Melbourne apartment completions strong as Sydney stalls and Brisbane grows

Charter's Rob Papaleo, Director of Strategic Research, was mentioned in an Australian Financial Review piece by Michael Bleby. See below for an exert from the article.
Almost half of all new apartments built over the next five years will be in Melbourne, mainly because planning and other bottlenecks are holding up growth in Sydney.
Independent consultancy firm Charter Keck Cramer estimates 42,220 apartments will be built in Melbourne from 2015 to 2019, which will be 45 per cent of the national total. The figures exclude serviced apartments or full-time student accommodation.
This is a smaller share of the national pie than the 48 per cent of the total Melbourne accounted for between 2010 and 2014. But with sales accelerating in all regions of the city and not just the CBD, Melbourne’s apartment boom shows no sign of running out of steam,said Robert Papaleo, the firm’s national director of research.
“Melbourne surprised on the upside in part because of the very significant impact of a few major projects by offshore developers in the central city region as well as peak releases in all other regions,” Mr Papaleo said.
With four-plus storey apartments accounting for just 10.2 per cent of total dwelling stock in Sydney, 3.3 per cent in Melbourne and 2.9 per cent in Brisbane, Australia’s apartment markets are immature compared to cities like Vancouver, where the figure is closer to 15 per cent, and Toronto, which is closer to 30 per cent.
The construction industry is benefiting from the boom, which has sustained activity at a time when other sectors are weak. Commercial builder L.U. Simon’s apartment starts more than doubled in the year to June to 1179 from 525. With more than three months still to go this financial year it has already made 953 starts, managing director Peter Devitt said this week.
“We’ve been tarred with the brush of ‘residential specialist’, which I don’t like,” Mr Devitt said. “I prefer office buildings and schools –they’re easier to build –but you’ve got to fish where the fish are.”
Sydney, despite a well-documented resurgence in growth, will tread water, with its 35 per cent share of apartment completions –2250 in the past five years –slipping to 34 per cent, or 31,850 dwellings in the next five, CKC forecasts.
The NSW capital took a dip last year, when sales of new apartments fell,held back by constraints such as land release, height controls and lack of capacity in the industry to facilitate faster development. Separate figures measuring new apartment releases –a proxy measure for sales in a booming market –show Sydney sales fell to 14,798 last year from 18,496 in 2013. Melbourne new releases, in contrast jumped to 20,945 from 12161. Brisbane nearly doubled to 8287 from 4263.
“Sydney was held back by a number of factors amongst others including the availability of permitted sites for sale through 2012-2013 to reload the future supply pipeline, height controls and other guidelines that limited the yield achievable across sites as well as capacity constraints in the professional services needed to facilitate development,” Mr Papaleo said.
Brisbane is likely to show big growth. The Queensland capital, which completed 8100 apartments, or 9 per cent of the national total in the five years to 2014, will boost that to 13,050, or 14 per cent of the total in the next five, CKC says.

 

To read more, please visit Australian Financial Review by following the link: http://www.afr.com/p/national/charter_grows_cramer_melbourne_apartment_Bm96FvJMnfC9tPRtzwM0SI