A MEXICAN wave of serious southern development money is building as the Gold Coast begins a $6 billion construction industry boom.
Several major Sydney and Melbourne companies admit to spying on potential development estates in southeast Queensland, with the Gold Coast a key spot as the interstate residential property markets reach their peak.
The key drivers are affordability as the Glitter Strip works its way out of the GFC, the positive vibe about jobs growth with the Commonwealth Games and the council removing bureaucratic red tape for planning applications.
“It’s the Mexicans that are coming – there is a renewed interest from Sydney and Melbourne investors in the Coast,” said Villawood Properties executive director Tony Johnson, pictured below.
The Melbourne-based company which has just received council approval for a $500 million residential estate on an 89ha site next to the heavy and light rail at Helensvale has land banked 20,000 allotments on the Coast since the Global Financial Crisis.
Villawood has 70 per cent of its business in its home State but the potential is for the Coast to to provide 30 per cent of its investment portfolio.
Mr Johnson said interstate developers and building companies were moving to the Coast as the Sydney property market peaked and Melbourne had only small room for growth.
A “tidal wave of buyers” were looking to invest, including cashed-up Baby Boomers, immigrants and families frustrated by spending $500,000 for a block of land in Sydney’s west where they face an hour-and-a-half commute to work.
“It’s a joke,” Mr Johnson said, when comparing the western Sydney market to his Helensvale plot within 300 metres of the Pacific Motorway and rail link.
The latest data on the development industry shows:
- City Planning estimates more than $6 billion of actual buildings on its books which includes mega projects like Jewel, the Pacific Fair upgrade, the Coomera Town Centre and four tower Ruby project.
- The number of building applications so far this year already totals 1469 which compares to 9998 in 2015. Only 3215 were received three years ago.
- 15 major projects are due to the 2018 Commonwealth Games with that infrastructure to costed at $950 million and the event itself expected to inject $2 billion into the local economy.
- Some suburbs like Southport and Ashmore have recorded average median growth in the past 12 months of 11 per cent and 10 per cent with market forecasts suggesting the increases will “continue up to 2018 and beyond”.
- The final quarter of 2015 recorded the highest sales rate for new apartments since mid-2008 with some of this older stock being picked up by buyers.
Council planning committee chairman Cameron Caldwell said he believed the interstate-driven boom was not just about building super towers.
“High rises and land subdivisions (particularly in the north) are seen by southern investors as being important,” he said.
Sydney-based developer William O’Dwyer who, with his Ralan Group is planning the Ruby project at the old Paradise Resort site, admits to being caught up in the positive vibe about the Games.
“The thing that attracted me was obviously the upcoming Commonwealth Games … the ingredients for growth on the Gold Coast are better than they have ever been,” Mr O’Dwyer said.
Choice Homes marketing manager Ben Peasley said the Queensland-based company noticed a turnaround as their Pimpama work took off after the Games’ announcement.
“Pre-Games every builder on the Gold Coast was suffering. We were building up to 800 homes a year here in the first year before the GFC,” Mr Peasley said.
“Our numbers were down to 152 pre-Games. We’re doing 500 homes on the Coast this year.”
At Pimpama, where between three to four homes a week are built by the company, the mantra among developers in the northern corridor is “a new home built a day for the next 22 years”.
Research by Masters Builders Queensland deputy director Paul Bidwell shows room for growth on the Gold Coast in terms of regional building approvals enjoying year-on-year an 8.1 per cent increase behind “Greater Brisbane” (29.1 per cent) and the Sunshine Coast (36 per cent).
In terms of business performance the Gold Coast, after strong growth between September and December last year, has slightly dipped but the forecast for both turnover and profit by June will top last year’s highs.
Compared to State-wide figures on setbacks for the industry, the city on average has more available land, lower infrastructure charges, better interest rates and infrastructure charges.
The region, unlike central and northern Queensland centres, recorded a positive change in total employment of 16,800 in the past 12 months.
Master Builders deputy executive director Paul Bidwell said the latest ABS statistics showed building activity across the State had reached a record high of more than 18 per cent in 2015.
“The large number of approvals in the pipeline means that we expect to see these elevated levels continue through to 2016,” Mr Bidwell said.
Mr Johnson, from Villawood, sees much of that future building occurring on the Coast and in the wider Brisbane area and singles out Gold Coast City and Logan councils for being supportive of projects.
“I was that scared of the Gold Coast 10 years ago. They were anti-development. Coming up here four years ago, I was downright depressed,” he said.
“Several of the (new) councillors, I think they are very smart people.
“I listened to the Mayor Tom Tate (at a seminar), I was impressed by what he said.
“They are very proactive and can see they need and encourage quality development.”
Published by Paul Weston and Andrew Potts in the Gold Coast Bulletin: Saturday April 23 2016