Since the Federal Budget, the Gold Coast’s new projects market has been recalibrating. Buyers have become more selective, developers are rethinking their delivery models and a supply squeeze is forming.   

In this Q&A, Kollosche’s Managing Director Michael Kollosche sheds some light on how the market is changing and why.    

What has happened to buyer activity since the Budget announcements in May? 

“The biggest change has been an increase in buyer selectivity. While there is still strong demand for quality new projects, buyers are taking longer to make decisions and are doing significant due diligence around the developer, builder, construction timeline, delivery feasibility, as well as looking at overall value. 

“At the luxury end of the market, buyers are less reliant on finance but are highly discretionary. They will move when they see something genuinely difficult to replicate but are unlikely to compromise simply for the sake of entering the market.” 

Has the buyer demographic changed? 

“Owner-occupiers remain the dominant buyer group, specifically at the top end. Downsizers, empty-nesters and established local and interstate buyers are looking for larger-format residences that offer the scale of a freestanding home but have the added amenity, security and convenience that comes with apartment living. 

“Purchase decisions in the luxury sector are led by lifestyle, with buyers focused on location, scarcity, design, amenity, quality and confidence in delivery rather than pure investment yield. 

“The investor story is more relevant at the middle and lower price points. The Budget settings created a potential structural advantage for new builds over established investment property, so we expect investors at these levels to increasingly assess new property through that lens.” 

Are buyers preferencing off-the-plan product over completed stock?

“There is demand for both, but certainty has become increasingly important for many buyers. Completed and near-completed stock naturally appeals to those who want to see exactly what they are buying or potentially move into immediately.  

“With off-the-plan product, buyers are scrutinising the delivery proposition much more closely. Projects that have an experienced delivery team, strong developer backing and a clearly articulated construction pathway with construction already under way, hold a considerable advantage. 

“That doesn’t mean buyers have moved away from off-the-plan. It simply means the threshold for confidence is higher. Buyers will commit early when the product is sufficiently compelling and they have confidence it will be delivered as promised.”  

Are more developers moving towards vertical integration as construction and labour costs rise? 

“The construction environment across Queensland remains challenging. Cost escalation, labour availability, financing and programme certainty can all materially affect a project’s feasibility. 

“For some experienced developers, vertical integration provides visibility and control across procurement, construction, programme and quality. It isn’t the right model for every developer, but delivery capability has certainly become an important part of the conversation. 

“From a buyer perspective, understanding who is delivering a project and how it will be delivered has become almost as important as understanding the project design.”  

How many approved projects on the Gold Coast are unlikely to proceed and what does that mean for others that do?

“There is a clear distinction between projects that are approved and projects that are genuinely deliverable. Approval alone does not mean a project will be built. Developers still need to achieve sufficient presales, secure finance, appoint a builder, and make the construction economics work. 

“We can’t put a number on it, but feasibility pressures suggest that there will continue to be projects that are delayed, need to be redesigned or fail to get out of the ground. Data from the Australian Bureau of Statistics shows volatility in the apartment and multi-residential pipeline, with private sector “other residential” commencements falling sharply in the March quarter. 

“Projects that are well-capitalised, appropriately priced and moving into construction can ultimately create greater scarcity because the future supply pipeline may be considerably smaller than the number of projects currently being marketed or approved.”  

Have there been any other notable shifts in the new project space? 

“Our biggest observation is that the market is increasingly favouring projects based on quality and certainty. It is not enough to have a suitable location and some attractive renders. Buyers want to understand a developer’s track record, the design quality, and what makes a project unique. 

“At the same time, the long-term supply equation remains important. Australia continues to need new housing, yet higher financing and construction costs are making projects more difficult to deliver. That creates an unusual environment as buyers have become more selective in the short term, while the number of genuinely deliverable projects may become more constrained over the medium term. 

“For high-quality projects that have strong fundamentals and can demonstrate a credible pathway through construction to completion, we believe that distinction is becoming increasingly valuable.”

Reach out to our New Projects team for further expert advice and guidance on what is happening in the new projects market.

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