Pace take advantage of demand v supply in 2022 and kick off construction in Flemington and Coburg
2022 was an uncertain year in the property industry, as aggressive interest rate hikes by the Reserve Bank saw sentiment drop drastically, along with prospective buyers' budgets.
But award-winning developer Pace Development Group pushed on with a number of projects, and they're commitment to launching in what many felt was a tricky period has paid off in spades.
Ash Bramich, Sales and Marketing Director at Pace, said that there’s no point waiting around for the market to correct itself and bottom.
“As long as developers are confident their product matches extensive research on the expected buyer demographic, then you’ve got to take the opportunity to get it in front of those buyers,” Bramich told Urban.
"Buyer demand has still very much been there.
"If you’re delivering a product which is what consumers are looking for, in quality suburbs, then you’ll achieve sales.
"We launched two projects [The Darley on Flemington Racecourse and Pace 3058 - Coburg] despite the headwinds in the property market, and now we're in a position to begin construction."
There’s also the case of the issues surrounding demand v supply. Because of the lack of product on the market, Bramich says that, despite consumer sentiment taking a hit, there were still considerably more buyers out there than what was on the market.
The 5,100 apartments launched for sale across Melbourne in 2022 was the lowest number of launches recorded over the past decade, almost -80 per cent lower than the peak levels during 2014 and 2015, analysis by consultancy firm Charter Keck Cramer found.
Also at decade lows was the total number of apartments which began construction in 2022. Just 5,200 apartments started construction, -77 per cent lower than the 2015 peak of 22,500 apartments.
By generating sales last year, Pace have now started construction on both their Flemington and Coburg projects, which allows the team to offer greater buyer confidence during the sales process.
"We can now communicate to buyers two things; a clear sign the project is going ahead with works already underway, and a more accurate completion date of the build."
The Darley, which will comprise 313 apartments and is over 60 per cent sold, is forecast to complete construction by early-2025. Pace 3058 - Coburg has sold over 60 per cent of its 312 apartments. That's expected to be completed by mid-2024.
The Darley on Flemington Racecourse. Image supplied
Bramich says he's never seen a market with such contrarian views.
"There's a lot of cyclical factors that are quite contrary and conflicting at the moment," Bramich says.
"On one side of the coin, you've got the headline issues around consumer confidence, increasing rates, cost of construction and difficult to predict completion timelines. On the other side however, unemployment is at record lows, immigration is going up and is forecasted to soar, particularly in Melbourne, and there's huge undersupply of apartments which always drives prices up," Bramich says.
Melbourne's population is forecasted to grow by 89,000 people in FY 2023, around 105,000 in FY 2024, and 101,000 in FY 2025, according to Plan Melbourne 2017-2050.
Charter Keck Kramer found that around 13,500 apartments need to be built each year in Melbourne to support the population growth. There were just 6,300 apartments completed in 2022 in Metro Melbourne, across 94 projects.
Bramich says inevitably the lack of supply will drive prices higher over the short term, and that will become long term if construction doesn't meet the forecasted population growth.
While interest rates have pinched the budgets of young professionals and investors, Bramich is seeing high demand from the downsizer demographic.
"There's a huge cohort of owner-occupiers with little debt or no mortgage, who are still ready to execute if there's product that ticks their boxes," Bramich says.
That's the target market for their upcoming Fitzroy project, Fabbrica, which Bramich expects will lure those empty nesters wanting to move back to a more active area.
Pace have geared Fabbrica toward this demographic, with larger than standard floor plans on offer, as well as double garage, large balconies, and high ceilings.
The one-bedroom apartments range from 52 sqm to 65 sqm, while two-bedroom apartments start from around 90 sqm and go up to 120 sqm. The three-beds range from 130 sqm to 250 sqm.
SJB Architects will restore the current buildings on the corner of Johnston and Gore streets, which were selling for the first time in five decades when Pace snapped up the site. In keeping with the signature streetscape of Fitzroy, the facades will be restored to their original brick finish.
"We've already been seeing a lot of enquiry from those blue ribbon suburbs like Armadale, Kew, Malvern, the suburbs which are more geared to grand family homes.
"For these buyers, their kids have headed off to university or are now young professionals, and they can cash out their homes for anywhere between $4 million and $10 million, and are wanting to spend between $3 million and $5 million on an apartment in a 'cooler' suburb.
"They want to immerse themselves in a suburb which is more reflective of culture, with arts, cafes, and local restaurants."
Bramich says Fitzroy and Collingwood are probably two of the strongest suburbs to sell projects in.
"Buyers want heritage facades, light industrial features, tree lined streets, all of the characteristics Fitzroy and Collingwood are well known for. Most importantly it’s about being back in the buzz of a suburb they’ve not lived in since their 20s or 30s.
"There's a cohort of people who don't need to be sold on the area, they're simply just waiting for the appropriate product."
Expecting a big year in the markets, Pace also have 90 apartments soon to launch in Sunshine North, part of their riverside and lakeside masterplan where there's limited townhouses remaining. Bramich says the apartments will be more geared toward the first home buyer demographic.
Toward the end of the year Pace will launch Pace Brunswick, around 90 apartments fronting the popular Lygon Street, next to Methven Park. That will have one, two, and three-bedroom apartments.
Always looking forward, Pace are currently working with the Frankston City Council on their proposed plans down on the Mornington Peninsula located beachside of the Nepean Highway.
They're wanting to create a mixed-use residential and lifestyle precinct, bringing a high-level of retail and dining experiences to the suburb, set underneath around 200 apartments. Pace always put a large focus on amenity. They have plans for a 25 metre rooftop pool with sweeping views across Port Phillip Bay, a cinema, and a health and wellness area.