With the first quarter of the year recently coming to a close, it’s an interesting exercise to explore the trends and changes that are occurring throughout the development marketplace in Melbourne.
Following prolonged post-Christmas celebrations and a particularly sweltering beginning to the year, 2016 has continued the trend of 2015, proving exceptionally active with a spate of large-scale transactions taking place and a substantial shift by property developers looking to offload high density CBD sites and focus more on lower density, boutique styles of development.
Whether this is a consequence of constant media speculation and overhyped statistics about the rise of ‘oversupply’ leading to a tightening of finance availability from the major players, or due to moderate economic growth and fears of overpriced real estate is anyone’s guess.
Nonetheless, these concerns have seen an increasing number of developers reconsidering their preferred geographic precincts, with particular emphasis now on middle and outer ring suburbs such as Box Hill, Clayton, Croydon and Doncaster.
Values in rapid growth suburbs such as these are still broadly considered as more realistic than many inner City options, whilst demand from both local professionals and international investors continues to outweigh supply, at least for now.
Not to be outdone, blue chip suburbs in Kensington, North Melbourne, South Melbourne and South Yarra continue to generate strong interest from developers, albeit with a considerable transition from lower quality, high volume one bedroom projects to more luxurious, boutique townhouse or apartment developments targeted more exclusively at the well healed downsizer or City professional.
This level of development appeals to a larger range of developers looking to minimise market exposure and turn projects over quickly compared to the longer time-frame required for 100+ apartment developments.
Buyer confidence and engagement is up across the board, with enquiry levels up 48.4% month on month.
Image Courtesy: Colliers Australia