SA MARKET OVERVIEW
SOUTH AUSTRALIA
Jack Dyson - Partner | RWC Adelaide
they have multiple options so it becomes important that land rates are reflective of the asset’s location, zoning and likely end use outcomes. There remains a slight discrepancy between Vendor and Buyer expectation on pricing noting that construction costs continue to make projects with no holding income difficult to stack up. Having said this, projects that are tenant driven are seeing strong land rates being achieved. We hear that building costs have peaked but what does this look like in your respective market and have project feasibilities improved/declined? If so, what has been the overarching impact on demand and supply for residential development projects? We are hearing that construction prices have peaked, even with some pricing of trades falling. That being said, the issue remains that we have a shortage of trades to do the required work. From our discussions with developers, their feasibilities remain difficult to stack with minimal projects being under construction currently. From a residential perspective, the national housing shortage ensures we will have continued demand with South Australia in particular shining in this sector. The shortage of available ‘infill’ sites makes it difficult to deliver projects of scale but is driving strong demand for Vendors actively in the market.
As we move into the second quarter of the calendar year, with fewer seasonal obstacles like Easter and public holidays in front of us, describe the sentiment among vendors and buyers across all asset classes and has there been a shift? Heading into the new year, there has been clear intent from the marketplace that both Vendors and Buyers are ready to make 2024 a big year. Across Q1, the pause on interest rates correlated to a strong surge of enquiry numbers across our campaigns. Buyers seem comfortable that we may be entering a ‘new normal’ of yield expectations and are ready to place their capital. Unfortunately supply has not kept up with the buyer demand, with Vendors still hesitant to pull the trigger on-market in the hope interest rates will be cut later in 2024. With ongoing interest rate instability, have you seen an uptick in receiver stock and what’s the appetite from vendors to meet price expectations from prospective buyers? There has been a notable increase in receiver stock, which began roughly in mid-2023. Majority of these were located in the Adelaide CBD and consist of sites with minimal to no holding income. With development stock forming the majority of the on-market opportunities, buyers are in a position where
JACK DYSON
104 – May / June 2024
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