A unique 12-months.
Across the past 12 months, our Land Team have completed a similar volume of transactions compared to the previous two years (2021 & 2022). However, the types of assets being traded have deviated from what is typically seen in a normal market. In a conventional market, residential development land accounts for 90% of our transactions, while the remaining 10% consists of industrial, retail, commercial landholdings. Currently, we are witnessing a significant shift in the types of assets we are transacting, with almost 50% of our listings comprising industrial landholdings, town centres/retail sites, school sites, and a higher number of medium-density super lots. This trend is influenced by a robust industrial market, and developers seeking to sell off super lots and non-core assets amidst a slowdown in retail lot sales.
With respect to residential land, we continue to experience strong sales for PSP (Precinct Structure Plan) approved land. This can be attributed to the scarcity of high-quality sites entering the market and recent announcements from the government and Victorian Planning Authority indicating delays in the release of many planned PSPs. The market for land holdings with planning risk, particularly related to PSP timing, has softened. Prospective buyers are now seeking more time in their deals to mitigate concerns about when the government and VPA will activate these precincts.
Looking ahead 12-18 months, we expect the market to continue stabilising, with a highly positive long-term outlook beyond that timeframe. Melbourne’s greenfield markets have consistently performed exceptionally well over the past two decades, and with consumer confidence rebounding, the VPA restricting new PSPs, an anticipated population increase of 1.2 million in Melbourne over the next eight years, and ongoing supply issues in our growth areas, the market fundamentals remain strong.
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