Perth apartment market looks positive in medium term

Samantha Reece attended the Property Council’s multi-unit development conference yesterday and came away with some great learnings that we will blog about over the forthcoming weeks.

But of the highest level of interest was the presentation from David Cresp of Urbis who spoke about Perth’s apartment market.

We are certainly hearing from clients that they are having to work harder to secure sales and the data outlined in the presentation indicated factors that were contributing to this current state.

Firstly David outlined the fact that Perth has the lowest proportion of apartments nationally at 9% of the housing stock, whereas Melbourne has 15% and Sydney 26%.  While this is a trend that will alter over time, Perth is certainly behind the other national cities when considering density.

And this is even more evident, with Perth’s apartment approvals in 2015 at the same level as it was back in 2008.  And while there are 44,000 apartments in total in Perth, 25,000 of these were constructed before 2000 and hence represent older stock.

There is no denying that WA needs 50,000 more dwellings to match underlying demand and this indicates that there is no oversupply of housing stock, especially as there were only 23,000 dwellings undergoing construction in 2015/16.

And while there is an expected delivery of 4000 apartments in Perth in 2017, if demand increases from the current 20% to 30% then there will be a need for 5500 apartments.  Once again this is an indication that there is not an oversupply in this specific market either.

The presentation also outlined that in 2012/13 Perth experienced an undersupply in apartments and that is why the market appeared to be moving faster, than current times.

And while there were 13 projects and 1300 apartments launched in the last quarter, not all will proceed.

As was stated, demand is continuing but Perth is now witnessing a condition where supply is currently exceeding demand – but this is just a short term situation considering the ongoing demand for housing stock.

The data also demonstrated that in 2015 there was $1.5 billion in apartment sales.  Of this 86% of the completed projects are sold, 65% under construction are sold and 31% in presales are sold.

In addition 50% of buyers are owner occupiers, 20% investors and 23% FIRB.

As such the current situation, where supply does exceed demand, is just temporary and there is no denying that CBD located properties are achieving better sales than outer suburbs.  On that basis it is more important than ever that your sales team are clear about your project’s unique selling proposition and ultimately are proactive in closing the sale!

If you would like to brush up on your sales team’s selling skills then contact Samantha Reece on 0452 067 117 – we can guarantee to give your project that elusive competitive edge.

South Perth set to soar

While we have seen a number of Perth locations take off lately including The Springs, Elizabeth Quays and Waterbank – it appears that South Perth is gunning to also boost its ratepayer numbers.

City of South Perth, CEO Cliff Frewing spoke at a recent UDIA function about the fact that the Council had approved the construction of 900 apartments over the past 18 months.

Of course top of mind is Finbar’s Civic Heart, which will feature 294 apartments on the corner of Mill Point Rd and Mends St reaching a staggering 38 storeys, on par with the QV1 building. In addition there is two more land parcels on top of that, which Finbar is developing including Aurelia (cnr Mill Pt Rd and Harper Tce) and 5-7 Harper Tce.

Plus there is a 70 apartment complex on the corner of Melville Pde and Richardson Street, a 102 apartment complex on the corner of Labouchere Rd and Charles St (Pinnacle) and 148 apartment development on the corner of Labouchere Rd and Lyall St.

Furthermore the City is undertaking a structure plan for the Canning Bridge precinct as well as looking to redevelop the Old Mill site.

Certainly South Perth has been home to high rise since the early 1990’s when Finbar started the ball rolling and while there has been a period of stagnancy it is quite clear that this is now about to change.

The good news is that there is a knock-on-effect and already other properties are changing hands including the IGA for $13.5 million. There is no doubt that all these apartment developments will therefore trigger a revitalisation for this beautiful riverside suburb.

Certainly the City has a lot to consider though as a result of this expansive growth, including its public transport needs – but regardless, this spurt of development will transform South Perth once again into a metropolis of activity and I can’t wait to see the end result!

The Springs is ready to boom!

I attended an interesting breakfast the other day, hosted by the Property Council and which outlined what is happening at The Springs in Rivervale.

This is a 14ha parcel of land nestled between Polly Farmer Fwy and Great Eastern Hwy and of course central to the new stadium, Crown Casino, Swan River and trainline into the city.

There are a number of developers in this precinct, which is being project managed by LandCorp, including Finbar, BGC, Psaros and Hillam.

While the majority of The Springs is residential (1900 apartments), there will also be 10,000sqm of commercial space, plus the first Sheraton Aloft hotel for WA.

The Aloft hotel will offer amenities for local residents to use as well as guests and will feature a rooftop bar as well as XYZ bar. This venue has attitude and will boast live music and tech forward thinking. Very exciting indeed!

At present there is $389 million of apartments being constructed with most being available for occupation mid 2016.

To date 36% of buyers have been investors and 64% owner/occupier.

Plus these buyers are coming from a range of areas including Como, East Perth, Rivervale, Ascot, South Perth, Southern River, Canning Vale, Thornlie, Victoria Park and Nollamara.

The breakdown of buyer ages is also just as varied:

springs graph 1

As can be seen by far, the 26-35 age group represents the biggest portion with 35% of buyers and it is not surprising considering the setting and the price advantage!

At the end of the day we believe that The Springs will in fact be the next East Perth and it is one of my hottest investment tips for Perth!

PropertyESP will be doing some further analysis work on The Springs precinct in the near future – so stay posted!