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Apartment building buoys Surfers Paradise property

By Greg Bell

When you're investing in commercial property in Surfers Paradise, it often pays to be aware of ongoing developments and announcements about policy. House prices, interest rates and construction can each suggest how well a market is doing and the Reserve Bank of Australia's Financial Stability Review for March has some interesting insights in this regard.

After it took to the cash rate with a pair of scissors back in February, the bank said lending has increased for residential and commercial property alike – and while the commercial market might not get quite the new exposure as residential, the monumental rise in the residential market will likely have some positive flow on effects. 

Multi-unit rewards

The residential market has had a big hand in supporting all aspects of the Australian economy and looks like it will continue to do so. Construction has had an important role to play, particularly for multi-units. As a whole, building work has contributed around $50.35 billion in the final months of 2014, according to the Australian Bureau of Statistics. In particular, there has been an impressive boom in apartment building.

This holds some great potential for commercial investors, as continued growth in building can help support population growth and even encourage more people to make the Sunshine State their home. 

In fact, the Gold Coast has recorded an impressive performance for new home building across all parts of the market. The Housing Industry Association (HIA) found that the Gold Coast saw a 137 per cent increase in multi-unit approvals in the three months to January alone and a 51 per cent rise for detached houses. Overall, this equates to a staggering 103 per cent rise in approvals for the period. Overall, this is far and away the highest level of any region in Queensland.

In even better news, Warwick Temby HIA executive director for Queensland said all markets across the state recorded an improvement in one segment of the construction market. While the Gold Coast is supporting residential building, the future is looking bright for economic development throughout the state. Commercial investors should take a lot of heart in these results, as it could suggest more people are settling in the region. 

"All these approved building projects will turn into work on the ground and new jobs in the home building industry for many months to come," he said in a 12 March release.

"Home building will be making a significant contribution to growth in the Queensland economy over 2015 and also to growth in Government revenues from the taxes and charges that apply to home building."

With the residential market providing a crucial support for commercial property in Surfers Paradise, get in touch with the team at Ray White to investigate your options. 

Assessing Surfers Paradise commercial property

The Reserve Bank's review notes that there has been a fair bit of competition in the commercial sector in past months, which has driven lending activity. At the same time, the bank noted that risks in this sector appear to be growing. This is something that commercial investors should keep in mind. The bank said growing risks are in part a result of declining yields and rising vacancies, but these insights could offer investors in Surfers Paradise some opportunities to think carefully about how they manage and maintain their commercial assets.

Advice and guidance can be especially useful in this scenario, particularly when you are new to the Australian market. Luckily, the team at Ray White are on hand to provide you with this kind of support.

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