THE banks strict lending criteria and difficulties in accessing finance for local developers, has seen offshore developers takeover the Melbourne apartments market, according a residential property expert speaking at the Australian Property Institute/REIV State of the Market.
Speaking at the Australian Property Institute/REIV State of the Market, Charter Keck Cramer’s director of residential projects Sam Nathan said Melbourne would see an injection of approximately 30,000 new apartments over the next two years.
Video interviews from the 2013 Australian Property Institute REIV State of the Market.
- API REIV State of the Market Luke Dixon
- API REIV State of the Market Sam Nathan
- API REIV State of the Market Stephen Andrew
- API REIV State of the Market Richard Bowman
- API REIV State of the Market Alan Oster
- API REIV State of the Market Justine Jacono
However, the figures are not alarming, as Nathan points out that pent up demand has been building up over the last 10 or 15 years. He said that in the period, the city has evolved, earning the status as the most liveable city, coupled population growth and demand for more medium density accommodation. He added that it was only in the early 2000s where investors began to realise the opportunity to participate in the Melbourne apartments market.
Charter Keck Cramer’s figures show in the early 2000s, it took seven years to add 30,000 units to the market, followed by another 30,000 over a six-year period from 2005/2006 to 2011/12. In the next three years, the city will add a further 30,000 units, an extra 50%, taking the total to 111,465 apartments by 2016.
Nathan also pointed out that offshore developers now produce more apartments in the city than local players, due the banks tightening their lending criteria since the global financial crisis.
Charter Keck Cramer’s figures show from 2000 to 2007, offshore developers dropped in thrice. First in 2001 releasing 7% of the total stock and in the following year, accounting for 15% and did not make an appearance again until 2006, where they accounted for 27% of stock. Every other year, they were absent.
And then came the GFC, Australian banks changed their lending criteria and became more conservative whilst foreign financial institutions closed shop and repatriated their funds back to their homeland.
Since 2009 offshore developers have been pushing into the city, accounting for 35% of unit releases in 2009, followed by 22% in 2010, 42% in 2011 and 57% 2012.
However in that eight year window, between 2000 and 2008, the number of units completed pales in comparison to the current numbers. From 2000 to 2008, apartment completions were approximately 3,000 to 5,500 units per annum and peaked at 6,000 in 2005.
Since foreign developers re-entered the market in 2009, completions have risen from 4,000 to 5,500 in 2010, approximately 8,000 in 2011, more than 11,000 in 2012. And over the next two years, it is estimated it will exceed 12,000 per annum.
Property Review
