MASSIVE investment in public infrastructure and rising international student numbers are driving an apartment boom in the heart of a major Australian city.
There are about 1800 apartments under construction across 12 projects in the centre of Adelaide with a further 24 projects approved for construction representing another 2000 apartments.
The Adelaide central business district’s population is tipped to reach 30,000 by 2020, which is more than double what is was in 2001.
The $100 million 30-storey Kodo development will have 208 apartments and become the tallest residential building in the South Australian capital upon completion in 2018.
Developer Flagship Property Holdings plans to build a second apartment tower alongside Kodo in the future.
All of a sudden it changes into a vibrant city centre
Flagship Property Holdings CEO Steve Wise said early sales had been promising for Kodo, which means heartbeat in Japanese as a reference to the development’s central city location.
Wise said Adelaide’s city apartment market had evolved from predominantly a student accommodation investor market to one where there were more highly livable apartments aimed at owner occupiers.
He said the 220,000 people who spent many hours a week travelling to and from the city for work were an obvious potential market for new city apartments.
“If you look around Australia and at what’s happened in Melbourne, Adelaide is approaching its time where city apartments will be a segment of the market that will grow significantly,” Wise said.
“(But) it’s only going to grow if it moves away from that small investor style of product and actually becomes much more attractive for people to upgrade or downsize.”
Wise said the will to create a vibrant city by the South Australian Government and Adelaide City Council backed by their investment in public infrastructure such as the city tram extension, Adelaide Oval upgrade, Rundle Mall revamp, the new Royal Adelaide Hospital and the Convention Centre redevelopment had been significant.
Adelaide has also committed to becoming the world’s first carbon neutral city by 2025.
A focus on smaller projects such as the rejuvenation of certain parts of the city and the council’s laneway strategy had also been important, he said.
“When you add all these things then all of a sudden it changes from a sterile CBD to a vibrant city centre … the city is now an attractive place to live – it’s far more vibrant than it’s ever been,” Wise said.
“If you live and work in the city you can just walk to your job so with that sort of lifestyle you get more hours back in your day to do the things you want to do.
“There’s a change where people are saying I don’t want to spend that time travelling and when I get home I don’t want to mow the lawn, I want to invest more time in my lifestyle.”
Median apartment prices in the Adelaide CBD are AUD$399,000 compared with $812,000 in Sydney and $455,000 in Melbourne. The median price for a one-bedroom Adelaide apartment is just $234,000.
The annual Liveability Ranking from the Economist Intelligence Unit has rated Adelaide the world’s fifth most liveable city two years running.
Greater Adelaide has a population of about 1.3 million. Close to 23,000 of those live in the city. The population in the heart of the city peaked in 1914 when 44,000 people called it home.
It dipped below 13,000 in the 1980s as automobile use and sprawling suburbs became the fashion but has enjoyed significant growth since 2000.
Adelaide Lord Mayor Martin Haese said the private residential market had responded “vigorously” to the public investment to bring the city alive in recent years.
“We have some confidence that with those 36 residential projects that between 2018 and 2020 we will reach a city population of 30,000,” he said.
The State Government plans to boost the number of international students studying at South Australia’s universities by 20 per cent over the next three years.
International education is the state’s top service export, contributing $972 million to the South Australian economy in 2013/14 up from about $850 million the previous year.
Haese said there were about 32,000 international students in South Australia, of which about 8000 lived in the city.
He said families of international students investing in Adelaide apartments was “very common”.
“They will sometimes choose to buy and then hold on to that apartment after their son or daughter has completed their study,” he said. “We are also a very, very safe city and that’s not to be underestimated.”
While city living was popular among international students, Haese said demand for apartments was being primarily driven by two distinct groups: young professionals aged from their mid-20s to late 30s and “empty nesters” who were middle-aged and were looking to downsize after their children had moved out of the family’s suburban home.
Haese said the city was home to the arts, major universities, retail precincts, central market and the state’s biggest hospital all within walking distance.
“You can buy an apartment anywhere in the city of Adelaide and your major mode of transport can be your feet. That compact nature is a wonderful strength of our city. We also have many opportunities for growth in good quality dwellings – we are not going to run out of space any time soon.”