Issue 34 | The Property Development Review

THE PROPERTY DEVELOPMENT REVIEW

Talk us through the most significant deals you have transacted thus far in 2022. We are fortunate that we work across multiple markets and therefore we have exposure to both development and investment sectors. We were pleased to represent the offshore owners of Lot 103 Lake Orr Drive, Varsity Lakes, which is a 5ha waterfront development site adjacent to the Bond University which sold for $45M to local developer, Cru Collective, in partnership with CVC. Upon completion this will be a fully integrated residential and retail development with potential components designated for premium waterfront units, aged care, build to rent, as well as a number of commercial uses. Lake Orr is one of the last major greenfield sites in the heart of the Gold Coast. Just recently we transacted the Emerald Lakes Town Centre commercial office building for $21.5M, this is a property that CBRE manage, lease and subsequently sold for the owners and now have the pleasure of being appointed by the incoming purchaser to continue our full circle services. Both of these assets represent significant holdings within the City that, as a group, we look forward to having long associations with.

From our own internal analysis, we’ve seen a significant shift in listing enquiries from traditional developers & investors who typically pursue residential projects toward industrial & commercial type assets - how have you seen that trend over the past few years or so? Construction prices have risen across the board but have been more prevalent in the residential sector given the level of fitout required to finish an apartment. This is not the case when dealing in commercial and industrial properties. In addition to this, with the population shift that has occurred over the past two years, opportunities in the commercial and industrial sector have grown significantly and this has seen developers gravitate to these markets. What impact have rising construction costs had on developers based on your conversations with them recently? In a word, significant. The increase in interest rates has slowed the market, however in South-East Queensland particularly, this slowdown started prior to Christmas 2021 based on building costs. We have seen a number of projects either scrapped or repriced given the uplift in construction costs, but the upside to this is that unlike other cycles, there is still a critical shortage of accommodation and in effect this is currently holding the market up from any dramatic falls.

growth in South-East Queensland. The international market is re-engaging since the COVID19 lockdowns, however most recently we have seen this sector investing via equity-based participation rather than direct development. In terms of size and scope, again the majority are looking for developments of circa 100 – 150 units with Development Approvals, focussing on the end user market. More recently we have seen a trend to Build to Rent as some of the institutional investors have identified the significant residential shortage in this market and the need for rental accommodation. From a vendor perspective, what’s driving their decision-making process in disposing of assets -is it the strength of the market or are you sensing there could be a level of uncertainty around rising interest rates setting in? A number of Vendors we are dealing with have enjoyed capital growth over the last few years and are looking to benefit from the opportunity, be it slightly less than what they may have achieved last year. Others have identified that construction prices have put pressure on their feasibility and therefore they are electing to sell now. As outlined previously, there is uncertainty in the market predominantly due to interest rates, equity markets and construction costs, however there is still significant activity with strong fundamentals.

July / August 2022 – 51

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