This article is from the Australian Property Journal archive
THE number of shelved commercial property and apartment projects has increased in March quarter compared to a year ago and at the same time, the value of commercial developments put on the backburner has soared to over $1.3 billion, according to a report.
Cordell’s Construction Market Movement Report found that in the first quarter, commercial developments in the pipeline held steady with 439 new projects compared to 437 in Q1 2015. There was a significant jump in dollar value with this quarter 2016 reporting $4.1 billion in value versus 2015’s $3.4 billion.
New South Wales and the Australian Capital Territory led the way in both number and value. The $800 million Manuka Green project in the Australian Capital Territory alongside the mixed use Goulburn St development ($171 million) in Haymarket, Sydney.
Victoria remained steady with major pipeline activity including the $250 million One Melbourne Quarter building. Whilst the total number of new projects in Queensland declined, the value increased from $455 million to $1 billion.
The Cordell report found the both the number and value of commercial property projects deferred jumped, rising from 66 projects to 83 projects and the value from $537.6 million to $1.3 billion.
In Victoria, two large commercial projects were put on hold – the Lorimer Fishermans Bend redevelopment ($300 million) with development approval and the $200 million Como Centre South Yarra. Both have been put on the market.
Cordell also found there were a significant number of commercial projects abandoned in Q1, jumping 13%. In total, 71 developments worth $426 million were shelved compared to 61 worth $300 million.
Victoria was again in the spotlight with abandoned projects increasing by 22% in number and 53% in value. There were 25 abandoned projects reported over 18 reported last year. Queensland also saw a significant number of commercial sites abandoned.
Meanwhile Cordell found the number of apartment developments abandoned totalled 155 projects valued at $517 million versus 125 projects valued at $619 million in Q1 2015.
According to the report, trends across most states and territories indicate the majority of abandoned projects were privately owned and funded.
Across Queensland, a staggering 38 projects worth $172.5 million were dumped. Victoria also reported 84 abandoned projects totalling $237 million compared to 60 projects worth $144 million last year.
Similarly in the apartments and units sector, the number of deferred developments also increased in Q1 with 153 projects on hold compared to 124 deferrals in Q1 2015.
Cordell found the New South Wales and Australian Capital Territory performed strongly with relatively low deferrals, but Victoria has seen an increase in projects put on the backburner.
The report found $148 million worth of apartments and units projects were deferred in Q1 2016 from $40 million Q1 last year.
According to Cordell, quite a large number of these deferred sites are also listed for sale.
On a positive note, deferrals in both Queensland and Western Australia have slowed comparatively keeping with the national trend.
Furthermore, the report found new apartment projects in the pipeline are either steady or showing slight signs of slowdown. New South Wales and the Australian Capital Territory have seen a decrease in both the value and volume of new projects whilst Victoria and Queensland have remained steady compared to Q1 last year.
Nationally, Q1 2016 reported 1428 projects entering the pipeline at a total value of $14.3 billion.
Meanwhile the number of apartments moving into construction nationally remained steady at 1027 projects with a total value of $7.84 billion versus 1013 projects value at $7.81 billion last year.
New South Wales and the Australian Capital Territory were the standout performers with 276 projects valued at $3.4 billion moving into the construction phase.
Projects moving into construction were the only good news story for Victoria, with 355 apartments valued at $2.59 billion starting.
In Western Australia, the apartments and units sector is reporting a small decline. Within South Australia, the number of apartments and units increased quarter-on-quarter however the dollar value was lower.
Australian Property Journal
