GOLD COAST COMMERCIAL PROPERTY 2020 - Research & Forecast Report - Colliers International
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Research &
Forecast Report
Accelerating success.
GOLD COAST
COMMERCIAL
PROPERTY
2020
Accelerating success.
MAXIMISE THE
POTENTIAL OF
DATA
IN-DEPTH DATA At the forefront of the
real estate industry, we
Granular datasets covering historical
understand the demand
and forecast data with over 2,000
datapoints updated quarterly. for reliable and accurate
data is more prevalent
than ever.
Our enterprising
technology, Colliers Edge,
offers comprehensive
DETAILED property data that enables
TRANSACTIONS you to delve deeper into
the Australian property
Individual reporting of
market, using data to
major transactions.
become more informed
and deliver enduring value.
Colliers Edge is a data
subscription service
developed by our in-
INSIGHTS house research experts,
Our experienced research team who collaborate with
will help you understand quarterly our National network
changes, as well as broader themes of operators to drive
behind each sector and market. exceptional results.
Joanne Henderson
Director | Research
+61 410 391 093
joanne.henderson@colliers.com
colliers.com.au/colliersedge
CONTENTS
Snapshot | Gold Coast 4
Market Overview 6
Industrial 8
Office 10
Residential 12
Retail 14
Our Expertise 16
Accelerating success.
GOLD COAST | Research & Forecast Report | 2020
GOLD COAST
SNAPSHOT
POPULATION*
622,048 48 % population growth
supported by net
internal migration
1 Million by 2050 (total of 21,260
residents for the past 3
years)
ECONOMY
$37.24b^^ $3.8b
Gross Regional Product Forecast Investment in
Infrastructure Projects
under construction
EMPLOYMENT**
359,500 5.7% 15%
People in the Labour Unemployment Health Care and
Force Rate Social Assistance
sector largest
regional employer
TOURISM AND INTERNATIONAL EDUCATION SECTOR
32,000 1.1m 12.5m
International Students International Domestic
Visitors^ Visitors^
* Data sourced from ABS to June 2018
^ Data sourced from Tourism and Events Qld to June 2019
** Data sourced from the ABS Labour Force Survey to November 2019 and Regional Labour Force estimates to January 2020
^^ Data sources from ID Community to June 2019
4
GOLD COAST | Research & Forecast Report | 2020
Annual Economic Growth by Region (%)
GRP Gold Coast GSP QLD GDP Australia
Source: Id Community and D eloitte Access Economics
10%
8%
Annual Change (%)
6%
4%
2%
0%
-2%
30 June
Gold Coast Infrastructure Projects Under Construction
Investment Number of Projects
Gold Coast Infrastructure Projects Under Construction
$2,500 7
6
$2,000
5
Number of Projects
AUD $ (millions)
AUD$ (millions)
$1,500
4
3
$1,000
2
$500
1
$0 -
Accommodation Community & Other services Transport & Storage
Investment Number of Projects
Source: Deloitte Access Economics, September 2019 Investment Monitor and Colliers International
5
GOLD COAST | Research & Forecast Report | 2020
MARKET
OVERVIEW
By Karina Salas from 4.6 per cent in June 2018 to 2.6 per cent in June 2019, noting
Associate Director | Research that the Gold Coast economy still outperformed the Australia and
karina.salas@colliers.com
Queensland economies.
Population Growth Shaping the Property Market In 2019, Colliers International recorded an increase in leasing
demand from service providers to the international education sector,
The Gold Coast commercial property market is a hidden gem for
food and beverage retail operators along the southern beaches and
savvy investors as it generally transacts at more affordable rates than
industrial operators servicing the tourism sector. The impact of
the capital cities and its growth potential is well supported by solid
the travel restrictions from China to Australia due to the COVID-19
economic fundamentals.
outbreak is still uncertain at the time of writing.
Population growth is one of the main factors contributing to the
We expect that the forecast population growth, planned infrastructure
increase in demand of commercial and residential property assets.
investment and future tourism activity support an improvement on
The unique lifestyle on offer makes the Gold Coast an attractive
the regional economic growth and investment confidence, shaping
destination for internal migrants who have supported over 50 per
the performance of the property market over the years ahead.
cent of the population growth over the past two years. According to
the City of Gold Coast, the regional population is forecast to continue
to grow at a faster pace than Queensland and Australia, expecting to
reach one million residents by 2050.
This rapid increase in population is expected to stimulate a faster
absorption of vacant land supply available for residential, industrial
and commercial expansion, improve design and land utilisation for
future office and industrial developments, and support a gradual
growth of land values across the region. Colliers International
estimates that the Gold Coast will need to build circa 145,280
new dwellings over the next 32 years (to 2050) to be able to
accommodate the forecast population. This represents a significant
expansion of the city in the magnitude of over 60 per cent of the
number of private dwellings currently available.
The investment in infrastructure projects to prepare the transport
network for the Commonwealth Games reached an estimated $1
billion. Upon completion of the Games, infrastructure investment
has continued to support economic development and regional
modernisation. The current investment in infrastructure projects
under construction is estimated at $3.8 billion, which is equivalent to
about 10 per cent of the Gross Regional Product (GRP).
Investments in projects like the Gold Coast light rail extension will
continue to improve regional connectivity and spread economic
growth beyond traditional and well-established locations like Surfers
Paradise and Broadbeach. Over the next decade, we expect to
see further infrastructure investment in transport connectivity and
integration between Brisbane and the Gold Coast. A further increase
to infrastructure investment is expected if South East Queensland
wins the bid to host the 2032 Olympic Games.
Tourism activity plays a key role driving economic development,
employment creation and demand for real estate assets. The rapid
annual growth in regional tourism expenditure of 16 per cent for the
year to June 2019 supported economic growth in 2019. However, the
decline of the housing sector (in terms of construction and wealth) Old Burleigh Theatre Arcade, 64 Goodwin Terrace & 1823 Gold Coast
Highway, Burleigh Heads
from mid-2018 to late 2019 underpinned a slowdown of GDP growth Iconic Beachfront Landmark - Sold by Colliers International for $18 million.
6
GOLD COAST | Research & Forecast Report | 2020
Attractive Investment Opportunities
A total of $903 million of commercial real estate assets (above $5
million) exchanged hands in 2019 across transactions in industrial,
office, retail and development sites for residential development. Each
asset class contributed to at least 20 per cent of the total transaction
volumes.
Sales of residential development sites contributed to 32 per cent of
the total sales volumes and have become an attractive investment
option for developers in the search of well-located sites along the
southern beaches and Northshore precincts.
Investments in industrial assets (over $5 million) increased by
nearly 55 per cent in 2019 reaching $221 million. Industrial assets
have proven to be a very attractive investment option, with a large
development site in Stapylton gaining nearly 75 per cent in value in
less than 12 months.
Following a stellar year for the retail investment market in 2018, the
investment sales volumes in 2019 reached $211 million representing
25 per cent of the commercial property sales in the Gold Coast. The
$65 million sale (pending-settlement) of the Circle on Cavill shopping
precinct was the largest commercial investment transaction in the
Gold Coast in 2019. The property was offloaded by the unlisted fund
EG Property Group and acquired by an offshore investor. Retail
investors continue to operate in a very competitive market, however
their capacity to adapt to market conditions and proactively search
for tenants has proved to be a successful strategy to maximise
returns.
Office sales nearly tripled in 2019, with the sale of 50 Cavill Avenue
representing more than 50 per cent of the total market transactions.
This sale is still pending settlement.
We expect that the Gold Coast commercial property market will 128 Bundall Road, Bundall
High Profile Office Investment Sold by Colliers International for $9.5 million.
continue to attract significant interest from domestic private
investors, looking for value-add opportunities at a smaller scale
compared to the largest capital cities. Offshore investors are also
expected to be attracted to large-scale transactions over $50 million
as they become available.
Gold Coast Commercial Property Sales ($5 million +)
$1,000
$66
$800 $186
AUD$ Millio ns
$600 $537 $211
$400 $221
$144
$200
$285
$176
$-
2018 2019
Resi Development Sites Industrial Retail Office
Source:Colliers Edge
7
GOLD COAST | Research & Forecast Report | 2020
INDUSTRIAL
OVERVIEW
Market Indicators - 2019 Investment demand of industrial assets in the Gold Coast was very
strong in 2019, with the estimated volume of sales (above $5 million)
of $221 million outperforming the 2018 sales volumes ($144 million)
INVESTMENT MARKET by 54 per cent.
$221 million of industrial sales
(above $5 million) H We witnessed an increase in the pool of potential buyers in 2019.
Investment demand from owner-occupiers within the price bracket of
AVERAGE YIELDS
$2-$5 million was very solid particularly within the Central precinct.
Prime
Institutional investors, REITs and unlisted funds, dominated the $5+
L H million market, with a Singaporean REIT purchasing a secondary
6.50% 7.50% warehouse and achieving the highest price in 2019.
Prime grade leasing activity dominated the market in 2019, driven
AVERAGE PRIME NET FACE RENTS ($/m²)
by the relocation and expansion activity within the Yatala Enterprise
Yatala Enterprise Area (YEA)
Area (YEA). The precinct recorded a solid rental increase of nearly 9
L H per cent over the year to December 2019, to an average net face rent
$100 $105 of $103/sqm. Secondary grade rental activity outside YEA remains
strong as there is limited vacant space of Prime grade warehouses
North-Central-Southern Precincts (1,000-2,000sqm)
ready for occupancy.
L H
$120 $140 Industrial land values increased strongly in 2019 across all precincts,
reaching historical highs averaging $268/sqm at YEA and exceeding
North-Central-Southern Precincts (2,000sqm+) $500/sqm within the Logos Logistic Hub within the Central precinct.
L H YEA remains an affordable location for large industrial operators
$100 $120 compared to other precincts in South East Queensland. Pre-leasing
deals signed by a number of industrial operators in different sectors
dominated the rental activity.
The Yatala Distribution Centre has secured pre-commitments
for circa 19,000sqm of Gross Lettable Area (GLA) with Simtech,
Crimsafe and Ozwide Group. The Yatala Central development also
secured a pre-lease agreement for 13,500sqm of GLA with Reward
Hospitality.
Gold Coast - Average Industrial Land Values by Gold Coast Industrial Sales Volumes ($5 mill+)
Precinct $120 $109
$104
$600
$100
$500
AUD$ (millio ns)
$400 $80
$60
$/sqm
$300 $60
$200 $42
$40
$100 $29
$0 $20 $13
$8
$-
$-
2018 2019
Yatala Central
Source: Colliers International Institutions Private Undisclosed Government
Source: Colliers International
8
GOLD COAST | Research & Forecast Report | 2020
2019 Key Trends 2020 Market Outlook
Diverse Buyers Pool drives Investment Demand Investment demand for industrial assets is expected to remain
strong in 2020. The limited investment opportunities across
The industrial market performed well in 2019, with rising capital
different asset classes and locations and the low cost of funds will
values and sharper yields supported by an increase in demand from
continue to put downward pressure on yields, particularly in regional
owner-occupiers and improved leasing activity. Colliers International
markets like the Gold Coast which continues to benefit from solid
recorded solid interest from a diverse pool of buyers including
economic fundamentals, consistent population growth and arbitrage
institutional investors, private developers and owner-operators,
opportunities compared to the capital cities. We also expect to see an
underpinning a competitive environment which has put upward
increase in demand from interstate and potentially offshore investors
pressure on capital values across the different price segments and
looking for solid investment returns with long WALEs.
precincts.
Leasing demand outside YEA is forecast to continue to be driven
Focusing on the $5+ million market, institutional investors
by small to medium enterprises operating in construction, tourism,
acquired $109 million of industrial assets, including acquisitions of
health and marine industries. Traditionally, local industrial owner-
development opportunities across the Central and YEA precincts,
occupiers have targeted the central-southern precinct to establish or
investment opportunities with long WALEs and assets providing
expand operations.
repositioning opportunities. The most notable settled sale was the
transaction of the secondary grade warehouse located at 209-217 In the case of land values within the central-southern precincts,
Burleigh Connection Road in Burleigh Heads for $38.46 million the very limited availability of vacant land is forecast to continue to
acquired by the Singaporean-listed AIMS APAC REIT at an initial put upward pressure on land values. The 22ha Logos Logistic hub
yield of 7.8 per cent. The former owner, GSM Rocket Australia Pty located in Arundel has pre-committed and/or sold over 55 per cent
Ltd (producing surfwear clothing), has leased back the warehouse of developable land over the past 18 months, with only about 9.5ha of
for 12 years. land available for future development. The 27ha City Link Industrial
estate located in Carrara and owned by City Link Developments has
We also witnessed a surge of local owner-occupiers’ demand within
been recently released to the market, and it is expected to drive land
the $2-$5 million market looking to purchase industrial development
values growth potentially to the range of $550-600/sqm. The project
opportunities and older warehouses with redevelopment potential
offers a 21-lot subdivision in the range of 2,000-50,000sqm.
within the central-southern precincts as they opt for proximity to
their clientele. The low cost of funds has driven this trend; and we YEA’s value proposition will continue to provide affordable rental
expect it will continue into 2020 and potentially over the next three options, competitive land values and easy accessibility to the M1
years. Pacific Highway allowing centralised access to both Brisbane and the
Gold Coast markets. YEA is likely to continue to experience moderate
Yields compressed slightly in 2019, finishing the year within a range
growth in land values over the next decade, with projections that
of 6.5 per cent to 8 per cent for Prime and Secondary assets. We
it will attract an increase in demand from interstate large-scale
expect to see a sharper compression of yields in 2020 as savvy
operators looking for logistic efficiencies in proximity to the two
investors take advantage of the arbitrage opportunities and owner-
largest cities in Queensland.
occupiers take advantage of the historical low funding costs.
Colliers International estimates that there is about 400ha of land
Land Values at Record High
available for industrial expansion within YEA. This includes and is
Industrial land values across all precincts and locations increased not limited to various development opportunities owned by Frasers
strongly over the past three years, with solid growth reported over Property within Yatala Central (12ha) and 60 Stapylton-Jacobs Well
the year to December 2019. Historical high levels of demand have Road (64ha). As developable vacant land continues to be scarce
placed upward pressure on average land values at YEA, increasing outside YEA, we expect to see an increase in investment demand
by 33 per cent from $200/sqm in December 2016 to $268/sqm in from local occupiers within the YEA over the next three to five years.
December 2019.
Colliers International recorded the sale of numerous vacant blocks
within the $160 million Logos Logistic Hub at a historical high
average of $500/sqm, representing an increase of nearly 20 per cent
compared to the average land sale price of $420/sqm achieved at
transactions at the Technology Park two-years ago. Other important
transaction within the precinct completed in 2019 includes the
construction completion of the 10,250sqm new logistic facility built
for Toll for an estimated investment of $40+ million. The initial lease
term was negotiated for a period of 12 years.
Eastlake Street, Carrara
Premium Industrial Land - Sold by Colliers International for $17.825 million.
9
GOLD COAST | Research & Forecast Report | 2020
OFFICE
OVERVIEW
Market Indicators - 2019 The estimated volume of sales (above $5 million) reached $186
million in 2019, nearly tripling compared to the 2018 sales volumes
($66 million). The Gold Coast investment market continues to
INVESTMENT MARKET operate as a value driven market, with the average yield spread
compared to the Brisbane CBD and Metro markets widening over the
$186 million of office sales
(above $5 million) past 18 months and sitting in the range of 50 to 200bps for A grade
assets.
AVERAGE YIELDS Business consolidation and downsizing underpins the upward trend
Prime Secondary of vacancy rates and negative net absorption (-6,760sqm) for the
L H L H YoY to January 2020. About 70 per cent of the enquiries in 2019,
7.50% 7.80% related to office space below 1,000sqm. The pool of tenants is
expected to remain diverse in 2020, with the top-three industries
driving enquiries in 2019 contributing to less than one quarter of the
AVERAGE GROSS FACE RENTS ($/m2)
total office enquiries over the year.
Prime Secondary
L H L H Over the past five years, new development supply has been limited
$475 $350 and estimated at 14,120sqm representing about 3 per cent of the
market stock. This trend underpins the market correction cycle
experienced until 2018. New development supply is forecast to revive
in 2020 and it will extend beyond the traditional office precincts as
FEB-2019 FEB-2020
more affordable and vacant commercial developable land may be
available in other locations.
TOTAL MARKET
VACANCY RATE Mooted projects with development approval are estimated to deliver
12.8%
20,800sqm beyond 2020. These projects include stage 2 and 3 of the
11.6%
Acuity Business Park, the new development and full refurbishment in
the Kaybank Plaza building, the proposed project at 26 Lawson Street
in Southport and the M1 Connect Business Hub in Helensvale.
Landlords are more willing to offer higher incentives to attract and
retain tenants, while gross face rents have held firmly across most
of the precincts. Under current market conditions, we expect to see
these trends carry into 2020, particularly for new and repositioned
assets able to customise the fit-out to the tenants’ requirements and
needs.
Gold Coast Office Sales ($5 million +) Gold Coast Office Market Vacancy Rate by Precinct (%)
$300
35%
$250 30%
25%
$200
AUD$ (millions)
20%
$150 15%
$100 10%
5%
$50
0%
Jan-20
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
$0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Gold Coast Broadbeach
Domestic Offshore Undisclosed 10-year average
Bundall Robina - Varsity Lakes
Source: Colliers Edge, 2019* includes one sale pending settlement Surfers Paradise Southport
So urce: P CA, Co lliers In ternational
10GOLD COAST | Research & Forecast Report | 2020
2019 Key Trends 2020 Market Outlook
Limited Investment Opportunities on the Market Investment opportunities are forecast to remain tightly held in 2020
on the back of the exceptionally low bond yield outlook. Potential
Investment volumes of $186 million (for sales above $5 million) were
regional market yield compression is now on the table for 2020,
transacted in 2019, with the sale of 50 Cavill Avenue (settlement
particularly for assets holding a long-WALE or the potential to
scheduled in March 2020) representing over 50 per cent of the
reposition and add value to the investment.
annual sale volumes. The market remains very tightly held as just a
handful of transactions underpinned the dollar value growth. Investment confidence from developers is returning to the office
market as we forecast an increase of new development supply in
Domestic investors including institutions, syndicates and owner-
2020 after five years of experiencing very limited construction
occupiers were active buyers in 2019. We expect to see an active
activity. New development supply and refurbishments under
participation of institutional investors in 2020 due to the value
construction with expected practical completion in 2020 is estimated
proposition on offer.
at 10,600sqm.
Yields held firmly in 2019 at an average of 7.5 per cent for A grade
New developments under construction includes stage 1 of the
and 7.8 per cent for B grade. The narrow B to A grade yield spread
Acuity Business Park (5,937sqm) expected to reach practical
is a reflection of the mature age of the current A grade stock.
completion over the second half of 2020. We are also expecting to
Mixed-used developments having a portion of commercial space are
see development activity beyond the traditional office precincts over
generally transacted at tighter yields in the range of 5.50 to 6.50 per
the next few years. The proposed M1 Connect Business Hub at 120
cent.
Siganto Drive in Helensvale is proposing to add 5,685sqm of A grade
We expect yields may compress in 2020 as yield premiums over office subject to achieving a minimum level of pre-commitment of
the largest capital cities have widened over the past year, creating 30-45 per cent.
an arbitrage opportunity for savvy investors able to add value to the
Leasing demand is forecast to hold steady. As the flight-to-quality
investment by repositioning the asset and improving and lengthening
trend has now extended from the capital cities to the regional areas,
the rental returns.
the new development supply will create backfill space of secondary
Diverse Pool of Tenants Driving Leasing Demand buildings, opening the opportunity to add value to vacant stock by
repositioning the asset. We expect the office market will enter into an
The uncertainty of the Federal Election had a stagnant effect on the
era of redevelopment and renewal of secondary stock.
regional leasing market over the first half of 2019. On the positive
side, tenants’ enquiries quadrupled over the second half of the Gross face rents for prime office assets are forecast to hold firmly;
year, revealing increasing interest from a more diversified pool of however gross face rents for secondary buildings may recede
tenants operating in tourism-related businesses, health and social slightly, with incentives playing a key role to attract and retain tenants
assistance, education and training, construction, business services and potentially trending upwards. Incentives remain well below the
and information technology sectors. current incentive levels in Brisbane CBD and Metro of 35 to 40 per
cent. Hence, there is significant scope for incentives to play a more
Despite the increase in enquiries, the office market reported a
active role in the correction cycle of the office market.
marginal net absorption of 90sqm over the past six months, with the
vacancy rate tightening marginally to 12.8 per cent. The precincts
of Broadbeach, Bundall and Robina-Varsity Lakes reported stronger
market conditions, recording a total six-months net absorption of
1,405sqm. However, the precincts of Surfers Paradise and Southport
recorded a total negative six-months net absorption of 1,315sqm.
The regional employment market has transformed over the past five
years relying more heavily on employment created by social service
sectors. According to the ABS Labour Force Survey for November
2019, the healthcare and social assistance sector has become the
most predominant employer in the Gold Coast, employing circa 51,100
people equivalent to 15 per cent of the total number of employed
people. The education and training sector is a top five employer,
supporting 27,300 jobs following a 5-year growth of 44 per cent.
We forecast an increase on tenant activity from the healthcare and
social assistance and education and training sectors underpinned by
the increasing population requiring these basic social services.
7-11 Short Street, Southport
Premier Office Precinct - Sold by Colliers International for $8.25 million.
11GOLD COAST | Research & Forecast Report | 2020
RESIDENTIAL
OVERVIEW
Market Indicators - 2019 The Gold Coast new apartments market performed well in 2019,
reaching about 905 unconditional annual sales with an estimated
NEW APARTMENTS MARKET value of $701 million. The development potential in the southern
beaches precinct has become evident as the precinct recorded the
$701 million of unconditional sales most sales and the highest weighted average sale price in Q4 2019.
Two-bedroom apartments are the most popular product type across
905 unconditional sales the market, underpinning about 60-70 per cent of sales. Sales
of apartments located on coastal suburbs support nearly 90 per
cent of the sales over the past three years. New apartments on
central coastal suburbs are the most predominant on the market
9.0% growth of the annual average sale
price over the past 3 years as they generally allow the construction of medium and high-rise
developments. The new supply pipeline has extended to the southern
beaches and the Northshore delivering small to medium boutique
developments.
MAJOR DEVELOPMENT SITES MARKET Demand of development sites was strong in 2019, amounting to $285
million (over $5 million). Sales of development sites to develop apartments
$285 million of unconditional sales
(over $5 million) nearly tripled from $72 million in 2018 to $215 million in 2019. Developers
have a preference to locate new projects in the southern beaches of
Burleigh Heads, Palm Beach and Kirra. The Northshore suburbs of Hope
Island, Hollywell and Sanctuary Cove are also attractive locations.
$215 $70
million site sales to million site sales to Development site sales for houses and townhouses amounted to
develop apartments develop townhouses $70 million in 2019. Colliers International negotiated the sale of the
and houses 65ha Serenity Cove site at Hope Island offloaded by the Malaysian
developer, Sime Darby and Brunsfield, with expectations to complete
21 unconditional sales a $650 million master planned development.
The estimated annual population increase of circa 11,800 residents to
2050 is expected to drive an increase in demand of 4,540 residential
dwellings a year. To manage the risk of housing undersupply, the
future residential supply should increase above the long-term
average levels of 3,800 dwellings a year.
Gold Coast Development Sites Investment Market
Gold Coast New Apartment Sales Volumes and Number of Sales ($5 million +)
$1,000 1,800 $300
$900 1,600
Annual Numb er o f Sales
$800 $250 $70
Annual Sales Vo lumes
1,400
AUD$ (millions)
$700
1,200
AUD $millio ns
$600 $200
1,000
$500
800 $150
$400
600 $104
$300
400 $100 $215
$200
$100 200
$0 - $50
$72
$0
Annual Sales Volume Annual Sales Transactions 2018 2019
Apartments Townhouses/houses
Source:Colliers International Residential
Source: Colliers International
12GOLD COAST | Research & Forecast Report | 2020
2019 Key Trends Supply of apartment sites is tightly held, particularly for small to
medium developments located in the southern beaches with a lot
Solid increase in the average sale price of new size range between 800 to 2,500sqm and with ocean views. The
apartments $17.025 million sale of the Village Square Market Place site at Hope
Island (negotiated by Colliers International) was one of the largest
The new apartments market continues to transition from large-
apartment development site sales over the year. This project is
scale projects (70+ apartments) to small and medium developments
expected to deliver nearly 350 apartments.
offering around 70 apartments. This new trend is supported by
the change on demand drivers from an investor-dominated market Development sites suitable for large residential developments are
looking for a basic investment product to an owner-occupier generally located in the northern Gold Coast corridor between
dominated market looking for high-quality apartments offering larger Ormeau to Upper Coomera. There are also opportunities for
floor plans and better amenities. Mature adults over 50 years old development south of the Gold Coast, close to the state boundary
entering a pre-retirement or retirement stage and looking for well- and across the border in NSW. For example, Leda Holdings land bank
located apartments in proximity to amenities, the beach and public development site at Cobaki Lakes has state and local government
transport, were the most active buyers in 2019. approvals in place. The first vacant lots are expected to be released
to the market this year.
Colliers International estimates that the annual average sales price
for new apartments has increased by 9 per cent a year over the
past three years, from circa $606,000 in 2016 to an annual average
2020 Market Outlook
price of circa $786,000 in 2019. This demonstrates the strength of The market outlook of the new apartments and residential
the new apartments market outperforming the overall Gold Coast development sites is promising and supported by solid population
unit market, which reported an increase of about 2.5 per cent growth, the increase in demand from owner-occupiers and the
from $400,000 in November 2016 to $410,000 in November 2019 improved funding market for developers and end users.
(according to Corelogic). Burleigh Heads and Palm Beach are becoming the preferred
Traditional locations for new apartments in the suburbs of Surfers suburbs for new apartment developments. Hence, we forecast an
Paradise and Broadbeach have become the preferred location for increase of unconditional apartment sales in the southern beaches
accommodation of domestic and international tourists. Local and in 2020. Colliers International has witnessed record demand on the
interstate owner-occupiers, driving demand of new apartments Village project in Palm Beach, selling the entirety of the stock (75
and housing, are favouring the Northshore and the southern apartments) over a period of four months, which has positioned this
beaches. The stage 3A of the light rail extension from Broadbeach project as the number one selling development in the Gold Coast. A
to Burleigh Heads secured Federal funding in November 2019 and similar performance in other well-located developments is projected
has commenced the design and procurement phase. This project is to occur in 2020.
expected to boost economic activity and property demand along the Favourable funding market conditions are forecast to continue in
southern beaches. 2020. Developers currently have access to a more diversified pool
Major Development sites in high demand of debt funding from APRA-regulated and non-regulated lenders.
Lending restrictions imposed by APRA has eased for developers
Demand of residential development sites remains solid and
and end-users and the low cost of debt encourages an increase in
supported by the forecast regional population growth and net internal
demand from owner-occupiers.
migration.
Demand of development sites for new apartments, particularly along
According to the ABS, the estimated resident population has reached
the southern beaches, is forecast to remain strong in 2020 on the
622,048 people in June 2018 and it is forecast to increase to 1
back of an increase in confidence from developers able to achieve
million by 2050. This is equivalent to a cumulative increase of circa
solid returns on well-located and well-managed projects. However,
378,000 residents over the next 32 years and an average annual
supply of these development sites is forecast to remain tightly held
increase of circa 11,800 residents. Assuming an average of 2.6
over the medium term.
persons per household (as per current regional statistics), Colliers
International estimates that the region will need to add about 4,540
new residential dwellings a year (or 145,280 dwellings until 2050)
to eliminate the risk of housing undersupply. We also note there is a
diminishing availability of greenfield land to support future supply of
residential lots.
According to the Department of Natural Resources, Mines and
Energy, the average long-term number of residential lots registered
in the Gold Coast is estimated at about 3,800 a year. This means that
the future residential supply must outperform the historical long-
term average supply by nearly 750 dwellings a year so the market
Cerulean, Main Beach
operates at equilibrium. 15-Level Residential Building Marketed by Colliers International.
13GOLD COAST | Research & Forecast Report | 2020
RETAIL
OVERVIEW
Market Indicators - 2019 The retail investment market was very tightly held in 2019, with the
volume of sales (above $5 million) of circa $211 million, representing
INVESTMENT MARKET a fall of 61 per cent compared to the sales volumes in 2018.
$211 million of retail sales
(over $5Hmillion) H
The Gold Coast economic fundamentals remain strong and supported
by infrastructure investment and consistent population growth, which
RETAIL MARKET NICHE
set up the pillars for a resilient and sustainable sector over the years
622,048 ahead.
residents + 13.5 million daily and
overnight visitors
The strength of tourism activity and the international education
sector continues to widen the regional retail market niche. Colliers
RETAIL EMPLOYMENT MARKET ¹ International estimates that these two sectors support an increase of
about 20 per cent of the regional retail market niche and both sectors
36,800 have the potential to increase its contribution to the market niche over
jobs standing as the third largest
regional employer the years ahead. The impact of the travel restrictions from China to
Australia on the Gold Coast tourism activity is still unknown.
LEASING MARKET Net interstate migration representing nearly 50 per cent of the
Gross Face Rents Range ($/m²) regional population growth over the past three years continues
to drive residential expansion and the need for new regional and
L H
neighbourhood shopping centres developments to service the
$350 $1,200
growing population heavily concentrated within the northern corridor.
As the retail sector continues to transform into an experienced-based
service, landlords in the Gold Coast continue to implement strategies to
boost foot traffic, improve the retail experience and maximise the use of
space.
¹ Retail market niche is the number of individuals who could be potential buyers
Gold Coast Retail Sales ($5 mill+) Population Growth and Internal Migration Contributing to
$1,400 Retail Activity
$1,200 20,000 60%
18,000
50%
$1,000 16,000
Numb er o f Residents
AUD$ (millio ns)
14,000
40%
$800 12,000
10,000 30%
%
$600 8,000
20%
6,000
$400 4,000
10%
2,000
$200 - 0%
$-
Population Increase Internal Migration (IM) IM Contribution
Source: ABS and Colliers International
Source: Colliers Edge
14GOLD COAST | Research & Forecast Report | 2020
2019 Key Trends migration policy assessment in late 2019, although the current travel
restrictions in place for Chinese nationals may slow down the growth
Domestic Private Investors dominated in a tightly in 2020. The international education and training sector was worth
held market $988 million in 2018 and it is on track to become a $1 billion industry.
Investment capital flowing into the Gold Coast retail market has 2020 Market Outlook
softened in 2019 compared to the activity seen in 2018. A total of
The regional retail investment market offers arbitraging opportunities
$211 million worth of retail assets (above $5 million) have transacted
compared to the largest Australian capital cities, which supports the
in 2019 compared to circa $537 million retail sales recorded in 2018.
potential growth of investment activity in 2020. Colliers International
One of the most notable settled sale in 2019 was the transaction of anticipates that the regional investment market will remain tightly
HomeCo Upper Coomera, a Large Format Retail (LFR) centre owned held in 2020. However, domestic and offshore institutional
by the ASX-listed company Home Consortium, which achieved a sale investors may become more active players if large-scale investment
price of $40.25 million. Private domestic investors and developers opportunities reach the market.
have generally grasped the limited retail opportunities in the Gold
Consistent net interstate migration and population growth are
Coast at market yields generally in the range of 5.5 to 6.5 per cent.
forecast to continue supporting retail activity. In light of this trend,
Development supply concentrated within the Costco are believed to be looking at the Gold Coast to establish
Northern Corridor operations and these business decisions may drive an increase on
Over the past few years, Colliers International has witnessed a development supply over the next 12 to 24 months.
concentration of retail development supply within the northern Residential hot spots like Coomera, Pimpama and Helensvale within
corridor. In 2018, the $470 million Westfield Coomera and the the northern corridor are forecast to remain as desired locations for
Pimpama City Shopping Centre reached practical completion and large retail development supply in 2020. New smaller-scale retail
opened to the public, while in Q3 2019 the $30 million Ormeau space within mixed-use developments will continue servicing other
Village Shopping Centre, anchored by Coles Supermarket, reached established areas in the Gold Coast beyond the northern corridor.
practical completion adding circa 4,900sqm of retail floor space to
the region. Rents across retail precincts offering retail experience and quality
services like Burleigh Heads and Palm Beach are forecast to hold
Over the past year, developers have shown stronger investment firmly or report a moderate growth in 2020. However, traditional
appetite for LFR centres able to accommodate household goods retail precincts, which lack of adaptability and flexibility, may
retailing operators. This trend aligns with the forecast increase in experience rental rates contraction as vacancy rates continue to
housing demand estimated at 4,540 dwellings a year. Some of the trend upwards.
potential LFR developments in the region under consideration include
the $200 million Home Focus Pimpama and the $50 million Coomera The international tourism and education sectors will continue to be
Home Ideas Centre. Both projects are still subject to development supported by the low level of the Australian dollar which remains
approval. below the 10-year average level of $0.85 cents. These two sectors
are forecast to continue expanding and diversifying the regional retail
Role of Tourism and the International Education market niche over the long term.
sector
1
4.3 million domestic visitors staying an average of 3.9 nights,
Tourism and the international education and training sectors play a 1.1 million visitors staying an average of 9.3 nights and 8.3 million daily visitors
critical role in supporting retail activity and expenditure within the
region as they expand the retail market niche. Colliers International
estimates that these two sectors support an increase of up to 20 per
cent on the retail market niche within the region.
Tourism activity added $5.1 billion to the Gold Coast economy,
equivalent 13.7 per cent of the GRP ($37.2 billion) for the year to
June 2019. A total of 13.5 million visitors were welcomed to the
region over the same period. Colliers International estimates that
overseas and domestic visitors support an increase on the retail
market niche of up to 95,0001 people a year in the Gold Coast.
The Gold Coast is currently home to 32,000 international students,
representing about 5 per cent of the estimated resident population.
International students are generally included within the estimated
regional population as long as they have lived in Australia for 12
months out of 16-consecutive months. The number of international
students has significant potential to grow since the Gold Coast
was reclassified to a major regional centre for the purpose of Servico on Olsen, 501 Olsen Avenue, Southport
Leased by Colliers International
15Maximise The Potential Of Your Property
CAPITAL MARKETS
RESEARCH INVESTMENT
SERVICES
VALUATIONS
& ADVISORY
REAL ESTATE
MANAGEMENT
OCCUPIER
SERVICES
PROJECT
LEADERS
LEASING
Offering a team of experts across every asset class and every service, we invest in relationships to
create enduring value. When it comes to delivering this value for your property, collaboration is key.
Our team of industry leaders work together to drive exceptional results.
OUR RESEARCH EXPERTS
Anneke Thompson Chris Dibble Joanne Henderson Luke Crawford
Head of Research Director Director Associate Director
Australia NZ Research & Colliers Edge Research
+61 412 581 647 Communications +61 410 391 093 +61 2 9257 0296
+64 9 357 8638
Karina Salas Sarah Walker Kate Gray Quyen Quach
Associate Director Manager Director Associate Director
QLD Research VIC Research SA Research WA Research
+61 7 3908 9961 +61 3 9612 8867 +61 401 610 766 +61 9261 6672
John Nicolopoulos
Adrianna Kazzi Manager
Database Analyst National Residential Research
+61 2 9770 3229 +61 3 9940 7213
Colliers International does not give any warranty in relation to the accuracy of the information
contained in this report. If you intend to rely upon the information contained herein, you
must take note that the information, figures and projections have been provided by various www.colliers.com.au
sources and have not been verified by us. We have no belief one way or the other in relation
www.colliers.co.nz
to the accuracy of such information, figures and projections. Colliers International will not be
liable for any loss or damage resulting from any statement, figure, calculation or any other
information that you rely upon that is contained in the material. © Colliers International 2020. Accelerating success.You can also read
