THE PROPERTY DEVELOPMENT REVIEW
story for the Hunter region and will result in jobs and economic activity for the sector. In terms of projects, Hunter Business Park at Black Hill and Regrowth Business Park at Kurri Kurri are both under construction and will deliver over 70.37 hectares of serviced land to the market in their initial stages. The biggest residential project kicking off in 2024 is the construction of the Store Residences by DOMA, with GWH well advanced in the construction of One National Park. Both projects will add circa 550 apartments to the CBD and have been well received by the market. From a house and land/residential community perspective, are regional green-field sites likely to surge in 2024 or will the associated feasibility challenges remain in play in 2024? And does this extend to other asset classes? Green-field development sites remain in strong demand, which is not surprising taking into account the limited supply and continued demand given the strong population growth characteristics. The lifestyle appeal of coastal regions means population growth is particularly concentrated to regions like the Hunter and Central Coast because families can also leverage employment opportunities, excellent health, education and retail services. So, the demand drivers are there, and developers are in regular contact with us to secure their next project given those underlying fundamentals. The cost of construction will remain the most challenging aspect across all sectors, however we will continue to see strong population growth which will support all asset classes. We anticipate growth of circa 100,000 additional residents over the next decade, which we predict will lead to demand for 40,000 additional homes, 400,000sqm of warehouse space and 185,000sqm of office. Consequently, we are buoyant around the Hunter and Central Coast markets. What advice would you give developers looking to invest in regional areas in 2024? Partner with an expert real estate agent in each location or market. Understanding what is happening and “why” it is happening will assist in the site acquisition phase, but also through the design and planning approval process. Our agent’s partnership with successful developers ensures the product is right for the market, which will increase demand and in turn revenues. This means better margins and increased confidence to “go again”. Understanding the market dynamics is key, so an agency that live and breath the sector you want to invest in becomes as critical as your financier, builder or planning team.
it has across all markets. Demand remains high should the site acquisition “work” considering current cost metrics, as developers are attracted to the Hunter and Central Coast. We have seen a diminishing supply of new projects as well as low transactional volumes, which means there will be continued price pressure for the limited completed stock given the demand drivers remain strong from end users. Developers are still taking a long-term view in the residential site market however interest is relative to asking prices and motivation of sellers given the available options available to them in metropolitan locations. Given the challenges in apartment projects, some developers are now looking at green-field developments, but that is less due to construction cost pressure and more to do with the difficulty in procuring a Class 2 builder for their projects in regional locations. How do you foresee regional property across the various asset classes faring as we enter a period of interest rate stabilisation and possible declines? We are already seeing positive signs in our market based on the interest rate outlook. Enquiry this quarter compared to Q1 2023 is up by 28% and transactionally we are on track to far surpass 2023 sales volumes. Investment demand will logically increase as buyers get more confidence that the interest rate cycle has peaked, with the savvy investors already actively pursuing options given the pricing arbitrage between regional and metropolitan markets. What does the development pipeline look like in your specific markets and what are some of the bigger projects slated for commencement in 2024? The strong investment market and continued A Grade net face rental growth experienced between 2019 and 2021 provided the required underlying fundamentals to facilitate new development, and as such since 2021 we have had substantial new supply of 54,300sqm from seven projects. Some of the developments like HYG’s 727HQ and DOMA’s 42 Honeysuckle Drive project are providing next generation workspaces and have been well received by the occupier market as they upgrade their premises. There are no new commercial projects kicking off in 2024, with the most anticipated announcement expected to be the successful proponent of the NSW Governments Honeysuckle Quays and Honeysuckle Quarter site. Three developers are in a Call For Proposals, with this site the last waterfront holding capable of delivering circa 180,000sqm of residential, retail and commercial gross floor area. The biggest news in the industrial market in 2024 is that the Port of Newcastle will no longer be penalised for competing in container freight against Port Botany. The diversification of trade in the port will form a significant part of the transition
April / May 2024 – 27
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