Why Sydney investors are dominating in Maroochydore's The Corso development on the Sunshine Coast

The development is only the second tower in the evolving Maroochdyore CBD, which is one of just a handful of greenfield CBD's in the world
Why Sydney investors are dominating in Maroochydore's The Corso development on the Sunshine Coast
Joel Robinson June 20, 2023PROJECT SPOTLIGHT

The Sunshine Coast market has performed as well anywhere in the country over the last five years.

Following a nation-wide decline in property values when the RBA started hiking rates, the Sunshine Coast has bounced back strongly, posting two per cent gains over the last three months, after seeing the market contract over 13 per cent.

But the upswing in values was so large, Sunshine Coast housing values are over 35 per cent, or around $239,000, higher than they were prior to the onset of COVID in March 2020, data exclusively commissioned from CoreLogic found.

CoreLogic Research Director Tim Lawless says it's yet to be seen whether the recent upswing can be sustained in the face of higher interest rates.

"Offsetting the downside effects of high interest rates and low sentiment is a persistently low number of listings," Lawless said.

"At the end of May, advertised supply levels were tracking 26.9 per cent below the previous five year average and one per cent lower than a year ago."

Lawless says the outlook remains strong for the Sunshine Coast property market.

"With interstate and internal migration rates expected to support demand across the region, the outlook for housing demand remains strong against a backdrop of reasonably tight housing supply.

"While we could see the pace of growth in housing values reduce, or even go backwards, if interest rates hold higher for longer, the medium to long term outlook for the Sunshine Coast remains positive."

The continued strong performance of Maroochydore, the Sunshine Coast CBD which has seen unit values jump over 40 per cent since 2018, paired with the relative affordability compared to Sydney, has Sydney-based investors not only window shopping, but going in the store and buying. And they're doing so in large numbers.

Sydney investors have made up nearly 50 per cent of all purchases in The Corso, the new two-tower development from prominent local builder developer Habitat Development Group.

The development is only the second tower in the evolving Maroochdyore CBD, which is one of just a handful of greenfield CBD's in the world. In Layman's terms, the Sunshine Coast City Council are building the CBD from scratch, and therefore are able to effectively create a city built with more modern technology than other cities across the world. Think automated waste tunnels underground rather than rubbish trucks.

The multi-billion dollar investment is turning what was once a retirement town into a thriving city with a self-sustaining economy. Health related services and construction are the two biggest employers in the burgeoning region, whose economy now mirrors that of Adelaide

There's the internationally-designated airport which has been a huge drawcard for investment, as well as overseas population growth, aided by the award-winning Sunshine Coast University, who are making waves all over the world for their green environmental work. The university recently ranked among the world’s top two per cent of universities according to the Times Higher Education Rankings.

The next step for Maroochydore is the public transport links, with a light rail under proposal to connect the housing precincts with the key employment hubs like the university, hospital, and the new CBD. Last year's budget proposed a $3.2 billion plan to connect Maroochydore to Brisbane by train, a commute of just over an hour.

The proposition of an affordable entry point compared to Sydney, paired with a significant infrastructure pipeline, have been the major drivers for Sydney investors.

Habitat Development Group's Sales Director Michael Schenk however says the buyers so far aren't a typical investor.

"They're also looking for an asset that they can use," Schenk says.

"Nearly all of the purchasers have looked at the apartments long-term, with a view that they could capitalise on strong rental prices over the next decade, before moving into the apartment and either making a sea change or retiring."

The Sunshine Coast is no different to the rest of the country with how tight rental markets are, Schenk says however it's not a new trend locally.

"The tight rental market in the Sunshine Coast isn't following the pattern of the other capital cities across the country.

"Across our portfolio for the last six years or so, vacancy rates have been well below one per cent.

"Maybe the recent crisis has brought it down closer to 0 per cent than one per cent, but the demand for rentals in the Sunshine Coast has been apparent for a number of years."

A local leasing agency expect the two-bedroom apartments in The Corso to secure a tenant between $720 to $790 a week, depending on which floor plan and level the apartment sits.

Prices for the two-bedroom apartments start from $849,900, which would give an investor a rental yield of between 4.4 per cent and 4.8 per cent.

The agency also noted that, given the development is to be completed within the next year, investors could realistically factor in rental growth expectations between five and 10 per cent per annum on current prices.

Habitat are currently building The Corso, and are up to level seven of the build which is expected to be completed by July 2024.

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Joel Robinson

Joel Robinson is the Editor in Chief at Urban.com.au, managing Urban's editorial team and creating the largest news cycle for the off the plan property market in the country. Joel has been writing about residential real estate for nearly a decade, following a degree in Business Management with a major in Journalism at Leeds Beckett University in England. He specializes in off the plan apartments, and has a particular interest in the development application process for new projects.

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