A tale of one street: the story of inner-Brisbane’s apartment boom
Even for those of us watching every day, the construction sites, the orange-vested men, the cranes, the concrete trucks – they’ve all become a blur of scurrying activity. It’s impossible to keep a track on the quantity of projects, the numbers so huge.
Inner-Brisbane is undergoing the most significant apartment construction boom of its short history and developers continue to submit new applications to Council in big numbers. Investor demand, particularly from the southern states, appears insatiable and – for those of us who own rental properties in these areas – the tsunami of competition for tenants is really only in its first stages.
To paint a picture of the enormity of the new supply, to give you some sense of what is happening in Brisbane’s inner suburbs right now, we’ve mapped just one street for you. One street that’s a telling example of market demand meeting willing developers with significant land holdings that were underdeveloped. At time of writing Cordelia Street in South Brisbane is home to 481 apartments (plus one excellent real estate agency!). It’s well-known for its central location and the 10 buildings that currently front the street offer variety in size and design.
Today there are 372 apartments under construction in Cordelia Street. By the end of 2016 that will take our total from 481 to 853. And these 3 buildings now rising from the earth are just the first wave of this latest development boom for this street. There’s another 4 Council-approved projects with 1503 apartments that are currently selling off-plan or awaiting marketing. Once completed, say by early 2018, they’ll bring our new Cordelia Street apartment tally to 2356.
Then there’s the 503 apartments recently submitted to Council for approval in a further 2 projects… An educated guess says we’ll see Cordelia Street’s apartment stock rise from 481 to just under 3000 in a little over two years’ time. And in the streets around us there’s similar activity.
What does this mean for property owners across inner-Brisbane? We’re witnessing growing resident and tenant demand – people are wanting to move to these suburbs in huge numbers and the lifestyle continues to improve. All these new developments bring with them a huge array of amenities like cafes and bars. We’ve had our agency in this street for nearly 10 years and after dark the area is so much more alive than ever before. Residents walk places. The gaps between things have shrunk so its more enjoyable and safer. Home buyers are eagerly trading suburban living and commuting for the buzz of the city. It’s not a new trend but for those of us on the ground the gaining momentum is obvious.
But there’s already clear evidence that the first surge in supply that’s washing over inner-Brisbane is more than meeting this demand. These new towers are selling strongly, (mostly to investors and, in our view, largely on the back of Sydney and Melbourne home price spikes – those home-owners making use of their massive new equity), but rents are already softening. Vacancies are growing. And when you consider our Cordelia Street example, for landlords at least, the toughest times are still to come.
This change of land uses, at this unprecedented scale, is a once in a generation event. Where Cordelia Street had several half-empty offices of average quality on large parcels of land, these are now making way for a 600% growth in apartment numbers. It’s one example only and a busy one at that. But it paints a picture of the huge changes to our inner-suburbs that are happening before our eyes. Buyer demand remains strong and, on our reading, there’s no major concern in the market on prices. But there is a limit to the growth in our tenant numbers, soon to be shared across a vastly larger marketplace. Investors had best plan for this change.
Please share your thoughts by commenting below – we’d love to hear what you have to say