There are many things that strengthen commercial real estate in Surfers Paradise. Population growth, strong economic performance and high demand for commercial property all have a part to play, but it can also rely on other industries, like construction. Fortunately, investors considering Surfers Paradise commercial property could have a bright building light on the horizon.
The volume of new builds in Queensland is set to experience strong growth in 2015, according to new research from the Housing Association of Australia – which could offer some great potential for commercial investment as the year rolls on. A fresh supply of new homes could be a panacea to buyers who have been struggling with price growth in past months. With building in a similarly strong position in southeast Queensland, Surfers Paradise could just the ticket for your commercial dream.
The building sector provided consistent support for the housing industry and Queensland economy throughout 2014. Detached home approvals rose 14 per cent across the state in the December quarter last year, and an impressive 50 per cent in the Gold Coast area alone. The HIA's National Outlook for summer 2015 has confirmed that this is likely to continue.
Nationwide, new home building is being boosted in part by the low interest rate environment and a consistent taste for new housing from buyers and investors alike – and Queensland is feeling the flow on effects. Record low interest rates and improved home prices have bolstered the industry's performance, finally enabling the number of new builds to catch up with population growth in the Sunshine State.
According to the HIA, the volume of new builds in Queensland will rise 14.9 per cent over the next year, followed by 2.6 growth per cent in 2015/2016. This will bring the level of new homes up to 41,918 for the period with an additional 40,000 commencements predicted thereafter.
"Improved new home building activity will be a boost to wider economic growth across Queensland," HIA executive director for Queensland, Warwick Temby, said.
This is great news for the commercial property market in Surfers Paradise. An expanding economy and a surging number of new home will likely attract more buyers and visitors to the area, while supporting commercial profits and local business.
While booming construction is fantastic for the future of Queensland's commercial sector, there are a few issues that need to be overcome in the near future. Land supply needs to be adequate enough to meet demand and the state's taxation system to be up to scratch.
"The heavy taxation burden on new housing, as well as planning delays and other obstacles add significantly to the final price of new homes for ordinary Queenslanders," Mr Temby noted.
"We look forward to working with the new state government on solutions to these issues."
Similarly, HIA senior economist Shane Garrett points out that, as things stand, there are some risk factors popping up that might suggest that land is running into a supply bottleneck. He notes that affordable housing needs a consistent supply of affordable land, something that policy makers have a great deal of influence over. If more land is brought onto the market, more homes can be built – the ideal combination to keep up with swelling demand for new builds.
"It is important that land supply policy across Australia is consistent with the goal of housing affordability," he said in a 19 February release.
With Queensland's economic future falling squarely with the construction industry, buyers and commercial investors in Surfers Paradise have a lot to look forward to over the next few years. Speak to the commercial real estate professionals at Ray White if you would like to know more about how residential construction could support your commercial interests.