Between the Lines
Commercial Research
Between the Lines Canberra Multi-Unit Development Sites October 2014
Foreign investor activity has entered the Canberra residential development site arena boosting total sales volumes four times over the long term average. During 2013/2014 foreign investment most notably from Asia has accounted for 35.4% of turnover which represents over 690 dwelling units and setting new benchmarks in value.
While other capital cities have shown strong growth in new apartment prices, recent high supply has ensured median apartment price remain stable keeping domestic developers cautious opening the door to these more bullish investors.
Canberra Residential Multi Unit Development Site Sales Volume Millions
By investor/developer type Like most major cities across Australia, the last 18 months has been a strong year for the purchase of residential multi-unit development sites across Canberra.
$180 $160 $140 $120
$100 $80
$60 $40 $20 $0 2008 2009 Source: Ray White Group *to September 2014
2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014* Domes tic
Foreign
Domestic
Single entities buying multiple sites has caused historically active developers to miss out and become more aggressive in their future purchase
Foreign
Turnover activity peaked in the first half of 2014 which resulted in 22 site sales which totalled $154 million. The next highest level of activity was the second half of 2013 which was less than half this amount of $64 million. The most notable trend which has emerged over this period has been the increased activity by foreign investors which contributed to 35.4% of all sales during this most active 2013/2014 financial year. Gungahlin historically has had the most stable level of investment activity averaging around $15 million per annum. Over the past two years however the emergence of site sales in the Belconnen and Molonglo precincts has grown these investment levels each year while sites across more established precincts of Inner North, Tuggeranong and Woden have boosted up these turnover levels more recently.
Canberra Residential Multi Unit Development Site Sales Turnover By anticipated unit yield and region While supply and demand fundamentals have remained reasonably balanced across Canberra, the release and sale of land by the Lands Development Agency over the past 18 months will increase development and residential supply for the city. The $218 million which changed hands
2,500 2,000 1,500 1,000 500
0 2008 2009 G ungahlin
1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014*
B elconnen
Molonglo
Inner S outh
Inner North
Tuggernanong
Woden
Source: Ray White Group
over the 2013/2014 financial year has translated to an anticipated addition of 3,400 units which is in excess of the anticipated dwelling units required to meet the forecast annual housing demand. The two largest buyers of Canberra developments sites during this time have secured land with an ability to develop approximately 1,300 units. It is expected these developers will stage the release of units match market demand.
*to September 2014
Canberra Residential Multi Unit Average Value Per Unit Site By Investor/Developer Type $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 2009
1H 2010
Source: Ray White Group
2H 2010
1H 2011
2H 2011
1H 2012
2H 2012
1H 2013
2H 2013
1H 2H 2014 2014*
Domestic
Foreign
*to September 2014
On a per site basis the values which have been achieved across development sites has varied over the past five years. Depending on size, quality and location, the average value per site has ranged between $25,000 to as high as $195,000 with the most recent periods showcasing this wide variance.
Domestic developers over the past few years have averaged around $50,000 per unit site with Gungahlin and Molonglo averaging around $45,000, Belconnen slightly higher between $50,000 and $70,000 per unit site, with more established precincts such as Inner South and Inner North ranging up to $100,000 more recently. The most outstanding trend which has emerged over this last couple of years is the premium in which foreign investors are willing pay compared to domestic developers and long term averages. Investment in the first half of 2014 by Celestial Development Group has averaged over $120,000 per unit site across the five properties purchased with a total of 528 units, while another large sale by Oriental Companion Property in late 2013 averaged just short of $100,000, well above the local average. Given the volume of supply and limited growth in median prices across most of Canberra, this continued growth in site values is not expected to continue particularly if the market does enter an oversupply situation.
Research
Know_How
Research
Ray White Commercial Canberra
Vanessa Rader
Andrew Smith
Doug O’Mara
Head of Research
Director
Director
T (02) 9249 3724 M 0432 652 115 E [email protected]
T (02) 6285 0349 M 0409 600 471 E [email protected]
T (02) 6285 3334 M 0412 485 181 E [email protected]
raywhitecommercial.com
Between the Lines Canberra Multi-Unit Development Sites October 2014
Foreign investor activity has entered the Canberra residential development site arena boosting total sales volumes four times over the long term average. During 2013/2014 foreign investment most notably from Asia has accounted for 35.4% of turnover which represents over 690 dwelling units and setting new benchmarks in value.
While other capital cities have shown strong growth in new apartment prices, recent high supply has ensured median apartment price remain stable keeping domestic developers cautious opening the door to these more bullish investors.
Canberra Residential Multi Unit Development Site Sales Volume Millions
By investor/developer type Like most major cities across Australia, the last 18 months has been a strong year for the purchase of residential multi-unit development sites across Canberra.
$180 $160 $140 $120
$100 $80
$60 $40 $20 $0 2008 2009 Source: Ray White Group *to September 2014
2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014* Domes tic
Foreign
Domestic
Single entities buying multiple sites has caused historically active developers to miss out and become more aggressive in their future purchase
Foreign
Turnover activity peaked in the first half of 2014 which resulted in 22 site sales which totalled $154 million. The next highest level of activity was the second half of 2013 which was less than half this amount of $64 million. The most notable trend which has emerged over this period has been the increased activity by foreign investors which contributed to 35.4% of all sales during this most active 2013/2014 financial year. Gungahlin historically has had the most stable level of investment activity averaging around $15 million per annum. Over the past two years however the emergence of site sales in the Belconnen and Molonglo precincts has grown these investment levels each year while sites across more established precincts of Inner North, Tuggeranong and Woden have boosted up these turnover levels more recently.
Canberra Residential Multi Unit Development Site Sales Turnover By anticipated unit yield and region While supply and demand fundamentals have remained reasonably balanced across Canberra, the release and sale of land by the Lands Development Agency over the past 18 months will increase development and residential supply for the city. The $218 million which changed hands
2,500 2,000 1,500 1,000 500
0 2008 2009 G ungahlin
1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014*
B elconnen
Molonglo
Inner S outh
Inner North
Tuggernanong
Woden
Source: Ray White Group
over the 2013/2014 financial year has translated to an anticipated addition of 3,400 units which is in excess of the anticipated dwelling units required to meet the forecast annual housing demand. The two largest buyers of Canberra developments sites during this time have secured land with an ability to develop approximately 1,300 units. It is expected these developers will stage the release of units match market demand.
*to September 2014
Canberra Residential Multi Unit Average Value Per Unit Site By Investor/Developer Type $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 2009
1H 2010
Source: Ray White Group
2H 2010
1H 2011
2H 2011
1H 2012
2H 2012
1H 2013
2H 2013
1H 2H 2014 2014*
Domestic
Foreign
*to September 2014
On a per site basis the values which have been achieved across development sites has varied over the past five years. Depending on size, quality and location, the average value per site has ranged between $25,000 to as high as $195,000 with the most recent periods showcasing this wide variance.
Domestic developers over the past few years have averaged around $50,000 per unit site with Gungahlin and Molonglo averaging around $45,000, Belconnen slightly higher between $50,000 and $70,000 per unit site, with more established precincts such as Inner South and Inner North ranging up to $100,000 more recently. The most outstanding trend which has emerged over this last couple of years is the premium in which foreign investors are willing pay compared to domestic developers and long term averages. Investment in the first half of 2014 by Celestial Development Group has averaged over $120,000 per unit site across the five properties purchased with a total of 528 units, while another large sale by Oriental Companion Property in late 2013 averaged just short of $100,000, well above the local average. Given the volume of supply and limited growth in median prices across most of Canberra, this continued growth in site values is not expected to continue particularly if the market does enter an oversupply situation.
Research
Know_How
Research
Ray White Commercial Canberra
Vanessa Rader
Andrew Smith
Doug O’Mara
Head of Research
Director
Director
T (02) 9249 3724 M 0432 652 115 E [email protected]
T (02) 6285 0349 M 0409 600 471 E [email protected]
T (02) 6285 3334 M 0412 485 181 E [email protected]
raywhitecommercial.com
