The true state of the Inner-Brisbane apartment market
Inner-Brisbane Apartments: Oversupply vs. Undersupply
The future development pipeline is a cause for concern for investors and owners alike, with fears that incorrect stock selection could compound price and cause oversupply issues, due to the increased apartment development in Brisbane since 2015.
Apartment completions increased by 83.9% from 2014 to 2015, and from 2015 to 2017 totalled nearly 15,000 apartments. There is also evidence of growth in deferred and abandoned projects within inner-city Brisbane, increasing by 23.0% from 2017 to 2018, which is a total of over 3,000 apartments.
Analysis of the future apartment development pipeline revealed the below findings:
There is a current estimated shortfall of up to 15,500 apartments by the end of 2023.
There is an oversupply of 1-bedroom apartments.
There is a growing appetite for 3 and 4-bedroom apartments, which are currently undersupplied.
Demand for 2-bedroom apartments is well met.
PRDnationwide Research’s findings regarding who is living in inner-city Brisbane and the current supply is key information or many stakeholders.
Developers can use this information to improve their marketing campaigns to target particular sociodemographic markets and/or influence their building design process and apartment configurations. Demand has shifted to favour apartments with more bedrooms, and as such adding or purchasing 1-bedroom apartments should be treated with caution.
Investors can improve their decision making as to what to buy, as it was found that larger apartments (3 to 4-bedroom configuration) held occupants for longer periods. This suggests a more stable rental income return for investors. There is a tendency for tenants to move into newer apartment stock as it becomes available, therefore investors need to lock in tenants for longer contracts as opposed to short-term leases.
Read more: Inner-Brisbane Apartments Report 2019