The new winning formula for Gold Coast apartments
Smaller projects, bigger apartments and higher prices. That’s the new recipe for success followed by apartment developers on the Gold Coast, where sales have started 2021 even stronger than they finished 2020.
There were 375 apartments that sold on the Gold Coast in October-December – the best result since 2016, the latest Apartment Essentials report from planning consultancy Urbis shows.
Momentum has accelerated post-Christmas with developers reporting that some luxury projects launched in December are almost sold out despite premium pricing.
A major reason is that downsizing owner-occupiers have displaced investors as the primary purchasers, a trend reflected in the increased development of larger apartments with more bedrooms.
Owner-occupiers accounted for 54 per cent of sales in the final quarter of last year, more than double the previous year’s figure of 25.1 per cent, said Urbis director of planning Matthew Schneider.
“Owner-occupiers are definitely a real market force and that’s become very, very apparent in the design and delivery of apartment stock,” he said.
Three-bedroom apartments accounted for 32 per cent of sales in the fourth quarter of calendar 2020 compared with 13 per cent in the same three months in 2018, Mr Schneider said.
Only two apartments remain at The Monroe, a nine level development of 33 units at Palm Beach, which began marketing in mid-December, said Todd Matheson, associate director at KM Sales & Marketing.
Farther south at Coolangatta on the NSW border, Mr Matheson said holding deposits had been taken on all but five of the 21 oversized apartments at Rockpool since Christmas, with prices starting at $2.75 million.
Both projects reflect the consumer shift to smaller projects, which Urbis said had decreased from an average of 91 to 67 units per project over the past two years, and bigger, better appointed apartments.
“It’s really significant and very different to what we saw pre-GFC when we saw a much smaller number of much larger projects such as Soul, Q1 and Oracle.”
These developments were all skyscrapers. Q1 was developed in the heart of Surfers Paradise by Sunland and topped out at 78 levels when completed in 2005.
The Oracle in Broadbeach – two towers of 40 and 50 levels – was completed in 2010 and soon after was placed into receivership. Soul, the second-tallest at 77 levels, was also dogged by controversy, going into receivership in late October 2012.
“They were all projects with hundreds of apartments being constructed over multiple economic cycles,” Mr Schneider said.
Developers were now focusing on developments of between 10 and 15 levels, he said.
The average price per apartment reached $972,000 in late 2020, compared with $785,000 in 2019, $751,000 in 2018 and $698,000 in 2017, Urbis data shows.
“We are now seeing a much more sustainable approach and these smaller projects really resonate with the market,” he said.
“The feedback we get is that it’s much easier for good quality developments in good locations to get finance.
“It really gets down to less risk in terms of pre-sales, execution and the time it takes to build.”
He said interstate migration from Victoria, in particular, and also NSW was expected to be the main growth driver in the next few years.
Apartment supply, meantime, is now at historically low levels with present stock levels set to be absorbed by the end of winter.
The southern Gold Coast has the lowest supply levels “but with several projects expected to launch over the next six months this will be alleviated somewhat.”