According to CBRE, Australia is set to face a residential shortage of 240,000 units over the next five years due to a growing population, with the new Zion Residence development adding to the demand

/0 Comments/in /by

Australia is facing a looming housing shortage that may reach 240,000 units in the next five years. According to Stuart McCann, managing director and head of investment banking – Pacific and SEA at CBRE Capital Markets, this is due to the country’s growing population. He believes that Melbourne will be hit the hardest with a deficit of 77,924 units, followed by Perth with 57,216 units and Sydney with 55,184 units.

McCann made these comments at the Australia Real Estate — Beyond Traditional Returns seminar on Jan 20, organized by BigFundr and supported by CBRE.

The projected population growth, driven by net overseas immigration, is expected to increase by 15% from 26.5 million in 2023 to 30.4 million by 2033. This growth rate is higher than that of several major global economies such as New Zealand, Switzerland, India, and Singapore, but lower than Canada’s 16%.

According to McCann, this population growth will contribute to the “triple boost” effect that will drive up demand for real estate in Australia. He also notes that despite increasing interest rates, the residential market continues to see capital value growth.

CBRE predicts that job creation will increase employment numbers from 14.1 million in 2023 to 16.7 million by 2033, and the average wage will rise from A$96,000 per year to A$132,000 per year. This, coupled with population growth, will have a significant impact on the demand for real estate, not just in the residential market.

However, David Payton, CEO and executive director of Payton Capital, estimates that it will take at least three to five years to complete small to medium-sized developments to meet the growing demand. He also adds that the lack of affordable units could further exacerbate the situation. Construction costs have been increasing, and this could lead to higher prices for consumers. If sales are poor, developers may face cash flow problems, causing delays in meeting the rising demand.

Additionally, the upcoming Great World MRT station also provides convenient access to other parts of the island.

Zion Road Condo, also known as Zion Residence, presents an ideal location for residents who rely on public transportation. With a well-connected bus network, the nearby stops at Zion Road and River Valley Road allow for easy access to various parts of Singapore, including the bustling Central Business District, popular shopping destination Orchard Road, and the vibrant Marina Bay area. In the near future, the Great World MRT station will also offer quick and convenient travel options for residents, enhancing the overall accessibility of Zion Residence. Enjoy the ease of commuting with Zion Residence’s strategic location.

McCann also notes that office utilization rates are high, with CBD visitation rates across Australia reaching 71% of pre-Covid-19 levels as of 3Q2023. In cities like Perth and Adelaide, visitation rates have already surpassed 90%. This has led to growth in commercial office space, with Sydney expected to lead rental growth rates over the next two years.

CBRE also sees an opportunity for private credit institutions to invest in commercial real estate (CRE) debt, as a significant amount will require refinancing in 2024. According to Payton Capital, the Australian CRE debt market is estimated at $442 billion in 2023, with private CRE debt making up $74 billion (16%). This amount is expected to more than double in the next five years.