THE PROPERTY DEVELOPMENT REVIEW
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? Despite the current landscape of higher interest rates and construction costs, there are promising signs of resilience and opportunity in regional green-field sites for house and land/residential communities in 2024. While feasibility challenges may persist, we anticipate a proactive response from developers, leveraging innovation and strategic planning to navigate these hurdles successfully. Across various asset classes, including retirement living and aged care, there remains a sense of optimism and steady demand, indicating potential avenues for growth and investment. Overall, while challenges exist, there is an underlying optimism and determination within the real estate sector to adapt and thrive in the face of evolving market dynamics. What advice would you give developers looking to invest in regional areas in 2024 I would advise developers to seriously consider investing in Regional Victoria for their next project in 2024. Compared to metropolitan markets, there is ample growth potential and upside in regional areas. The ongoing population growth in Regional Victoria is a positive indicator, with many cities expecting their populations to double over the next two decades. Moreover, the recent expansion of big businesses like KPMG into regional areas, such as their first office in Regional Victoria, signals confidence and opportunity for further investment. Regional Victoria offers a promising landscape for developers seeking long-term growth and success in the real estate market.
How do you foresee regional property across the various asset classes faring as we enter a period of interest rate stabilisation and possible declines? As we approach a period of interest rate stabilization and potential declines, we anticipate varying trends across regional property asset classes. In Geelong, yields have shifted from the typical range of 4-5% to 5-6%, with expectations of stabilizing around 5%. Ballarat’s yields remain steady at 5-5.5%, driven by limited stock and sustained low vacancy rates. Meanwhile, Bendigo has seen yields increase to approximately 6.0-6.5%. These shifts reflect adjustments in market dynamics and investor sentiment amidst evolving economic conditions. Overall, while some areas may experience modest fluctuations, regional property markets continue to demonstrate resilience and attractiveness to investors seeking stable returns. What does the development pipeline look like in your specific markets and what are some of the bigger projects slated for commencement in 2024? Despite the setback of the Commonwealth Games not proceeding in Regional Victoria, the state government remains committed to supporting the region’s development. In Geelong, construction is underway for the Geelong Convention Centre, featuring a Crowne Plaza hotel, slated for completion in 2026. Additionally, the Geelong CBD boasts several high-rise residential and office development sites with approved plans and permits, expected to break ground later in 2024. Bendigo anticipates the release of multiple industrial parks to the market throughout 2024 and into 2025, reflecting strong demand driven by population growth during the COVID period. Notably, the industrial estate at Victor Road has already sold 70% of its inventory, indicating robust interest in industrial properties in the region. These developments signify ongoing investment and growth opportunities across our specific markets.
April / May 2024 – 43
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