Foreign buyers are fuelling higher density development sites sales across major Australian cities, according to a new analysis report.
As state governments have encouraged higher density living by re-zoning key sites around infrastructure hubs, opportunities for developers have been ample over recent years, according to the report from Knight Frank.
With the outlook for the Australian Dollar lower than originally forecast, more foreign developers are now taking this opportunity to enter the Australian market, it adds.
Sales of major sites likely for higher density residential development in the four major capital cities of Australia totalled $7.30 billion in the year ending August 2015, down 5.7% on the previous year’s volume.
However, Greater Sydney is still experiencing upward growth in sales volume, although the prior steep upward trajectory achieved in the year to 31 August 2014 is flattening out. A total $4.61 billion sales were recorded over the year to August 2015, when almost 63%, by value, was sold to foreign purchasers.
Across Greater Sydney, development sites sales with potential for higher density ranged from $60,000 to $400,000 per apartment, excluding the Central Business District, while the range extended out significantly in the CBD to $350,000 to $1,000,000 per apartment. Site sales volumes have fallen over the course of the past year for the remaining major capital cities after strong results over the two years to August 2014.
Sales volume in Greater Melbourne totalled $1.79 billion in the year to August 2015. Site sales averaged $35,000 to $200,000 per apartment, excluding the CBD, where 47.6% of these sales, by value, were sold to foreign purchasers.
The volume of site sales in Greater Brisbane at $685.85 million and Greater Perth at $213.36 million saw foreign investment, by value, at 58.6% and 64.6%, respectively. Both cities have a similar sales rate range when excluding the CBD starting from $30,000 to $110,000 per apartment for Greater Brisbane, while Greater Perth ranges slightly wider from $20,000 to $120,000 per apartment.
Since January 2011 some 123,815 new apartments have been added to the major capital cities residential stock, led by Greater Sydney with 46,490 and Greater Melbourne with 41,045. In total across the major cities, there are currently 80,135 apartments under construction, with another 125,060 with DA approval which have the potential to be online by the end of 2018.
The report suggests that apartment numbers could grow further when approval is granted for the additional 86,430 apartments currently submitted in these cities. ‘As determined by pre-sales, the market dictates when new apartment projects get underway, so for most local developers, there is a strong chance that these projects may be pushed beyond this timeframe, the report explains.
Prices for new apartments can vary considerably, with the most disparity seen in Greater Sydney with a range from $9,000 to $22,000 per square meter for a standard finish up to $32,000 to $45,000 per square meter for prime.
A standard finish apartment in Greater Melbourne will range from $6,500 to $13,500 per square meter while Greater Brisbane and Greater Perth will be closer to $4,500, $9,000 and $6,000 to $12,500 per square meter respectively.
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Source: Property News Spain