APARTMENT ELEVATOR….GOING UP ANYBODY..?
David Cresp, director of economics and market research at Urbis Perth Apartment Essentials report, to be released quarterly, found high house prices, a shortage of land and shifting demographics for Gen-Y, baby boomers and immigration have made apartments a more popular housing option.
Mr Cresp said a key problem understanding Perth’s emerging apartment market was the lack of information available on the levels of demand or supply.
“Apartments are being sold off-the-plan two and sometimes three years before the building is completed, which means traditional ways of tracking sales activity through settled sales are not relevant,” he said.
According to Urbis, there is a $107,750 gap between the median house and unit price in Perth – making apartments relatively more affordable for many buyers.
“It is very expensive for a population of two million to service these infrastructure requirements,” Mr Cresp said.
“In the inner and middle areas there is now almost no new land for single residential housing – we must build up and densify.”
Mr Cresp said strong demographic drivers – immigration, Gen-Y’s quest for lifestyle and active baby boomers were pushing up demand.
“What this flags for Perth, and the property industry, is a strong desire from buyers to live up rather than out in the suburbs,” he said. “This is evidenced by a very high proportion of new apartments being sold off-the-plan. I think we can say the densification of Perth has arrived.”
Urbis surveyed developers behind 80 per cent of active projects and found most apartments were selling off-the-plan with most new apartment projects sold out by the time they are completed.
The report surveyed 79 projects and found there were 1148 unconditional sales contracts in active projects in the six months to December and that Perth has 4279 apartments under construction.
Of the surveyed projects, 68 per cent of apartments had been sold and most projects were sold out or very close to being sold by the time they were finished.
Mr Cresp said of all the dwelling approvals for Perth in 2014, only 17 per cent were for apartments – an increase on the previous two years but still well below east coast levels of 37 per cent to 55 per cent.
“Perth should look to Brisbane for . . . new housing and apartment trends,” he said.
“Five years ago apartments in Brisbane made up only 18 per cent of new dwellings.
Today it is closer to 44 per cent. Given a variety of economic and industry indicators,
we believe Perth will follow.”
The Essentials report also showed that while inner-city Perth experienced the most apartment supply activity, new apartment projects were now being developed across the wider metropolitan area.
Buyers (want) to live up rather than out in the suburbs.
If you have an old investment it would be advisable to upgrade in the next year or two.
The would be buyers over the coming years ahead will see a large number of projects promoted & completed. It is only natural they will be exposed to attractive accommodations in complexes that are modern state of the art. This will educate buyers to want & aspire to a better standard of property product. It will unfortunately also see
buyers become critical of older apartments & complexes. Timing is everything in the property game, so the burning question to ask yourself. Do I hold on to an old investment that could be depreciated & also devaluing. Moreover, purchasing a new apartment could open the door to the future of WA property investments.
(Posted April 2015)
:: Demand for Apartments is Strong
Apartments are being built at record levels in Perth’s metro area with 57 completed each week! Could this mean a looming glut of units, apartments & strata titles..?
The developers of WA are on track to deliver 3000 new apartments in the metro area by the end of the year. With analysis of 83% of all metro property sales in the first quarter of 2015 showing 50 apartments sales a week. Approval has been achieved for another 426 apartments in 2 buildings 23 storey Q Zone Project corner Aberdeen & Beaufort Streets Northbridge, plus 22 storey complex on Hay Street West Perth.
Director of economics & research at Urbis WA Mr David Cresp was quoted this week… (1/7/15)
” Perth’s population is expected to grow by 950 people a week for the next decade.”
That’s around 50,000 per year or 500,000 over the next decade.
Australian bureau of Statistics figures show only 17% of new property dwellings in Perth are apartments, compared to 55% in Sydney & 40% in Brisbane.
Another interesting fact to prove a glut is unlikely, 60% of apartments are pre-sold in order to meet financing requirements of developments. Therefore is the market does not respond with pre-sales the project is likely to be shelved or postponed until conditions are more favorable. Also prospective project investors would not take action on high risk ventures or apply for approvals if there is a slow down. The market simply self adjusts & responds to demand.
(Posted May 2015)
:: Tourism is Terrific
Talk about residential strata titles, units, multi-level apartments & accommodation.
One of the biggest global names in hotels Hilton brand is banking on WA winning the tourism business as a world class destination. Over the last 18 months 205 room Hotel Amansari in James Street Northbridge under the DoubleTree by Hilton brand. Proposed opening 2017. Another DoubleTree in Elizabeth Quay, plus south coast at Fremantle. Perth’s hotel market is undergoing a shake up with the new owners of Rydges Hotel on Hay St seeking approval for a $35 million upgrade. Transition to a 5 star International Hotel proposed for late 2016. Carlton Hotel will have a long awaited six storey addition with 64 new & renovated rooms, beer garden, new bars, café which is also on the state register of Heritage places.
:: In The Pipeline
Ritz Carlton ~ Elizabeth Quay ~ 204 rooms
Ibis Styles Hotel ~ Adelaide Tce ~ 200 rooms
Business Hotel ~ Adelaide Tce ~ 250 rooms
Holiday Inn Express ~ Adelaide Tce ~ 224 rooms
Como Treasury ~ Barrack St ~ 48 rooms
West Perth FESA ~ Hay St ~ 362 rooms
AVANI ~ Perth City Link ~ 250 rooms
Sage Hotel ~ Hay St ~ 95 rooms
DoubleTree by Hilton Waterfront ~ Barrack St ~ 247 rooms
Mantra Kings Square ~ Wellington ~ 120 rooms
Courtyard by Marriot Wellington St ~ 332 rooms
DoubleTree by Hilton ~ James St ~ 205 rooms
City LightS ~ Newcastle St ~ 46 rooms
Breakfree (Mantra) ~ Hay St ~ 132 rooms
Ace Cinema Hotel ~ Hay St ~ 217 rooms
Crown Towers ~ Burswood ~ 522 rooms
Starwood Aloft ~ Grt Eastern Hwy ~ 224 rooms
Perth Airport Hotel ~ Expressions of Interest ~ To be announced
DoubleTree by Hilton ~ Point St Freemantle ~ 143 rooms
Old Emu Brewery ~ Mounts Bay Rd ~ 120 rooms
It is tipped by the experts that over the next 5 years demand will increase with a target of at least 1900 rooms needed or the state will lose an estimated $600 million in potential tourism income per year! But with all the activity it is creating a synergy in the city that has not been seen since our federation.
It is a build it & they will come plan for a “City of Dreams”.
A metaphor would be – WA has been motoring along as a reliable six cylinder family car since the 1950’s. Now the next generation is here & the owners (Govt) , designers, engineers, developers/mechanics are building a V8 Super Car to be in the race as a world class competitor. Amazingly WA is right now at the beginning of a once in a century transition to evolve into a real international level city & destination to travel, holiday, visit or live.
:: Incredible Up Side
Most home grown West Aussie would not even consider or contemplate the vast influences or opportunities of tourism. But when you start looking at the figures it is mind boggling what is possible if you get it right in the global market of destinations for gettaways.
:: Western Australia
741,600 international visitors and 1,124,000 interstate visitors in 2012.
The number of international visitors grew by 2.5% since 2011 and interstate visitors grew by 7.4%.
These visitors spent a total 34.4 million nights in WA and spent a total of $3.48 million in the state.
Of all international visitor nights in WA, 79% are spent in the Greater Perth region.
Of all domestic visitor nights in WA, 39% are spent in Greater Perth region.
The city received 7 million domestic visitors and 2.7 million international visitors in year ending December 2010, making it the 42nd most visited city in the world
In the year ending December 2014, expenditure grew moderately (+5.0%) to reach $5.0 billion; growth was ahead of the national average (+4.5%).
Victoria experienced strong year-on-year growth in international visitors (+8.9%) to exceed 2.1 million visitors.
Growth in visitors outperformed NSW,
Queensland and the national average.
Nights increased (+3.0% to 49.9 million), ahead of the national average growth (+2.7%)
Largest concentration of themed attractions in the southern hemisphere.
More than 12 million visitors annually
22.4 million annual visitor nights.
$4 billion in total visitor expenditure.
$1.5 billion in value add to the local economy.
27,000 people employed.
151 hotels, motels and serviced apartments (13,500 rooms).
Markets: Australia, China, New Zealand, United Kingdom, South East Asia, Europe, North America’s
Los Angeles & California
Hosted a record 251 million visitors in 2014, up 3% from the previous record of 243 million in 2013, according to Visit California, the state’s nonprofit tourism agency. Visitors spent $117.5 billion in the state and supported more than 1 million jobs, according to the agency.
A new record was also set in Los Angeles, where a final tally of visitors reached 44.2 million, up from the 43.4 million estimate announced in January, the Los Angeles Tourism & Convention Board. The final number is 4.8% above the 2013 tally.
In Los Angeles, visitors spent $19.6 billion in 2014, a 6.8% increase over the previous year,
according to the board. International visitors — a coveted group of tourists who generally
stay longer and spend more per visit — accounted for nearly 33% of all visitor spending.
Now that’s a lot of bread if WA was to get a fair slice of the tourism loaf.
:: Perth apartment supply
The Perth High Density Apartment Report published by Master Builders and Y Research in March 2015 found 121 apartment projects under construction, approved or being designed in 19 suburbs within five kilometres of the CBD. If and when completed, these projects could add 10,685 apartments to the inner city market by 2020 – a 56 per cent increase on current supply. The report found there were 531 buildings with 19,064 apartments currently within the study area, with 51.5 per cent of it built in the past 15 years, 731 apartments available to rent at the end of January, and 620 for sale. The apartment vacancy rate was 3.8 per cent at the end of January.
Apartments count for more than 20 per cent of new dwelling approvals in WA and the supply of inner city apartments has increased 34 per cent since 2010. Across the Perth metropolitan area, new apartment supply is expected to increase by 2,855 this year and 3,800 new apartments will be built in 2016. The report found about 59 per cent of apartments under construction in Perth are two bedroom, of which 85 per cent have two bathrooms, with three bedroom construction down to five per cent and one bedroom apartments about 38 per cent of new supply.
Research by property economists Urbis in early 2015 found a $107,750 gap between Perth’s median house and unit prices. Urbis says 17 per cent of all Perth dwelling approvals in 2014 were for apartments and believes buyer trends will be similar to Brisbane where the apartment proportion of all new dwellings increased from 18 per cent five years ago to around 44 per cent in 2014. Foreign buyers made up just seven per cent of Perth apartment buyers in the March quarter 2015, at which time Urbis calculated 4,279 apartments were under construction.
Approval data shows the proportion for detached housing such as flats, units, townhouses and apartments in Perth stood at 27 per cent by the end of 2014, up from 16 per cent in 2009, but not yet matching the record level of 29 per cent in 2008. In greater Perth during 2014, there were 20,071 housing and 7,473 non-housing approvals. During 2014, two storey semi-detached housing approvals increased 32.6 per cent to 1,185, two storey apartments increased 34.5 per cent to 1,138, and four storey or higher apartment approvals were up 60 per cent to 3,172.
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