22/04/2016 - 14:56

Mirvac changes tack on apartments

22/04/2016 - 14:56

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Mirvac Group has shifted its strategy to reflect the nature of Perth’s patchy apartments market, rolling out more affordable dwellings at its Leighton Beach and Claremont projects instead of multimillion-dollar luxury apartments. 

Mirvac changes tack on apartments
ON THE WAY: Mirvac expects to start building its Claremont apartments, The Grandstand, in the 2017 financial year. Image: Mirvac Group

Mirvac Group has shifted its strategy to reflect the nature of Perth’s patchy apartments market, rolling out more affordable dwellings at its Leighton Beach and Claremont projects instead of multimillion-dollar luxury apartments.

The ASX-listed developer recently began construction at the second stage of its Latitude Leighton Beach project, with 50 per cent of the apartments having been sold.

The first stage at Leighton Beach was largely high-end dwellings, some carrying multimillion-dollar price tags.

However Mirvac Group head of residential development, John Carfi, said changes in the market since the first stage of Latitude was completed necessitated a different approach for the second tranche.

“What we’ve found is, and it’s been pretty well nationally since the last cycle, the top end apartment market has waned significantly; there is no depth in the market at that price point,” Mr Carfi told Business News.

“So what we’ve tried to do is mix up the product and price point differently.

“There are still some high-end offerings but nowhere near the level that there was in the first stage.

“It’s fair to say that market has all but disappeared nationally.

“Unless you’re doing small, boutique developments of 10 or 12, you can’t really make a project stack up like that.”

Mirvac is taking a similar approach at Claremont, where it is expecting to begin construction on The Grandstand by the end of the year or in early 2017.

Mr Carfi said sales at Claremont had been tracking well, again due to meeting the market on dwelling choice.

“We are trying to identify people who already live in the area and are looking at downsizing, then you’ve got young people and young families looking to enter that market at an affordable price point, so you need to be at a price that’s comparable to existing stock,” he said.

“The other thing is that you need to have a variety of stock to suit people at different stages of their life.

“There isn’t a great deal of supply in the Claremont market, so what we are doing is providing a bit of relief in supply in a high-density scenario.”

Mr Carfi said Mirvac also remained committed to the next stage of apartments at its Burswood Peninsula landholdings, which it was developing in a joint venture with national property fund manager ISPT.

A design is well progressed for Tower 6, while Mr Carfi said he expected a sales launch within the next 12 months.

Again, Mirvac has altered its offering in favour of less-expensive apartments at Burswood.

“There has been a change in buyer composition since the last stage,” Mr Carfi said.

“We did four-bedroom apartments in the last stage; it is clear there is no market for that right now so it’s a slightly smaller and different composition of product.”

Overall, Mr Carfi said Mirvac was confident in the prospects of Perth’s apartments market, despite subdued sales activity being experienced by developers across the city.

“Patiently and cautiously we are going to hang in there and trade through our stock,” he said.

“Our view is (that) within 12 to 18 months we will start to see some recovery in that market, particularly when sites are well located.”

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