THE PROPERTY DEVELOPMENT REVIEW
the bank was going backwards so investors were happy to pay premium yields for a better return. We have since been challenged with buyers opting to keep their money in the bank or invest in other asset classes such as shares of bonds. Stock levels across most sectors remains very low and the growth of our region is still continuing so it is likely we are going to see continued capital growth. Construction cost increases has meant a fairly sharp rise in rents in both the industrial and commercial sectors and while yield compression to the levels we saw through the pandemic is unlikely, the sale rates on a per square metre basis will remain on an upward trajectory, particularly as more buyers entre the market again. As for the retail market, this has probably been the hardest hit sector when it comes to interest rate rises and while some businesses seem to be doing incredibly well, parts of the hospitality industry have been struggling. Conditions should improve with more tourists coming to the region. What does the development pipeline look like in your specific markets and what are some of the bigger projects slated for commencement in 2024? Stockland’s Aura development at the southern end of the coast will remain the major development focus from a residential perspective for the next decade. They are also bringing on land in other classes including industrial, commercial, and large format retail. Office space wise, Walker Corporation are building a 10,000sqm office building in Maroochydore CBD which will see the first premium grade office asset in the market. Neighbouring this is a private hospital development which Barwon Health are developing. The state government are about to release 39 industrial lots at Bells Creek and a private developer has also just completed 38 lots in Beerwah which was sold out 12 months prior to completion. 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? Demand for residential land subdivisions is still very strong in our region. This applies to both straight land subdivisions and Land Lease Community sites. We have found anything that has potential for either of these two sectors will have strong competition. The State Government released the expansion of the South East Queensland urban footprint earlier in the year which saw only a few larger parcels of land being included for future development. This will put more price pressure and demand on existing undeveloped sites included in the footprint with access to services the main barrier for the feasibility of most greenfield sites. We have seen feasibility issues mainly confined to construction of medium density and high-rise product but I think our region has a fair way to go to catch up to the sale rates per square metre of places such as the Gold Coast which developers will hopefully see as an opportunity rather than a risk. What advice would you give developers looking to invest in regional areas in 2024 Understand the market you are looking at. Understand the risks whether it be planning, construction or market related. Talk with trusted advisors on where the gaps in the market are and act quickly when you see an opportunity.
April / May 2024 – 71
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