INNER BRISBANE
APARTMENT
RENTAL MARKET
MARKET
ANALYSIS
DATE: MAY 2015
The information outlined within this document represents a subjective interpretation of the development based on plans, pricing and other information
provided to us by the developer and/or their representatives. This information should not be relied upon for investment decisions. Interested parties
should undertake independent inquiries and investigations to satisfy themselves that any details herein are true and correct. No forecasts are being made
by Resolution Research & Marketing Pty Ltd about potential capital gains. Past information contained within this document about capital gains or price
growth does not imply that such gains or growth will be made in the future. Resolution Research & Marketing Pty Ltd accepts no responsibility for reliance
on this information. Date compiled September 2014. This information is current for twelve months from May 2015.
MARKET ANALYSIS
BRISBANE’S INNER CITY CORE
RENTAL MARKET
(2.5KLM FROM QUEEN STREET
MALL)
Recent reports relative to inner Brisbane’s rental
market which have suggested the rental market
is entering a state of oversupply with vacancy
rates over 11% have focussed on the market as a
whole and not differentiated between the new and
established markets.
Across the established market, we are seeing
2015, the median weekly rent of a one-bedroom
apartment in South Brisbane rose by $90 per
week which corresponded with a high volume of
construction completions.
NOT ONLY IS DEMAND MOVING
IN LINE WITH SUPPLY, BUT
THE RENTAL MARKET HAS
DEMONSTRATED ITSELF TO HAVE
A WILLINGNESS TO PAY MORE FOR
NEW RENTAL DWELLINGS WITHIN
INNER BRISBANE’S CORE RENTAL
MARKETS.
older, secondary apartments located away from
core infrastructure nodes failing to meet with
Since 2010 we have seen high-density residential
underlying demand from the rental market placing
development within Brisbane’s inner city mature
upwards pressure on the overall vacancy rates
to a level of sophistication which is closely aligned
recorded throughout the inner city.
with the lifestyle needs of Generation Y. This
demographic has a demonstrated preference
By contrast, an our analysis of vacancy rates
for renting within developments offering a wide
across new, high-density developments completed
variety of body corporate amenities and inclusions
since 2010 and situated within 2.5 kilometres of
providing the rental market across inner Brisbane
Brisbane’s city heart reveals a prevailing vacancy
with a lifestyle which has never before been
rate of 2.6%.
offered. This flight to quality has resulted in a
clear division between the market dynamics of
OUR ANALYSIS OF VACANCY
RATES ACROSS NEW, HIGHDENSITY DEVELOPMENTS
COMPLETED SINCE 2010 AND
SITUATED WITHIN 2.5 KILOMETRES
OF BRISBANE’S CITY HEART
REVEALS A PREVAILING VACANCY
RATE OF 2.6%.
new versus established apartments throughout
inner Brisbane.
THE FLIGHT TO QUALITY HAS
RESULTED IN A CLEAR DIVISION
BETWEEN THE MARKET DYNAMICS
OF NEW VERSUS ESTABLISHED
APARTMENTS THROUGHOUT
INNER BRISBANE.
Our research shows that of the 2,080 apartments
which have been completed in inner Brisbane’s
Inner Brisbane is in a very fortunate position when
core rental markets since 2010, only 47 apartments
compared with Sydney and Melbourne’s inner
are available for rent. Importantly, our research
city markets in that we still have available land for
also shows that between Mar quarter 2010 and
the development of new apartment towers which
Mar quarter 2015 a total of 2,272 new bonds
have the capability to deliver, modern world-class
have been lodged in these core markets. This
facilities moving forward.
provides clear evidence that the number of
rental bonds have risen in line with the delivery
These facilities, such as those being constructed
of new apartment supply. Not only is demand
in Gurner’s FV development and Metro Property
moving in line with supply, but the rental market
Development’s Central Village development (both
has demonstrated itself to have a willingness to
in Fortitude Valley), include man-made beaches,
pay more for new rental dwellings within inner
underwater lounge areas and comprehensive
Brisbane’s core rental markets. For example,
hotel-style concierge services on top of the
between March quarter 2014 and March quarter
standard gyms and pools which have long-been a
2
staple of residential development.
On top of this, according to the RACQ, earlybird
car parking rates in Brisbane’s CBD are second
It is the unique nature of these facilities, combined
only to Sydney, averaging $24.63 vs $29.43 per
with proximity to a live, work and play lifestyle,
day. On an annual basis, the average annual cost
which is driving the “me-change” trend of Gen Y,
of running a small/medium class car, combined
and the emerging Gen Z renters moving out from
with the cost of car parking in the Brisbane CBD1
under Mum and Dad’s roof into their own city pad.
averages between $3,054 and $19,662.
Not only are lifestyle factors and deteriorating
By contrast, inner city renters who have immediate
housing affordability contributing to the expansion
access to a high level of public transport
of the rental pool within the inner city but the cost
infrastructure are currently paying only $1,608 per
of travel is also a significant contributor driving
annum to travel to work which greatly reduces
rental demand. The latest figures show that the
the cost of living for those moving into Brisbane’s
commute to and from the work in the CBD is
inner city. With the cost of living potentially
having a significant impact of the cost of living of
moving from an average of around $10,000 per
those electing to travel by private vehicle.
annum to $1,600 per annum it is not surprising we
are witnessing a notable push towards the rental
The weekly running costs of small and medium
take up of inner city apartments.
class cars now average between $1,848 and
$18,480 per annum at the lower end of the scale.
IT IS THE UNIQUE NATURE OF THESE FACILITIES, COMBINED WITH PROXIMITY TO
A LIVE, WORK AND PLAY LIFESTYLE, WHICH IS DRIVING THE “ME-CHANGE” TREND
OF GEN Y, AND THE EMERGING GEN Z RENTERS, MOVING OUT FROM UNDER MUM
AND DAD’S ROOF INTO THEIR OWN CITY PAD.
COST OF TRAVEL TO CBD VIA PRIVATE
VEHICLE PER WORKING WEEK & ANNUAL (2
TRIPS PER DAY, 5 DAYS PER WEEK)
Kilometres to CBD
Cost per annum^^
PUBLIC TRANSPORT COST OF TRAVEL TO
CBD PER WORKING WEEK & ANNUAL (2
TRIPS PER DAY, 5 DAYS PER WEEK)
Kilometres to CBD
Cost per year
5
$1,848
5
$1,608
10
$3,696
10
$1,886
15
$5,544
15
$2,237
20
$7,392
20
$2,515
25
$9,240
25
$2,208
30
$11,088
30
$2,861
35
$12,936
35
$3,490
40
$14,784
40
$3,768
45
$16,632
50
$4,046
50
$18,480
*
cost calculated on rate per kilometre for petrol & wear and tear
costs as provided by the ATO
^ amounts rounded to the nearest dollar
^^ 48 week working year
Source: Resolution Research, Australian Taxation Office, May 2015
Source: Resolution Research, Queensland Government Translink,
May 2015
1
MARKET ANALYSIS
3
allowing for 4 weeks annual leave per annum
MARKET ANALYSIS
Over the coming years, as Brisbane’s population
continues to grow it follows suit that the size of
the rental pool will similarly grow. This expansion
in the size of the rental pool will be driven by large
increases in the numbers of residents throughout
the Brisbane LGA who fall into the core rental
market age bands of 20 to 35. In the five years
BASED ON AN ANALYSIS OF
HISTORIC DEMAND BEHAVIOUR
SINCE 2010 THERE IS CURRENTLY
JUST OVER 6 MONTHS OF
AVAILABLE SUPPLY THROUGHOUT
BRISBANE’S TOTAL INNER CITY.
to June 2016 alone, Brisbane population aged
between 20 and 35 is projected to have increased
by 4,276 persons.
Available supply of new apartments has been
trending downwards since December 2012, in stark
contrast with demand which has been trending
upwards over the same time period. Based on an
analysis of historic demand behaviour since 2010
there is currently just over 6 months of available
supply throughout Brisbane’s total inner city.
With construction completions and subsequent
releases to the rental market this contraction in
available rental supply is likely to remain in place
over the coming months.
POPULATION PROJECTIONS – CORE RENTAL MARKET 2011 TO 2036
350,000
341,524
340,000
328,232
330,000
316,294
320,000
311,347
310,000
304,922
300,000
291,965
290,000
280,000
270,000
260,000
2011
2016
2021
2026
Source: Resolution Research, Queensland Government Office of the Statisticians, May 2015
2031
2036
4
DEMAND VS SUPPLY – MARCH QTR 2010 TO MAR QTR 2015 – INNER BRISBANE
Rolling Annual Sales Numbers
Supply in Months
5,000
39
4,750
36
4,500
Sales Rates are increasing
Prices are affordable
4,250
4,000
33
30
3,750
3,500
24
3,000
Units
2,750
Availability is Declining
Less Overhang
Very Limited Finished Stock
2,500
2,250
2,000
21
18
15
1,750
12
1,500
1,250
9
1,000
6
750
500
3
0
Mar-15
Dec-14
Sep-14
Jun-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
250
0
Estimated months of supply
27
3,250
Source: Resolution Research, Place Advisory - May 2015
INNER BRISBANE NEW SUPPLY INJECTIONS – DECEMBER 2002 TO DECEMBER 2017 (F)
6,000
Forecast of new apts
to be released
5,000
Apartments Released Inner Brisbane
4,000
3,000
2,000
1,000
Source: Resolution Research, Place Advisory - May 2015
MARKET ANALYSIS
5
Dec-17
Dec-16
Dec-15
Dec-14
Dec-13
Dec-12
Dec-11
Dec-10
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
Dec-02
-