Investment Volume in Melbourne Soars

Investment Volume in Melbourne Soars

Great news for those in the construction and associated industries, as well as the Owners Corporation management industry;

Robust investor and developer demand has led to a strong investment volume in Melbourne, with new research revealing $2.6 billion was invested in residential development sites in 2014.

DTZ Research’s new report Melbourne Residential Development Strategies shows that $2.6bn was invested in residential development sites in the CBD and inner-Melbourne fringe market across 171 transactions, with offshore investors committing a little over $1.0bn (40 per cent) across 47 transactions. Consequently, the average deal size of overseas investors, at an average of $22m for the year, was consistently larger than their domestic counterparts who registered a volume of $1.5bn at an average of $15m.

DTZ Director of Capital Markets Patrick O’Callaghan said development site demand was at an “all-time high” from offshore developers, a fact which was reflected in the enquiry numbers.

“However, local Australian developers are strong if not a little stronger for non CBD growth catchment locations, with local developers accounting for 60 per cent of development site transaction volume.”

The report also reveals that there was a steady transition of certain household types towards living in flats and units over the past decade, with this trend predominantly concentrated in smaller household types, such as Lone person and Couple without children households. Given these trends, as well as the underlying population growth, there is population-driven demand for 35,000 units to 2021 and a further 54,000 units to 2031.

Dr Dominic Brown, Head of South East Asia / Australia & New Zealand Research and lead author of the report, commented: “At one end of the spectrum, young couples will continue to prefer unit living in light of the lifestyle choices it offers. At the other end, although many aged couples prefer to age ‘in situ’, there is growing evidence that downsizing is becoming more prevalent. Both these factors will lead to increased demand for apartments going forward.”

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