An inability to pre-sell enough apartments may stop a number of apartment projects from proceeding in Canberra, a report from Colliers International has claimed.
Ariel Pollard, director of research at Colliers International, said financing restrictions imposed following the fallout of the global financial crisis (GFC) has seen higher presales required before developments are considered viable and construction commencing.
“There are seven projects comprising 673 apartments which are yet to commence,” she said. “They are 40 per cent sold and will be under threat of not going ahead if presales for these projects are not met and further developments are taken to market.”
According to the Colliers International Canberra Apartments Research and Forecast Report – Second Half 2012, new projects which are complete and under construction are faring well with 91 per cent and 85 per cent sales rate respectively.
Despite a slowdown in the market, about 559 apartments were sold in the past six months with 76 per cent located in the inner north. The total number of apartments in the inner north had risen by six per cent to 1,972, whilst the inner south reported a 22 per cent decline.
“The inner north still retains the highest proportion of apartments sold at 83 per cent, which is actually an increase of five per cent over the past six months,” Ms Pollard said.
“On the other hand, the inner south has seen a decline in apartment sales over the same period, with 63 per cent of the 879 apartments sold.”
Paul Powderly, state chief executive at Colliers International, said the ACT residential market would remain solid for the next three to five years on the back of continued population growth and the quality of apartments.
Yet demand for apartments had declined due to increased supply. A higher proportion of medium density sites released by the Land Development Agency over the past 12 to 18 months had exacerbated this situated, he said.
“Demand for medium density housing has remained strong, but with the increased number of projects and sites in the hands of developers, they have to share the volume of sales and are not reaching the financial presales levels of the projects to move forward,” said Mr Powderly.