Apartments sales cycle turns, again

Interest in apartments is again on the rise, with developers across Perth unveiling new projects as the market emerges from a significant slowdown in sales and new product launches through much of calendar 2015.

Finbar Group was recently given the green light to proceed with a new development at The Springs Rivervale, while two days later the ASX-listed company purchased another plot of land in the area, for yet another project.

In close proximity, Golden Group is expected to lodge an application shortly for the first building at Belmont Park, a project anticipated to be valued around $200 million.

The new projects follow Psaros reporting strong sales success at its Scarborough development, Sundance, late last month, and Saracen Properties selling quickly at its new development, Rose on Angove, in North Perth.

Devwest Group is also understood to be gearing up for significant new developments in Subiaco and West Perth, as its Railway 23 project on Subiaco’s Railway Road nears completion.

The developments are part of a strong pipeline expected in coming months in Perth, with recent research by Urbis showing 16 new projects are expected in the third quarter of 2015, totalling 1,670 apartments.

That pipeline includes Far East Consortium’s towers at Elizabeth Quay, part of the Ritz-Carlton Hotel, and two mega-towers at Kings Square that have also received planning approval.

Another new project attracting interest from buyers is TRG Properties’ City Gardens development in Booragoon.

Although formal marketing has not yet been launched, TRG Properties managing director Simon Trevisan said the level of inquiry was quite significant.

Mr Trevisan said the 122-dwelling project was in line with TRG Properties’ strategy of developing projects in well-established suburbs where there was not already significant supply, and targeting them at owner-occupiers.

He said there were two major groups of apartment buyers – those buying as an investment and those buying as owner-occupiers. The latter group, which makes up the bigger proportion of purchasers, contributed to the slow sales experienced through much of the year.

“On the owner-occupier side, many of the buyers are downsizers,” Mr Trevisan said.

“Downsizers are quite a different market, they are typically not exposed to the job market or financing conditions, because they have a significant amount of equity in a home already.

“And the older segment of that market, they are very cautious in their outlook, and they are particularly concerned about the ability to sell their home quickly, in two or three years’ time, if they are signing a contract today.

“When there is a lot of negative sentiment around, what we are seeing is the sales cycle blows out.”

Mr Trevisan said the developer was seeing good signs that the pause, which he said occurred between September last year and July this year, was ending now.

“To some extent, people can only put their lives on hold for so long,” he said.

“In our market, the sales cycle got longer, but nonetheless the interest continued and we are seeing that turning around.”