Bumpy, but resilient, the Gold Coast's Broadbeach has strong drawing power: Peter Chittenden

GUEST OBSERVER

In December, I was happy to be involved in the launch of a new Gold Coast project, The Beach Apartments At Broadbeach.

Broadbeach is easily one of the best locations and most desirable neighbourhoods on the Gold Coast, and since the launch over 40 apartments, with a value of $20m have already been sold.

This is the only off-the-plan project of its kind, and I think for a number of reasons it represents a turning point for the Gold Coast apartment market. The Beach offers the sort of combination that many buyers look for, headlined by a great location, value for money, with a quality developer and builder profile and a reasonable expectation for an up-side when the project is finished.

The Gold Coast has a interesting history, its been the location for lots of activity since the 1880’s when the then Queensland Governor built one of the first holiday homes in the area.

The 1930’s saw quick growth when cars became more common and from around the 1940’s the term ‘Gold Coast’ started to come into common use and the growth trend continued strongly after the Second World War.

In the 1960’s, high-rise holiday apartments made a lasting impression on the area, as did the big changes to the skyline in the 1980’s with the Japanese lead investment boom, along with the opening of the areas well-known and legendary theme parks.

Now the Gold Coast is taking on a new level of glamorous sophistication, as evidenced by the new generation of mega towers, a mature lifestyle offer and the energy of the forthcoming Commonwealth Games will be a welcome bonus.

Among interstate buyers, Broadbeach already has a well established reputation as the Gold Coast’s premier apartment location – given the suburb’s proximity to the beach, the new light rail network and surrounding lifestyle amenities.

In combination it all comes together to deliver a lifestyle offer that is clearly very appealing. The quality of apartments like The Beach has improved in leaps and bounds to accommodate a more demanding and design, quality driven buyer. It’s a trend that developers and their architects and builders are aware of and are responding to with some really appealing product. That’s exactly where I see this project rightfully positioned.

I have shared a little slice of the Gold Coast’s history because I think its important to understand how Australia’s sixth largest city has changed. It continues to evolve, but can sometimes be in the shadow of it’s larger sister cities.

Today, the entire area, including the Tweed, is home to more than 605,000 people, while the 5-year growth rate sits at around 11.2%.

Leading areas of employment are perhaps more diverse than might be expected and spread evenly across three sectors, retail trade, health care and construction. The area’s non-residential building approvals ranks fifth out of all Australian cities and in combination this creates a stronger and more robust local economy.

Combined these figures do I think clearly show that the local economy has moved on from the bikini clad ‘Meter Maid’ image of the past. As an investment destination the Gold Coast deserves to rank well. The potential growth outlook looks set to continue over the next three years. The weaker Australian dollar will also help the area, as locally based tourism regains strength and at the same a time international visits are also on the rise.

A Strong Value Proposition

I also feel the project is perfectly timed and that overall the Gold Coast is currently an ‘undervalued market’. It’s one of the few markets on the east coast that you would have to consider as a buyers market. The local market has been one of the last areas to feel the impact of boom conditions that has swept across Sydney, Melbourne and Brisbane. When you look at reasons to buy here, above all the area represents outstanding value.

In particular, for those buyers who might see themselves as priced out of some areas in the other cities. That applies equally to owner-occupiers and investors. But then it’s also good to keep in mind that Broadbeach is also a stunning location. The overall development taking place in the area is impressive and so there’s always going to be strong demand for short term holiday leasing.

Those buyers looking for a lifestyle asset get a bonus out of buying into The Beach Apartments.

Already according to our local sales team, since the December launch there’s been strong demand out of Sydney and Melbourne from buyers looking at possible future retirement to the area in five or so years time. Understanding the areas appeal, Sydney, Melbourne and also Brisbane families that are regular Gold Coast visitors have lead the enquiry on the premium ocean view, high floor, 2-bedroom apartments.

These buyers are looking for a toe-hold in the area that’s both a good investment and a semi-permanent holiday home, and again this is where the position and aspect of the project clearly come into play. Almost 70% of the 219 apartments will enjoy ocean views. The apartments are affordable with good-sized 1-bedroom apartments starting from $330,000. With sales currently sitting around $7300/sqm, buyers can reasonably anticipate capital growth before and after completion.

Tony Hazell, chief executive of Anthony Moreton Group, says local Gold Coast residents looking to downsize and enjoy the Broadbeach lifestyle have also been attracted by the two year settlement which gives them time to plan for their next move. Again this appears to be ideal timing, as the wider market on the Gold Coast starts to look more assured.

I agree with Tony that the Gold Coast is currently the most undervalued property market on the east coast of Australia. Over the last two to three years there has been a decline in stock of new beachside apartments, and this has begun to put upward pressure on values and pricing.

Even if we see a position where some of the activity of the last 18 months starts to slow in Sydney and Melbourne, in those markets prices are not going to retreat, current price benchmarks are set to remain and continue to increase and so buyers will be looking further afield.

On the Gold Coast the emerging demand appears to indicate that buyers recognise that the market is now in an upward cycle. There are strong expectations that by the time The Beach project is due to settle in early 2017, the value of new property will very likely have improved significantly from where we are today.

The Gold Coast has always been seen as one of Australia’s most desirable holiday destinations. The market has adapted well to the shifting demands from visitors, and despite some bumpy patches it’s a very resilient market.

I suggest that with projects like The Beach Apartments and the recent completion of several major mega-high rise projects, that we are seeing a new depth of maturity in the market, which is underscored here by the perfect location and value for money.

Peter Chittenden is managing director for residential of Colliers International.