$68 billion worth of property developments underway on Gold Coast, but expert says tread carefully

Over $68 billion worth of property developments are planned or underway on the Gold Coast, with the value of the work across all sectors now higher than expected during 2007, a new report has revealed.

But head of property research at Advisor Edge, Louis Christopher, says the market is flooded and developers would do better to seek investments in other areas.

The figures also come after insolvency experts PPB announced earlier this week that 25% of all resorts and hotels on the Gold Coast are being watched due to fears they may become insolvent.

According to the latest Colliers International Gold Coast Development Map, the total value of current developments in the commercial, industrial, retail and residential sectors is now $2.3 billion higher than during the 2007 boom. The report states there are 379 developments planned or underway – just 27 less than in 2007.

Of the $68 billion in identified works, about $30 billion is currently under construction with the remaining $38 billion in planning stages. The majority of works are major residential projects, followed by 32 major apartment projects and 25 projects classed as “major infrastructure”.

There are currently three major resort/hotel projects underway, with nine major retirement projects also under construction.

Of the properties planned for the region, 21 have an end value above $1 billion, which Colliers international director Stewart Gilchrist has said is a “huge vote of confidence”, according to the Australian Financial Review.

The region was hit hard by the downturn, with housing prices falling up to 40% and several companies falling into receivership, including Jim Raptis’ Raptis Group, and Paul Brinsmead and Peter Madrers’ Resort Corp.
But Christopher says the Gold Coast market is flooded, and investors should consider moving their interests elsewhere as the area is not experiencing a recovery.

“We are recording thousands of properties on the Gold Coast that have been on the market for over six months, literally thousands of them. This is not a market that has recovered unlike the capital cities throughout the course of this year, and is very similar to what we are seeing in other holiday locations across the country…very weak.”

“At this stage, I think it’ll be very tough for developers to compete in the area unless they’ve got something essentially very, very good, or at or below market value. There is just too much stock listed. Now things can change, but at this point in time it doesn’t look like the best move.”