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THERE is strong demand to rent new apartments in Brisbane’s inner-city despite oversupply fears, with tenants even willing to pay more for premium product, a new survey has found.
Urbis has released a snapshot of the city’s apartment market, which also found that while sales of new apartments have dropped, supply coming to market is low and is not expected to increase in the short term.
It reveals rental vacancy rates in inner Brisbane are “very low” at 0 to 1.2 per cent and that take-up of new apartment rentals within 5km of the CBD is solid, with projects generally renting up within two to four months.
Urbis surveyed the building managers of 16 new apartment projects in Brisbane’s inner, middle and outer rings to get an ‘at the coalface’ view of the market.
Urbis property economics and research director Paul Riga said the survey results reflected confidence that there was enough demand to absorb the supply of new apartment stock.
“What it’s showing to us is there is a premium level of demand being placed on these new projects,” Mr Riga said.
“(People) want to be in them and they’re willing to pay, in a number of cases, higher rent than in the more established market to be in something that’s new or has good communal amenity.”
Mr Riga said 10 to 12 apartments a week were being rented out in each of the projects included in the survey in inner Brisbane.
“We’re confident this absorption will continue over the next 12 to 18 months,” Mr Riga said.
Inner Brisbane building managers reported that rental inquiry from interstate had almost doubled in the past 12 months.
Only three residential projects comprising 146 apartments were launched in the first quarter of 2018, according to Urbis.
Another eight projects totalling 1318 apartments are expected to launch in the second half of this year.
Apartment completion numbers are set to decline after this year, dropping from 5500 in 2018 to 2200 in 2019 and 2000 by the end of 2020, based on projects currently under construction or in presales.
“While figures are quite low for new apartment transactions, if you add on the resale level of demand, it hasn’t really moved over the last 12 months,” Mr Riga said.
“Those projects coming to market are smaller, more boutique and lower risk. Because of that, completions of projects are going to continue to decline.”
Mr Riga said many developers had realised the need to tailor their product to a specific demographic and their desires.
The survey found tenants looking to rent new apartments in the inner-city prioritised size, external amenities and proximity to employment.
Of the projects surveyed, more than 70 per cent were rented, as opposed to owner-occupied, but sales of new apartments to owner-occupiers almost doubled in the past two years.
Demand to rent new apartments is also evident in Brisbane’s middle and outer rings, where the vacancy rate was 0 to 0.9 per cent and around 0 per cent, respectively, according to Urbis’ survey.
Mr Riga said it was surprising to find a spread of age groups renting apartments in the middle ring.
“That shows that apartment product in that middle ring isn’t something that’s just a Gen Y/young couple targeted product,” he said.
“I think it does show apartment living is becoming less of a dirty word in the middle ring.”
NEW APARTMENT PROJECT PIPELINE INNER BRISBANE
March quarter 2018
Three new projects launched, totalling 146 apartments:
1. 186 Lutwyche Road, Lutwyche
2. Ari - Stones Corner
3. Hanlan Park Residences, Greenslopes
June quarter to December quarter 2018
Eight projects pending launch (when all contracts are unconditional), totalling 1,318 apartments:
1. Eagle Farm - Tulloch House, Ascot
2. Le Bain, Newstead
3. One Bulimba, Bulimba
4. Silk 1, Woolloongabba
5. Tenor, Newstead
6. The Coterie, Fortitude Valley
7. The Domain, Kangaroo Point
8. The Standard, South Brisbane
Inner Brisbane indicative apartment completions
Originally published as Renters absorbing unit oversupply.