Demand for Infill Development
Over the last decade, a large amount of residential development in SEQ has been focused on greenfield sites outside the Brisbane LGA, with the notable exception of Rochedale. These include the Western corridor near Springfield, the Northern corridor around North Lakes, the Northern Gold Coast area near Coomera and the Southern area around Logan. These areas are projected to have high population and dwelling growth rates to 2031 and will be important residential growth areas, however in absolute numbers; the Brisbane LGA will require more dwellings than any other LGA in South East Queensland and 88% will be infill dwellings. We need to find ways to create affordable medium and higher density communities that offer lifestyle benefits across a range of age cohorts. This market space remains largely untouched.
The table below shows that there are 156,000 new dwellings projected to be required in the Brisbane LGA by 2031 and 88% or 138,000 of these are infill dwellings. In some parts of the greater CBD area significant infill development is already underway; however there are opportunities in other areas that will emerge as a result of new and planned infrastructure. The recently released Draft Brisbane City Plan 2014 highlights some of the opportunities by designating them as growth areas and increasing density around them.
New Dwelling Requirements in South East Queensland to 2031
The Draft Brisbane City Plan 2014
The recently released Draft Brisbane City Plan 2014 reinforces the node and corridor structure that was established in 2006 through the Cityshape 2026 document. The Draft Brisbane City Plan provides more certainty for developers in acquiring land in these growth areas and seeking development approval in accordance with the Plan. Many of the neighbourhood plans for the growth corridors and nodes have been completed or are in draft version, providing an extra level of detail for developers. The map below is taken from the Draft Brisbane City Plan and shows the growth corridors, nodes and the areas that have a neighbourhood plan over them and whether the plan has been adopted or is in draft form.
This creates the conditions not unlike the introduction of the SEQ Regional Plan where developers were essentially informed of where greenfield developments could or could not occur. This high level map will provide astute developers and investors with areas that are more likely to achieve favourable planning outcomes. In many locations, the market is becoming more accepting of density around infrastructure with sales rates supporting this changing market preference.
Brisbane’s Growth Corridors and Nodes
Preconditions for Infill Development
Some of the neighbourhood plans for certain growth areas have been in effect for a couple of years however other factors apart from planning regulations impact upon the potential profitability and risk of infill development. The main factors that impact the success of infill development are:
- Population – This needs to increase sufficiently so that increased density becomes an acceptable option for buyers. The latest ABS data demonstrates that population growth has again picked up, particularly with overseas arrivals.
- Infrastructure – A driver for all development, this needs to be in place to effectively service the needs of higher density living including public transport, roads, parks, shopping centres, medical and education facilities. Whilst there is often considerable press, both in favour and against, SEQ has been playing catch up and now has some very good infrastructure assets in the form of tunnels, busways and extended ferry services as examples.
- Planning – The planning legislation needs to support and facilitate infill development at a level that is attractive and feasible for developers. This is not always easy with most projects going through a number of different iterations to meet both Council’s and the market’s expectations. Planning should never lose sight of the customer if it is to remain a valuable part of the development sector.
- Economy – There needs to be enough confidence in the economy to provide a positive outlook for economic and employment growth, project financing and the property market generally. At present we find the market in a confused state as a result of the looming election and real or imagined job security issues. However, it is also being stimulated by RBA monetary policy which has made owning property more attractive than it has been in the last five years.
Preconditions for Growth of Infill Development
These four factors have been building at varying rates since the early 2000’s when population growth in Brisbane started to increase significantly and property prices with it. Since the start of the GFC in 2008 the Government has focused on stimulating the economy through building new infrastructure in anticipation of a pickup in population growth for Brisbane. The post GFC recovery has been hampered by the floods but despite slow conditions for the property industry during 2011 and 2012 there are numerous new infill residential projects in the inner city areas of Fortitude Valley, Bowen Hills and South Brisbane.
NPR Co. believes that the Brisbane property market has turned the corner and although it could be slow and patchy, the outlook is for positive growth. In some areas where supply is high there may be a glut of stock to work through before prices improve but volumes are expected to start improving.
The improvement in the property market is being driven by improving consumer confidence and favourable economic conditions such as low interest rates and a potentially more stable political environment after the September Federal election. The slowing of the property market in some resource areas may also entice investors back to the Brisbane market which is generally less volatile than resource areas and, compared to other Australian capital cities, more affordable. This is an advantage that the Brisbane residential market lost through the middle part of the last decade. Once again Brisbane is one of the more affordable capital cities with a profile that is starting to reach outside of the beach culture/mentality. Brisbane is now starting to become a more refined city which is evident in the retail offering at the Edward Street end of the Queen Street Mall. The discussions surrounding the proposed casino precinct at the top of the mall has the potential to create a destination that tourists will travel to see. This will provide a further injection of capital to the city assuming that we will have the accommodation available to support these larger attractors to the CBD.
The completion of a large number of major infrastructure projects over the last few years combined with the upcoming finalisation of the Brisbane City Plan 2014 will see the start of a new growth phase for infill development in Brisbane. The table below shows the significant number of infrastructure projects that have been completed since 2000 with the majority being in the last four years. As stated above, this infrastructure spending does create the preconditions for a buoyant real estate market. It also produces the necessary day to day infrastructure that allows for the use of more community oriented services.
Infrastructure Projects Since 2000
First Homebuyer Appeal
Changes to the FHOG were introduced by the State Government and came into effect in October 2012 requiring the dwelling to be newly constructed. Due to the importance of affordability for first home buyers many will have to either forgo the grant so they can buy a more affordable established dwelling closer to the city or buy a new dwelling in a greenfield area on the outskirts of the city. Purchasing a new dwelling close to the city is typically out of the price range for many first homebuyers unless it is very small. As a result of this, it is increasingly more important that the urban precincts that this product is being sold into support the lifestyle ambitions of this market segment.
The chart below shows how first homebuyers as a proportion of all buyers has dropped considerably since the introduction of the new legislation. Both NSW and QLD introduced similar legislation and the effect can be seen by the drop from 22% in October 2012 for QLD to currently be at 10.6% in March 2013. NSW dropped from 17.8% in September 2012 to 7.8% in March 2013. What this demonstrates is that the legislation can sometimes be at odds with both Planning and the Market. Having stated that, good middle ring infill developments may well reverse this trend, time will tell.
Affordable apartments that are within 5-10 kilometres of the Brisbane CBD and located on transport corridors and growth nodes generally represent good value and lifestyle opportunities for first homebuyers. While NPR Co. believes that the majority of first homebuyers prefer the affordability of established properties, some may be attracted to new properties if they are able to buy a reasonable sized apartment or townhouse in a small block but still be within 5-10 kilometres of the CBD. With the correct market research to determine their needs, first homebuyers will be a target market for future infill development. They have however proven to date that if a project is not on message, it will be rejected.
Identifying Priority Infill Areas
The overall structure of planned development in Brisbane outlined in the Draft Brisbane City Plan follows a node and corridor pattern with growth concentrated within the nodes firstly and along the corridors secondly. The benefits of this are that by increasing densities considerably in the nodes and corridors, other suburban and character housing areas can remain relatively unchanged. The densities achieved in the nodes and along the corridors can improve the efficiency of public transport and create local centres or urban villages that offer an active and attractive mix of retail, residential, hospitality and commercial outcomes.
Acknowledging Brisbane CBD as the main centre, there are the three corridor hubs of Milton, Fortitude Valley and Woolloongabba. The nine transport corridors are listed below and along the corridors are planned and future growth nodes, major centres and special centres.
- Logan Road transport corridor - Kangaroo Point to Upper Mount Gravatt
- Gympie Road and Northern Busway transport corridor - Royal Brisbane Hospital to Carseldine
- Old Cleveland Road and Eastern Busway transport corridor - Stones Corner to Carindale
- Brisbane South Rail transport corridor - Princess Alexandra Hospital to Coopers Plains
- Kingsford Smith Drive transport corridor - Newstead to Hamilton
- Brisbane South-west Rail transport corridor - Milton to Wacol
- Enoggera Road and North-west Rail transport corridor - Kelvin Grove to Mitchelton
- Brisbane North-east Rail transport corridor - Bowen Hills to Northgate
- Brisbane East Rail transport corridor - Buranda to Cannon Hill.
From a planning perspective, the priority areas for infill development will have an adopted neighbourhood plan and be a planned growth node rather than a future one. In terms of infrastructure, the priority areas will have improved accessibility due to recently completed infrastructure such as the Airport Link, new busways, tunnels or bridges. To offer the best amenity, lifestyle and growth opportunities the priority areas will be located close to retail centres and cafes and be within easy travel distance to a key employment centre such as a hospital, university, commercial or retail area. Areas with further gentrification or non-residential development planned will also offer good opportunities for capital growth as the property market recovers.
If you would like NPR Co. to assist with an in-depth quantitative or qualitative analysis of specific suburbs, sites or projects please contact us.
The National Property Research Company
Level 1, 307 Queen Street
BRISBANE QLD 4000
Ph 07 3229 0111