25/09/2007 - 22:00

Sector to ride out the space squeeze

25/09/2007 - 22:00

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Land supply, housing affordability and office space shortages in Western Australia emerged as hot topics for the property industry in 2007.

Sector to ride out the space squeeze

Land supply, housing affordability and office space shortages in Western Australia emerged as hot topics for the property industry in 2007, and those at WA Business News’s recent forum say these issues will continue to dominate the sector into the future.

Satterley Property Group chief executive Nigel Satterley said the residential market was in for some interesting times, with an oversupply of established homes providing buyers with more choice and bargaining power.

Mr Satterley believes the land shortage crisis that has gripped WA over the past year is improving, as is housing affordability.

 “Last June, established listings were about 6,000 [properties]; they’re now about 21,000, so it shows you how quickly it changes,” he said.

“This overhang of residential supply will take us into the end of the first quarter of 2009, before it recovers, so there is still a lot of product yet to be absorbed into the market.”

Despite the oversupply of lots in some areas, however, Mr Satterley said developers were still conscious of affordability constraints and were providing a good mix of housing product.

“It’s good to see that the land developers and builders can put out house and land packages from about $280,000 up to $350,000, which is about the maximum a first homebuyer can afford.”

Urban Development Institute of WA executive director Debra Goostrey said the industry was being very responsive and creating more affordable products, such as cottage lots, particularly in the areas of Cockburn and Kwinana.

“The lower end of the industry is responding especially well with an appropriate product mix that will encourage those first homebuyers back into the marketplace. It’s still an active market but certainly not what it was before,” Ms Goostrey told the forum.

She said that, while the market had experienced a correction, the industry needed a long recovery process to build up stock.

The growth in WA’s housing market has also been good news for the retail sector, which is expecting continued demand for bulky goods and convenience items, and more shopping centre developments to meet it.

Centro Properties Group general manager WA Bruce McCully said the new housing market had been a boon for retail.

“The retail sector has grown considerably in WA because of all the new homes and [it has] done wonders for the bulky goods sector and the Harvey Normans of the world with their furniture and plasma screens,” he said.

“WA is growing a lot faster than the rest of the country for at least the last three years, so with low unemployment and population growth, I see that retail demand continuing.”

In the commercial office sector, Pivot Group chairman Peter Laurance expected a long period of low vacancies, both in the Perth CBD and on the city fringe, which had extended to areas such as Wembley, Burswood, Victoria Park, and South Perth.

“One way or another, I think we will have to battle through [the boom]. In the commercial office sector, the tenants will have to pay for it, because the costs are going up every year,” he said.

“Tenants are short sighted in not choosing their office space requirements with a long lead time because there’s a long lead time to provide the stock.”

Another emerging issue for commercial property players is the general push to join the ‘green building’ movement, by having existing and new office buildings rated on the basis of water and energy efficiency.

Perron Group general manager Ian Armstrong said good design, as well as simple measures like recycling, should not be ignored.

“We must maintain intensity on green issues because the tenants are asking for it and the government is specifying that space has to have certain ratings,” he said.

LandCorp chief executive Ross Holt predicted that future office buildings would be designed for people first, rather than leaving them as an afterthought.

“If you look at commercial buildings, where do people want to work? If there’s going to be a shortage of people, how will you attract and maintain people? Green buildings may cost you a premium, but you will reap the benefit,” he said.

WA’s ageing population is also weighing on the minds of many in the development game.

Mr Holt said the baby boomers would keep the top end of the residential market alive, particularly in higher density developments.

Port Bouvard Ltd chief executive Ross Neumann said the baby boomer market was the future, and had underpinned the success of its Port Bouvard estate.

 

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