The number of new projects recorded by CoreLogic for the Cordell Construction monthly report over March was 1,707. This is 4.0% higher than in February, and 4.6% lower than the 5 year monthly average of projects. The construction value of new projects captured over the month was $12.8 billion, up from $12.6 billion in February.
As with February, the highest construction value segment received within new development applications was in the apartment and unit space, accounting for 28% of the combined value of development applications captured over the month.
CoreLogic commercial research analyst Eliza Owen observed that while apartments represented the highest value construction segment in new projects in March at $3.6 billion, this is far lower than the $6.1 billion worth of construction in new apartment projects detected in February. The second highest segment captured in the pipeline was Civil Engineering, at 25% of the construction value of new projects.
Ms Owen said, “The continued strength in the apartment development space comes from a combination of long-term confidence in east coast cities, particularly close to the inner city suburbs, and calls for more housing to address a reported under-supply - particularly in social and affordable housing.”
As an example, Meriton has purchased the City of Sydney council depot site in Zetland. The 1.1 hectare site has the potential to accommodate around 300 apartments. This recent acquisition reinforces Meriton’s confidence in the suburb, further to their acquisition of the City Ford site in Elizabeth Street last year.
Eliza Owen said, “Although some developers continue to be confident in the Sydney unit market, joint venture projects and state government participation in housing is starting to rise in an effort to deliver affordable housing in the cities.”
The Victorian Department of Health and Human Services is currently seeking expressions of interest from the social housing sector and private developers to participate in joint venture property development; selection of a development partner is still in progress. The partnership will enable delivery of affordable, mixed housing on vacant, state owned land throughout Victoria. The program will start with 52 vacant sites that run from Melbourne’s western suburbs to Geelong.
Eliza Owen said, “While the pipeline continues to rise in value, the number of projects moving into the construction stages reached a two year low. The total number of projects moving into construction over the month was 597, where the 5 year monthly average is 1,009. The total value of construction commencing over March, as collected by CoreLogic, was $4.4 billion across Australia. This was lower than the $5.1 billion commencing in February.”
“Most of the loss in the value of works moving into construction was attributable to a $1.4 billion decline in the value of apartment and unit commencements, however, the losses were partially offset by increased commencement value in industrial, commercial and community starts over the month.”