In this episode of the Brisbane Property Podcast, Melinda and Scott Jennison are joined by Andrew Burke from Ray White Special Projects to unpack the current state of land and unit development across South East Queensland.
From heated demand for greenfield sites to the affordability crisis reshaping where and how we build, this episode dives into:
- Why developable land is in short supply and hard to unlock
- The true cost of bringing new homes and units to market
- Which regional and metro growth corridors are heating up
- Why existing unit blocks are becoming a hot investment
- The growing role of land lease communities and over-55 living
- The reality behind “Build to Rent” projects in Brisbane
Whether you’re an investor, developer, or just curious about Brisbane’s property future, this is essential listening to understand where the opportunities and limitations lie. If you liked this episode, please share this podcast with others you know will benefit from the information we share!
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Transcript
[00:00:00] Scott Jennison: In this episode of the podcast, we’ve been joined by a special guest, Andrew Burke from Ray White Special Projects.
[00:00:05] Melinda Jennison: Andrew is going to give us a snapshot view of what is happening in the land subdivision market as well as the unit market here in Brisbane. There’s going to be some incredible insights shared, so you won’t want to miss this episode.
[00:00:17] Announcer: Welcome to the Brisbane Property Podcast with your hosts Melinda and Scott Jennison.
[00:00:21] Scott Jennison: Hi everyone, and welcome to another episode of the Brisbane Property Podcast with Scott and Melinda Jennison. We’ve got a returning guest, so a guest with us today, Andrew Burke from Ray White Special Projects. Welcome back, mate.
[00:00:33] Andrew Burke: Thanks for having me Scott and Melinda once again. It’s great to see your business going so well.
[00:00:37] Melinda Jennison: Thanks for coming back and joining us once again on the podcast. It’s been quite a while, I believe for those people that are regulars on the podcast, you’ll have to rewind back to episode 192. And that was back in January 2024. We invited Andrew on to the podcast at that time to give us an update of what’s happening in the development space. Andrew works with Ray White Special Projects. It’s going to, he’s going to provide another update today because obviously, things have moved again in the last 18 months or so. We’re going to give you an update in terms of what’s happening in the greenfield land space, multi-residential unit space, and a few other areas just to help you understand what’s, how that area has been tracking over time.
[00:01:21] Scott Jennison: It’s always interesting, Andrew. I do like chatting because you give us a bit of a, I mean, we work a lot in established properties, and when we chat to you, you can, you help us understand and our listeners understand what’s coming to the market and what’s happening on that space. It’s always interesting to see what’s coming along because people do ask us, you know, where’s, where’s all these properties coming from, and what are we going to be able to buy in the future because they need to keep on making properties as well.
[00:01:48] Melinda Jennison: It’s interesting. I know that we’ve got this housing accord, you know, the federal government’s got all of these plans in place to to build so many new dwellings in in the foreseeable future, but the reality is what you might be seeing on the ground could tell a very different story. Let’s unpack all of that today and more.
[00:02:06] Scott Jennison: Let’s jump into some land subdivision. What’s happening on that side of things?
[00:02:10] Andrew Burke: I think when I was here 18 months ago, I would have said it’s probably the hottest part of the market. To just go back a bit for for the listeners, Ray White Special Projects, we do two things. We specialise in selling residential development sites, and we also sell quite a lot of residential unit blocks, so the entire block. Unlike some of the other agents who know every nook and cranny of their area, we specialise, I suppose, in an asset class. You’re right what you said earlier, we’re closer to that supply side and knowing what’s happening. In answer to your question about land, land is the most constrained, the most, the tightest supply, and hence it, but it’s also the hottest part of the market. What’s happened since then is that it continues to get even stronger. We’re talking about large, what we’d call englobo land. Picture, listeners, large parcels of land that you go past one day, and then you come past two years later, and you see 200 lots and a thriving community all with its own parks and waterways and and general facilities. The demand from developers for that land, it could not be hotter. We’re talking anywhere from a splitter block up to major large-scale planned communities of, you know, a couple of thousand lots. The reason for that is that the population continues to increase. What this is based on is called the Southeast Queensland regional footprint. That document that stipulates where we can build houses. Whilst it, I think it was about 18 months, two years ago, they adjusted it, it was a very minor adjustment. We didn’t want new swathes of land being approved. It continues to see strong buyer depth in that market. The easy sites are done.
[00:04:10] Melinda Jennison: It’s only the complex sites that are left and.
[00:04:13] Scott Jennison: Complex sites, yeah.
[00:04:13] Melinda Jennison: It’s interesting because obviously we can’t create more land, so we are constrained by what is available. And not, you know, people might look at Google Maps at the aerial photography for example and say, well, hey, there’s plenty of land in Southeast Queensland, why can’t we just start building more housing here or here? What are some of the constraints that exist on some of this land that we might see? Is it zoning constraints? Is it services? What’s what’s causing…
[00:04:38] Andrew Burke: It’s so zoning because it’s easy just to change the zoning by the by the governments or councils. You’re dead right, it’s if you unpack it, and it’s really got a lot to do with the non-sexy issues of stormwater and sewer. On that, sometimes a land owner will have some acreage and say, I want to know what this is worth as a development site. People hate a real estate agent avoiding the question, but sometimes I just go, I could be out by 30% unless I know something like the sewer has capacity. Those issues, one that’s becoming quite prevalent is the these environmental overlays where the council or even the federal government will put overlays on it saying, yes, I’ve zoned that, you can do that, assuming that you comply with these environmental constraints.
[00:05:27] Melinda Jennison: And so some of those overlays, Andrew, would be for example, habitats where perhaps native animals live, or there’s fauna that that’s protected on those sites. Are they the sorts of things you’re talking about?
[00:05:39] Andrew Burke: Exactly. And quite often just vegetation. But no one wants unnecessary damage to the environment, but sometimes that broad, it’s a very broad brush instrument. The issue is that they put those overlays over the whole broad region without ground testing them. And then it’s up to the developer to prove that it’s wrong. I’ve had instances in the past where I’ve gone, you can’t develop that. And the developer’s brought in his own arborist and gone, that is a weed. Every that tree is actually a weed. There’s nothing amazing about that.
[00:06:11] Scott Jennison: Yeah.
[00:06:12] Melinda Jennison: But the problem is to get an arborist in, if you’re not even know you’re buying the site, it costs a lot of money. It it does restrict it.
[00:06:21] Scott Jennison: I know we spoke, whether it’s the last podcast or the one before, I’m not sure Andrew. And one of the things which we we’re really aware of then was the cost. How is that side of things now for developers when we talk about constraints and you talk about zoning and environmental side of things, what about when it comes to the construction side of things? Cuz people think construction and they think houses and units and dwellings, they don’t think what’s under the ground. How is that affecting…
[00:06:48] Andrew Burke: That’s what I was referring to, civil construction. That seems to have stabilised in the since I’ve been here. But there was a dramatic escalation. We used to sort of work on a rule of thumb for every lot that was developed. And when I say a lot, picture, you know, 400 square metres or even smaller these days, maybe maybe 300. We used to sort of work on it could it could cost a developer about 100,000 to develop it, and people are gobsmacked by that. But the sewer, the infrastructure charges, the marketing, the civil, the civil is the big one that’s gone up, you know, huge amount. It seems to have stabilised, but it, you know, it’s still, it’s still a big chunk, because I think it’s gone from 100 to about 170 seems to be the rule of thumb now.
[00:07:32] Melinda Jennison: And of course all of that gets charged on to the end buyer.
[00:07:35] Andrew Burke: It gets charged on, and and that cost is the same whether you’re in blue chip Hamilton or you’re out at Woop Woop, you know.
[00:07:42] Melinda Jennison: Let’s talk about Woop Woop. Some of these emerging growth corridors. I know people may not know where Woop Woop is in Southeast Queensland, but there are growth corridors, there are locations where we are seeing some land subdivisions occurring. Can you talk us through where these locations are? Where is this developable land in Southeast Queensland?
[00:08:02] Andrew Burke: Southeast Queensland market, they sort of divide it up into several corridors, and a lot of those are quite constrained. That eastern side out near Redlands, you’ve got the water one side, so you can’t go too far. They have quite a lot of, um chicken chicken factories down there, and they need some sort of buffer, so there’s not a huge amount down there. There are pockets. That Brisbane to the Gold Coast, it continues to thrive, but there’s not a lot left there. The one that’s really going well at the moment is, we’re getting a lot of interest is what we’re calling Caboolture West or Warraba, I think it’s now renamed. And that’s finally coming, it’s starting to come online after a long, long run up simply because they’re trying to, there’s a bit of a priority unpacking those infrastructure challenges of sewer, water, all that sort of thing. Laws are being freed up so viable, developers can make their projects viable. That is, that’s the main one. Caboolture West seems to be the flavour of the month. But if we look a bit further afield, areas which may not have, would have been really sort of secondary and third rate locations have had a good run in the last 18 months since I’ve been here. I’m talking about Beaudesert, Fernvale, areas which weren’t on developers’ radars and now are getting a a real huge strong amount of interest, simply because people, it’s an affordability issue and people are going a bit further out. Regional is one as well. There’s a world outside Southeast Queensland. Regional is something that is, um interesting. A bit of a mixed bag, but a couple of places that stand out would be Bundaberg, Toowoomba is off the charts hot. There’s a good reason why, a couple of reasons why. And Bundaberg is actually showing a bit of, yeah, Bundaberg, Toowoomba, and Gympie.
[00:09:51] Melinda Jennison: So when we talk about some of these regional areas, you’re talking about the demand for land subdivision sites, not necessarily the demand for established dwellings. You’ve mentioned that a lot of that is driven by affordability. Is it costing developers less to bring that land to the market or is there more demand for the end product? Or is it more so just the fact that the land that is there is more shovel ready, it’s more able to be developed and therefore that’s where developers are shifting to?
[00:10:21] Andrew Burke: You can buy the land a lot cheaper in Bundaberg than you can in Ripley, you know. And there might be less fragmented too, fragmentation meaning you might be able to buy a much larger parcel rather than having to put together five or six owners. Toowoomba’s got a lot going for it there. It’s got a diverse economy. You’ve got government, you’ve got education. It acts as a bit of a headquarters for rural, a headquarters for mining, and it is getting some very strong revenues. I think people want to think differently. Like Gympie is a good example. The revenues to buy a block of land in Gympie about a couple of years ago, I’m talking like four years, maybe three or four years ago, it was about 135,000 to buy a block of dirt out of a new estate. Now, it’s pretty much at 300,000.
[00:11:19] Melinda Jennison: Not bad land appreciation.
[00:11:20] Andrew Burke: I’ve had a developer who I sold something to when the market was dead. He paid just under 500,000. He’s got several million dollars with it, selling it. Simply because it’s 45 minutes to Noosa, and all those people who live in the Sunshine Coast who work there, they can’t all afford to be on Hastings Street.
[00:11:42] Melinda Jennison: We all wish we could afford to be in Hastings Street. Can I ask just more specifically about Brisbane? Brisbane City Council region, is there any land left?
[00:11:51] Andrew Burke: Hardly any. Unless just say none. If they are, they must be heavily constrained with environmental or infrastructure issues.
[00:12:01] Melinda Jennison: When we talk about Moreton Bay, we’ve already spoken about Caboolture West, which is to the far northern segment of the Moreton Bay region. Is there any other land in that sort of council region?
[00:12:12] Andrew Burke: There is, but it’s the same issue. It’s fragmented and serviceability. And let’s be honest, not all sellers are realistic. We’d like to think we really maximise the price and we we give a property a good run and get premium result for our sellers because they’re the ones that are paying us, but sometimes owners just aren’t realistic. If someone’s been knocking on your door every week, 10 real estate agents a week out in these places, it doesn’t breed reality for the seller.
[00:12:43] Melinda Jennison: And of course, we’ve seen a lot of newer estates popping up over the last 10 years or so in areas of Ipswich and also in areas of Logan. Is that likely to continue? Is there still land in those locations?
[00:12:56] Andrew Burke: In that Logan area, it’s becoming a bit, it’s running out a little bit, but the west is one area that’s not constrained, because you could start at Redbank Plains and you can go out through Ripley, Deebing Heights, and you can keep going all the way to Aratula or the base of Warwick, you know.
[00:13:17] Melinda Jennison: It’s not physically constrained, it’s just the zoning which will unlock if the demand is there.
[00:13:24] Scott Jennison: And you’ve had those areas out there like Springfield, Springfield Lakes, I mean, they’re they’re probably a long long time ago now, feels like it. But that area, as you say, can keep going because it has the land.
[00:13:33] Andrew Burke: That’s true. And and also, we we sit here sort of relatively inner city Brisbane. We get a bit too focused on proximity to Brisbane CBD. A lot of those people don’t come to the Brisbane CBD. Their employment centres are Ipswich or western suburbs, manufacturing. There’s, yeah, so they’re not as far away from employment. I mean, employment’s everything in these areas.
[00:13:57] Melinda Jennison: 100%. Absolutely. Let’s move on to unit development sites. What’s happening there? Is momentum building?
[00:14:04] Andrew Burke: There’s a slight change. I think when I was here last time, I said pretty pretty clear in that that high-end, that that product that people build for the units above, at that higher end, that goes on unabated. It continues to be very strong. But listeners who were there last time would recall me saying, just be careful when you see those cranes, because they’re only building one product, it’s the high-end stuff. There are no units being built for affordable, for medium or low low price points, and I mean none.
[00:14:36] Melinda Jennison: So, let’s talk about that, because when you were last in 18 months ago, we were talking about the price to build these entry-level units. The cost for a developer to acquire the land, construct the building, and resell. And at that time, we were saying it was costing developers around $850,000 per unit. What’s changed and how has that shifted in the last 18 months?
[00:14:58] Andrew Burke: I think it’s probably best described. We we get a listing and it’s for a medium to high-rise unit site. The developers can’t make it stack unless they’re getting $950,000 minimum per unit.
[00:15:12] Melinda Jennison: That’s incredible.
[00:15:13] Andrew Burke: So we’ve had developers say, you could give this land to me for free and I still can’t make it work. Keeping in mind the land is actually a fairly small component of the total cost. When you’re in a high-rise.
[00:15:22] Melinda Jennison: Because of construction costs.
[00:15:22] Andrew Burke: So, I mean, that’s a lot, isn’t it? So,
[00:15:25] Melinda Jennison: 950.
[00:15:26] Andrew Burke: It it seem, word on the street, it seems to have stabilised. But that that top, there’s a real, there is the only change would be that we’re just seeing a few green shoots come through, meaning we’ve sold a couple of a couple of unit sites to people who are going to build it to to satisfy that sort of medium-income area. But they’re almost always build-a-developers.
[00:15:48] Scott Jennison: Yeah.
[00:15:48] Andrew Burke: They’re not developers, they’re build-a-developers. And some of them might have a different mandate where they’re like, I’m just going to hold on to these, I’m not going to sell them down. They’ve got some lazy capital, they can hold on to these things for a while.
[00:16:01] Melinda Jennison: It is a significant difference.
[00:16:02] Andrew Burke: So, next time you’re driving around listeners, have a look. Those cranes guaranteed you they’re on the river or they’re out at New Farm or they’re out at West End. They’re not where they used to be at Chermside, Mount Gravatt, Greenslopes, but they are coming back. So, it’s just that it turns quickly because it’s a hard thing for a developer because to get it right, it takes a long time to get a building out of the ground. So if you’re a bit too late.
[00:16:28] Melinda Jennison: And we’ve seen really strong capital appreciation in the unit market in the last two years here in Brisbane. Median values in that segment of the market have just actually surpassed $700,000 for the first time in history. But when we’re talking about a cost to bring a unit to the market being, you know, mid-nines, 950,000 as opposed to what the median unit value is being around $700,000, there’s still a huge gap between established and brand new if you’re talking similar product type.
[00:17:02] Andrew Burke: I was always brought up saying you had to buy houses because the land appreciates better, but I think, you guys have the stats better than anyone, but I I think am I right in saying that unit prices of existing unit prices have outgrown houses in the last two years correctly.
[00:17:16] Melinda Jennison: For the last two years, correct. Yeah. And
[00:17:17] Scott Jennison: The older ones are pretty big, too. The older ones, they’re older ones are actually more liveable.
[00:17:23] Melinda Jennison: Buying established and refurbing, perhaps there’s something in that. The secret’s out. If you’ve been a podcast listener for many years here on the Brisbane Property Podcast, that won’t be a secret to you because I know Scott and I’ve been talking about that segment of the market for a couple of years now, more than a couple of years now, for this simple reason. We are seeing that that cost to build, that cost to deliver the final product escalates so rapidly and there’s a huge gap between established and new.
[00:17:59] Andrew Burke: An important point on that, everyone should keep listening because it’s no way it can go down, that construction cost, with what’s going on in Brisbane. It’s impossible that it’s going to come down. So prices of existing will have to go up. It’s an affordability thing. People who wanted to live in a house are buying a unit.
[00:18:23] Scott Jennison: The only units as we’ve talked about, and we’ve talked about this a fair bit on the podcast, is the only units that they’re actually building, and Andrew, you just mentioned that, you know, 925 to build a unit. It’s the high, it’s a different product. It’s coming to the market. It’s completely different product to that affordable unit that people want to get into as they get closer to the city.
[00:18:48] Andrew Burke: The old ones are pretty big, too. The older ones are, the older ones are actually more liveable.
[00:18:52] Scott Jennison: Buying established and refurbing perhaps, there’s something in that.
[00:18:56] Melinda Jennison: The secret’s out. If you’ve been a podcast listener for many years here on the Brisbane Property Podcast, that won’t be a secret to you because I know Scott and I have been talking about that segment of the market for a couple of years now, more than a couple of years now for this simple reason, we are seeing that that cost to build, that cost to deliver the final product escalates so rapidly and there’s a huge gap between established and new.
[00:19:27] Andrew Burke: Just what you said, when you’re a builder and a developer, you’ve combined basically two margins into one. Is that why they are the ones that are continuing in this area but you’re not necessarily seeing the developer that then goes to pay the builder and the developer’s trying to make their margin whilst the builder is making a separate margin? Is that why we’re seeing builder-developers sort of, you know, succeeding in this market?
[00:19:40] Melinda Jennison: Exactly, yep. They don’t have to have the development margin, they don’t have to have the build margin. They can they can get away with a bit less. Yeah. Merged the two margins into one, which is interesting because and a lot of that is due to the the construction costs escalating and that’s been a result of not only material cost increases but labour cost increases. Off topic, but how do you think that’s likely to change in the lead-up to the Olympics with all of these these infrastructure projects, obviously there’s going to be competition for for construction workers.
[00:20:05] Scott Jennison: It would make sense that it’s going to go up, but people closer to them in the know tell me it it really depends and maybe people, the builders that do infrastructure don’t necessarily always do small scale… Yeah, residential, you know?
[00:20:17] Andrew Burke: They they mightn’t do like townhouses or they mightn’t do low-rise units. So in the high high-rise units, there must be services, there must be sub-trades which are still going to be, you know, covered by all sectors that’s going to be competitive.
[00:20:34] Melinda Jennison: You know. Yeah.
[00:20:35] Andrew Burke: Tiling a bathroom for a, you know, a stadium is the same person who surely tiles a bathroom for a residential unit.
[00:20:41] Scott Jennison: You would have thought so.
[00:20:41] Melinda Jennison: Yeah. So, it’ll it’ll go up. The good news is, you know, it’s not all doom and gloom. Revenues are going up. It’s just when you get in.
[00:20:49] Andrew Burke: So that’s so true.
[00:20:50] Melinda Jennison: So true. So get in sooner rather than later, that’s what you’re saying.
[00:20:53] Andrew Burke: I am, I believe it.
[00:20:54] Melinda Jennison: Very good.
[00:20:55] Scott Jennison: Are you seeing many of the unit, I know we talked about, we talked a little bit about your your established unit complexes or unit blocks, your six-packs, your those smaller complexes, I guess. Are you seeing much of that coming to the market?
[00:21:10] Andrew Burke: Not a lot. So, touched on previously in that we we’ve been selling quite a lot of, and it’s a bit of a specialty of ours really, existing unit blocks. So think your brick six-pack that the Greeks and Italians built in their day. Not a lot come to the market, but when they when they go, they are really strong buyer depth. With the exception of the land market, this would be the this would be the strongest part of the market. One for that affordability we’re talking about and existing, lack of existing product, but also there’s reliability of income. Now, the big, probably one big change has happened in the last 18 months, I probably haven’t talked about, is rents would have gone up 35%.
[00:21:50] Melinda Jennison: That’s true. Yes.
[00:21:51] Andrew Burke: So rents on these unit complexes have gone up 35%. Not only that, ones that, unlike a commercial asset in the same price point, these do get capital growth. They benefit the same capital growth that the surrounding houses have. You’re getting 35% uplift in your rental income and then you’ve got just your straight capital growth has gone up as well.
[00:22:18] Melinda Jennison: Your overall return.
[00:22:18] Andrew Burke: Yeah. And not only that, a lot of them sometimes are future development sites. We sold a ripper last year, it was out at Wooloowin. The building inspector came out and I said, has it got a few more years? He goes, it’s got about 30 because it’s built so well. And it was zoned three or five storeys, but you know, huge upside. You walk to the train. The council will be far more bullish on those zonings, so I I really like those unit blocks as an asset class. The downside is you do cop a pretty tight yield in the short term. Get your rents up, you get it revalued, and you’ve got a future development site there. So probably not for someone in the later stages of their investing life, but probably someone in the earlier stages or the middle stages, I reckon.
[00:23:05] Scott Jennison: And and they’re the ones, the units, as we said earlier, they’re a little, generally they’re a little bit bigger in size. The way they were built, they’re nice and solid. And if you want to hold them for a longer period of time, you could actually go in and just do a quick little kitchen and bathroom and your cost is not like it is compared to a house.
[00:23:22] Andrew Burke: Exactly. And you can do it progressively, too. So you don’t have to kick everyone out. It’s one tenant moves out, you fix up your bathroom. I think they’re a tremendous asset class. One thing you’ve just got to watch with them though is you don’t want to be in an area buying them where they are going to throw up towers and towers around you. Then that mark, when that market does recover.
[00:23:39] Melinda Jennison: Yeah, yeah. That’s so true. Yeah. So…
[00:23:42] Scott Jennison: The areas where there’s post-war homes and they can knock them down.
[00:23:47] Andrew Burke: They’re going to be, they’re going to be near train lines. So I’d be less reluctant to be buying an existing product where they’re going to throw up lots of units around you because that will, they those unit towers can flood the market pretty quickly.
[00:23:51] Melinda Jennison: Yeah, so true.
[00:23:52] Andrew Burke: It can die off pretty quickly unlike land. So those areas where there’s post-war homes and they’re presently three storeys, they’re going to be 10 storeys, I reckon, for sure.
[00:24:04] Melinda Jennison: So think of Brisbane, pre-war homes, that’s anything built prior to 1946 that has a character overlay. Think traditional buildings, areas that have a lot of those sorts of homes around, there’s some zoning that that might show that that higher density is permitted. But if there’s a character overlay, that that property cannot be removed. They’re the sorts of areas in terms of established. You’ll still see your old six-pack or existing units in those traditional suburbs. That’s where I’d be hunting.
[00:24:36] Scott Jennison: Generally solid as a tip, maybe a few cracks in the brickwork, but they’re not going to, they’re not going to go anywhere.
[00:24:38] Melinda Jennison: So I think it’s a positive story. I just think there’s frustration that people are saying, I can’t believe how much it’s going up. I think you’ve got to accept it’s going up and then be a smug prick later on how much it’s gone up after.
[00:24:51] Scott Jennison: Yeah, it’s not going to go backwards. It’s not. We know that. There’s no way with construction prices, what’s going on in this town and a lack of land, it’s only going one way. And it’s and it’s good for sellers as well.
[00:25:02] Melinda Jennison: You’ve heard it from Andrew, not from us. Andrew, thank you so much for joining us on today’s podcast. I’m sure listeners have enjoyed all of the content that you’ve been able to share, and it’s good to get that real on-the-ground insight in terms of what’s happening in that development space. So thank you.
[00:25:18] Andrew Burke: Thanks for having me. Congratulations on your business. I’d just like to say, listeners, we deal with a lot of buyers’ agents, and these are the only people that I trust. They actually have the courage to tell you not to keep bidding if you’re paying too much for something. Takes a lot of courage. Good on you.
[00:25:32] Scott Jennison: Thanks, Andrew. Thanks, Andrew. We love having you back again, and we will continue to do that for our listeners so they can keep an eye on all parts of the market when it comes to land supply and all those types of things as well. Ray White Special Projects, Andrew Burke. If you need help with anything on that side of things, look out for the guys over there. They’re always very, very helpful. So, thanks again, mate, for for coming in and having a chat.
[00:25:53] Melinda Jennison: Fantastic. Thank you. Thank you once again to you all for joining us on the Brisbane Property Podcast. As always, if you have enjoyed this episode, please share with friends and family, especially those that may be wondering, you know, what is going to happen in Brisbane real estate in the future. I think this episode provides some valuable insights to really help people understand where we’re heading. If you would like to leave us a review, we would love for you to do so. Hit that subscribe button so you don’t miss any future episodes. And we look forward to speaking with you again next week. Until then, bye for now.
[00:26:27] Announcer: Thanks for tuning in today. Please remember to subscribe to the Brisbane Property Podcast.
[00:26:30] Scott Jennison: Yeah.
[00:26:32] Melinda Jennison: Built to rent. Obviously, this has been big on the government’s agenda, but have we actually seen this play out on the ground? What’s happening in that space?
[00:26:33] Andrew Burke: I don’t know a huge amount about that. How’s that an agent just saying I don’t know? But my take on it is this, there’s a lot of talk for not many things being developed. And even if they are, this housing affordability crisis isn’t being solved. Look, it’s helpful, but I’d imagine it’s a couple of percent of the market. It’s more solved by the mums and dads investors who own these things. It simply can’t be any different than this. If a builder-developer in Brisbane can’t make a unit complex stack up, how does a build-to-rent model work? How does a build-to-rent model any different? There’s a couple of minor differences they have, but the main one is the government’s throwing incentives at them.
[00:27:16] Melinda Jennison: That’s right.
[00:27:17] Andrew Burke: And even then they can’t make it work. I think what, I could be wrong, but my take on is a lot of these are owned and retained by large funds. And a lot of these funds like to have funds under management. So maybe they sacrifice a development profit to have funds under management down the track, because it’s owned by, they’re not selling, you know, they’re keeping it in-house, maybe they’ve got their own manager or and and maybe they’re factoring in in their feasibility some quite big appreciation towards the end. Now, things will change, and other, look, you know, it’s it’s not a broad brush. Some some are being developed and stacking up, but it’s like it’s got this catchy title, BTR, but I I don’t I don’t see any units being developed.
[00:27:58] Melinda Jennison: It’s interesting, isn’t it? Because I think the media would have us all believe it’s a huge growing segment of the market, but the reality is very much different. And you touched on a really valid point there, that the government want us to believe they’re doing so much to help the housing crisis. And yet, the solution right now is and has always been mum and dad investors, especially in Queensland. We, you know, mum and dad investors, that’s private investors, still provide the majority, well and truly the majority of rental housing for people that are tenants in the state. So the government provide such a small minority of housing options.
[00:28:40] Andrew Burke: And look, if it wants to be solved, and maybe they’re doing this, I don’t know, because the state government seems to be doing some good things, but you get so much knowledge by talking to a developer. I think developers get bum raps, this white-shoe brigade. It’s garbage. Most of the, 98% of the developers we come across, they’re dealing with tradesmen all day, they started in humble back, they’re backing themselves, they’re employing people, and they have really good solutions. Like, you get them in a room and say, like, units, how do you make them more affordable? They go, okay, relax things like car parking or relax your design guidelines so that we don’t have to build basement car parking, which is exponentially expensive every basement level you go down. You can see that now, you’ll see on some some unit towers, you’ll see that first five floors, it’s sort of covered in greenery and you go, it’s a bit odd. But you don’t realise that’s actually car parking for the first five levels. They’re the sorts of solutions. You get 10 of Brisbane’s smartest developers in a room and put on some booze for them, they’ll come up with brilliant ideas. I went there once, I had this meeting with a group of them and the Lord Mayor. The Lord Mayor was excellent, actually, just getting really practical advice from them.
[00:29:48] Melinda Jennison: That’s what we need to see more of, governments consulting with industry to to get that real-time knowledge and understanding.
[00:29:56] Scott Jennison: And not the solution, but imagine if you had the developers together and you put these affordable units together, and then you had the maybe combine it with something like the way they’re building those over 55 complexes where it’s smaller and it’s more dense. You’d actually create more housing for people as well.
[00:30:11] Andrew Burke: It would, be a solution. I think it’s a good idea.
[00:30:13] Melinda Jennison: So, just generally, broader market observations in the space you’re operating in. How would you like to sort of describe that, Andrew?
[00:30:22] Andrew Burke: Broader market observations but on those sectors we’ve talked about?
[00:30:25] Melinda Jennison: Yeah, yeah.
[00:30:26] Andrew Burke: I just can’t see it going down. All the demographics we get at Ray White are correct, it’s just a very, the population will continue to increase. We only have so much land. So, land will keep going strong. And eventually, we’ll reach a price point in revenues where these units start to stack up and units and townhouses start to stack up. And I suppose the big thing is, it’s very frustrating for people to go, jeez, I can’t believe it’s going to go up. But it’s not, I can’t see how it could possibly go down. Not out of Longreach here, there’s only, you know, there’s only so much land around.
[00:31:07] Melinda Jennison: That’s so true. Yeah. I think all of that’s been extremely valuable information because, you know, every part of the market shifts and changes quite often. And here we we’ve spoken 18 months ago, you know, fast forward to today, and we’re starting to see some transitions, but ultimately, we still have a problem with, they’re not creating more land. A lot of our land is gridlocked because of the inability to develop it for the sake of services or where that land is located. And that’s not going to change.
[00:31:40] Andrew Burke: And this disconnect between Queensland Urban Utilities, the council, and the state government. So that’s pretty hard for people to, they’re never going to agree on anything.
[00:31:50] Melinda Jennison: But then at the same time, you know, building up in higher density development, because of the construction costs and constraints in that regard, that that’s become less feasible over time as well. So we’re not really seeing, you know, a huge volume of land subdivisions, but we’re also not seeing a huge volume of higher density dwellings. So ultimately, we’re not building for the future.
[00:32:10] Scott Jennison: Which just means prices are going up. That’s right.
[00:32:12] Melinda Jennison: Yeah, yeah. I mean, I can’t remember what the government says their housing targets are, but…
[00:32:17] Andrew Burke: Us on the ground in our job is focusing on supply, it’s fantasy land. It simply, it’s completely is. So, to me, it’s just got to be, if you’re listeners, if you’re an investor, keep in mind there’s nothing affordable being built. So get into that second-hand product. And maybe for for the developers, it is, where’s having a real run? For example, like Toowoomba that’s having a big run. At one point, at some point, it’s got to become unaffordable just like Sunshine Coast was and Gympie was dead. Now Gympie is actually getting some strong revenues. So it’s sort of just getting out your radius, what’s what’s near to these areas that are thriving, like what’s near Toowoomba? Or is it Warwick, for example, which is only, you know, 40 minutes away, which is still really hard to shift product there.
[00:33:11] Scott Jennison: Yeah. The big question then when you talk about the getting into the established market, people are going to ask, what’s coming to the market? What sort of products? And what’s the market look like? Is there going to be that supply of that established, which is always a hard one because you don’t really know what’s coming along. But I mean, do you see that?
[00:33:28] Andrew Burke: I think realistically, where are they going to put units? They’re not putting them in Ascot and Hamilton. That’s right. It’s going to be where there’s post-war homes and they can knock them down. And they’re going to be, they’re going to be near train lines. So I’d be less reluctant to be buying an existing product where they’re going to throw up lots of units around you because that will, they, those unit towers can flood the market pretty quickly and die off pretty quickly unlike land. So those areas where there’s post-war homes and they’re presently three storeys, they’re going to be 10 storeys, I reckon, for sure.
[00:34:05] Melinda Jennison: So think of Brisbane, pre-war homes, that’s anything built prior to 1946 that has a character overlay. Think traditional buildings. Areas that have a lot of those sorts of homes around, there’s some zoning that that might show that that higher density is permitted. But if there’s a character overlay, that property cannot be removed. They’re the sorts of areas in terms of established. You’ll still see your old six-pack or existing units in those traditional suburbs. That’s where I’d be hunting.
[00:34:34] Scott Jennison: Generally solid as a tip, maybe a few cracks in the brickwork, but they’re not going to, they’re not going to go anywhere. So, I think it’s a positive story. I just think there’s frustration that people are saying, I can’t believe how much it’s going up. I think you’ve got to accept it’s going up and then be a smug prick later on how much it’s gone up after.
[00:34:51] Andrew Burke: Yeah.
[00:34:51] Scott Jennison: It’s not going to go backwards. It’s not. We know that. There’s no way with construction prices, what’s going on in this town and the lack of land, it’s only going one way. And it’s and it’s good for sellers as well.
[00:35:02] Melinda Jennison: You’ve heard it from Andrew, not from us. Andrew, thank you so much for joining us on today’s podcast. I’m sure listeners have enjoyed all of the content that you’ve been able to share. And it’s good to get that real on-the-ground insight in terms of what’s happening in that development space. So thank you.
[00:35:18] Andrew Burke: Thanks for having me. Congratulations on your business. I’d just like to say, listeners, we deal with a lot of buyers’ agents, and these are the only people that I trust. They actually have the courage to tell you not to keep bidding if you’re paying too much for something. Takes a lot of courage. Good on you.
[00:35:32] Scott Jennison: Thanks, Andrew.
[00:35:33] Melinda Jennison: Thanks, Andrew.
[00:35:34] Scott Jennison: We love to have you back again, and we will continue to do that for our listeners so they can keep an eye on all parts of the market when it comes to land supply and all those types of things as well. Ray White Special Projects, Andrew Burke. If you need help with anything on that side of things, look out for the guys over there. They’re always very, very helpful. So, thanks again, mate, for for coming in and having a chat.
[00:35:53] Andrew Burke: Fantastic.
[00:35:56] Melinda Jennison: Thank you once again to you all for joining us on the Brisbane Property Podcast. As always, if you have enjoyed this episode, please share with friends and family, especially those that may be wondering, you know, what is going to happen in Brisbane real estate in the future. I think this episode provides some valuable insights to really help people understand where we’re heading. If you would like to leave us a review, we would love for you to do so. Hit that subscribe button so you don’t miss any future episodes. And we look forward to speaking with you again next week. Until then, bye for now.