Soaring costs and a shrinking pool of buyers have prompted developer Andrews Projects to slash the size of a planned project in Gold Coast, cutting the project to nearly one-third of the 1100 units already approved for the Surfers Paradise site.
Andrews Projects purchased the 5700-square-metre site earlier this year with plans okayed for two towers rising to 104 and 73 levels, but the company wants to cut that back and is now seeking approval for two 37-storey towers with 394 apartments and an end value of $700 million.
Australia needs to be building more new homes, not fewer. But the post-pandemic surge in materials, labour and borrowing costs have conspired to make housing development more expensive than most can afford and all too often, the only projects getting off the ground are those targeting downsizers and empty nesters.
“We all know how challenging the current building market is,” Andrews Projects sales manager Sarah Andrews told The Australian Financial Review on Thursday.
“The apartments [in the approved design] were much smaller, investor-style. Our design is 100 per cent owner-occupier, with much larger, generous floor plates. Every unit has a view. It’s a completely different market we’re targeting.”
The Bates Smart-designed project at 3006–3016 Surfers Paradise Boulevard will have a public cafe and co-working space for residents, as well as two large outdoor pools, steam room, gymnasium, barbecue and picnic areas.
National cabinet’s already-optimistic target of building 1.2 million new homes over the five years to 2029 and boosting the country’s total housing stock faces the further challenge of market dynamics prompting developers to focus on boutique new projects that reduce housing stock.
“That owner-occupier is still the dominant purchaser generally across most of our locations,” said Paul Riga, a director of national planning consultancy Urbis.
**Fewer approvals**
That’s translating into fewer approvals of so-called attached homes, the very type of denser housing types the country desperately needs to build more sustainably and make use of existing public transport, health facilities and schooling, rather than pushing cities further outwards.
Official figures this week showed approvals of new apartments, townhouses and semidetached homes slumped almost 18 per cent in August from July. The monthly figures can be volatile but even on a more-stable 12-month calculation, attached home approvals totalled just 58,249, down 14 per cent year-on-year.
Similar dynamics are at work across the country. In Sydney’s inner-eastern Elizabeth Bay, developer Fortis faces opposition from locals and the City of Sydney over plans to knock down two walk-up buildings with 28 homes – 70 per cent of which are rented – and rebuild the site with 22 for-sale luxury units.
On inner-ring Melbourne’s St Kilda Road, Wingate is providing construction financing for Sunnyland Investment Development Group’s $403 million Park Quarter project designed by architecture firm KUD.
As many as 85 per cent of the 204 premium apartments in the 18-level building – which will also have a 216-room hotel – had already sold off the plan, reflecting the still under-served demand of downsizers for apartment accommodation, Wingate managing director Mark Harrison said.
A number of factors were holding back the viable development of lower-priced, investor-focused apartment projects, Mr Harrison said.
These included the lack of stamp duty incentives to encourage buying off the plan, higher surcharges for foreign buyers and significantly higher construction costs, all of which meant the price of an investor-grade apartment would have to go up 20 per cent from 2020 levels, he said.
That hasn’t happened, however.
“They haven’t gone up 20 per cent for investor product,” Mr Harrison said.
**Signs of life**
There are signs of change. Mr Harrison said offshore sales channels were starting to sell to buyers in Malaysia, Indonesia, Singapore and China, but activity was still slow.
Mr Riga said investor-focused channels were selling more apartments, but it was not at a rapid pace and developers weren’t designing whole projects with investor or overseas buyers in mind as they did a decade ago.
“The developers will provide a mix of product,” he said. “In some cases the smaller product they’re putting forward will not be contributing to their profit. They’re a loss-leader.”
Back in Gold Coast, where her family-owned company hopes to get approval by early next year on the project and begin construction in the second quarter of 2025, Ms Andrews said all niches of the housing market needed more stock.
“The Gold Coast market is undersupplied generally, and it’s likely to get worse,” she said.
_bonbi on
So TLDR keeping stock low to keep the price inflated?
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**PAYWALL:**
Soaring costs and a shrinking pool of buyers have prompted developer Andrews Projects to slash the size of a planned project in Gold Coast, cutting the project to nearly one-third of the 1100 units already approved for the Surfers Paradise site.
Andrews Projects purchased the 5700-square-metre site earlier this year with plans okayed for two towers rising to 104 and 73 levels, but the company wants to cut that back and is now seeking approval for two 37-storey towers with 394 apartments and an end value of $700 million.
Australia needs to be building more new homes, not fewer. But the post-pandemic surge in materials, labour and borrowing costs have conspired to make housing development more expensive than most can afford and all too often, the only projects getting off the ground are those targeting downsizers and empty nesters.
“We all know how challenging the current building market is,” Andrews Projects sales manager Sarah Andrews told The Australian Financial Review on Thursday.
“The apartments [in the approved design] were much smaller, investor-style. Our design is 100 per cent owner-occupier, with much larger, generous floor plates. Every unit has a view. It’s a completely different market we’re targeting.”
The Bates Smart-designed project at 3006–3016 Surfers Paradise Boulevard will have a public cafe and co-working space for residents, as well as two large outdoor pools, steam room, gymnasium, barbecue and picnic areas.
National cabinet’s already-optimistic target of building 1.2 million new homes over the five years to 2029 and boosting the country’s total housing stock faces the further challenge of market dynamics prompting developers to focus on boutique new projects that reduce housing stock.
“That owner-occupier is still the dominant purchaser generally across most of our locations,” said Paul Riga, a director of national planning consultancy Urbis.
**Fewer approvals**
That’s translating into fewer approvals of so-called attached homes, the very type of denser housing types the country desperately needs to build more sustainably and make use of existing public transport, health facilities and schooling, rather than pushing cities further outwards.
Official figures this week showed approvals of new apartments, townhouses and semidetached homes slumped almost 18 per cent in August from July. The monthly figures can be volatile but even on a more-stable 12-month calculation, attached home approvals totalled just 58,249, down 14 per cent year-on-year.
Similar dynamics are at work across the country. In Sydney’s inner-eastern Elizabeth Bay, developer Fortis faces opposition from locals and the City of Sydney over plans to knock down two walk-up buildings with 28 homes – 70 per cent of which are rented – and rebuild the site with 22 for-sale luxury units.
On inner-ring Melbourne’s St Kilda Road, Wingate is providing construction financing for Sunnyland Investment Development Group’s $403 million Park Quarter project designed by architecture firm KUD.
As many as 85 per cent of the 204 premium apartments in the 18-level building – which will also have a 216-room hotel – had already sold off the plan, reflecting the still under-served demand of downsizers for apartment accommodation, Wingate managing director Mark Harrison said.
A number of factors were holding back the viable development of lower-priced, investor-focused apartment projects, Mr Harrison said.
These included the lack of stamp duty incentives to encourage buying off the plan, higher surcharges for foreign buyers and significantly higher construction costs, all of which meant the price of an investor-grade apartment would have to go up 20 per cent from 2020 levels, he said.
That hasn’t happened, however.
“They haven’t gone up 20 per cent for investor product,” Mr Harrison said.
**Signs of life**
There are signs of change. Mr Harrison said offshore sales channels were starting to sell to buyers in Malaysia, Indonesia, Singapore and China, but activity was still slow.
Mr Riga said investor-focused channels were selling more apartments, but it was not at a rapid pace and developers weren’t designing whole projects with investor or overseas buyers in mind as they did a decade ago.
“The developers will provide a mix of product,” he said. “In some cases the smaller product they’re putting forward will not be contributing to their profit. They’re a loss-leader.”
Back in Gold Coast, where her family-owned company hopes to get approval by early next year on the project and begin construction in the second quarter of 2025, Ms Andrews said all niches of the housing market needed more stock.
“The Gold Coast market is undersupplied generally, and it’s likely to get worse,” she said.
So TLDR keeping stock low to keep the price inflated?
It’s all so tiresome.