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Luxury Apartment Undersupply ‘Opportunity’ for Developers: Knight Frank

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The downsizing lifestyle with a focus on luxury apartment living is a growing trend in Australia, reflecting an appetite towards medium and high-rise development, according to a new report.

Knight Frank’s Australian prime residential insight 2020 describes “rightsizing” as a growing trend, and the undersupply of luxury apartment product and medium-sized development a key area to watch over the next three years.

Knight Frank’s head of residential research Michelle Ciesielski says opportunity sits with the developer to fill the gap in the market for people who want to comfortably downsize.

Ciesielski says if developers produce that type of stock, it could actually impact their bottom line.

“What we are finding is that people who are wanting to downsize still want all those things that they have in their current home or a higher amenity to compensate for that in their later years,” Ciesielski said.

“There are a lot of people who are wanting to downsize but are staying in their family home because the stock is not available.

“At the end of the day, a lot of that power is sitting with the developer whether that stock is built or not.”

Top 10 suburbs ranked by apartment median values

SydneyMelbourneBrisbanePerthGold Coast
Barangaroo $2,880,000Brighton $947,500Tennyson $1,045,000Cottesloe $775,000Main Beach $761,250
Point Piper $2,750,000Toorak $929,675Seven Hills $679,900North Beach $750,000Paradise Point $650,000
Millers Point $2,400,000Balwyn North $917,000Bulimba $637,000Mount Pleasant $697,500Hollywell $635,000
Darling Point $1,900,000Kew East $915,000Camp Hill $632,000Claremont $680,000Burleigh Heads $610,000
The Rocks $1,540,000Canterbury $911,000Newstead $629,688Wembley Downs $660,000Benowa $577,500
Double Bay $1,320,000Beaumaris $827,500New Farm $604,000Applecross $584,000Broadbeach $540,000
Kirribilli $1,318,500Black Rock $815,000Bardon $580,000Sorrento $582,500Broadbeach Waters $540,000
McMahons Point $1,315,000Brighton East $799,500Teneriffe $572,500Booragoon $572,500Runaway Bay $530,000
Cremorne Point $1,298,750Hampton $726,250Kenmore $567,825Attadale $565,000Miami $520,000
Milsons Point $1,292,500Camberwell $720,000West End $564,000Carine $519,000Mermaid Waters $465,000

^Includes medium and high-density prime suburbs. Settled sales, Q3 2019. Knight Frank, APM.

The report notes that luxury apartment buyers typically seek a minimum 3-bedroom medium or high density apartment located in a prime suburb.

“We look at the portion of the new dwelling pipeline being delivered out to 2022, and compare the average delivered since 2017 for both medium and high-density projects across the major Australian cities,” Ciesielski said.

In the past three years, the Gold Coast saw the highest portion of 3-bedroom-plus luxury apartments being built, at 70 per cent, in medium-density projects. The pipeline shows this portion will rise to 81 per cent by 2022.

Brisbane followed the glitter strip, with a 61 per cent share of 3-bedroom-plus luxury dwellings being built over the past three years.

Brisbane’s pipeline shows a major increase to the end of 2022.

“The largest share of 3-bedroom apartments to be built in prime suburbs is in Brisbane medium-density projects at 87 per cent,” Ciesielski said.

▲ The Knight Frank research found the largest share of three-bedroom luxury apartments being built over the next three years is in Brisbane medium-density projects (87%).
▲ The Knight Frank research found the largest share of three-bedroom luxury apartments being built over the next three years is in Brisbane medium-density projects (87%).


Knight Frank says that Melbourne and Perth are projected to grow their share of three-bed-plus luxury medium density dwellings.

Melbourne, with a 43 per cent share of medium density product underway since 2017, has a 52 per cent share in the pipeline over the next two years.

And Perth’s three-bedroom portion will grow from 27 per cent to 50 per cent by 2022.

But Sydney bucks this trend.

Sydney’s share of three-bedroom luxury apartments being built over the next three years falls for medium-density projects to 44 per cent of new dwellings by 2022, down from 50 per cent since 2017, according to Knight Frank.

“Over this time it’s expected less than 30 per cent will be located for the prime regions of CBD and inner Sydney, eastern suburbs, inner west and lower north shore,” Ciesielski said.

“This shortfall will impact prices given proximity to activity hubs and amenities ranks third most important for those looking to downsize and these regions are best suited to this lifestyle.”

Related: Gold Coast Enters Luxury Market Hit List

▲ Knight Frank describes 'Rightsizers' as ‘Active Retirees’, ‘Entrepreneurs’ and ‘Families’ looking for low maintenance properties but with house-like proportions and nearby amenities.
▲ Knight Frank describes 'Rightsizers' as ‘Active Retirees’, ‘Entrepreneurs’ and ‘Families’ looking for low maintenance properties but with house-like proportions and nearby amenities.


The report notes that Brisbane and Melbourne are home to the strongest share of the total three-bedroom-plus apartments being built in high-density projects over the next three years.

Both Brisbane and Melbourne have 21 per cent in the prime suburb regions pipeline.

Melbourne has fallen from 22 per cent over the previous three years, while Brisbane has lifted from a 15 per cent share.

While, Perth and the Gold Coast are expected to see 19 per cent of their three year pipeline dedicated to 3-bedroom-plus sized apartments, growing from a share of 16 per cent and 14 per cent, respectively.

Ciesielski said luxury apartment trends to watch over the next three years include the growing "active retired" group.

“And increasing competition from international buyers, thanks to increasing direct flights to Australia, seeking second homes and the undersupply of product.”


Knight Frank head of residential research Michelle Ciesielski is speaking at The Urban Developer’s annual market outlook in Sydney, Melbourne and Brisbane.

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Article originally posted at: https://theurbandeveloper.com/articles/medium-density-high-density-development-knight-frank