Companies
including Hong Kong-based Far East Consortium International Ltd., Beijing-based Sino-Ocean Land Holdings Ltd. and
Singapore ’s Aspial Corp. have flocked to build high-rises in Melbourne as lifestyles
change and Chinese demand climbs. Twenty-three buildings taller than 200 meters
(656 feet) are being planned or built, the most on record, according to Urban Melbourne, a website that tracks developments in the
city.
“The level of
building is unprecedented,” said Cameron Kusher, Brisbane-based senior research
analyst at property information provider RP Data Pty. “The supply has been sufficient over
recent years, and that could turn very quickly into an oversupply.”
Overseas
developers are responding to a shift away from the great Australian dream of a
suburban life centered around backyards and swimming pools. They’re also
reacting to ever-increasing demand for new, centrally located apartments from
Chinese buyers seeking to escape their own faltering housing market and improve
their quality of life.
About 91,000 apartments in almost 530
projects are in planning or construction across all of Melbourne , according to Urban Melbourne data. Approvals for dwellings
excluding houses jumped 66% in August from a year earlier in the greater
Melbourne area,
data from the statistics bureau showed.
Only six towers
higher than 200 meters have been built since 1986, Urban Melbourne data show.
Convenience,
reducing commuting times and a desire to be near city centers are driving a
high-rise boom akin to Hong Kong and Singapore, where residential projects
include communal swimming pools, barbecues, roomy foyers, theaters and
entertainment rooms.
Deborah
Flanagan, a 57-year-old school teacher, is a recent convert to high-rise
dwelling. The life-long country resident and her partner are buying their
second apartment in two years on the 60th floor of the 63-story Eq. Tower in
Melbourne .
“You’ve got so much that’s
accessible and close, and the unit will have magnificent views,” said Flanagan,
whose three-bedroom apartment is set to be completed in 2017. “As mortality
looms, we want a taste of living.”
Melbourne-based ICD Property is
developing Eq. Tower
in partnership with Chinese developer Sino Ocean .
Closely held ICD was founded by Michael Mai, the son of Mai Boliang, executive
director of Hong Kong-listed China International Marine Containers Group Co.
While some developers are concerned demand won’t meet the rising supply, Melbourne’s population and home-price growth, and its ranking as the world’s most-livable city for four years running by the Economist Intelligence Unit, are proving irresistible for many, according to Matthew Khoo, development manager for ICD.
While some developers are concerned demand won’t meet the rising supply, Melbourne’s population and home-price growth, and its ranking as the world’s most-livable city for four years running by the Economist Intelligence Unit, are proving irresistible for many, according to Matthew Khoo, development manager for ICD.
The city’s
population could grow to 7.7 million by 2051 from 4.4 million now, according to
estimates from Plan Melbourne, which sets out a blueprint for the city until
2050.
“Banks require that
developers have a certain number of pre-sales, and that can happen only if
there’s appetite,” Khoo said, adding that all 634 units at Eq. Tower
have been pre-sold. “We were concerned demand wouldn’t meet supply, but it has
been stronger than we anticipated.”
The average price of a two-bedroom apartment at Eq. Tower
is A$540,000, according to ICD.
Apartment
values in Melbourne
rose 5.2% over the 12 months through September, according to the RP Data CoreLogic
home value index.
“In a country
like Australia ,
people are historically not used to going up,” said Chris Hoong, Hong
Kong-based managing director at Far East Consortium.
“But when housing moves further and further away from the city, when you have
to travel an hour, that’s when city living has its appeal.”
Far East, one
of the earliest developers to introduce “Hong Kong-style” high-rises in Australia , is planning a four-tower complex in Melbourne ’s center with
about 3,000 apartments. The project, with its largest building expected to be
more than 300 meters tall, is located across from the company’s other A$1
billion four-skyscraper Upper West Side that’s now under construction.
The average
price of an apartment at Far East ’s
development is about A$9,500 per square meter, according to the company.
“There are more Asian developers now
who have quite a lot of experience developing skyscrapers, more than many of
the local developers,” said Louis Christopher, managing director of Sydney-based
SQM Research Pty. Many of them are building apartments in Australia to satisfy growing demand
from foreign buyers, he said.
Australia
is the No. 1 destination for Chinese seeking to emigrate after Canada, which in February implemented restrictions on foreign
investment and immigration, according to a report by CLSA Asia-Pacific Markets.
Chinese were the biggest investors in
Australian residential and commercial property in the year through June 2013, according to the latest figures from
the Foreign Investment Review Board.
Foreign buyers accounted for a quarter
of demand for new homes and 11.5% of existing homes in Victoria in the three
months to Sept. 30, the highest among all states, National Australia Bank Ltd. said in
an Oct. 15 report. It did not break down demand by nationality.
Among other planned projects is Australia 108 in
Melbourne ’s
center. The project, being developed by Aspial, is set to become the first
100-plus-story building in the Southern Hemisphere, according to a Victorian
state government statement in June. The tower, at 319 meters, will include
1,105 units.
The state government also approved a
75-story tower with 622 apartments, being developed by Melbourne-based Golden Age
Group (Note by The Folks @SG PropTalk: project name is Victoria One, designed by Elenberg Fraser architects. We also found a video presentation of the project) . In addition to traditional amenities including pools and gyms that many
apartment buildings have, extra features include poker rooms and guest lounges
to help attract buyers, Golden Age founder Jeff Xu said.
“The house on a
quarter-acre block is losing relevance today,” Xu said in an e-mail.
The government
of Victoria , of which Melbourne is the capital, estimates about 1.6
million additional homes would be needed to accommodate the city’s population
growth, with apartments and townhouses making up two-thirds of these, according
to Plan Melbourne.
The state
government’s goal of higher density, which it is facilitating by rezoning
certain areas to allow for high-rises, is encouraging developers, even when the
demand to absorb the new supply is not evident, according to Andrew Wilson,
senior economist at property information firm Domain Group.
“Melbourne is facing the prospect of a forest of empty
high-rise towers in its central business district,” said Wilson . “We have yet to see the outcome of
this record level of apartment construction.”
Source: Bloomberg
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