Residential Development Booms Amidst Forecasts Housing Market Set To Rebound

Posted on 07/10/2013

Property mogul Harry Triguboff has put his money where his mouth is, buoying up his claims that the housing market is set to rebound by forging what is a landmark deal for his company, the Meriton group, The Australian recently reported. This move comes amongst reports by industry experts that the housing market will rebound.

Triguboff recently bought the British American Tobacco site in Pagewood, close to Eastgardens shopping centre in Sydney’s southeast, for $142 million, with plans to develop a complex of 2000 apartments in a series of four fourteen-storey buildings, plus shops, a large childcare centre, and possibly student accommodation. “It is a huge site even by our standards, the biggest we have ever tackled, and a big site even by world standards,” Triguboff said.

Low interest rates and bridled demand seem to be the impetus for a wave of developers seeking top sites in and around the city. Triguboff backs this, saying, “ I’m very bullish [on the Sydney apartment market] … because of the low interest rates and growth in investors.” Meriton has purchased seven sites already this year, for a total sum of nearly $400 million, which will eventually be home to 5000 apartments.

This seems to be a wise move, with NSW experiencing more demand for housing than supply. Indeed, approximately 48,000 more residential dwellings are needed to cope with demand. Economic forecaster BIS Shrapnel has stated in its spring report that residential construction projects will further multiply next year, leading to a yet bigger rebound in the sector. It forecasts that residential development will rise by 12 per cent to 43,350.

Meriton apartments

As the result of a substantial deficit in residential accommodation, low interest rates and a surge in investors, large developers have been fighting to get their hands on prime unit sites. Earlier in the year Chinese developers the Greenland Group paid $107 million for a site on Bathurst Street in Sydney’s CBD, on which they plan to build the city’s tallest apartment building. Meriton has also bought a plot in Mascot for $100 million, with plans to construct 1261 apartments, and the Bridgehill Group has forked out $82.5 million for a site in Zetland which will house 780 apartments in a complex that will cost them over $500 million. It seems developers are itching to buy large sites on which to build integrated complexes that will establish new communities for hundreds of residents.

Despite the current imbalance between supply and demand in NSW’s residential housing market, Triguboff believes “there is no bubble on the horizon,” describing the notion as “nonsense.” He does however believe that the new Coalition government should do more to support the housing market, such as relaxing the regulations around self-managed superannuation funds’ purchase of residential property and considering making the interest paid by homeowners tax-deductible, as is the case in the US. In the meantime, developers such as Meriton will forge ahead, ensuring there is constant growth in the residential building industry to support demand.

By George B (follow me on Google)