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Where Property Developers Should Be Looking and at What?
It’s kind of a bittersweet time right now in the real estate industry when you really look at it. Take the best interest rates on mortgages that we have ever seen. Then pair that with skyrocketing property prices and you’ve got the full picture. 2021 has been a blast so far with a lot of people trying to beat the rush and snag a piece of property to make use of the lower interest rates.
The Australian real estate industry is nowhere near stopping or slowing down its aggressive growth. This year is the first time in 18 years that we’ve had a quarterly growth this high. Between January and April of 2021, our quarterly growth rate went up by 5.8%.
Property prices nationwide increased by 1.5% more throughout August. That means that in the last 12 months, we have seen a total increase in property value of 18.4%. The lockdowns resulted in fewer properties being listed, though. So there’s also been a decrease in the number of property sales finalised.
“Lockdowns are having a clear impact on consumer sentiment. However, to date, the restrictions have resulted in falling advertised listings and, to a lesser extent, fewer home sales, with less impact on price growth momentum…” -Tim Lawless, Research Director, CoreLogic
So with the Commonwealth bank predicting another 16% property price increase over the next 2 years, where should property developers be looking?
Where Property Developer Should Be Looking In 2021
Our real estate sector was worth roughly $8 trillion back in March of 2021. Plus, with the current growth rate, it could reach $9 trillion before 2021 ends. Let’s look at some of the best locations to check out as a property developer in 2021.
You can look at Bendigo and Monash. Bendigo is not too far from Melbourne. So great for residential development. A place like Monash, on the other hand, located in the suburbs south of Melbourne offers a 4% rental return.
Median house prices in Bendigo reach at least $300,000, with a 4.5% to 5.5% rental yield. Plus, vacancy rates have remained under 3% since April. In most of Bendigo’s suburbs, the vacancy rate is steadily below 1% so it’s a good place for residential property development. Monash’s median house price, on the other hand, ranges from $1 million to $1.3 million.
Other industries thriving in Bendigo and Monash include tourism, tech, mining, retail, agriculture, and the industrial sector. Spaces like warehouses would do well to support this thriving economy. In East Bendigo, a 414 square metre to 678 square metre warehouse is going for $425,000.
Queensland’s property development sector is already using up empty government land. They’re looking at things like eco-friendly apartments and houses for the residential part of the market. Then there’s the need for commercial and industrial species to support the expanding tech, retail, and general business spaces.
The Economic Development Queensland, (EDQ) already has plans underway to create a sustainable community in Northshore, Brisbane. This will be done using 60 hectares of government land.
Plus the return on residential property is promising in places like Toowoomba. With Median house prices settling around $400,000, the vacancy rate is the lowest since 2010 at 0.5%. Places like Shailer Park and Birkdale boast vacancy rates under 0.5%. While for the Sunshine Coast, most of the property increases happened in the more scenic beachside property locations. So the median range house price on the Sunshine Coast is still under $500,000.
New South Wales
Now here’s an opportunity for commercial development. Things like logistics and distribution centres, warehouses, ports, and other distribution hubs are some of what’s booming here. This is directly linked to the uptake in eCommerce since the pandemic struck.
The eCommerce boost leaves the entire east coast with vacancy rates of under 2%. Don’t get fooled, though. This doesn’t mean there’s a problem with supply. There’s actually a lot of land available for development.
“There’s plenty of land, it’s just getting the services to it…” – Sass J-Baleh, Head of Industrial and Logistics Leasing, CBRE.
The nation’s average industrial rent price for super prime spaces went up by 0.4% so far. So companies like Stockland are recording a Steady growth in the need for industrial floor space.
There are many opportunities for property developers nationwide. There will always be the need for housing and business services. Both of which have boomed since the pandemic.
People spend a lot more time at home because of the lockdowns. So many people are moving to quieter areas. The same type of growth is seen in the commercial and industrial sectors as eCommerce also flourishes.
If you want to talk about the best possibilities for your next development, reach out to our team at MLS Finance.
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