Developer Poly Australia, a subsidiary of the $125 billion state-owned conglomerate China Poly Group Corporation, is planning to expand its multi-density apartment portfolio in Melbourne and Sydney and even Queensland this year, despite fears of an apartment supply and price correction.
The developer doesn't think there will be a correction and considers some areas on the east coast undersupplied.
"The apartment market in Melbourne this year, for instance, differs quite significantly to the picture painted by commentators last year, with a recent Commonwealth Bank report showing that of the 140,000 apartments approved for construction in Melbourne between 2016 and 2018, just 35,000 of these will be completed," Poly Australia managing director Arthur Wang said.
Mr Wang said the gap between approvals and completions is due to lack of funding, forcing developers to abandon projects.
Eastern seaboard boom
The cashed-up developer told The Australian Financial Review it planned to do the opposite and expected to "announce additional acquisitions in coming weeks and months" on top of its sites in Richmond and Highett in Melbourne and Epping and Werrington in Sydney as well as grow its Sydney headquarters by 50 per cent in 2017.
"This year will see Poly Australia well on its way toward realising our company projection of delivering two to three thousand apartments in the next few years," Mr Wang said.
The developer's strategy may be a good one.
Australia's eastern seaboard is undergoing a record-level boost to supply of new apartments. While this did prompt concerns of a crash, plagued by dropping prices and failed settlements, it has not appeared and there are signs that a self-correcting industry is reining development in to avoid such a scenario.
Figures from consultancy Charter Keck in December show the number of new apartments scheduled for completion in Melbourne this calendar year has fallen nearly one-third as developers have slowed or delayed projects.
Reserve Bank of Australia assistant governor for economics Luci Ellis last week gave a sanguine assessment of the various apartment markets. Brisbane was undergoing a correction due to the sudden boost in supply, but it was a different picture further south, Dr Ellis said.
"In Brisbane, apartment prices are falling," she told the Australasian Housing Researchers Conference. "There was more supply coming online than there had been underlying population demand for it. In some senses Melbourne's population has grown so quickly it's less of a concern. In Sydney again, the population is growing so quickly, there's lots of overseas migration – people have to live somewhere – and it's more dispersed across the city."
It wasn't just the volume of new apartments but where they were that was important, Dr Ellis said.
"There's been a lot of housing supply in recent times and what matters is how it's distributed."
