Shrinking pipeline for new CBD projects

Shock new data shows a steep decline in new towers compared to before the pandemic, as the industry grapples with huge price hikes, material delays and labour shortages.

Urbis director Paul Riga: steep decline in apartment numbers

THE pipeline of new apartment projects for inner-city Brisbane is shrinking amid a deepening construction crisis.

Latest Urbis data shows a steep decline in new towers compared to before the pandemic, as the industry grapples with huge price hikes, material delays and labour shortages.

The exclusive figures show 1477 apartments currently under construction within a 5km radius of the CBD this year, with a further 2221 next year.

By comparison, 4699 units were built in 2018 and 4581 in 2019.

Urbis director Paul Riga said a healthy forward supply was a crucial factor in addressing housing affordability and alleviating Queensland’s crushing rental crisis.

Brisbane CBD apartment supply over the next two years is in decline

“The supply of apartments to be delivered over the next two years is well short of where we were in 2018 and 2019,” Mr Riga said.

“If we are delivering less than half of the apartments we were, there are potential impacts of affordability and on our rental market as well.”

The Real Estate Institute of Queensland’s (REIQ) June quarter Residential Vacancy Report shows inner-city suburbs notched the biggest fall to hit a vacancy rate of one per cent.

Vacancies across the Brisbane Local Government Area (LGA) also dropped to a new low of just 0.8 percent.

“Typically, inner-city apartment supply is more bountiful and keeps Brisbane’s vacancy rate quite buoyant, but what we’re seeing now, is that even this market is being filled to the brim,” REIQ CEO Antonia Mercorella said.

REIQ CEO Antonia Mercorella

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Urbis data shows the number of new projects built during the pandemic dipped to 3100 across 2020 and 2021, and remained low amid global supply chain issues.

Meanwhile, hundreds of Brisbane unit owners have bought off the plan in towers where construction is yet to commence.

The figures show 613 apartments were sold in the last year, across 12 planned projects within a 5km radius of the CBD that had not yet been built.

Those contracts represented just under a half of pre-sales for the towers, which comprised a total of 1376 apartments.

Hundreds of Brisbane unit owners bought off the plan

The weighted average median sale price for first quarter sales in 2022 was $920,655 in inner Brisbane.

Mr Riga said Urbis data did not indicate how many of those projects had been deferred.

“We could ultimately see a significant proportion of this product eventuate,” Mr Riga said.

“There are quite a number of commercial factors, including revenue from pre-sales but also the cost implications, in particular with construction costs being as fluid as they are at the moment,” he said.

“There is that concern from a number of developers that the timing of a particular project might not be right to move into the market.”