According to The Australian Financial Review today, apartment developers from Sydney and Melbourne are heading to Queensland following buyers who have been priced out of the southern cities and want to capture value in Brisbane and the Gold Coast.
Half a dozen developers have purchased more than $100 million worth of development sites in the last few months with close to $1 billion worth of apartments planned.
Last month Sydney-based developer Dyldam, known as the "Meriton of the West" because of its prolific apartment projects in Sydney's west, purchased with the Barakat Group one of Brisbane's best-known pubs, the Chalk Hotel and adjoining land, for more than $25 million. They want to build about 430 apartments.
Melbourne based developer Tim Gurner, who has rapidly risen up the ranks of the BRW Young Rich List, bought two Brisbane riverfront sites for a $170 million apartment development, bringing his workbook in the city to more than $1 billion.
Melbourne-based Kokoda Property has snapped up a major residential development site in Brisbane's Newstead for $19 million and wants to build for 376 apartments across two high-rise towers. While the Melbourne based OpenCorp revealed earlier this month that it had purchased $37 million in development sites and wants to build 777 apartments on them.
CBRE associate director Mike Walsh, who has been selling development sites, said the demand from developers was the result of increased competition in other states but also the demand from investors wanting to take advantage of the value gap between brisbane and southern cities.
"This is a ultimately a by-product of the volume of capital, predominantly from off-shore, which is flowing into their home markets and encouraging a number of interstate developers to assess other markets where profit margins may be more compelling. Naturally, Brisbane has become to destination of choice." Mr Walsh said.
Brisbane was also the only capital city to show a rise in dwelling values over the December quarter of more than 1 per cent up 1.3 per cent, but apartments showed no growth in price over the quarter.
Mr Walsh said that while Sydney and Melbourne remain a core focus for major developers, those who took the time to understand the Brisbane market would see the opportunities arising throughout various precincts.
CBRE associate director Peter Court said some early movers had been successful in the Brisbane market and that was encouraging the southern developers.
"Now that other interstate developers have bought, done well and established themselves in Brisbane, it underpins the confidence for new entrants"
"Based on our current dealings with a number of groups who are yet to buy in Brisbane, we confirm this trend will continue into 2016 and expect a more concerted focus on our market whilst the value proposition remains."
It is not just Brisbane. The Gold Coast is also ramping up with Sydney developer Ralan spending about $70 million buying a site for what will be a $1.4 billion project. Ralan 's managing director William O'Dwyer is convinced that property risks on the Gold Coast are now lower than in Australia's southern capital cities.
He is certainly not the only one with the Sydney-based Winten Property Group, founded by Garry Rothwell, making a call last month to buy a development site at Main Beach on the Gold Coast for $10.3 million with the intention of building a 30-storey apartment tower.
Diversified property group Mirvac also purchased 480 hectares of land at Greenbank within a special government planning area 30 kilometres south of Brisbane city and expects to build up to 3000 new homes there.
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