Gold Coast construction thriving ahead of Games

 

One of the driving forces in Gold Coast real estate right now is planning and building for the Commonwealth Games to be held in 2018, which is contributing to a rise in the city’s population.

Following several years of prolific residential construction on the Gold Coast, real estate firm Ray White says there’s a shortage of land in the city.

This is usually a sign of a strong marketplace and has led some developers to seek out land away from the coast for more traditional housing.

For example, the number of ‘registered’ residential lots on the Gold Coast hit its highest level in five years in the year to September 2015, up 44% to 2,487, according to the Ray White’s SEQ (South East Queensland) Land Market Report.

This was the strongest increase of any city in the region over the period. Lot ‘approvals’ on the Gold Coast also rose to 1,555 over the year, higher than in 2014 (1,026) and significantly higher than in 2013 (744), as per Ray White.

Registrations and approvals are both helpful markers for those studying activity in a given area. For example, a lot is registered once the land has been approved and readied for building. To do this, developers must apply for a permit from the local government authority.

Overall, there were 18,182 lot approvals by South East Queensland councils in the year to September 2015, according to Queensland State Government figures. This was an increase of 11% compared with the same period last year when 16,444 lots were approved.

It’s game on

One of the driving forces in Gold Coast real estate right now is planning and building for the Commonwealth Games to be held in 2018, which is contributing to a rise in the city’s population.

Director of Matusik Property Insights, Michael Matusik says that he anticipates the average dwelling price on the Gold Coast to rise by about 10% by the end of 2016, given this population increase and as sales listings tighten.  

"The current upswing is expected to last longer than normal due to the hosting of the Commonwealth Games," says Matusik. "Without this marker, the Gold Coast would most likely peak sometime in the next 12 months. A large number of local residents should be attracted to small lot homes and dual income properties, plus townhouses and smaller unit complexes. There is also a strong demand for traditionally sized detached homes." 

Director of land marketing in Queensland for Ray White, Jamie Martin says that low interest rates and bank funding have been instrumental to new types of house and land products being added to the area.

"We have seen major land development in the Gold Coast's northern corridor of Pimpama and Coomera area [for example]," says Martin. "The median lot size is just 469 square metres and we would expect to see land lots continue to fall in size and more focus on innovative small lot housing designs.  

"Small lot housing could include terraces and town homes offered as a freestanding [houses], possibly with minimal side setbacks and zero lot boundaries."

Major players  

Martin says some of the major Gold Coast developers include Stockland, Pointcorp and Sunland. For example, one of Sunland’s new developments on Palm Beach is called Magnoli and features 88 luxury terrace homes in a village set-up.

Stockland and Pointcorp have also increased their focus on houses in the region, as buyer demand is said to be shifting away from coastal apartments. Plans for better infrastructure in and around outlying suburbs is clearly making these builds more feasible.

With the Games on the horizon, major projects are indeed under way across the Gold Coast and include transportation links, a new healthcare precinct in Coomera, a revitalisation of the CBD and a new cultural precinct, according to the State Government.

In addition, the Minister for the Commonwealth Games, Stirling Hinchliffe said in April that $404m in construction contracts had been awarded for the event’s venues and village projects, with $366m of this going to Queensland companies.

Demand fuels price rises

Ongoing construction activity on the Gold Coast has also been supported by investor demand and tight rental vacancies of 2.3%, as of June 2015, as per QBE’s Australian Housing Outlook 2015-2018.

This has helped keep median house prices buoyant and looking ahead they are expected to have increased by 14% to $615,000 between June 2015 and June 2018, the report says.  

However, there’s been an oversupply in the unit market, especially off the back of a surge in building between 2008 and 2011, QBE says. As such, the median unit price still hasn’t recovered from its June 2008 peak of $390,000. These excess apartments are expected to be absorbed though and price growth should return before the Games, according to QBE.

Published in The Real Estate Conversation by

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