THE PROPERTY DEVELOPMENT REVIEW
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? Build-to-rent and luxury apartment projects are the main projects being delivered in the near future. Very few build- to-sell projects are being delivered, especially if the project boasts 30-40+ apartments. As there is limited projects being delivered, this in itself is creating an affordability issue. 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? The luxury apartment market (downsizer market) still remains extremely buoyant. In addition, properties with 1-2 years of holding income but development upside have seen a huge uptick in market demand. As noted, developers are looking ahead and trying to fill their pipeline in anticipation of a market shift, for the better.
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? The misalignment in pricing expectations is generally from Vendors who have bought a site, post 2018. The land prices and per dwelling prices in certain precincts of Melbourne haven’t shift over the past 6 years due to the increase in construction costs, cost of debt, plus building and government levies. Therefore, Vendors are forced to re-weight their portfolio and offload 1-2 non-core developments, allowing them to deliver 1-2 of their core projects.
May / June 2024 – 49
Powered by FlippingBook