Gold Coast development: ‘Perfect storm’ which could delay construction and force prices up
The Gold Coast’s booming property and development sector is facing a “perfect storm” which could delay projects for years and force costs up.
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THE Gold Coast’s booming property and development sector is facing a “perfect storm” which could delay projects for years and force costs up.
The sector, in the midst of its biggest boom in 30 years, is so busy prominent builders are booked out through late 2023.
But rising building costs and shortage of materials an increasing number of developments threaten to pull the handbrake on the sector.
While the Covid-19 pandemic has led to an explosion of Gold Coast’s property market interest, experienced builders and developers are warning disrupted supply chains and the increasing cost of materials including wood, would have a significant impact on the city.
New Master Builders Gold Coast regional manager Adam Profke said many construction outfits had a growing backlog of work thanks to an influx of new projects with crane also in demand: “If you are wanting to get something built, particularly in housing, you could be waiting a while, with some of our builders saying ‘don’t call us until late 2023’.
“There are only so many cranes in the country and the Gold Coast is not alone in this boom and some customers are being told it could take up to a year for their house to get built.
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“But the industry is bracing for a lot of pain to come in the back end of the year – there is a worldwide wood shortage, supply chains have been disrupted for things like doorknobs which are largely made overseas, copper prices already went up 30 per cent this year as did timber and we hear this could go up another 15 per cent in September. This really is a perfect storm.”
The warning comes on the back of a flood of luxury high-end unit towers aimed at downsizers and owner-occupiers.
A newly released Australian Residential Development Review 2021 report by Knight Frank Research reveals Gold Coast development unit sales have surged an astonishing 238 per cent in one year on the back of planned light rail extensions. According to the report, unit sales accounted for 75 per cent of all residential development sales in 2020, significantly higher than the 29 per cent in 2019.
Hutchinsons is one of Australia’s biggest builders and is behind some of the Gold Coast’s most prominent under-construction developments, including The Star Gold Coast’s Dorsett Tower, Sunland’s 252 Hedges Ave and The Lanes.
Spokesman Jack Hutchinson said the Gold Coast’s development industry was facing pressure from growing costs and shrinking supplies.
“It has been a busy financial year after the recovery from the shock of Covid as projects that were paused came back online while the market on the Gold Coast has been particularly strong despite the ongoing impacts of the pandemic. Our expectations are activity levels will continue for the time being but the big issue we face as builders with the strong demand, combined with the global supply chain issues caused by the pandemic, is cost escalation and potential delays in procurement of materials.
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“Hutchies Gold Coast teams’ forward order book is very busy, but we are still trying to service all of our key clients on future work.
“The challenge for us will be communicating with them the volatile market forces presently at play, as well as ensuring we have the key people internally to service the work.”
Construction is underway on a range of large scale projects across the city, including two new supertowers at The Star Gold Coast, the $500 million Mondrian Burleigh Heads and the first stage of Southport’s multi-billion dollar Imperial Square project.
Work is expected to begin later this year on new towers including Rainbow Bay’s Awaken Residences as well as several small-scale projects in Palm Beach.
Leading Brisbane-based developer David Devine, who last week unveiled plans for a $340 million Surfers Paradise tower, said the Gold Coast was an increasingly popular place to live and anticipated interest in the city’s real estate market would continue to accelerate.
“The past 18 months have changed everything and with people unable to travel overseas they are restricted to what they can do in Australia and I suppose that means buying into property,” he said.
“Queensland has always been a holiday destination and the Gold Coast is number one in that field so it is only logical, now that people can live anywhere while still working, that it would become a popular place to settle.
“With interest rates being the way they are, (buying property on the Gold Coast) is a very inviting proposition.”
Originally published as Gold Coast development: ‘Perfect storm’ which could delay construction and force prices up
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