Canberra’s apartment oversupply continues
Colliers International have just released the Canberra Apartments Research and Forecast Report for the second half of 2012. It does not appear to be available online yet (I’ll update when it is) but the Canberra Times has jumped all over it with an interactive map of the status of current and future apartment developments in the Inner North and Inner South.
I’ve summarised the data from the Canberra Times interactive map in the two tables below. The first table shows the situation for Inner South apartment developments with the two columns on the far right showing the cumulative percentage of apartments sold in each development according to Colliers International first half or second half of 2012 reports. The results show that apartments are still selling, albeit slowly, and it seems hard to sell those last few remaining units.
Results for the Inner North developments below show a similar story. I’m not sure what happened to the Arte development to go from 100% sold earlier in the year to only 84% sold recently.
Interestingly, the recently completed ‘Lakefront’ development at 11 Trevillian Quay in Kingston was missing from the Canberra Times analysis although Colliers recorded 7 still for sale from the 154 apartment complex in their first half 2012 report. However, there are at least 12 for sale listings for ‘Lakefront’ apartments on allhomes indicating that some of the sales either fell through or buyers/investors are bailing. There are also over 50 rental listings for apartments in the ‘Lakefront’ development on allhomes, making up over one-third of all of Kingston’s rental listings, plus they flooded on last week indicating that the apartments have just been finished. To give the development credit, they do appear to be renting fairly quickly with a number either rented or under application indicating that people do want to live in the apartments by the lake.
The Canberra Times presented differing opinions of Canberra’s apartment situation. According to Paul Powderley from Colliers International, Canberra apartment developments are “at crossroads now [and] it’s not dire straits yet, but it has the potential to get bad.” Ariel Pollard from Colliers stated that some developments “will be under threat of not going ahead if presales for these projects are not met and further developments are taken to market.” Independent Property Group’s Sales and Marketing Director John Minns was not so negative arguing that some approved developments “will not be built for some time.” Similarly, REIACT’s Craig Bright thinks that “it can turn around pretty quickly.”
But can it turn around quickly? Earlier in the year, Colliers International Canberra Apartments Research and Forecast Report for the first half of 2012 noted that “31 projects comprising 3,959 apartments are expected to complete over the 2013 calendar year. These 31 developments represent 56% of the future supply in the Canberra region.” Most of these developments (15) are located in the Inner North and Inner South, while the other 17 are in outer lying districts. This is approximately double the 2,000 apartments across eight inner Canberra and seven outer Canberra projects that are scheduled for completion in 2012.
But none of this is new news. Recently I showed how units and apartments were largely contributing to the growth in Canberra’s stock on market and several new developments were not selling quickly enough. Similarly, earlier in the year it was becoming clear that an oversupply of Canberra apartments was coming due to an increase in development construction and approvals.
While some of the scheduled apartment developments may be delayed or even shelved, there is still set to be a flood of new apartments in the coming years. This additional supply to the already increasing supply of apartments looks set to have a downwards impact on both rental and sale prices of units and apartments in the ACT.
I’m surprised to see how much stock has actually moved. Shows that my perception of demand may have been a little off on appartments/units, at least initially.
Still, I can’t believe the amount of one-bedroom appartments for rent/sale at the 400 mark. Does anyone really value living close-ish to the city over, 2 extra bedrooms, a place to park your cars, an area for your kids to play and to not have to share 2-3 walls with noisy neighbours, having to deal with body corporates? I think the cohort for that exists, but it’s been hugely exagerated.
Traditionally appartments are supposed to be for singles/couples trying to save money for a family home. I feel for the slack (in appartment uptake) to be taken up the purchase value/ rents need to fall back to the mid to high 200s. Considering that appartments tend to go from flashy and modern when they are built to junky farms in 20-30 years they just seem like a bad, bad investments in Canberra for the past 10 years.
I think more attention needs to be paid to Belconnen and the Flemington Road corridor in Gungahlin. There seems to be massive amounts of activity in both of them, and they don’t have the same trendy appeal (particularly Flemington Road) and location draw as the Inner North and Inner South.
I agree. The “Space” development at Macquarie was heavily marketed and now seems to have fallen over (there are For Sale signs for the land, not the units). The development on the corner of Bindubi St (Mystere) appears to be going ahead, but given that apartments in the complex next door seem to sell slowly, I can’t imagine it would be fully sold.
In Belconnen central and Bruce there are new apartments everywhere, all competing against each other. Despite the fact that Axis isn’t fully sold, the development across the road from Westfield is still going ahead optimistically.
As for the Flemington Rd area, they need to drop $100k to meet their target market (people who can’t afford to live anywhere else). Not only are they competing against each other, but there are also all the rapidly ageing (but larger) villas in Palmerston and Ngunnawal that are fighting for bottom dollar purchasers.
Cobbler, you have it spot regarding the value comparising on an apartment VS a proper hosue just 5-10 mins drive further out from a town centre. But the other question is where are all the apartment buyers expected to come from? How mnay public servants will be leaving canberra the next year or two with tight fed and ACT budgets? How many blow-in tradies will pack up their bags and move back interstate? I dont see the international student market gorwing too much with with the good old high $AUD. We may be able to land a few retirees who want to move to canberra to be close to good health care but this too would only benefit a select few apartments.
I can see sales bumping along for another 6 months but it will really hit the wall after that.
This development has also been “commencement date TBA” for a long time now. And one of the old houses on this bit of land was recently advertised for long-term rental.
http://geocon.com.au/projects/129
Canberra Times article on the stalled Space Macquarie development from a few days ago:
http://canberratimes.domain.com.au/real-estate-news/site-decays-after-apartment-development-delays-20121205-2aucz.html#comments
What about Linq in Belco? That one seems to be going nowhere fast as well.
Heh, should have read the link re: Space first =)
The Linq Apartments in Belconnen is another project that has fallen behind schedule, but Independent Property Group’s sales and marketing director John Minns said the delays were not due to lack of take up.
Mr Minns said the market had “certainly changed” since the project was first launched, but emphasised that lack of interest was not a concern for this development with approximately half of the 248 apartments released in stages 1 and 2 already sold.