Brisbane’s apartment market will shift from oversupply to balance in a year, according to prominent Queensland developer Don O’Rorke.
The Consolidated Properties founder said there were “headwinds” in the development industry as thousands of units came on the market, banks tightened lending, and construction and finance costs rose.
“There is certainly an oversupply,” he said. “My sense of it is that it will be short-lived. We believe there is underlying growth. There are certainly choppy times at the moment but we continue to do what we do: get the DA (development approval), do the sales, build the building.
“We will continue to develop even if we get squeezed.”
According to analysts Urbis, sales for Brisbane’s off-the-plan apartment market have plummeted from an unprecedented high in the June quarter last year of 2277 to 810 sales in the last three months to June, the lowest volume since early 2014.
Developers including veteran Kevin Seymour and young rich-lister Tim Gurner have revealed residential projects in Brisbane that were yet to go to market will not proceed at this stage.
Consolidated Properties’ $200 million central business district Spire high rise is being built, having sold out prior to construction.
Mr O’Rorke said apart from the major listed developers’ projects — Lend Lease’s $2.9 billion RNA development and Mirvac’s $950m Ascot Green racecourse conversion — few projects not yet under construction would proceed and the market would return to a stable setting.
“You could almost say none of them would happen,” he said.
But he said smaller, boutique developments in the suburbs and townhouses for owner-occupiers were doing well.
Mr O’Rorke said infill was needed because there was little land available for greenfields developments.
It comes as researcher Urbis says the lack of greenfields sites will put pressure on affordability.
Urbis national residential economics and market research director, Malcolm Aikman, said new blocks close to the employment hubs around Brisbane were at “an absolute premium”.
“Creating jobs is one thing but if we see those additional workers travelling in to major employment hubs from outer suburbs and across neighbouring council boundaries on a daily basis, we can expect a marked rise in road congestion,” he said.
He said Rochedale, Lower Oxley Creek and Upper Kedron were the only available land development areas within 15km of the city.
ASX-listed Cedar Woods is rolling out its Upper Kedron development 12km from the city after it was initially called in by the state government shortly after the 2015 election. The Brisbane council recently approved a scaled-back second stage.
Cedar Woods’ chief operating officer, Nathan Blackburne, said there had been 60 sales so far in the first stage.
Original article published at www.theaustralian.com.au by ROSANNE BARRETT 03/10/16