Momentum from 2021 will carry well into the new year for the region’s commercial markets, according to two local agents.
Kollosche Commercial’s Adam Grbcic and Tony Grbcic believe current confidence in the region’s commercial marketplace will remain stable in the year ahead, thanks to robust interstate migration and population growth.
Citing an Urbis projection that the Gold Coast would be home to 812,000 people by the time Queensland hosts the 2032 Olympic Games, the pair have also acknowledged Queensland’s seasonally adjusted state final demand increased by 1.8 per cent in the September quarter to be 6.1 per cent higher for the year.
According to Adam Grbcic, this all places the region “in an enviable position”.
“We’ve seen people leave capital cities and move to regional areas during the COVID pandemic, especially if they have a job that enables them to work remotely,” he commented.
“Despite accommodation and tourism enduring low occupancy rates during the past 12 to 18 months, we are now receiving high levels of interest from developers looking at key development sites with a view to use them for short-term accommodation providers.”
From his perspective, “this provides a strong indication of the confidence they have coming into 2022 and identifies that the Gold Coast is lacking in quality high-end accommodation.
“These sites are outside of the traditional tourism precinct – Surfers Paradise – and span from Broadbeach through to Coolangatta.”
Anticipating “an exciting year ahead for the Gold Coast”, Mr Grbcic acknowledges the area as benefiting from a growing amount of capital on the Gold Coast, brought to the city by an influx of interstate visitors and migrants who have become wealthy from the strong residential sector.
In turn, higher population growth will fuel demand for childcare centres, neighbourhood retail and industrial precincts, with other sectors set to benefit also.
Having recorded $192 million in sales across 2021, here’s how the agents predict 2022 to play out:
Gold Coast retail
According to Adam Grbcic, “demand has definitely grown from investors during COVID for convenience retail centres as not only do they provide a freehold, multi-tenanted asset for investors, but a shift in consumer behaviour throughout the series of lockdowns has seen these assets perform better”.
“There is also a high demand from developers looking to develop neighbourhood and retail centres which adjoin masterplan communities or residential estates such as The Lanes Retail Village.”
Adam Grbcic said the liquidity and growth in the residential market have led to a growing pool of cash-rich commercial property investors looking for investments priced between $1 million and $3 million.
He pointed to the recent $1.2 million sale of a 179-square metre shop in Mermaid Beach as one such example.
“It sold with a net yield of 5.75 per cent, which is much more than investors are seeing in capital cities.”
Previously, high barriers to entry existed in this asset class – which Mr Grbcic said was due to banks requiring 30 to 40 per cent deposits.
But now, “many more investors have this cash in the bank and are fuelling this demand for both tenanted and vacant assets that they can reposition or repurpose.”
Gold Coast industrial
Tony Grbcic has weighed in on the industrial side of things, expressing that demand for industrial property should tell a similar story to that of retail across the next year.
Positive sentiment is set to be fuelled by new supply in the coming year, “particularly in the Burleigh area, but new projects are going to cater for smaller floor plates with high-end finishes”.
He said: “The My Space Burleigh project on Burleigh Connection Road is a good example of this type of project with a mix of 46 strata units including showrooms, warehouses and self-storage units.
“The project is more than two thirds sold already and the same developer has plans for another project in Molendinar, on the former Gold Coast Bulletin site on Southport-Nerang Rd.”
Mr Grbcic also anticipates several large-scale industrial unit projects will hit the market on the southern Gold Coast area over the coming year.
According to him, mixed-use projects have two distinctive advantages: “The first being that you don’t oversupply the market with one product and the second being that you target a wider range of buyers than before.”
Gold Coast development sites
According to Adam Grbcic, development sites will also have a moment in 2022, with Stage 3 of the light rail network launching in the coming months.
This means there will be more focus on Gold Coast Highway-fronting development sites between Broadbeach and Burleigh Heads.
The three-year project, which will cost more than $1 billion, “is a massive infrastructure boost for the southern Gold Coast and exactly why developers, who seek amenity, infrastructure and proximity to the beach, will increasingly target the light rail route”, according to Mr Grbcic.
So much so, the agent said they are already seeing “significant interest” in development site listings along the Gold Coast Highway.
While it will be challenging for developers to find the right site with appropriate zoning and height to avoid long approval processes, Mr Grbcic is of the opinion that all the signs are pointing to “another strong year for development sites”.
ABOUT THE AUTHOR
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.