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APRA Changes Could Prevent Apartment Market Collapse


Financial difficulties faced by developers could be the saving grace for Australian apartment market.

As apartment oversupply concerns intensify following predictions of record settlement numbers in the near future, the head of an off the plan property marketing firm believes the issue may be overstated as work is unlikely to start on a large number of projects.

Mark Mendel, chief executive officer of iBuyNew, said many developers are facing the same financial issues many property investors are facing and will likely be unable to see projects through.

“While there is a lot discussion about banks toughening their lending policies for buyers, they are even tougher on developers,” Mendel said.

“Developers with no track record are getting a blanket ‘no’ from lenders across the board while those with a limited track record are also finding it extremely tough,” he said.

Earlier this week, CoreLogic RP Data released figures predicting more than 200,000 new apartments will be built in Australia over the next two years and said there is “big disconnect” between supply and demand in the sector currently.

Mendel is not the only one who believes Australia is likely to see a lot fewer apartments completed than is currently predicted.

Daniel Holden, director of construction broking group HoldenCAPITAL, made similar claims this week and said “cash is king” for developers currently as they face the tougher lending requirements as well as increased construction costs.

While Mendel said supply concerns are likely overblown given the fact projects will fail to get off the ground, he also said claims that oversupply is a problem at a national, state or city level are also off the mark.

“You really need to look at the specifics of each state, region and suburb,” he said.

“There are definitely pockets of Brisbane, Melbourne and Sydney that may experience an oversupply of apartments.

‘But if you look at Zetland/Waterloo in Sydney’s inner south where thousands of new apartments have been built over the last five years, everyone expected an oversupply but capital growth has still been more than 10 per cent in the last 12 months.”

In particular Mendel said the transformation areas of south east Queensland are currently undergoing will mitigate any risk posed by a boom in apartment numbers.

“This is becoming an international region with infrastructure developments such as the new $2 billion casino in Brisbane as well as the Gold Coast hosting the Commonwealth Games in 2018,” he said.

“These elements will change the way the world sees Brisbane and South East Queensland in coming years.”
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Gold Coast

Gold Coast economy ‘turbocharged’ and tipped to outperform in post-pandemic rebound

Gold Coast economy ‘turbocharged’

The Gold Coast economy is poised for a sharp post-pandemic recovery with new data showing the city coming out of the COVID downturn faster than the rest of Queensland.

And jobs growth is making an even faster comeback than the economy as a whole, according to the Gold Coast Economic Outlook report released by the City of Gold Coast.

The city’s employment market has grown at an average of 2 per cent a year over the past decade but it’s now expected to track at 5 per cent a year until 2024. This overshadows a healthy gross regional product (GRP) increase of 3.6 per cent a year for the next two years.

The report notes that while the Gold Coast generally follows national economic trends, it traditionally also grows at a higher relative speed to Queensland and the rest of Australia.

“In the short term, GRP is expected to lift from $39 billion to roughly $43 billion in the space of four years (to 2024),” says Bull and Bear Economics director Marcus Brown, who addressed a business breakfast on the Gold Coast on Wednesday.

“That’s a sizeable bounce back that will bring with it a consequent increase of local jobs from 302,000 to 349,000. Certainly, this is a level of economic growth is well beyond what could be expected for Queensland more broadly.”

Brown sees expansion across all sectors of the economy, with the Gold Coast benefiting from increased diversity with a maturing professional services and technology sector.

“The Gold Coast has a strong economic base that is turbo-charged by external stimulus from hospitality, tourism, education and service exports,” he says.

“I expect there will be a strong return in tourism activity, and we are already seeing a rebound there. There are also signs of strong recovery in education. (International student) inquiries have picked up among all the major universities, as well as regional universities and I suspect we could see a return to even higher student numbers coming out of the pandemic as Australia, and Queensland, plays a role as a safe and healthy destination.”

The economic outlook report finds the Gold Coast’s recovery is being led by arts and recreation services (up 47 per cent), accommodation and food services (35 per cent), retail trade (33 per cent), transport and warehousing (32 per cent), healthcare and social services (22 per cent), financial and insurance services (20 per cent) and wholesale trade (19 per cent).

Despite the gains, the Gold Coast economy is still lagging behind pre-COVID growth targets with the value of the economy set to be $2.42 billion, or 5.3 per cent, smaller than expected by 2024. The report also notes that this reflects a smaller impact from the pandemic for the Gold Coast than other centres, with the broader regional Queensland figure tracking at 7.2 per cent behind forecasts.

The Gold Coast economy this year will be 4.8 per cent lower than pre-pandemic forecasts, which is also below the regional Queensland forecast of 5.7 per cent.

In comparison, jobs numbers will be down by 2.5 per cent forecasts in 2022, easing to 2.4 per cent by 2024, both of which are lower than the expected shortfalls for regional Queensland.

The Gold Coast Economic Outlook report offers a preliminary snapshot of the city’s business landscape, with a more detailed State of the Economy report expected to be released in August or September this year.



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Steven Bradbury times his run perfectly with Kings Beach pad

Steven Bradbury, Kings Beach pad

Olympic gold medallist Steve Bradbury is renowned for his good timing, so it is perhaps not surprising that at the height of Queensland’s property boom his former weekender on the Sunshine Coast has hit the market.

For the uninitiated, Bradbury is a speed skater who won gold in the Salt Lake City 2002 Winter Games – the first for Australia at the Winter Olympics – after his four rivals collided just ahead of the finishing line, clearing the way for Bradbury to skate into first place, alone.

Brisbane-based Bradbury is hoping to repeat his good fortune with the sale of his Kings Beach apartment, at what he no doubt hopes will be the peak of the Queensland property boom.

And given the timing, the recent $2 million asking price has been revised to more than $1.8 million by Danelle Wiseman, who has listed it with her husband, Jonathan Pattinson of Better Homes and Gardens Real Estate.

A sale at the reduced asking price would more than double the $855,000 Bradbury’s investment company paid for the four-bedroom spread in 2011 when it was purchased as a weekender for the family.

Set in a block of 12 called Kings Palazzo, one street back from the beach, it has been used as an investment in more recent years, leased for $750 a week.

It hit the market as apartment values in the broader Caloundra area were at a median high of $660,000, having soared 26.9 per cent in the 12 months to March, according to Domain figures.

Bradbury’s name has become synonymous with good timing thanks to the famed moment in Australia sport 20 years ago when his name became part of the Aussie vernacular as “doing a Bradbury”.

Last year, he launched a boutique beer called Last Man Standing with co-owners Damian and Stephen Prosser, sons of the late Australian rugby union player Roy Prosser.



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Barwon secures Princess Alexandra Hospital car park

Barwon secures Princess Alexandra Hospital car park

Barwon Investment Partners has snapped up a multi-level car park and medical centre on a site with significant development upside opposite Princess Alexandra Hospital.

The Woolloongabba asset at 250 Ipswich Road is setting the healthcare focused fund manager back around $95 million, reflecting a circa four per cent net passing yield.

The property contains an eight level, 773-bay garage attached to a two floor wellness centre with 21 tenancies, anchored to Gabba Dermatology, Brisbane Cardiology and Allied Health; the Weighted Average Lease Expiry is nearly seven years.

A pedestrian overpass connects the building to the Princess Alexandra Hospital, also a major teaching campus, employing 6810.

The 5106 sqm block has significant upside – up to 15 storeys based on its zoning, according to JLL’s Seb Turnbull, Elliott O’Shea and Simon Quinn, who marketed the asset with a Blight Rayner scheme.

BIP invests again

Established in 2006, BIP holds a property portfolio worth $2.3 billion.

Its medical related product, much held in a Healthcare Property fund, is priced at about $1.4b as at March, 2022.

Seven months ago, for the trust, the manager paid Forza Capital $34.7m for a South Brisbane medical centre – not far from 250 Ipswich Rd – and two Canberra assets including Belconnen’s Ginninderra Medical & Dental Centre on nearly a hectare.

Also late last year BIP spent $75m for a 12 level St Kilda Rd office majority leased to Alfred Health.

More to come.



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