The State of Play Address
The Gabba and Brisbane Live arena?
The state and federal governments have reached a funding agreement to redevelop the Gabba and Brisbane Live. Queensland state government will fund the Gabba to the tune of $2.1bn, up from the original estimation of $1bn in 2021, with demolition commencing in 2026 after the Ashes cricket tests in 2025. Monumental cost blowout aside, this is a big win for some property owners. The state government has expanded the Woolloongabba PDA (priority development area), allowing urban renewal to be fast-tracked in certain locations between Woolloongabba and South Bank.??
Brisbane Live arena is expected to host the Olympic swimming in 2032, with the federal government chipping in $2.5bn in funding for the 18,000-seat venue. The legacy of Brisbane Live post-Olympics is of greater benefit to Brisbane as opposed to the rebuild of the Gabba, which only increases the stadium capacity from 42,000 to 50,000.?
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101 Albert Street
Major Queensland Developer QIC has lodged plans for a 40-level commercial tower at 101 Albert Street, aiming to “create a distinctive urban marker in the heart of Brisbane city” according to QIC. The project is positioned directly opposite the Albert Street Cross River Rail Station, bordering Brisbane CBD’s midtown and government precincts. The significance of this project reinforces the notion that the nucleus of our CBD is changing, new thoroughfares are being created, and there is every reason to be excited about the shape our city is taking.?
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Rates & Yields??
The spread between buyer and seller expectations has widened and led to a decrease in transaction volumes compared to the prior corresponding period last year. This has been instigated by the huge divergence in forecasts from the most well-respected economic institutions and commentators. It is difficult to get to a valuation or development conviction when the outlook changes so drastically from one forecast to the next. The one clear thing is that we are at an inflection point, and this month’s data releases will go a long way towards clarifying what’s next for inflation, interest rates and commercial property values. The latest guidance from the RBA is that rate increases may pause in the near future, possibly, somehow, depending on a few things, no promises… So it’s easy to understand why some buyers AND seller are sitting on the fence.
Student Accommodation
?“The students are back!” it’s a great boost to our economy and is the latest thematic on display from the larger end of town. Major institutions are pivoting towards student accommodation projects due to the expected influx of students over the coming period, triggered by China’s decision to stop recognising online learning at foreign universities. Already in the midst of a housing supply crisis, it is hard to understand how these students will be housed without a significant chunk of investment into the sector. It will also be interesting to see how quickly these projects can come out of the ground, given the labour and material shortages Brisbane is experiencing will make it difficult to meet demand. This should put more pressure on traditional housing market vacancy.?
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The Usual Suspects
As well as student accommodation, developers and investors continue to pursue projects and investments in the Industrial sector and traditional build-to-sell residential markets, as vacancy shows no signs of easing in either space, no matter how hard and fast the RBA push rates. Industrial and residential rents continue to tick upwards and as construction costs plateau or reduce, more and more projects in these sectors will become viable.?
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Data Points
?March Data So far:
·????????February NAB Business Survey
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?“Overall, the survey confirms the ongoing resilience of the economy through the first months of 2023, though we continue to expect a more material slowdown in demand later in the year when the full effect of rate rises has passed through.” (Alan Oster, NAB Chief Economist)
?·????????February Labour Force Survey
?“The February increase in employment follows consecutive falls in December and January. In January, this reflected a larger than usual number of people waiting to start a new job, the majority of whom returned to or commenced their jobs in February.” (Bjorn Jarvis, ABS head of labour statistics)
?Keep your eyes on:
·????????February Retail Sales (28/3)
·????????February Monthly CPI Indicator (29/3)
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For further information contact:
Hugh Menck MRICS
Head of Capital Transactions
+61432560589
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Jake Taylor
Executive | Capital Transactions
+61491901488
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Disclaimer: All articles are for general information only and should not be relied on as advice. You should consider your personal situation and seek advice that is specific to your circumstances before making any decisions based on this information. If you have any questions please contact our office 07 3231 9737. McGees Property Brisbane is a?Liability limited Company by a scheme approved under Professional Standards Legislation.