Cove Magazine: An industry perspective – What the future holds for the property market
There is a lot of talk about the health of the property industry at present, particularly on the Gold Coast in the wake of the collapse of builders Condev and Pivotal Homes.
So we’ve reached out to some of our valued industry partners to gain their insights on how they see rising inflation and supply chain issues impacting the market in the future – or whether it will have much impact at all.
We have the Director in Charge of one of the biggest agencies on the Gold Coast, Colliers, which recently released an insightful report on all sectors of the property market from residential to retail, industrial and office; seasoned private developer Brent Thompson of Siera Group, and multi-generational companies such as Niecon and John Kearney’s Greyburn, that have been part of the fabric of development on the Gold Coast for many years.
Read their insightful overviews below.
STEVEN KING – DIRECTOR IN CHARGE – COLLIERS GOLD COAST
For us the facts don’t lie, and our latest report paints a very optimistic narrative of the property sector despite some recent headwinds.
The fundamentals of supply and demand dictate the health of the market across all sectors, and we are seeing constrained building activity and low unemployment only reducing supply, particularly in the residential sector
More residents, a growing economy, and continued demand for residential and commercial offerings are the major draw cards that have been laid bare in our latest Gold Coast Market Overview.
The report shows that a key driver of growth for the Gold Coast market lies within the residential vacancy rate which sits at 0.4 per cent – well below Sydney at 1.6 per cent and Brisbane at 0.7 per cent.
Despite vacancies in both the commercial and residential property sectors dropping to record lows, the Gold Coast will be gearing up to welcome an additional 14,500 residents every year leading up to 2032 Brisbane Olympics.
The value of the Gold Coast economy has doubled over the last decade to $39.24 billion, underlying the growth of the regional economy. If this exponential growth continues the need for residential dwellings, offices, warehouses, industrial facilities and retail will only increase.
Our forecasts show that the economy this year alone will grow by 5.6 per cent.
The city has reached critical mass and has also attracted major international and national investors – highlighted by the sale last year of Pacific Fair Shopping Centre – and a range of major residential players from both Sydney and Melbourne.
In summary, we see very strong fundamentals over the next decade despite recent interest rate rises, inflationary pressures and material supply issues.
BRENT THOMPSON – FOUNDER AND DIRECTOR – SIERA GROUP
From the very outset of each of our Gold Coast projects we were aware that the current market conditions being experienced on the Gold Coast could not last forever. We took an approach where we wanted to be able to manage the risks of sales, construction cost escalation, or just general market conditions.
Good projects, in good locations, that are well designed and delivered by reputable developers with a strong track record will always be able to go ahead, despite any market conditions.
For various reasons, the Gold Coast market has an undersupply of owner-occupier apartments and apartments in general, and this is seen through the vacancy rate of 0.4% currently being experienced.
This shows that there is simply not enough housing to meet demand. When we mix this with interstate and overseas migration, which is continuing to bring more people wanting to live in South-East Queensland and in particular the Gold Coast, we do not see this subsiding any time soon.
As a result, each of our projects have employed a design that is highly efficient and targeted at the local owner-occupier market which would work both for owner-occupiers and investors.
Siera Group continues to take a research-based approach to the general market conditions from a sales perspective, as well as a construction climate perspective – with respect to building approvals, construction starts, and capacity in the labour market.
We are also mindful of future supply increases where we feel that things have started to stabilise – an early indication of some reprieve from price escalation.
From an industry perspective, the Gold Coast apartment market has entered a new territory. It will require developers to invest more time and resources into thoughtfully navigating their way through escalated construction costs, added pressure on project feasibilities and limited access to labour and materials.
JOHN KEARNEY – MANAGING DIRECTOR – GREYBURN
Ensuring buildability in a challenging period for the industry is a sentiment towards preserving the future of the property market, which is already shifting as a response to the shortage of land and supplies amid strong demand for coastal living.
Let’s face it, demand for the Gold Coast property market is rapidly changing, so what does this mean for the future?
As we continue to see inflation, rising costs, less stock on the market and more demand from local downsizers and interstate re-locators looking for premium beachside property, the foreseeable future for the Gold Coast property market will entail more multi-unit apartment offerings to meet the demand.
Given that there is next to no land left on the Gold Coast, it’s very hard to find townhouse sites. It’s for this reason that we see multi-level dwellings as the future of development on the Coast. Greyburn is currently planning its own multi-dwelling apartment project at Coolangatta to accommodate the influx of interest to the southern Gold Coast’s surfing mecca.
There’s no denying there are unprecedented cost escalations facing the construction industry right now.
Luckily, we are in a fortunate position to have our construction arm and development arm under the same roof, which has allowed us to stay abreast of these cost challenges and step in at the last hour to complete Minnippi Quarter in Brisbane for its residents.
If upcoming projects continue to be delayed it is safe to say there will be less stock available on the market which will see demand soar to new heights.
WILLIAM NIKIFORIDES – MANAGING DIRECTOR – NIECON DEVELOPMENT
Niecon Developments has been on the Gold Coast for over four decades and has seen the market cycles.
In a post covid atmosphere, working from home is still very much active and we are finding buyers are increasingly opting for a move to the Gold Coast even though their head office remains in Brisbane, Sydney or Melbourne.
The work from home phenomenon is an influence that we see supporting the Gold Coast property market for some time to come.
Over the years, we have witnessed the highs and the lows of the city’s property market and maintain the notion that the Gold Coast is now entering a golden era – attracting the likes of interstate re-locators.
The desire to live in South-East Queensland has been on the cards for many around Australia and we are now noticing a strong drive-in demand from southern buyers, who are realising how much the Gold Coast lifestyle has to offer.
Record high demand in the property market and the health and knowledge sectors has added a legitimacy to the Gold Coast and we believe this strong demand for the city’s market, is what’s driving this interstate migration.
The Gold Coast is now being recognised as a highly sought-after destination for work and lifestyle, and buyers are flocking to the city to try and get their foot in the door to secure an already scarce supply of desirable Gold Coast property.
In summary, the demand for property on the Gold Coast will only continue to grow, especially with the infrastructure spend required from all levels of Government for the 2032 Brisbane Olympic Games. This will drive more work, increase opportunity and showcase South-East Queensland on a bigger world stage than even the successful Gold Coast 2018 Commonwealth Games.
We are certainly witnessing a challenging time for the Gold Coast property market with rising construction costs hindering the supply of development and driving demand in the market to new heights.
There is no doubt, the construction cost escalation, changing political environment and the continued demand versus a shortage of supply in the Gold Coast property market, will be the top topic of discussion for quite some time.
Article written by Steve Hunt, of Media Hunt Communications for Cove Magazine Issue 91, July 2022