Liam Proberts, Managing Director of Brisbane-based bureau^proberts, has over 20 years’ experience designing award-winning multi-residential and mixed-use developments in Australian and international markets.
Liam shares his top five tips for creating successful development projects in Brisbane.
1. Know Your Neighbourhood
Brisbane has one major city plan made up of lots of smaller neighbourhood plans that encourage developers to respond to the character of a specific city area. This allows government to influence the overarching character of Brisbane in a meaningful way by providing specific incentives to developers. This is of real benefit to developers because it helps them build projects that are more attractive to the market and maximise yield, while at the same time making a significant contribution to the urban fabric of Brisbane.
2. Respond To Trends
The Brisbane market changes quickly, especially when demand for real estate is high. What the market wants changes almost monthly and developers need to be responsive to this. This means keeping a constant eye on the market by being across social trends. Successful developers are ready to commit to a project as soon as they see an opportunity but are also flexible enough to adapt if the market changes suddenly — for example, from three bedroom apartments to one bedroom studios. Developers need an experienced team that can alter the design just as quickly, and who has strong relationships with local authorities to fast track any planning issues through the system.
Urbanisation is a key trend that has led to more diversity in city populations and is therefore driving the need for more diverse urban housing options. Student housing, aged care developments and single person residences are all big trends in Brisbane now— we’re currently working on a number of owner/occupier single-bed houses, along with single-floor apartments as an alternative to a home. Developers who take into account current social trends are able to create more successful projects because they are directly meeting the needs of the market.
3. Develop Diversity
I believe that development has the greatest influence on how we will live in and enjoy our cities in the future. The quality and variety of developments shapes the character of the city, as well as being of value to the developer because it makes projects more marketable. In the last 18 months there has been a massive boom in the building of compact and affordable apartments in Brisbane, which reflects the rising awareness that you can live comfortably in apartments in a sub-tropical city.
As this awareness grows, so too the design of these smaller dwellings is changing and becoming more diverse in response to the greater demand. We need to look at how to encourage diverse projects that can be commercially successful and create a positive experience for the people who live and work in them.
4. Learn From Other Cities
In Sydney and Melbourne you tend to get ‘champions’ of particular areas in development and I believe there is a lot we can learn from these larger Australian cities. For example, the City of Sydney has its own authority to manage development. Brisbane’s cultural centres of the CBD, Fortitude Valley and South Brisbane would benefit from more incentives for high quality design developments and a special body to promote this could strongly influence the cultural heart of the city in a positive way. Developers can play a role by being advocates for high-quality projects that work for both their bottom line as well the overall character of the city, and by working with local governments to best improve Brisbane going forward.
5. Create A Point Of Difference
We should all strive to be adventurous in finding solutions that exceed client expectations and provide outcomes that make a really positive contribution to the city. bureau^proberts achieved that with M&A in Fortitude Valley. We worked with the local Council on the pedestrian laneway that runs through it and we created a retail and residential mix that has significantly contributed to the area and really livened up that corner of the Valley.
Another point of difference we try to promote in our work is bringing in specialists to help with a project, including working with artists. While the types of residences people require have changed, a desire for a strong sense of identity to place has not. Using integrated art in our building concepts we create developments that are individual and distinguishable, meeting the needs of both the end user and the developer.
How good an investment is south-east Queensland
Why do we believe we’ll see increasing investor interest in this market? Strong population growth, a diversified and growing economy, and substantial investment in infrastructure should combine to boost demand.
We expect that these factors will swell the number of white-collar jobs – increasing demand for office space, which in turn will push down vacancy rates and raise rental incomes. This should be good news for office property investors – especially those like Centuria Metropolitan REIT (CMA) that are already well-positioned in the market.
A significant and growing population
South East Queensland (SEQ) stretches from the Gold Coast up to the Sunshine Coast and across to Toowoomba in the west. As Australia’s third-largest population zone, the region has been growing significantly, particularly Brisbane and the Gold Coast. Interstate migration figures show a pattern of steady net migration, with Queensland the only Australian state with consistent net inflows of people from other states. In the five years prior to the 2016 Census, over 220,000 people moved to the Sunshine State – mainly to SEQ where nearly 90% of population growth occurred. This is important for property investors because of its implications for demand, but the trend is interconnected with other favourable factors.
A diversified economy poised for growth
Queensland’s economy is diversified across a range of industries including agriculture, resources, construction, tourism, manufacturing, and services. Over the past two decades, its economic growth has consistently exceeded the national average – and in our view this is likely to continue.
The resources sector is gaining momentum, and a significant pipeline of major infrastructure and development projects is helping propel economic and jobs growth, in turn increasing interstate migration and driving demand for both residential and commercial property.
Investment in infrastructure
A strong infrastructure program delivers more than business and consumer amenity – it generates jobs, drives investment, and facilitates population growth. The pipeline of infrastructure and development projects announced in the past few years is likely to have a material impact on the region – substantially improving its accessibility and amenity – most notably, Brisbane’s Queen’s Wharf precinct and the Cross River Rail.
Queen’s Wharf, touted as a “world-class entertainment precinct”, is an integrated resort development costing $3.6 billion and covering over 26 hectares with retail, dining, hotel and entertainment spaces. As Queensland’s biggest ever tourism project it will be a game-changer for Brisbane, attracting overseas as well as local visitors. Estimated to contribute $1.69 billion annually to the economy, it will employ more than 2,000 people during construction and an estimated 10,000 once operational.
The Queensland Government’s number one infrastructure project, the $5.4 billion Cross River Rail, comprises a new 10.2km rail line between Dutton Park and Bowen Hills, which includes a 5.9km tunnel under the Brisbane River and CBD. It’s the first major rail infrastructure investment in the inner city since 1986 and is set to generate urban renewal, economic development and the revitalisation of inner-city precincts.
Outlook for commercial office property investment
These factors indicate a region poised for growth – and for growing commercial property demand. CMA’s portfolio has a significant exposure to the area in general (six SEQ assets with a combined book value of over $480 million), with many of the individual assets located in those parts of Brisbane set to benefit most from these developments.
Our view is that Brisbane office markets, where five of CMA’s assets sit, are continuing to improve, with vacancies hitting a five-year low – indicating increasing tenant demand – and continued yield compression, demonstrating strong investment demand. Office sales hit the highest level in a decade during 2018 (at $2.35 billion), increasing 60% from 2017.
With the strong outlook for SEQ, we expect the region will continue to attract tenants and investors alike.
Queensland’s 100,000-property public housing shortfall revealed
Queensland has a severe shortage of social and affordable housing, an issue that is projected to get worse by 2036 according to new research.
More than 102,000 additional social houses are currently needed across the state, and 54,700 affordable houses are also needed with nearly 13 per cent of Queenslanders spending more than 30 per cent of their income on rent.
By 2036, Queensland is projected to need 254,300 more social and affordable houses – the second-highest unmet need behind NSW, the report found.
The new figures come from a UNSW City Futures Research Centre report on social housing shortfall across Australia.
Regional social housing shortfalls are higher than in Brisbane, the data shows, but Brisbane residents are slightly more likely to be spending more of their income on rent.
Housing Minister Mick de Brenni said housing affordability was a “big issue” for Queensland.
“Through the Palaszczuk government’s $1.8 billion Queensland Housing Strategy, Labor is driving key reforms and targeted investment across the housing continuum,” he said.
“The Strategy commits us to build more than 1000 affordable homes for Queenslanders, as well as a further 4522 new social homes to help ensure everyone has a safe, secure and stable place to live.”
Lead researcher Laurence Troy said 22.5 per cent of Australia’s entire housing growth must go to social housing to meet demand into the future.
“Our analysis shows that the sheer number of households in rental stress across the country means that if we’re going to meet the need, at least 12 per cent of all our housing by 2036 will need to be social and affordable housing – which is a very reasonable ambition in global terms,” Mr Troy said.
“To cover the backlog of unmet need and future need in Australia two in 10 new homes will need to be for social housing over the next 20 years, and a further one in ten for below-market affordable rental housing.”
Mr Troy said the research’s financial modelling found the “best and cheapest way” for governments to meet the need for social housing was to fund it through upfront grants and low-interest government financing.
“Delivering below market rental housing through the not-for-profit sector, as opposed to the private equity model, will save $3 billion a year by removing developer mark-ups and shareholder returns,” he said.
The financial modelling was commissioned by the NSW community housing sector.
Mr de Brenni said the state government was “listening” through its recent public consultation on rental reform and was committed to investing in affordable housing in partnership with community housing, to provide more subsidied homes for low income earners.
“We heard Queenslanders are struggling to afford rental properties in the suburbs close to where they work,” he said.
“Through our Build-to-Rent pilot project, we are seeking to work with the private sector to increase the number of long-term, affordable rental properties for low to moderate income earners, including key workers in health, early childhood and hospitality.
“Internationally, the Build-to-Rent model is delivering fantastic outcomes and facilities for tenants and we’re looking to see what the market is open to delivering here.
“The pilot, if it proceeds, will see $70 million invested towards delivery of hundreds of affordable rental properties for key workers in inner-city areas where affordability has been identified.”
Mr de Brenni said the registrations of interest for that pilot had seen strong market interest, and the department was considering the responses before calling for expressions of interest.
Treasury: Negative Gearing Reforms Will Have ‘Little to No Effect’ on House Prices
Federal Treasury has delivered a serious rebuke to the Coalition for exaggerating the impact of Labor’s negative gearing and capital gains changes.
In emails released under freedom of information, acting treasurer Kelly O’Dwyer requested the department fact check the Coalition’s claims that Labor’s policies would cause house prices to fall.
In response, Treasury issued a correction: “The [s]tatement is not consistent with our advice.”
“We did not say that the proposed policies ‘will’ reduce house prices,” the email reads.
“We said that they ‘could’ put downward pressure on house prices in the short-term depending on what else was going on in the market at the time.
“But in the long-term they were unlikely to have much impact.”
Labor has jumped on the release, with shadow treasurer Chris Bowen saying that the government had been “caught red-handed” misrepresenting Treasury’s advice.
For his part, treasurer Josh Frydenberg denied that the government was misrepresenting Treasury, pointing to the Financial Review’s take on the release that changes “could” put downward pressure on house prices in the short term.
Frydenberg quoted building industry group the Masters Builders Association figures.
“If Labor’s policy is in place you’ll see 32,000 fewer jobs and 42,000 fewer homes being built.”
House prices hit spending
It has been a difficult week in economic policy, with GDP figures released on Wednesday revealing that the economy has slowed significantly, entering a “per capita recession” for the first time in 13 years.
Retail trade figures for the March quarter were also sluggish, with falling house prices impacting wealth and spending.
RBA governor Philip Lowe highlighted the link between the two at the AFR annual business summit on Wednesday.
“The evidence is that a tightening in credit supply has contributed to the slowdown in credit growth,” Lowe said.
“The main story, though, is one of reduced demand for credit, rather than reduced supply.
“When housing prices are falling, investors are less likely to enter the market and to borrow. So too are owner-occupiers for a while.”