the lockdowns. In the wake of the current global geopolitical environment, there’s even talk Brisbane will be a submarine base in the future. On a more positive note, we have the pending infrastructure spending required to host the Brisbane 2032 Olympics – imagine what the unemployment rate will be like in the lead up to this?
The stress of finding homes in the southeast because of these factors will only be further exacerbated when international students return to Australia. I also predict a flurry of expats returning to the region as they look to get out of cities such as Hong Kong. And let’s not forget the Brits. Word has it that a by-product of Brexit – subsequent closer economic ties to Australia – will also include a plan for qualifying British subjects to migrate in droves.
The elephant in the room in the region at present has been the talk of rising construction costs. This has been driven by the rising inflationary pressures and constricted supply chains.
I’ve had some industry pundits saying 40 per cent of the projects mooted for the Gold Coast won’t go ahead. Whether that’s correct or not, what would a reduction in the number of projects mean for the apartment market? Firstly, less supply against a backdrop of strong migration and low unemployment – not to mention all the other factors outlined above – means the demand will remain high for the stock that will enter the market.
“Record high demand is meeting record low supply, which has led to the most acute shortage of new apartments ever experienced on the Gold Coast,” says Lynda Campbell, a senior consultant for Urbis town planners.
“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.
“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 feasibility. 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 fundamentals on the supply side into 2023.”
Prices in the general residential market remain firm despite indications of negative price growth in some of the southern states. A record $11 million plus off-the-plan penthouse sale for Brisbane, in Azure Property Group’s luxury One Five Six Oxlade Drive, is a sure sign that the market will remain strong and sustain strong price growth.
Let’s also not forget the growing number of ‘empty nesters’ across Australia who are selling their homes and downsizing into smaller products such as apartments and townhouses.
The record sale of a double beachfront block at Palm Beach for $13.5 million in March also shows the appetite for high-end beachfront stock hasn’t ebbed out with the tide like the off-the-plan apartment market has.
New projects are still entering 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 tenth 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 Melbourne-based BeckDev’s $130 million ‘Palais’, currently before council. Paul Gedoun, head of S&S Projects is nearing his third sell out in as many years following the success of Flow Residences, Awaken and now Esprit.
Iris Capital’s $800 million 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 island suburb undergoes its own 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. Meanwhile, the company’s latest product is being overrun by interest – despite not having officially hit the market. Aniko has also jumped into Chevron Island, where it is planning a stunning new addition in what is fast becoming the Gold Coast’s apartment hotspot.
Jayde Pezet and Todd Matheson, who have rebranded their KM Sales and Marketing (KMSM) to Pezet Matheson, agree that any delays in new projects entering the market will keep prices up.
“If there are issues that delay new projects coming to market we believe this is only going to create a situation where there is less stock on the market and therefore more demand,” he says. “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.”
Needless to say, we certainly haven’t seen the end of the city’s thriving property era just yet.