Fresh off completing Pienza Neutral Bay, developer <a href="https://www.apartments.com.au/developers/central-element">Central Element</a> is preparing its next move in the coveted Lower North Shore suburb.&nbsp;

Central Element (CE) has lodged plans for an eight-storey apartment building at <a href="https://www.apartments.com.au/new-apartments/54-64-barry-street-neutral-bay-nsw-2089">54–64 Barry Street</a>, a 1,659 sqm site just south of Military Road and the Neutral Bay town centre.

The $52 million development will involve the demolition of four detached homes across four lots to deliver 45 apartments, including eight affordable housing units to be managed by Bridge Housing. The mix will comprise six one-bedroom apartments, 24 two-beds, and 15 three-beds. The apartments will sit above three basement levels with 62 car parking spaces and 50 bicycle spaces.

<a href="https://www.apartments.com.au/architects/mhn-design-union">MHN Design Union</a> (MHNDU) has returned as architect following its work on Pienza, again shaping a mid-rise form with a clear street presence. The design features a lower four-storey podium element that responds to surrounding context, with upper levels recessed to reduce perceived bulk. Communal open space is proposed both at ground level and on the rooftop, the latter including an outdoor kitchen and swimming pool.

“The building has been designed with a lower four-storey element and with building materials commensurate with the character of the area,” Beam Planning noted in its submission to the North Sydney Council.

<img alt="Barry Street, Neutral Bay Nsw 2089" data-entity-type="file" data-entity-uuid="3a28ab3a-b8ba-4476-81cd-e4a8bb84f3a7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Barry-Street-Neutral-Bay-1327x742.png?VersionId=hlgvxszAWXIHgHtdR5HiwIKiSli2lLZV" />

Bridge Housing will manage the affordable units for a period of 15 years, as required under the Housing SEPP’s incentive provisions.

MHNDU’s design report further highlights the site's strategic location just 250 metres from key bus stops and 1.3 kilometres from North Sydney CBD, positioning it for transit-accessible housing supply. In their planning justification, the design team emphasised the site’s compatibility with emerging local character and scale.

Central Element has a solid apartment pipeline spread all over Sydney. They recently completed&nbsp;Pienza, 37 apartments just 500 metres away from the new project, and are currently building Ethos Chatswood, Ballamac House in Coogee, and Bianca on the harbour in Drummoyne.

They have plans for future projects in Mosman, Bondi Beach, Greenwich, Lavender Bay, along with a tower on the edge of Hyde Park.

Joel Robinson

First look: Central Element unveils second Neutral Bay apartment project

Real estate investment fund Wentworth Wentworth Equities is soon to launch a "Los Angeles-inspired" residential, leisure and lifestyle precinct in Brisbane’s Hamilton riverside ahead of the predicted Olympic-led population explosion for the city.

Drawing its style inspiration and name from Los Angeles’ renowned The Grove, <a href="https://www.apartments.com.au/new-apartments/hamilton-grove-19-hercules-street-hamilton-qld-4007">Hamilton Grove</a> will feature three residential towers and a vibrant street-level public precinct with curated luxury lifestyle, retail and dining offerings.

The first of the three towers, to launch in March 2026, will comprise 61 apartments, in the same building as a premium hotel.<img alt="Hamilton Grove" data-entity-type="file" data-entity-uuid="d227fe61-8392-45b7-b386-9133f29a249f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-01-19%20at%209.10.56%E2%80%AFAM.png?VersionId=HTCV35HZ4h84jQCmHwhsdIPN0ctO5d7Z" />

Wentworth Equities Executive Chairman Sameh Ibrahim said the precinct will be unique in its appeal to both residents and the wider community.

“Hamilton is already one of Brisbane’s most sought-after riverside suburbs and for good reason,” Ibrahim said.

“Where else in the world can you walk out of your front door and have everything you could possibly need at your fingertips? The city is just around the corner, the airport is only ten minutes away, you have the river and green spaces right there and premium retail and dining on your doorstep."

Wentworth Equities acquired the 7637 sqm Hercules St site in 2014, when Ibrahim said he had a "very clear vision" for the precinct, but ultimately it wasn't the right time to develop. He said Hamilton was still very much an "emerging precinct."

“Since then, Hamilton and surrounding suburbs like Ascot and Albion have significantly grown and matured into a precinct that aligns with our vision for Hamilton Grove. Brisbane as a whole has so much to offer in the way of lifestyle appeal, but as it stands it is so widespread – you go to Howard Smith Wharves for fine dining, you go to James Street for shopping, you go to West End to walk along the river – but what if you could go to Hamilton Grove for everything?

“Our vision is a precinct that brings together the best of Brisbane into one central space abundant with culture, class and culinary experience – a place that a lucky few will get to call home, but the rest of Brisbane still get to explore and experience at their leisure.”

<img alt="Hamilton Grove" data-entity-type="file" data-entity-uuid="46550990-8aeb-44d4-bb47-150cdca96529" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-01-19%20at%209.10.50%E2%80%AFAM.png?VersionId=bmCkApPKY_Bj3z02Q8vI7Kyo_caJXOnv" />

Experienced civil engineering contractor Mainland Civil has been appointed to commence early works for the project, adding Hamilton Grove to their extensive portfolio where it will join other iconic Brisbane developments including Queens Wharf, 300 George Street, Infinity Tower and 1 William Street.

Construction on Tower One is scheduled to commence in early 2026 with completion expected in late 2028.

Fast Facts 
 
• Three residential towers and a vibrant street-level public precinct with curated luxury lifestyle, retail and dining offerings. 
• Construction on Tower One is expected to commence in Quarter One 2026, with completion expected in late 2028. 
• 7,637 square metre site at 19 Hercules St, Hamilton (part of Economic Development Queensland’s 304 hectare Northshore Hamilton Priority Development Area). 
• 61 waterfront residences and skyhomes in the first tower, ranging from two to five bedrooms. 
• Hamiton Grove will be officially launched in March 2026.

"LA-inspired" Hamilton Grove to launch on Brisbane riverside

There’s a quiet patch of <a href="https://www.apartments.com.au/developments/hawthorn-vic-3122">Hawthorn</a>, between the bustle of Glenferrie Road and the curve of the Yarra, that rarely sees change, and even more rarely, new apartments. But that’s exactly where <a href="https://www.apartments.com.au/developers/pomeroy-pacific-quattro-corp">PQD</a> is planting Kooyongkoot: a deliberate, 18-residence answer to the question of what downsizers actually want.

“This is something this pocket of Hawthorn has never seen before,” says Fil Gacesa, head of sales at PQD. “<a href="https://www.apartments.com.au/new-apartments/kooyongkoot-hawthorn-1-kooyongkoot-road-hawthorn-vic-3122">Kooyongkoot</a> will deliver just 18 large-scale apartments in the heart of Hawthorn. It is the true definition of resort-style living.”

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/59D7VxzltmM?si=1iCzRD7FRneKryfv" title="YouTube video player" width="560"></iframe>

That scale is central to the story. It’s what allows for two dedicated lift cores, short corridors, and a generous lightcourt that draws natural ventilation and sunlight into every residence. It’s also what makes room for the sort of amenity usually confined to high-density towers: a fully equipped wellness centre with infrared and traditional saunas, yoga and pilates studio, cold therapy shower, and treatment room. There’s a golf simulator, car and dog wash stations, and extensive storage too, not bolted on, but baked in from the start.

But more than the checklist, it’s the design intent that carries weight. “This project has been many years in the making,” says Mark Pomeroy, Director of PQD. “Not just in planning, but in listening, to what our buyers and the local community are looking for”.

[smartcode_project:default project_id=102717 project_image_fid=355289]

That listening shows up in the materials, oak floors, natural stone, V-ZUG appliances, and in how space is handled. Penthouses feature private rooftop terraces with pools. Terraces and garden residences embrace outdoor connection. Inside, the layouts skew large and open, geared for hosting, not just housing.

Architecturally, <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a>’s approach is grounded. There’s no reaching for spectacle here. Instead, the building offers a sculptural calm, anchored by landscaping from Eckersley Garden Architecture.&nbsp;

“We wanted to create spaces that feel expansive, serene, and meaningfully connected to daily life,” said founding partner Chris Stribley elsewhere.

[smartcode_project:default project_id=102717 project_image_fid=355304]

That sentiment, calm, connection, echoes in the location itself. Kooyongkoot sits just a short stroll from Central Gardens, Fairview Park, and the Rivoli Cinema. Tram lines and schools are close, but the street is tucked, quiet, and leaf-lined.&nbsp;

“Residents of Kooyongkoot will be a short stroll from Fairview Park, Central Gardens, and the Glenferrie Road retail strip," Gacesa notes, "but you're also cocooned in this peaceful pocket behind extensive landscaping by Eckersley Garden Architecture.”

Kooyongkoot is set for completion in late 2026.

[smartcode_project_cta:default project_id=102717]

Staff Writer

The project that said no to compromise: Inside Kooyongkoot, Hawthorn

When long-time Ivanhoe locals Graeme and Catherine, decided it was time to downsize, they weren’t necessarily in a rush.&nbsp;

Like many in their stage of life, they had started thinking about apartment living, but anticipated making the shift in two to three years.

That timeline changed when they visited <a href="https://www.urban.com.au/new-apartments/candela-ivanhoe-40-upper-heidelberg-road-ivanhoe">Candela</a>, a new boutique development by <a href="https://www.urban.com.au/developers/salter-brothers">Salter Brothers</a>. The project ticked all the boxes they were looking for: location, quality design, and long-term lifestyle benefits, which prompted them to bring their decision forward.

“It was the right place at the right time,” they said. “We knew immediately it ticked all the boxes, and we didn’t want to wait.”

[smartcode_project:default project_id=342 project_image_fid=358855]

Their decision to downsize was driven by a combination of practical needs and lifestyle considerations. Their existing home, while much loved, had become increasingly difficult to maintain. It spanned multiple levels, included extensive front and back gardens, and was starting to show the wear that comes with age.&nbsp;

They were looking for a more manageable lifestyle, one with less upkeep and more freedom. A brand-new apartment with no maintenance requirements and the ability to simply “lock up and leave” gave them peace of mind and a greater sense of control over their future.

Financially, the purchase made sense as well. The available stamp duty savings, strong price-to-value offering, and timing of the settlement suited their plans, making the transition smoother and more cost-effective. The apartment's design and inclusions further supported their choice.

[smartcode_project:default project_id=342 project_image_fid=357493]

The layout was both functional and flexible: three bedrooms, a butler’s pantry, a separate laundry, and a large open-plan living area. It gave them the freedom to host a family, accommodate guests, or set up a home office. The expansive balcony and elevated views added to the appeal, providing a sense of openness and connection to the outdoors.

“It just had a really good flow,” Catherine noted, something they found lacking in many other apartments they’d considered, particularly in the established market.

Candela’s boutique scale was another deciding factor. With a smaller number of residences and a top-floor penthouse position, the couple felt the development offered the privacy and space they were looking for, without feeling isolated.

“We liked that it wasn’t a huge development. It felt well-balanced, modern but still with a sense of community, not overwhelming,” they said.

[smartcode_project:default project_id=342 project_image_fid=357508]

Equally important was the ability to remain in Ivanhoe, a suburb they know well and have deep roots in. After 46 years in the area, proximity to local parks, shops, and familiar faces mattered just as much as the apartment itself.

“We didn’t want to give up the community we’ve known for decades. Candela allowed us to upgrade our lifestyle while staying in the place we call home.”

With a Walk Score of 90, the village location supports a convenient, connected lifestyle. <a href="https://www.apartments.com.au/developments/ivanhoe-vic-3079">Ivanhoe</a> Station is just a eight-minute walk away, and the neighbourhood offers access to parks, cafes, restaurants, and schools along Upper Heidelberg Road, all within easy reach.

Beyond the apartment, the couple also saw value in the broader vision for Candela, one that integrates residential living with public spaces and local amenities.&nbsp;

The development introduces 58 new apartments as well as a mix of commercial and social spaces that integrate contemporary architecture with the suburb’s existing character.&nbsp;

At ground level, residents will find a charming café and a lifestyle wellness centre, perfect for unwinding and rejuvenating. Meanwhile, the rooftop garden offers a stunning vantage point for residents to enjoy breathtaking sunsets, host gatherings, or enjoy barbecues with family and friends. It's not just a place to live; it's a vibrant community where every moment is an opportunity to connect and create lasting memories.

[smartcode_project_cta:default project_id=342]

Why Ivanhoe locals are choosing to downsize to Candela

Mark and Roy Makari are expanding their presence in Sydney’s South West with a second major proposal for Leppington, this time envisioning a 900-dwelling mixed-use development just 850 metres from their previously lodged tower trio on Fifth Avenue.

Project management and construction management firm Creative Vision filed the plans for the&nbsp;multi-building project at <a href="https://www.apartments.com.au/new-apartments/230-rickard-road-leppington-nsw-2179">230 Rickard Road, Leppington</a>. The proposal seeks to establish a new focal point for the precinct through a high-density, transit-oriented development supported by diverse land uses.

According to the Scoping Report prepared for the Department of Planning, the scheme includes around 900 apartments across multiple towers, including 135 dwellings designated for affordable housing. A mix of market and subsidised apartments will be supported by ground-level activation through retail and office space, a childcare centre, and a hotel, forming a comprehensive urban precinct.

<img alt="Mixed Use Development 230 Rickard Rd Leppington" data-entity-type="file" data-entity-uuid="34797362-f3dc-4d84-8235-2657fc5f3bde" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Plan.png?VersionId=Uzckrz9tUpDQl5lX1_WMhjnv16bsr8wG" />

The Design Report by <a href="https://www.apartments.com.au/architects/studiosc-0">Studio SC</a> notes that the project “intends to deliver a high-quality, high-density built form that supports the vision for the Leppington Town Centre, integrating mixed-use outcomes and public domain upgrades.” The development is expected to be delivered in stages, although a precise timeline is yet to be confirmed.

The project will be assessed through a future State Significant Development Application, with the Scoping Report indicating the team will seek design excellence via a competitive process or through an expert design review panel. Early massing diagrams suggest a series of mid- to high-rise buildings framing a central landscaped spine, with emphasis on pedestrian permeability and public space.

The planning documentation flags a strong sustainability agenda, stating that the development will “respond to the urban heat island effect, incorporate water sensitive urban design, and prioritise active transport”.

<img alt="Mixed Use Development 230 Rickard Rd Leppington" data-entity-type="file" data-entity-uuid="369d7b54-1279-4cde-88ec-dcb215594414" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Podium_1.png?VersionId=QArL7B2kkLt63vl5xvL0FNV_ardAlez4" />

The proposal follows in the footsteps of the Makaris’ nearby Fifth Avenue site, where they’ve submitted plans for three towers comprising nearly 500 apartments, with 10 per cent dedicated to affordable housing. That project features commercial podiums, a childcare centre, and a new public park that would occupy more than a third of the site.

Both developments are situated within walking distance of Leppington Train Station and fall under strategic precinct plans promoting higher density housing. The town centre is undergoing substantial transformation, driven by state government planning reforms aimed at fast-tracking housing delivery.

Together, the two projects represent a combined ambition of nearly 1,400 new homes across just under two kilometres of central Leppington.

First look: 900-home mixed-use precinct planned for Leppington

Bis Shrapnel

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The upturn in demand for residential land in the major eastern state centres is expected to begin to peter out over 2017/18 as the new housing market faces emerging headwinds, according to leading industry analyst and economic forecaster, BIS Oxford Economics.
According to the company’s Outlook for Residential Land 2017 to 2022 report series, residential lot production in Sydney, Melbourne and South East Queensland is around its peak in this cycle and will begin to fall away. In contrast, demand for land in Adelaide and Perth has been weakening and will continue to soften.
However, BIS Oxford Economics senior manager and report series author, Angie Zigomanis, said that the forecast downturns in the eastern state centres are likely to be moderate. New supply in these markets has been more pronounced in the unit/apartment sector, with markets continuing to experience a deficiency of detached house stock that is likely to continue to underpin demand.
Nevertheless, new housing demand has still risen to high levels. Sydney is estimated to have recorded its highest level of residential land production over 2016/17. Lot production in Melbourne peaked in 2014/15 but has remained close to this peak in the subsequent two years. Similarly, the Brisbane, Gold Coast and Sunshine Coast markets have been experiencing a moderate upturn since 2013/14 after an extended period of weakness.
“Steady price growth in houses in the initial stages of the housing construction upturn improved land price affordability and shifted some demand from the established house market, to the new house and land market,” said Zigomanis.
“This not only encouraged a greater percentage of home purchasers to opt for a new house over an established one, but also established house owners to sell up and upgrade to a new, larger house.”
In contrast to the strength of the eastern state capitals, the Adelaide land market has softened considerably, in line with weak population growth and a subdued local economy. Lot production in 2016/17 was well below its peak and there are few key economic drivers on the horizon.
Meanwhile, the Perth market continues to struggle both in absorbing the declines in mining investment and in broadening its economic base. Migration and population growth have fallen to well below their pre- mining boom levels. Despite easing lot production, dwelling supply has remained well above underlying demand adding to a significant dwelling oversupply, which will weigh on any cyclical upturn in the coming years.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/12/7/lot-production-chart.jpg" alt="">
Lot production in the main east coast capital cities and the Gold and Sunshine Coasts has been underpinned by solid population growth and a housing deficiency, and has been facilitated by record- low interest rates that drove new house demand.
Zigomanis states that the rise in new housing activity is now easing some of the demand pressures in the market, while the deterioration of housing and land price affordability will impact demand for new houses and consequently limit the next round of lots produced.
“Most markets saw house price growth outpace land price growth through the early stages of the upturn, which improved the value proposition for a new house”, said Zigomanis. “That said, land prices have now largely caught up and this gap will have narrowed, making new housing less attractive.”
As a result, many cities are expected to see demand for land and lot production decline over 2017/18 and 2018/19.
Land production in Sydney was estimated at 11,300 lots in 2016/17; its highest level in the past 25 years. Although a sizeable dwelling deficiency is still estimated to be in place in Sydney, it is now being eroded by new dwelling supply. Meanwhile, the house and land price growth through the upturn has seen affordability diminish, as evidenced by rising net outflows of population from Sydney. This is expected to see lot production begin to ease back from 2017/18.
Record population growth has been the main driver of demand for new houses and land in Melbourne. Together with affordable land, this has also seen lot production sustained at record levels since 2014/15.
“However, there have been significant rises in land prices in Melbourne in 2017, and this has seen new house affordability deteriorate,” said Zigomanis. “While lot production is likely to remain high in 2017/18 as recent pre-sales of residential lots are delivered, the resultant weaker demand will cause lot production to fall away from 2018/19.”
After bottoming out at a 20-year low of 4,800 lots in 2012/13, the resultant undersupply in Brisbane initiated an upturn that has been supplemented by strengthening net interstate migration inflows, with an estimated 9,400 lots created in 2016/17. A further rise is forecast in 2017/18, before significant oversupply in the Brisbane apartment market plays through to demand for new housing.
The Gold Coast and Sunshine Coast markets have followed the lead of Brisbane. A weak market and emerging dwelling deficiency saw lot production rise from a low base in 2013/14 through to a peak in 2016/17. Both markets arguably benefit from migration from Brisbane, Sydney and, to an extent, Melbourne, as affordability becomes increasingly constrained in those cities.
Lot production in Adelaide has been more moderate than the eastern state centres. Low interest rates and modest house price growth has supported some buyer demand. However, slowing economic conditions and easing population growth are now weighing on the market.
Similarly, lot production in the Perth market is now falling after a peak in 2014/15. The decline in mining-related investment has caused net interstate migration to shift from an inflow to an escalating outflow, while overseas migration has fallen. Consequently, demand for new houses has slumped, impacting the land market.
Through the upturns in all markets, developers have sought to keep land affordable and maintain margins by steadily reducing the size of the lots sold. However, it appears that median lot sizes have stabilised in most cities in the past two-to-three years. This suggests there is a lower limit to what the market will absorb. Moreover, it makes the economics of development more challenging as rising costs cannot be met by further reductions to the size of lots.
An expected softening in house price growth over 2017/18 and 2018/19 is expected to play through to land prices, which in turn will make it more difficult for developers to maintain margins as construction costs continue to escalate. Together with recent solid rises in land prices making affordability more challenging, and strong construction alleviating some of the undersupply pressures, most markets are expected to experience an easing in lot production in the next two-to-three years.
Separately, changing lifestyle choices and affordability preferences have also seen greater demand for medium and high density dwellings, at the expense of new houses, across the country.
The downturn in new dwelling supply will eventually see a rising deficiency re-emerge in most markets. Together with an expected acceleration in economic growth by the turn of the decade, this will underpin rising demand through the next cycle. 
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jrobinson-rf4aSBido9

Emerging headwinds will dampen demand for new houses and land across the major centres: BIS

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Australia’s building market, a main driver of growth, is expected to decline over the next three years led by a drop in residential starts, says a new report by BIS Oxford Economics.
Residential starts are expected to fall 31 percent as key markets move into oversupply, according to the Building in Australia 2017-32 report.
Further, the BIS report says that the value of national building commencements peaked in 2015/16 at $107.3 billion (in constant 2014/15 prices), up 22 percent in real terms since the end of the resources investment boom in 2012/13. 
While a similar value of commencements is estimated for 2016/17, the report forecasts a cumulative 17 percent decline in the real value of commencements over the three years to 2019/20.
The report comes close on the heels of another BIS report that the muted retail industry will continue to struggle in the face of tough economic conditions and investment risks in the sector are higher. 
FIGURE 1: VALUE OF TOTAL BUILDING COMMENCEMENTS 
CONSTANT 2014/15 PRICES, $MILLIONS 
<a href="https://www.propertyobserver.com.au/images/2017/08/10/BISFig1.png" target="_blank" style="font-size: 12.16px;">Click to enlarge</a>
 <img src="https://www.urban.com.au/images/2017/08/10/BISFig1.png" alt="">
A soft economy, weak household income growth and subdued consumer spending will continue for some years, while Amazon’s entry will only add to the challenges to Australian retailers and shopping centres, says Retail Property Market 2017 to 2027. 
“The record breaking residential building boom is already turning, offsetting growth in starts for non-residential building through 2016/17,” said Adrian Hart, associate director of Construction, Maintenance and Mining at BIS Oxford Economics.
Residential building starts will decline sharply in the next two years, particularly in the investor-driven apartments segment, as supply catches up to underlying demand. 
BIS expects the total residential market to fall by around 31 percent over the next three years.
The decline will be even sharper for the number of private high density apartments getting underway nationally, being close to 50 percent.
FIGURE 2: NUMBER OF DWELLING COMMENCEMENTS 
<a href="https://www.propertyobserver.com.au/images/2017/08/10/BISHousing2.png" target="_blank">Click to enlarge</a>
 
<img src="https://www.urban.com.au/images/2017/08/10/BISHousing2.png" alt="">  
Figure 3: Dwelling Stock Deficiency, Thousands 
<a href="https://www.propertyobserver.com.au/images/2017/08/10/BISHousing3.png" target="_blank" style="font-size: 12.16px;">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/10/BISHousing3.png" alt="">
“Overall the slump will be similar in percentage terms to the residential downturns in the mid-1990s and the introduction of the GST in 2000/01,” the report said.
The economic forecaster’s outlook for residential building activity is more bearish than that included in the 2017/18 Commonwealth Budget, as well as last week’s RBI statement during its rate decision announcement.
The central bank has kept rates at a record low of 1.50 percent for a year now.
In the statement, Reserve Bank Governor Philip Lowe said the “current high level of residential construction is forecast to be maintained for some time, before gradually easing”.
“It may not be as rosy as all that,” said Robert Mellor, managing director at BIS Oxford Economics.
“Our dwelling demand/supply analysis indicates that all states with the exception of Victoria and New South Wales are either in balance or oversupply,” said Hart.
Dwelling completions are ahead of underlying demand over the next two years, implying a national residential stock surplus by 2018/19 despite New South Wales still being undersupplied.
“While high density dwellings do take longer to complete than traditional detached dwellings, when the end comes it will be very swift,” said Mellor.
“The high proportion of investor activity is another risk factor as investor sentiment can turn quickly. Overall, we expect 2017/18 will be the peak in high density residential completions, but that part of the market will slump around 50 percent in the subsequent two years. By contrast, a milder decline is forecast for detached houses. The saving grace is that the floor in residential commencements is likely to be higher than in previous busts.” 
Commercial property, however is a different story.
The Building in Australia report forecasts the value of non-residential building commencements to rise further in 2017/18 – following a cumulative increase of 25 percent over the past two years. 
“Improved economic conditions along the eastern seaboard are driving new commercial and industrial developments, particularly in New South Wales and Victoria,” said Hart.
“Offices, retail and accommodation commencements have been very strong, although the latter two segments will run out of puff in coming years given the project pipeline and fundamental demand drivers. By contrast, education and health segments are poised for further growth in commencements given a range of large tertiary education and hospital projects about to get underway.” 
However, the total value of non-residential building commencements is expected to ease later this decade, joining the downturn in residential starts.
“Except for a few sub-segments, the current upswing in non-residential building commencements is unlikely to be sustained over the next few years,” said Hart.
Weaker prospects for growth in retail sales will see a narrower pipeline for retail projects, while a tripling in accommodation starts since 2012/13 may also push activity in this segment over the top, resulting in a correction, added Hart.
Barring offices, transport buildings (eg. railway stations and airport terminals), health and education, most other non-residential building segments are expected to experience flat or declining commencements activity over the remainder of the decade.
BIS said the looming downturn in building commencements would be a strong challenge to achieving the three per cent growth targets for the Australian economy outlined in the 2017/18 Federal Budget.
“The strong growth in building commencements since 2012/13 provided a welcome boost for the Australian economy at a time when resources-related investment and construction activity fell heavily,” said Hart.
“But with residential building activity in particular now set for a sharp decline – along with its multiplier impacts on industries such as construction, manufacturing and retail – the Australian economy will need new investment drivers to support growth and employment.”
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j.ballantyne1990-6AQqhLzZaK

Residential building starts to plunge 31 percent in three years: BIS Oxford Economics

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There is no relief on the horizon for the muted retail industry due to tough economic conditions and investment risks in the sector are higher, according to forecaster BIS Oxford Economics’ latest report.
A soft economy, weak household income growth and subdued consumer spending will continue for some years, while Amazon’s entry will only add to the challenges to Australian retailers and shopping centres, says Retail Property Market 2017 to 2027. 
“While the spectre of large scale shop closures, declining retail employment and abandoned shopping centres that we see in the US is unlikely to be repeated to the same extent in Australia, the risks associated with retail property investment are arguably higher than at any time in the past,” it says. 
Returns are expected to vary significantly from centre to centre, while some will fail, it cautions. 
Report author Maria Lee observed that the retail environment remains challenging against the backdrop of a difficult economic transition—away from an economy underpinned by a resources boom and back to more broadly balanced growth. 
“This is proving to be a long, hard slog. We expect retail expenditure to remain muted for the next three years,” she said. 
Shopping centres will struggle to match the pace of aggregate turnover growth due to heightened competition from additional retail floorspace and the continued growth of online sales—now given fresh impetus by the expansion of Amazon. 
Other challenges in converting turnover growth to additional centre income include over-rented shops, high leasing incentives, poorly performing anchor tenants and pressure on retailer profit margins. 
In addition, changing consumer spending patterns means centres must constantly be reinvigorated — and this involves spending money, it concludes.
“We forecast shopping centre net income growth to barely keep pace with inflation over the next five years, with probably more downside than upside risks to those forecasts” says Lee. 
On a positive note, however, BIS Oxford Economics said retail property remains in high demand among investors, with the dollar value of transactions seemingly held back only by a lack of stock for sale. 
Meanwhile, existing owners are pumping large sums of money into (often defensive) refurbishment/expansion projects. Competition for assets is driving yield compression, thereby boosting centre values and total returns. Average yields for regional, sub-regional and neighbourhood centres are all below pre-GFC levels. 
“We can’t see much further yield firming from here. If anything, the main risk is in the opposite direction” said Lee. 
Putting income and yield forecasts together, BIS Oxford Economics forecasts modest IRRs of below 7% over a five-year investment horizon, with considerable variation from centre to centre. 
Some centres are at risk of losing anchor tenants and/or specialty retailers and will underperform. Even for stronger centres, Lee notes that “even experienced shopping centre managers may have trouble in dealing with what are arguably the toughest conditions yet in retail property investment.” 
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Retail property investment risks higher than ever: BIS Oxford Economics 

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Stricter regulation around lending and more levies on foreign buyers was likely to impact apartment demand in inner Sydney, according to BIS Oxford Economics.
Surging prices had also pushed yields to long-term lows, but this price growth is now slowing, the economic forecaster suggested. f
Foreign buyers still however prefer to invest in Australia given the stable political environment, while local investors still benefit from low interest rates, said BIS. 
It noted that while oversupply concerns had been voiced for Melbourne and Brisbane, Sydney’s new apartment supply had already peaked at 3,698 completions in 2015, falling to 2,521 last year, and it was likely to remain largely steady at 2352 in 2016-17.
Though demand is expected to be weaker ahead, new Sydney supply is set to surge over the three years to 2019-20, with completions averaging 4,650 apartments a year over the period.
About 2,800 units were already under construction, with other large projects locked in and pre-selling, the research said.
Occupier demand mainly came from three groups — students, particularly overseas, young adults in white-collar employment, and empty nesters. 
Vacancy rates have been tight for more than a decade, after falling below the balanced market rate of 3 per cent in inner Sydney in June 2005, as demand outstripped construction for much of this time, The Australian reported.
Vacancy rates also tightened to 1.7 per cent in February 2017 after rising to 2.6 per cent in June 2015. 
Meanwhile with price increases, yields on the median two-bedroom apartment dropped to an estimated 4.17 per cent at June 2017. The median two-bedroom unit rent in inner Sydney was an estimated $745 in June, with the median price at $930,000, said BIS.
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Apartment demand in inner Sydney likely to weaken as tougher regulation bites

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UK-based advisory firm Oxford Economics has acquired a controlling stake in leading Australian analytics and forecasting firm BIS Shrapnel for an undisclosed sum, which the former says will make it the largest independent economics research firm in the world. 
The new organisation will be named BIS Oxford Economics and will see the merger of BIS Shrapnel  with the Australian arm of Oxford Economics. BIS Shrapnel generally focuses on the building, construction, property and mining sectors.
“This investment by Oxford Economics sees the merging of BIS Shrapnel’s deep knowledge of the Australian and New Zealand economies with Oxford Economics’ detailed understanding of the global economy,” said Robert Mellor, managing director, BIS Oxford Economics.
The new firm will be better able to assess market trends and quantify the impacts for its clients at the global, national and city levels, said a media release.
“The acquisition brings together Oxford Economics’ rigorous global modelling and analytical framework with BIS Shrapnel’ expertise across the Australian economy, in particular in forecasting investment cycles,” said Adrian Cooper, chief executive officer and chief economist, Oxford Economics.
“This agreement expands the Oxford Economics Group to more than 300 staff globally, making it the largest independent economics research firm in the world, and allows us to support our clients in understanding economic trends and their impacts both domestically and globally.”
Highlighting this, Mellor added that “major political, social and economic events in nations abroad have profound global impacts – look no further than Brexit or Trump”.
The new entity will operate from BIS Shrapnel’s existing offices in Australia. Robert Mellor will lead BIS Oxford Economics, with Dr Frank Gelber to remain Chief Economist and Director.
All of BIS Shrapnel's staff will be retained.
 
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