Sunshine Coast apartments eclipse the Qld capital
If ever there was a place name that best self-promoted its post-COVID lifestyle credentials, it would be hard to go past Sunshine Coast.
Even before the ravages of the pandemic struck the nation, the region 100km north of Brisbane was enjoying the highest interstate migration rates in the country.
From its population growth, low vacancy rates, rising economy and infrastructure spending, the Sunshine Coast is proving to be a region of growing popularity for interstate and offshore investors.
As Sydneysiders contend with unaffordable property prices and Melbournians hunker down with a resurgent wave of COVID-19 infections, the major redevelopments underway on the Sunshine Coast are adding to its interstate allure.
Among the projects driving investment, and the jobs that lure residents and drive up property prices, are an airport expansion delivering more routes nationally and internationally, Australia’s only greenfield city centre in an urban area at Maroochydore, a $1.8 billion tertiary teaching hospital campus, a business, technology and retail precinct adjacent to the University of the Sunshine Coast, and delivery of international broadband submarine cable infrastructure to provide the east coast of Australia with an alternative entry point for its international data connectivity.
Indicative of the strong demand for apartments in the region, Mosaic Property Group’s $41 million First Bay development in Coolum Beach is 90 per cent sold, mainly to local owner-occupiers, ahead of a late 2021 completion date.
Mosaic’s managing director, Brook Monahan, said the Sunshine Coast had been recognised as the country’s best place for capital gain wins for medium to long term investors.
“It has achieved a growth rate well above national averages, of more than 4 per cent over the past 15 years, while in the last decade, the region has grown by more than 7,000 families, leading to an increase in demand for education and health facilities,” Mr Monahan said.
“This growth is largely attributed to interstate migration, likely due to the attraction of the lifestyle and housing affordability.”
With about 30 new apartment developments on the market in the Sunshine Coast, demand is the key to the apartment market. The latest available figures suggest the demand is there.
Of the 1,555 total new apartment supply, only 592 (38 per cent) remained available for sale. The weighted average sale price for the six month period up to April 2020 was $565,374, showing that there is a demand for mid-range apartments.
“There is a serious shortage of, but high demand for, premium quality, low maintenance living options on the Sunshine Coast, as evidenced by the sales success and levels of enquiry we have had across every apartment development we have launched to the region, now numbering five,” Mr Monahan said.
Define Property principal Ross Cattle said the Sunshine Coast was starved of new apartments for many years after the global financial crisis.
“Only over the last couple of years has apartment development been in full swing, and this has placed the Sunshine Coast in a completely different position compared to Brisbane,” Mr Cattle said.
The Brisbane apartment market has appeared to shift from undersupply to oversupply in the space of three months, due to the COVID-19 pandemic that has cut population growth and demand.
“There isn’t a huge supply of apartments on the Sunshine Coast, and for apartment sales it’s an even market at worst and for good apartments it’s still a seller’s market,” Mr Cattle said.
“The Sunshine Coast hasn’t had huge apartment style developments so it’s not suffering a downturn by oversupply, so I would go as far as saying by early next year we will have a gross undersupply.”
Borders and buyers
Queensland Premier Annastacia Palaszczuk announced on July 1 that from July 10, people from interstate could apply for a border pass to Queensland, as long as they haven't been to Victoria in the previous fortnight.
The travel restrictions have limited interstate property sales around the country as prospective buyers are denied the chance of viewing their intended purchase but this could be about to change.
“We have a huge drive from southern states right now, with enquiries coming in from Melbourne, Sydney, Adelaide and Canberra, and we are selling properties via facetime, videos and making sales sight unseen,” said Mr Cattle.
“We also have many interstate buyers we are talking to that want to touch and feel, and these buyers will be here in droves when the borders open.
“My prediction is that the Sunshine Coast will be one of a few places in Australia to boom post COVID -19 lock down.
“People want to be in COVID-free Queensland and they’ll be coming and we don’t have enough new development for them, so all styles of Sunshine Coast property will boom 2021 to 2023.”
Retail rents have suffered as the pandemic dried up business, with declines of around 20 per cent and capital values reflecting these lesser returns.
The expectation from commercial agents was for a busy six months, however, actual transactions were likely to remain low, with agents concentrating on communicating and working with owners, landlords and tenants in preparation for improved market conditions.
With many employees working from home, smaller office tenancies and those in serviced-office environments were the most adversely affected by the lockdown.
The Sunshine Coast has more than 2,700 industrial zoned properties across 870 hectares. Industrial leasing activity has slowed as tenants prove reluctant to commit to new leases, holding off until market conditions become clearer.
The Sunshine Coast Enterprise Corridor, stretching along the coastal strip from the Sunshine Coast airport to Caloundra South, is the key regional location for commercial and residential growth over the next 20 years and home to many of the 31,695 registered businesses.
According to the Sunshine Coast Council, more than 80 per cent of the region’s projected population growth and most new business investment in the high-value industries will be accommodated within this Enterprise Corridor.