THE PROPERTY DEVELOPMENT REVIEW
Anecdotally, there still seems to be a slight misalignment between vendor and buyer expectations. If this is true in your market, what needs to happen to bridge that gap and can you see it playing out in 2024? There is a misalignment in Vendor/Buyer expectations, however, I don’t believe it to be as big as those in interstate markets. From a commercial development perspective, if tenant rents aren’t increasing and yields have softened on the exit of the project, the land value is the remaining piece that needs reassessment. This is where it gets challenging navigating a transaction and usually those that are tenant driven can get an outcome. There are sales occurring which will set a new precedent of land value rates and we expect this to continue through 2024.
What does the development pipeline look like in your specific markets and what are some of the bigger development projects slated for commencement in the next six months? The pipeline in Adelaide’s development market is relatively buoyant with a number of major projects being completed or under construction. Of note, Festival Tower Two ($1.3b) plans have been submitted for approval, this project will deliver some 58,000sqm of A-Grade office space on the back of the recently completed One Festival Tower by Walker Corp. Recent news highlights RAA expanding its city footprint committing to new office space on Grenfell Street catering for its 1,300 workforce due for completion in 2026. In your market, in the January-March period, what asset classes experienced the most buyer demand and has this changed over the last 12 months? Q1 2024 saw the residential and industrial market at the forefront of buyer demand. From a residential perspective, the shortage of housing, significant government funding coupled with the upward trend of house prices is the perfect storm for the asset class. Developers that can get their hands on sites of scale will undoubtedly do well in the long run. Industrial in SA has been in demand for a few years now, we continue to have displacement of South Road occupiers, minimal land releases in the south and north, and zoning holding back land conversions. All of this ensures ongoing demand in the industrial space.
May / June 2024 – 105
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