[+] Facing Up to the Gold Coast’s Mission Impossible

Here’s the plan. In the next two decades, under new housing supply targets, a total of 100,254 high-rise apartments must be added to the Gold Coast’s famed skyline. It’s a big number. Huge. And according to local town planner David Ransom, who has crunched the numbers in the finalised South East Queensland Regional Plan (SEQRP), it is nothing short of “total fiction”. By his calculations, the plan anticipates the construction of a staggering 4010 high-rise apartments on the Gold Coast every year. That’s the equivalent of 48 residential towers of no less than 25 storeys—each comprising more than 80 apartments—rising annually from its already well-developed dunes. Significantly, it’s also double the delivery rate of the swag of apartments—not just high-rise but low-rise and medium-rise units—that have been completed across the city in the past few years at the height of a construction boom. “It’s a fantasy—absolutely,” says Ransom, director of the Burleigh Heads-based Zone Planning Group. “There’s no way we’re going to build that many [high-rise apartments] every year, particularly in the current climate … bearing in mind the 2032 Olympic Games commitments, large pipeline of public sector works and labour constraints.” The figures are based on the SEQRP target that 62 per cent of the city’s future supply of 161,700 additional homes needed to cater for its growth to 2046 will be apartments in high-rise towers (that is, buildings of nine storeys or more). ▲ It’s a fantasy—absolutely: Zone Planning Group director Dave Ransom. “Clearly the lion’s share of projected population growth on the Gold Coast is anticipated by the SEQRP to occur in apartment buildings exceeding 9 storeys in height,” Ransom says. Only 11 per cent (17,787) of its total future supply target is detached “slab-on-ground” housing, 17 per cent (27,489) low-rise homes and 10 per cent (16,170) medium-rise apartments. Of the 12 local government areas in south-east Queensland, the Gold Coast supply target has the highest proportion within high-rise buildings—well ahead of Brisbane (30 per cent) and the Sunshine Coast (16 per cent). Ransom says the SEQRP is placing “an unrealistic reliance on high-rise towers to do the heavy lifting” on the Gold Coast. Corroborating that, he notes: “We are already falling behind—substantially”. Three years into the 2021-2046 SEQRP, the city has not produced enough homes to meet the supply targets, he says. “We are already approximately 10,000 dwellings behind the nominated 143,913 target for high-rise, medium-rise and low-rise dwellings. “And we are in a development boom with more cranes on the city’s horizon than have been seen for many years.” ▲ The Coast is already about 10,000 homes behind the nominated 143,913 target. Jim Krebs is the Gold Coast director for Rider Levett Bucknall, an industry consultancy group well known for its crane index —a biannual barometer for construction activity. “If you look at where we’re at from a crane count perspective on the Coast, we’ve got about 57 cranes up in the sky at the moment,” he says. “We’re at the peak of apartment delivery this year and that crane count has already started to come off in the past six months. “So, it sort of shows you we’d have to run at that peak or higher for the next 20 years to try and achieve those sorts of numbers [of high-rise apartments] … which is just not going to happen. “If we’re already struggling to meet those targets and there are capacity issues present in the market, going forward it’s going to be an increasingly challenging problem hitting the numbers required and making up that shortfall.” It is the first time the crane count has fallen on the Gold Coast since 2019 but Krebs says that is not surprising “given the feasibility challenges in the market” and fewer projects coming out of the ground. And he says getting the future housing supply mix right will be more crucial than ever given the prevailing industry headwinds. “Various delivery models will be required to achieve that density. High-rise is one of them but the problem is the capacity of the market, from a builder and subcontractor perspective, to deliver it.” ▲ Prolific Gold Coast developer Barry Morris says they have the demands, but just can’t do the supply. That’s now the “bigger issue” at play, says prolific Gold Coast high-rise developer Barry Morris. “We have the demand already. We just can’t do the supply. “We’ve got to find more people to work in the construction industry … if you’re wanting a level of production, you’ve got to have the people that can do the delivery.” Morris says he is yet to look at the updated SEQ Regional Plan. But he agrees a nominated target of 62 per cent of the city’s future housing supply being within high-rise buildings “seems a lot”. “It seems high, yes,” he says. In the past few decades, Morris Property Group has been one of the city’s most successful developers, delivering a string of apartment towers in the beachside corridor between Broadbeach and Burleigh Heads. Nevertheless, its founder concedes: “Not everyone wants to live in a high-rise. Some people do like to have a small garden and somewhere for Fluffy to run around. “It’s all about product diversity and appealing to different markets.” But Morris says densification through more high-rise development is “just logic … otherwise we’re just building more and more roads and creating more and more congestion”. Not only that, he says, the demand for high-rise living on the Gold Coast remains strong—particularly from baby boomers. “They want a lifestyle and that lifestyle can only be delivered to them in the beachside corridor. Now, how wide that corridor becomes, of course, is the next question.” ▲ About 10 per cent of the built form on the Gold Coast currently is high-rise—by 2046, it will be 30 per cent, says CoreLogic research director Tim Lawless. Speaking at a Property Council of Australia event on the Gold Coast last month, CoreLogic research director Tim Lawless observed: “The landscape of this region is fundamentally starting to change”. Under the SEQRP supply targets, he says that change will be “more pronounced” on the Gold Coast than anywhere else in south-east Queensland. “At the moment, across the Gold Coast, we have about 10 per cent of the built form is high-rise. By 2046, that’s going to be 30 per cent.” Lawless says there is no other market that has stronger fundamentals than the Gold Coast. However, he warns it’s a double-edged sword. “The other side to that is there’s not many other markets that have the same sort of challenges, the worsening affordability like what we’re seeing here on the back of strong price growth, and very clear geographic supply side restrictions.” Ransom agrees and says therein lies the flaw to the SEQRP’s “overly optimistic” supply target. How the provision of 100,254 high-rise apartments will address the ongoing housing affordability issue is “the great unanswered question for the Gold Coast arising from the 2021-2046 SEQRP”, he says. Under its supply targets, Ransom says, the issue will only be exacerbated. “High-rise buildings are part of a variety of housing types which can increase supply in the city. “But because you’re using a lot more concrete, a lot more steel, a lot more glass, it’s a lot more expensive to build high-rises. ▲ Ransom says there are still “substantial holdings” that could provide thousands of lower density homes on the Gold Coast. “So, basically, we’re going to end up with hardly any of the affordable stuff and we’re going to have lots of expensive stuff.” He adds: “The reality is any of the developers currently with cranes in the air are already building high-rise apartments the vast majority of people in our society cannot afford. “They have to. There’s no other way. “Even if they wanted to deliver them affordably, they’re forced towards the luxury end of the market because that’s the only place they’re going to get the margins required to obtain bank finance.” Ransom suggests there are some “stroke of a pen” planning solutions that would ensure the Gold Coast does not become “an area where only very wealthy people have access to real estate”. Expanding the city’s urban footprint to open up new developable greenfield land is one. And reducing minimum lot sizes in existing urbanised areas is another. He says although the city is geographically constrained and land is limited, there are still “substantial holdings” that could be included within the urban footprint to provide thousands of lower density, cheaper to construct homes such as detached houses, duplexes and townhouses. “Yes, we’re eventually going to run out of greenfield land in this city because it is hemmed in by the ocean to the east, the mountains to the west, the NSW border in the south and other local government jurisdictions to the north “But we’re not there yet.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

Infrastructure
Phil Bartsch
Sun 10 Mar 24

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Construction Forecasting Benchmarks | Sydney | Tass Assarapin | Partner, Mitchell Brandtman

The New Advantage in Development isn’t location, It’s Intelligence | Sydney | Mark Bernberg | Co-founder, PRIMAX.AI

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