The rapidly growing market for premium luxury apartments is reshaping commercial real estate as much as residential. Ultra-luxury residential developments are multiplying around the country, spurred by increasing numbers of cashed-up downsizers whose goal is to not only swap the family home for a low-maintenance apartment, but one that is also opulently appointed and nestled in a top-quality complex offering five-star amenity. Tagged ‘right sizers’ by the property industry, these buyers are unwilling to sacrifice the comforts of the family home and often want to remain living locally near friends, workplaces and their usual conveniences – all of which is creating fresh opportunities for commercial agents to find, sell and market development sites and premium properties said Nicholas Heaton, CBRE’s Senior Director of Metropolitan Investments NSW.
“Out of all the asset classes luxury development sites are being received the best,” Mr Heaton said. “The reason for this is the ‘flight to quality’ which gained momentum especially after the record rises in home values we saw last year. A significant proportion of people who may or may not have been considering downsizing were able to sell their family homes for record prices then, and at the same time a lot of cashed-up expats were returning home due to the pandemic.”
The lure of luxury living
The shared desire among these two groups for high-end luxury living has been a key driver for the rash of premium apartment developments springing up across both capital cities and lifestyle locations such as the Gold Coast.
Developers of the new elite residential complexes are striving to deliver unprecedented styles of luxury living that have more in common with five-star boutique hotels than blocks of apartments. Far from only offering a pool, gym and perhaps a concierge in the lobby, marketers are aiming to lure prospective buyers by including such features as temperature-controlled wine cellars, space to store and display art collections, and resident’s-only facilities like rooftop dining rooms and upscale health and wellness. Buyers are often granted the option of a bespoke floorplans should an apartment’s initial layout not fit their requirements.
Finding suitable sites
Mr Heaton said the opportunity for commercial agents lay in the dearth of suitable, approved development sites for premium apartment projects. “These ‘right sizers’ might be in love with Darling Point, Kirribilli or Mosman where they have lived all their lives yet there are only so many luxury apartments that they can buy in those kinds of areas,” Mr Heaton said. “So that’s why this style of property is taking off.
“From an agent’s perspective the right thing to be targeting is the luxury development sites - because the bottom line is you want to list what you can sell. However, there is low supply. Agents need to go out and hunt for them and find them.
“Our team at CBRE for instance would look to identify land and properties with the highest potential for such a development, the sorts of properties where their use as a development site for a premium luxury residential project far exceeds any benefits gained from making improvements to the existing asset.
“Then we would contact the owners and discuss the fact we believe their property is worth far more as a development site than in its current state.
“The opportunity lies in finding those kinds of sites and educating the vendor of their highest and best use.”
Cost concerns are generally cancelled out by the premium prices such developments eventually attract. “Even though construction costs have gone up 35% to 40% that can be absorbed because the gross realisations have gone up as well,” Mr Heaton said.
Multiple projects
Numerous premium residential projects have hit the market in the past 12 to 24 months as the trend picks up steam. Mirador on the Gold Coast’s Chevron Island is typical of many coming to fruition soon in SE Queensland. Its ultra-luxury apartments offer hinterland and ocean panoramas, while the building includes a private rooftop dining room, club lounge, lap pool, gym and fully equipped wellness centre with infra-red sauna and Pilates machines.
Demand for premium Gold Coast apartments has risen so sharply that prices have more than doubled in three years said Colliers International Sales Executive Campbell Van Tongeren.
“Two to three years ago $550,000 to $600,000 was a high price for a three-bedroom apartment,” he said. “Now the average three-bedroom price is $1.8 million.
“Much of the influx over that time has come from interstate migration. People are attracted to Chevron Island because it’s quiet and convenient.”
Aria is among developers at the forefront of Brisbane’s premium apartment market. When complete, Upper House by Aria will be the tallest building in South Brisbane and offer Australia’s first double storey rooftop club as well as a wellness club to promote residents’ health, fitness and general wellbeing.
Upper House and Trellis, another Aria development in Brisbane, Trellis, are scheduled for completion next year. Trellis will come with a dramatic 10-metre-high lobby, work-from-home spaces and a fitness and yoga area.