Gold Coast developers battle to get high-rise projects off ground

The average price of Gold Coast apartments has soared to new highs as developers face surging costs and are forced to put projects on hold.

While some Gold Coast apartment developers are storming ahead with projects — think multi-billionaire Harry Triguboff and Brisbane stalwart David Devine — others are struggling to get their projects off the ground.

Colliers data shows the apartment supply shortage drove the average price of a Gold Coast unit to $1.6m by the fourth quarter of last year.

By the first quarter of this year, the average price for new apartments had jumped even further, to $1.772m, the highest ever reported by Colliers.

The average price remained steady in the second quarter of this year at $1.714m, but Colliers anticipates prices will hold or jump even further.

The housing crisis on the Gold Coast is also hitting the top end, with a 30 per cent supply gap for luxury apartments. While there are about 5650 new apartments under construction across the Gold Coast, only 31 per cent of them are expected to be completed this year, and 36 per cent next year.

The projects struggling to get off the ground include a proposed 38-floor, 146-apartment high-rise development in Surfers Paradise which is apparently struggling due to the collapse of its builder.

Construction is yet to start on SPG Land’s The Paradiso Place, which is to include 800 apartments in northern Surfers Paradise, despite launching to the market in December 2021. Surging construction costs meant the development was not feasible at original prices and the developer had since contacted buyers about the changing situation.

Central Equity ditched its plans to build a 56-storey apartment tower on the Gold Coast due to “unprecedented” expenses in July 2022.

Another project in abeyance was the proposed twin tower, The Minette at Pacific Point, with the site recently sold by Hong Kong billionaire Tony Fung to businessman John Camilleri.

An artist impression of the Victoria and Albert Broadbeach Towers project planned for Broadbeach. Picture: Iris Capital

NSW publican and developer Sam Arnaout’s Iris Capital’s Victoria and Albert Broadbeach Towers was delayed following rising construction costs and the termination of builder Descon. The developer cancelled 399 contracts — about half of which were for sold apartments — saying the sale prices were no longer feasible. The developer told buyers if they wanted one of the units they would have to sign a new contract at an increased cost. More than $400m in sales had been recorded.

Sales are now moving forward and demolition works have been completed.

The average price increase on each unit was less than 10 per cent, which would enable the main construction phase to progress.

Construction on Melbourne developer Tim Gurner’s Surfers Paradise project also has not started. The 600-plus unit and hotel Aquia tower was announced in November 2022 as part of the $1.7bn La Pelago, Surfers Paradise precinct. This week, a spokesman said Gurner was in “exclusive dealings with a builder, working through the design given the current construction market”.

Despite setbacks, Colliers said about 2000 new Gold Coast apartments would be

completed and settled this year, but it won’t be enough to meet demand, which continues to run hot.

“Despite an estimated 2000 apartments coming to completion later this year, it has to be remembered that the bulk of this supply has already been pre-sold over the last three years,” said Colliers Residential director David Higgins in a statement.

“The settlements this year are effectively the flow-on effect of a massive increase in buyer activity in 2021, but since then we have seen significant challenges for the high-rise sector that continues to keep supply well behind the demand curve.

“Buyers continue to flood the market competing for less available stock than this time last year.”

Colliers revealed 1157 new apartments had been sold off the plan in the past 12 months on the Gold Coast, leaving 1401 apartments available for sale, or just over 12 months’ supply.

The pressure is being shared across all price points as supply at the end of the June quarter remained well below the 1689 apartments for sale in the second quarter of 2023.

This led to a surge in the weighted average price for new apartments to $1.772m in the first quarter of this year, the highest ever reported by Colliers.

The average price held its ground in the second quarter at $1.714m and Colliers sees plenty of reason to expect the average price to hold, or even go higher.

“We’re now seeing more apartments selling above $1m than ever before and it’s evident that this is part of a changing dynamic for the Gold Coast market,” Mr Higgins said.

“Over the last two years, 67 per cent of sales were priced at $1m and over, but during the second quarter of this year 89 per cent of sales were $1m and over.”