Record number of Melbourne apartments to be completed in 2013 followed by decline in 2014: Charter Keck Kramer
apartment construction in Melbourne is likely to peak in 2013 with as many as 14,000 apartments being completed, according to forecasts by consulting and valuations firm Charter Keck Cramer (CKC).
However, in 2014 the great spurt in the apartment construction, which kicked off in 2011, will at least halve and possibly fall as low as just 4,000 apartments, taking the market back to average annual rate achieved from 2000 to 2011, the firm says.
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Source: Charter Keck Cramer
In total, about 31,000 apartments are set to be completed or commence construction between now and 2014, with most of these to be built in the inner city.
Around 7,500 apartments will be built within 10 kilometres of the city, more than 4,400 in the middle to outer ring, and only 800 in the outer-growth areas.
Since 2010 apartment construction in Melbourne has risen steeply, with 5,000 constructed in 2010 and nearly 8,000 constructed in 2011 – compared with the annual average of just over 4,000.
Most of this has been with a 2.5-kilometre radius of the CBD.
About 9,000 apartments are under construction currently.
According to 2013 estimates, if those projects that the firm assesses as “more likely” and “possible” go ahead, new apartment numbers will reach 14,000.
Robert Papaleo, head of research at CKC, says up until 2015 there will be no shortage of apartments available in the market, but the question remains: “will there be enough owner-occupier demand”.
“To date the product has been well received, but we now have a softer rental market and population growth is slowing,” he tells Property Observer.
He says the big unknowns are whether Asian developers, which have accounted for about 20% of the market, will continue to target the Melbourne market.
“If they can access funding offshore, there is no limitation to the number of apartments they could build,” he says.
According to Papaleo, offshore banks are more willing to provide funding and are less aware of local conditions and carry out fewer checks.
The Manhattanisation of Melbourne began in 2010, when number of off-the-plan apartments reached 17,000 apartments, compared with a historical average to 2010 of about 6,300 apartments being marketed off the plan.
The following year off-the-plan marketing of apartments fell somewhat, but there were still more than 12,500 apartments marketed to investors and owner-occupiers.
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Source: Charter Keck Cramer
This week construction of Lend Lease’s 807 Bourke Street tower will begin. The boutique development featuring 21 apartments and four townhouses in Melbourne’s Docklands will be Australia’s first timber high-rise building – and the tallest of its kind in the world.
In Southbank construction has just commenced on the 652-apartment Nightingale Village project being developed by the PDG Corporation and Schiavello. The project is split into two sections, accessed via separate lobbies, with Pearl starting from level 10 to level 35 and Prima from level 36 to level 66.
Lower levels start from $351,000 for a one-bedroom apartment and $638,000 for a two-bedroom unit, rising up to $10 million for a top-level penthouse. More than 600 of the apartments have been sold to date.
The Luxton, a six-storey development on Chatham Street in Prahran that will contain 53 one- and two-bedroom apartments to be developed and constructed by Watpac Property, is currently being marketed. One-bedroom apartments start at $405,000.
Further out from the city, the Boom Property Group (BPG) is marketing its Belise development in Caroline Springs with plans for 35 residencies. Building is expected to begin in July and be completed in mid-2013. A further 101 apartments are planned for BPG’s Cascada development also in Caroline Springs as well as 74 apartments in Doreen, to the city’s north.
