What challenges, projects and predictions does 2016 hold for the property industry? Our managing partner and regional directors share a few of their thoughts on the year ahead.
John Wynne, Managing Partner
I increasingly find myself wondering whether it is just the fact that I’m getting older or whether the world is spinning faster than ever. The truth probably sits somewhere in between.
Unquestionably modern life, fuelled by turbo charging technology and overlaid with unprecedented population growth and demographic change, is thrusting us unceasingly into a very different future. Everything seems to be changing and, while occasionally we are able to reach back to the familiarity of what we know, more often we are required to deal with the new world that unfolds over us every day.
Like life, the cities we live in are ceaselessly changing. All of them are getting bigger, busier, faster, higher, denser and more complex. ‘Change the only constant say Congress thought leaders’, was the headline from the most recent Property Council Australia congress – and it’s absolutely true. While cities may be the greatest creation of mankind, they are also one of the hardest to understand.
At Urbis, we have one simple goal – to help our clients shape cities and communities for a better tomorrow.
At Urbis, we have one simple goal – to help our clients shape cities and communities for a better tomorrow. For over 50 years, people at Urbis have been working to help clients understand complex issues associated with the planning, use, development and investment associated with cites.
In this edition of Urbis Insights, our leaders provide perspectives on the big influences in our cities that drive both opportunity and challenges in the coming year.
Peter Small, VIC Regional Director
With the 2015 year behind us, I expect 2016 to be a little different, but still positive.
The impact of Amendment C262 to the Melbourne Planning Scheme has seen a slight drop in CBD activity. We have witnessed a number of clients looking at the inner/middle ring areas for opportunities to develop low to mid-rise apartments. Further, the mandatory controls mean that there is less ‘bullish’ behaviour in the market.
There is still some uncertainty in the decision making process through all levels, which is impacting on developer confidence. Although, our commercial and retail clients are still active.
The education sector is proving to be an area of focus for us: both international and local.
The education sector is proving to be an area of focus for us: both international and local. Demand for student accommodation from overseas students is expected to remain strong, while many of our private school clients are very active in re-development programs. Early Learning Centres, Learning Hubs, Performing Arts Centres and general upgrading of facilities to meet changing expectations as to how we educate our children are all on the agenda.
Development on Melbourne’s periphery is continuing apace with strong land scales underpinned by pent up demand. This demand is caused by the long term and sustained population growth in the state. Both interstate migration and immigration contribute to this demand and we see this continuing over the next 12 months. The strongest growth can be seen to the north and west of the city, with the east and south not far behind. One of the challenges facing the industry is to ensure that the approval process, and council/government resourcing, is able to maintain the pipeline of supply through timely approvals.
David Hoy, NSW Regional Director
On the back of New South Wales and Sydney being recently ranked number 1 in the State of the States, we can continue to look ahead with a great degree of optimism, although I do anticipate a dampening of the “stampede mentality” that was a feature of 2015 to more sustainable levels of activity. There remains an unprecedented commitment to the delivery of funded infrastructure in this state, particularly within Sydney. In some ways Sydney is currently blessed with a multitude of opportunities, with the risk being the potential oversupply in the short term and projects potentially taking longer to get off the ground then ideally wished for.
The biggest opportunities for the year really revolve around reinvigorating Sydney’s great network of connected centres through their progressive transformation into vibrant mixed use precincts.
As such, the biggest opportunities for the year really revolve around reinvigorating Sydney’s great network of connected centres through their progressive transformation into vibrant mixed use precincts. This means understanding the success drivers for quality centres, and aligning investment decisions with knowledge of the prioritisation of government-led planning actions that is occurring on multiple fronts particularly where transport and educational and knowledge led infrastructure investment is most advanced or established. I also believe that, we will continue to see growing pressure on secondary middle ring industrial lands for repositioning, particularly where these lands are located on well-connected transport linkages to vibrant centres. The whole Parramatta to Strathfield corridor on both sides of the river will be focus. Somewhat overlooked or understated is the Pennant Hills Road Corridor, the amenity of which will be transformed with the North Connex project. Centres along this corridor are highly accessible with otherwise high levels of amenity.
2016 will also witness perhaps the greatest shake up in metropolitan planning and governance arrangements for many decades with the establishment of the Greater Sydney Commission and finalisation of Local Government Boundary reviews. In both cases the challenge for government will be to effectively manage this transition so that the momentum generated by buoyant market conditions is not inadvertedly stalled or negatively impacted upon. This will be no easy task and I foreshadow that industry participants should be prepared for some delay to projects in the short term as these new arrangement unfold.
Peter Hyland, QLD Regional Director
2016 is shaping up as an exciting year for Urbis in Queensland. While the state economy outside of the southeast corner is facing challenges, there are significant projects keeping the Urbis team very busy.
The $3 billion Queens Wharf project, which will be a city changing project for Brisbane, is moving into detailed design and approval phases, with Urbis deeply involved.
The $3 billion Queens Wharf project, which will be a city changing project for Brisbane, is moving into detailed design and approval phases, with Urbis deeply involved. As well, we continue to be involved in nearly all of the major development and renewal projects in Brisbane including the University of Queensland Master Plan, Yeerongpilly, Brisbane Racing Club, Boggo Road, and RNA developments, with a total value of some $3.5 billion. Many of these projects involve input across all of our business units. We also continue our profile as the leading CBD experts in Queensland with appointment to undertake the preparation of the Rockhampton CBD Master Plan.
We are also very involved in significant projects on the Gold Coast where the economy is experiencing strong activity. The recent securing of a high profile Planning Director to further drive our Gold Coast presence will help to facilitate substantial growth in this major city.
In March, Urbis celebrates its 16th Anniversary in Brisbane and now with over 100 staff, we look forward to another very positive year ahead.
The impact of the end of the resource construction boom and contraction of the resources sector have seen office space vacancy rise and property prices stagnate, however we have great optimism that 2016 will see a return to moderate growth and normalisation.
Ray Haeren, WA Regional Director
2015 has seen some significant challenges for the Western Australian property and development sector. The impact of the end of the resource construction boom and contraction of the resources sector with declining commodity prices have seen office space vacancy rise and property prices stagnate, however we have great optimism that 2016 will see a return to moderate growth and normalisation. Some highlights and opportunities for 2016 are:
CBD game changers – Elizabeth Quay, the major State Government waterfront precinct in the Perth CBD is now open to the public and work is about to commence on the new Ritz Carlton Hotel and apartments. To the north, Perth City Link is well advanced with the new underground bus station to open by the middle of the year and construction on Yagan Square underway. These projects will add northern and southern focal points and connections between the CBD which will provide major amenity and development focal points to the City.
Strata Title Reform – The new strata title legislation is before parliament, which will provide for community title opportunities previously not available within WA whilst also broader improvements which will benefit major apartment developments.
Retail Evolution and Growth – Perth’s retail landscape has been limited for a number of years through restrictive floor space caps which both limited the size of centres but also consequently limited redevelopment of centres in line with contemporary retail trends. A number of major expansions have now been approved and will move into development phase in 2016. Regional Centres at Whitford, Innaloo, Booragoon, Carousel and Karrinyup are well progressed, however we expect to see a new wave of developments for smaller district and sub regionals as they seek to reposition themselves with a focus on mixed use, fresh food and dining experience.
Government Asset Sales – With the State Government requiring revenue and the completion of major hospital projects, a motivated vendor exists for a range of strategic redevelopment sites in Perth. Hospital sites in Midland, Subiaco and Shenton Park are earmarked for new residential and mixed use developments, whilst a range of other government land holdings across Perth have been identified for sale and redevelopment by the State Government. The Federal Government is also contributing with the riverside Leeuwin Barracks site in East Fremantle being put on the market. Processes have also been set up to enable unsolicited bids to be considered, facilitating the private sector to target any government land.
Overall, there remain many opportunities in WA and although more competitive, a more sustainable and diversified growth trajectory lies ahead. What’s important is that developments are well considered and based on good advice and research… and that’s where we can help.
What’s in store for the property market globally, and how will these ripples affect the local scene? Urbis Director of International Property Economics, and Urban Land Institute Australia Chair, Peter Holland, shares his thoughts on the coming year.
At Urbis, our practice areas cover many different sectors and our services vary. Our national directors of Design and Economic and Social Advisory discuss where the opportunities will lie and the key sectors they expect will rise to prominence in 2016.