Melbourne is at risk of facing a shortage of apartments. That was a dire warning issued by the CEO of iBuyNew Group LimitedMark Mendel. The main driver of this shortage would be the booming population of the metro. Melbourne is expected to reach a population of 8 million, a feat that would be a first in Australia. The increase in a number of locals would mean stronger demand for residential units. According to Mendel, Melbourne will find it difficult to meet those demands.
Mendel said that many of the proposed apartments would not be constructed, in a report released by Property Observer. Furthermore, developers who secured government approvals for their planned apartments actually have no plans to continue their projects. This will blow up the number of approved proposals and lead to inaccurate predictions in relation to the volume of apartments that would rise in Melbourne.
Mendel also contradicted the statements of other experts who said that Melbourne would face an oversupply of apartments in the coming years due to the heaps of approved projects in the pipeline. Let us take the figures released by the Commonwealth Bank of Australia. According to the data, about 140,000 projects were approved but, only 35,000 would be built until 2018.
The chief of iBuyNew Group also emphasized that the marginal number of construction for new residential apartments would be the main reason why Melbourne would definitely not face a supply glut of larger and high-quality apartments. According to Murray, Melbourne should build more top of the range and state of the art apartments if the metro seeks to retain its title as the world’s most livable city, as per the survey conducted by the Economist Intelligence Unit.
Tim Gurner, the boss of luxury property developer Gurner also expressed similar concerns and belied claims that Melbourne would face problems with oversupply. As reported by The Broker News, Gurner noted the increased demand for apartments in the city based on the company’s latest public sales. He shared that during the opening of the company’s two apartments last December, they received an unexpectedly strong response. He said they also anticipated to deal with 20 to 30 possible buyers. Instead, they received a remarkable 450 expressions of interest. He reiterated his strong belief, which he maintained within the last 18 months, that Melbourne would experience a shortage and not a supply glut of new apartments.
Several industry experts also expressed the same thing during the first month of this year. In a report by Realestate.com.au, Melbourne is on track to facing problems related to an insufficient number of new apartments because several of the approved proposals failed to commence their construction work. They also backed Murray’s statements that many developers that secured project approvals actually have no plans of pursuing their development. Let us consider the data released by CBRE. It showed that out of 4148 units in the pipeline, only 543 units are being constructed. Beller Project Marketing Associate Director Heath Thompson noted another trend. He said that several developers are combining smaller one-bedroom units to make bigger homes with two bedrooms. This practice was used by Forza Capital’s Supply Co. in Richmond. The company saw its planned apartments drop to as low as 130.