If you’re looking to buy into or build a development, it’s important to learn from the mistakes of the past in order to make your decision as sound as possible. The CEO of a construction company, who is also an investor, shares his takes on the current trends of property development.
Speaking to Smart Property Investment, Len Warson, the CEO of Glenvill Homes, an investor and development builder, shares the current trends and predictions occurring within the development industry:
A trend that Mr Warson claims does not make sense, yet is occurring regardless, is the rising and falling popularity of townhouses and apartments respectively.
“[People are] staying away a bit from apartments and they think that townhouses are the next big thing, and I’m not saying townhouses aren’t the next big thing, but I just don’t think the discrepancy between the demand for apartments and townhouses makes any sense at all,” Mr Warson said.
“The underlying principle is that there is affordability means and people are changing their attitudes, and that attitudinal change is a big, big fashion we’re seeing.”
He continued, stating that five to seven years ago, apartments were typically considered only by empty nesters, with homes the only serious option. Today, however, apartments are a serious contender in the property market.
“We’re seeing the market change and accept, like the rest of the world, that apartments are a real option, so the owner-occupier market is super strong in that space because people have come to accept that’s an option, so that’s a huge fashion,” he said.
Due to the current economic environment, Mr Warson also noted the diminishing size of apartment buildings are more ‘boutique’, yet they’re “not all they’re cracked up to be”.
“The reality is that they don't have a lot of amenity because you can’t afford to run that amenity when you’re only a boutique development, and the land tax and council rates is amortised over less people, so we’re seeing a trend towards smaller developments,” he said.
Mr Warson is also seeing more sensible interiors being designed, rather than something additional for the sake of something additional.
“Contemporary architecture is still a big fashion. We’re seeing a lot more design sensibility come in into interiors and seeing that really considered in a greater way rather than just throwing in a more standard kitchen and bathroom,” said Mr Warson.
Much like for investors, acquiring additional finance is currently a difficult task for developers, which is going to see construction slowing down.
“A lot of developments that are on the market won’t proceed … through sales, but more so through finance,” Mr Warson said.
“When you’re talking to the bigger developments, finance is really, really difficult, and the amount of equity people need to put in is much greater.
“So, I think we’re going to see a supply shortage coming up, but I think we’re going to find a slowdown in construction driven more by finance than by sales.”