Gold Coast development: Property prices to explode as thousands of units delayed

The Gold Coast property sector is banking on more than 2500 units across 20 new tower projects hitting the market in the next three months to ease the city’s apartment shortage,

THE Gold Coast property sector is banking on more than 2500 units across 20 new tower projects hitting the market in the next three months to ease the city’s apartment shortage, a new quarterly report reveals.

The Gold Coast’s long-running lack of available units had not eased in the past three months, according to an apartment essentials report by property consulting firm Urbis, and just 2.3 months of supply remains if new projects were not launched.

The report reveals a significant number of apartments will be put up for sale after more 16 towers went to market in the final quarter of 2021.

The figures are supported by council approvals and developer intentions to proceed with sales and construction.

However, the projection is tempered by the close watch on escalating material costs and supply chain delays.

Lynda Campbell. Picture by Scott Fletcher

Urbis senior consultant Lynda Campbell said: “The remaining supply for the Gold Coast sat at 475 apartments at the end of 2021, which based on the current sales rate, leaves just 2.3 months of supply.”

“There are more than 20 projects that could launch across the first six months of 2022 which will contain around 2500 apartments.

“Several of these projects are large in scale and I expect them to be released in stages.”

The Urbis report confirmed that more property changed hands in 2021 than in any other year on record.

Its findings showed:

* More than 610 units were sold in the final three months of 2021, and a record-breaking 2492 units sold throughout the year.

* The 2022 sales figure was higher than both 2019 and 2020 combined. There were 905 recorded sales in 2019 and 987 in 2020.

* More than 6200 new apartments have been sold since late 2016, 40 per cent of which changed hands in 2021 alone.

* The weighted sales pace for a new unit on the Gold Coast was $1.05m in the final quarter of 2021, the fourth time in 18 months that it exceeded $1m.

* Of units sold, 54 per cent were two-bedroom and two-bathroom, while 31 per cent had three bedrooms.

Artists impression of the Iris Capital project known as Victoria & Albert Broadbeach

New high-density towers that have already gone on the market in 2022 include the 333-unit first stage of the Iris Capital’s $1bn twin tower V & A development in Broadbeach and 258 apartments in the first phase of SPG Land’s three-tower Paradiso Place project.

However, Ms Campbell warned rising material costs and supply chain issues would have an impact on the market and potentially delay new towers.

“We saw a record-breaking year in 2021 but now we will shift towards more resort-style projects which will be aimed more towards investors,” she said.

“The overseas borders have opened and that is why we are starting to see these larger projects coming to the market.

“But there are challenges, including construction costs, supply chain issues and interest rates rises which could lead to property price rises and some projects may have to be delayed.”

Why Gold Coast house prices are set to explode

THE building of thousands of units expected to ease pressure on the Gold Coast’s tight property market will be delayed or cancelled outright.

Leading real estate figures warn it increase property values further.

Developers across the city are reassessing their plans in the wake of increasing costs, supply chain shortages and tradies being booked out until late 2023.

While more than 40 cranes litter the sky and at least five major towers are due to be completed by Christmas, a real estate figure behind some of the biggest unit sales of the past five years says a building slowdown is coming.

Jayde Pezet

Jayde Pezet, of KM Sales and Marketing, has sold units in some of the biggest tower projects of the past decade, including the Star Residences in Broadbeach and Sunland’s Magnoli in Palm Beach.

He warned rising construction costs were affecting the feasibility of already announced and approved projects. Some had been cancelled and others delayed because of a shortage of building materials and global supply chain issues.

Developers would not absorb the increasing material costs and interest, and ask more from buyers in return, because they could not always be guaranteed finance and risked being left with unsold towers.

Artist impression of SPG's Paradiso Place towers planned for Surfers Paradise. The project is on the market.

“There has been a lot of industry talk about the impacts of rising costs and supply chain issues, but we are seeing the continuation of a very strong downsizer market similar to what we saw in 2021,” he said.

“If there are issues that delay new projects coming to market we believe this is only going to create a situation where there is less stock on the market and therefore more demand.

“(Last year) was a watershed year for the city and we are well and truly anticipating this momentum to accelerate into 2022.”

Mr Pezet, who along with his partner Todd Matheson is rebranding KM Sales as Pezet Matheson, said demand for Gold Coast property was increasing following the reopening of borders and an influx of overseas buyers.

“The Gold Coast property market will begin to transition into a new phase driven predominantly by southern buyers or local downsizers who want the appeal of coastal living.

“It’s not just buyers that are flocking north – interstate developers too have been quick to cotton on to the value that lies on Gold Coast soil, snatching up development sites before they even hit the market.”

Ray White’s Andrew Bell. Picture by Richard Gosling

A new report by Knight Frank Research last month showed:

* More than 216 properties in the $2-7m range sold in the third quarter of 2021, the highest on record and up 160 per cent on 2020. This is expected to increase by eight per cent in 2022.

* There were five sales above the $7m mark, also a record.

* Properties in the $2-7m range spent on average 122 days on the market in July-September 2021, down from 141 days in the March-June quarter.

Ray White Surfers Paradise boss Andrew Bell said delays to a large number of developments would not drive up the price of existing units.

“Developers identify the opportunities which come from unprecedented demand but as often does happen, there will have been an over-exuberance to be part of the market,” he said.

“I would say there are more new developments proposed than what are needed at this point and history would tell us that when something like this happens, a number of them will not proceed.

“For a purchaser I would say tie yourself to someone who has a track-record of building on the Gold Coast and, where possible, has a strong balance sheet.”

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Originally published as Gold Coast development: Property prices to explode as thousands of units delayed