Queensland’s net migration has more than doubled over the past two years with migrants from interstate and abroad continuing to find the Sunshine State an attractive place to call home. The state led the country in terms of new jobs created in 2017 and Brisbane’s appealing subtropical climate, coupled with the diversity and strength of its rapidly expanding economy, has created a unique city environment which requires exceptional accommodation options to complement it.
According to CBRE managing director Paul Barratt, “It’s the only major Australian city that can accommodate a genuine subtropical Asia-Pacific flavour,” and, “with the new casino precinct and the weather, and a diverse economy, Brisbane has a lot going for it.” This is clearly evident in the Queen’s Wharf $3bn development which includes a new casino, five luxury hotels and 50 restaurants which will create thousands of jobs, as it is in Place Advisory’s luxury sales property report that shows 25 $3m-plus apartments were sold in Brisbane last financial year.
While Brisbane’s apartment oversupply has seen investment units fall out of favour with buyers, its luxury property market has never been stronger, with high-end apartment prices skyrocketing 9 percent over the previous year compared to a 4.5 percent decline in investment unit prices over the same period. The decline in the low to mid-range is expected to correct itself over the following 18-24 months as construction slows down and vacant rental apartments fill, but what’s really exciting is the reclamation of the city centre and riverside suburbs’ prestige status with the success of several high-end luxury developments, including London Residences in West End.
“There are always exceptions in a downturn, particularly at the top end of the market. Boutique blocks like the London Residences at West End are selling to cashed-up buyers who have sold up in the suburbs.” ABC News
An influx of downsizers who’ve sold up in the suburbs and have their sights firmly set on luxury inner-city residences is helping to push this trend towards luxury developments, as is the arrival of thousands of wealthy interstate and international migrants. However, experts like Barratt believe it’s the scarcity of — and subsequent demand for — premium build boutique blocks with high land-to-building ratios that’s really driving strong growth in the luxury growth market and will lead to “postcodes 4000 and 4001” becoming “the residential precinct for the future of the city.”
Cheaper units in large developments have a lower appreciation ratio in relation to purchase price compared to high-end luxury developments, due not only to the tendency towards market oversupply, but also because of the significant difference in the land-to-building component. For instance, when 26 high-end units are built, the average unit value appreciates more rapidly than the average value of 50 or 100 units built on land of equal value because the land-to-asset ratio of the luxury unit is much higher. That means the value of a high-end unit like London Residences, one of the notable exceptions to the city’s unit price downturn, appreciates much faster than mid-range apartments in large-scale residential developments in the same area.
Potential capital gains, combined with notable differences in floorspace, features and facilities that deliver an attractive inner-city lifestyle, make luxury residences an appealing investment in both the present and the future for wealthy owner-occupiers. Says Place director, Sarah Hackett, high-end property buyers looking for a boutique apartment to call home “know the good fittings and the costs involved, they want that point of difference, whether it is the outdoor area key to the Queensland lifestyle or a garden.” And, it suffices to say, they want to know the value of their property will continue to see strong growth into the future.