September 27, 2021

Investors return to the apartment market in South-East Queensland


Over the past six months, Merricks Capital has been assessing investment opportunities in residential development across South-East Queensland.

Yields on units in Brisbane and the Gold Coast have been progressively increasing, whilst yields in Melbourne and Sydney remain stable at 3.4%. This has resulted in a spread on the southern capitals of 1.5%-2.0% and increased activity in residential development in Brisbane and on the Gold Coast.

Supply in South-East Queensland is at its lowest level since 2010 with Urbis reporting a 7-year low in apartments available for purchase off the plan.

“Demand on the Gold Coast has been fuelled by recent migration led by pandemic-inspired sea-changers and intrastate downsizers which has led to record apartment sales and supply levels falling to historical lows” – Urban Developer

Vacancy rates across are also sitting at all time lows, sub 1.5% in the central and sunshine coast.

With a show of demand for residential property, developers are once again gaining confidence in the apartment market and are looking to commence projects in these areas of Queensland, resulting in increased opportunities for investors and room to be selective.

Several opportunities in this space have recently been reviewed for the Partners Fund, all with 60-100% presale coverage and we currently have one term sheet issued for a residential development on the Gold Coast.

There has been one change to the portfolio this week with a $10.3m investment added to the Partners Fund and Agriculture Credit Fund, for a 717-hectare sheep grazing and cropping farm in the Macedon Ranges in Victoria.

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