According to a report in the Australian Financial Review, a forecast from the Commonwealth Bank for 2016 predicts moderating levels of residential construction, particularly in the apartment sector, will result in development sites turned over for commercial use.
“The easing in high density apartment development is likely to see an increase in the sale of sites once earmarked for residential projects," CBA head of property strategy and research Kevin Stanley said in the forecast.
"These sites may provide the opportunity to offer uses to service the market created by a fast increasing population in these new high density suburbs. Ideally, shorter-term uses in existing buildings may provide the option for more intensive development in the future, when the residential development cycle strengthens once again,” Stanley said.
Stanley’s prediction follows a similar one from the Housing Industry Association, who earlier this month released figures revealing a downturn in new housing approvals, particularly in the apartment sector, over the December 2015 quarter.
Stanley also said that share market upheaval, both at home and abroad will help the popularity of commercial real estate as an investment avenue, with Brisbane and Melbourne likely to be locations where sites earmarked as residential are handed over to commercial developers.
“The popularity of commercial property as an investment is set to increase further in 2016, amidst volatility of global and local financial markets,” Stanley said.
Stanley’s prediction for Brisbane may be a good thing for the city, as an oversupply of apartments has been raised numerous times as a significant hurdle for the Queensland capital.
Speaking to Your Investment Property Magazine last week, Simon Pressley, managing director of property investment advisory firm Propertyology, predicted a tough few years for Brisbane’s apartment market following a spike in construction in recent years.
“Historically, Brisbane City Council approves 4,000 apartments each year; however, 24,000 have been approved over the last two years. Much of this new stock is being purchased by ill-informed investors and they are unlikely to get the rental income which they had hoped for,” Pressley said.