Investors make cautious return to WA apartment market
Insight
23 October
West Australian apartment development company Finbar Group managing director Darren Pateman presented to a solid turnout of shareholders this week at Finbar’s annual general meeting, and was able to point to a positive launch of its newest project suggesting investors may be slowly returning to the Perth apartment market.
As was the case in the previous financial year, Finbar continues to benefit from the strong demand for completed apartments in the Perth market, but has also experienced increased interest from investors for well-located and targeted product.
Finbar launched The Point in Rivervale earlier this month and has already made 35 sales to the value of $20 million off-the-plan. As a result of the early sales activity Finbar is now committing to the commencement of construction at The Point, its fourth apartment building in The Springs Rivervale precinct, this financial year.
The Point will consist of 167 one, two and three bedroom apartments plus nine ground floor commercial units. Previous apartment developments in the precinct have also proven popular with investors, but Mr Pateman said the level of interest in The Point was significant.
He said record low interest rates, increased rental yields, and some consecutive periods of price growth were slowly encouraging investors to return to the market.
“The strong launch of The Point featured a number of investors and first home buyers and reflects the range of product offered at the project as well as its location close to the city and river, Optus Stadium and Crown Entertainment Complex, and the airport.
“Buyers can now take comfort in the fact Finbar is committed to commencing construction at The Point this financial year, as we will at Aurora in Applecross where works will commence in December.”
Sales of Finbar’s existing completed stock continue to be steady, with selling down over $100 million in completed stock over the past 12 months, and having only a few months of stock available at current sales rates.
Sales have been averaging at 1.2 per day this financial year, compared with 1.3 per day over the 2021 financial year, with Finbar benefiting from having completed product available, across different price points and suburbs.
The recently completed project at Dianella has seen total sales reach 71 apartments as many down-sizers and families in the area finance purchases after selling their existing homes.
With two major projects under construction, and another two to commence this financial year, Finbar is focused on delivering the projects on time and on budget.
With apartment prices recovering and developer margins returning to more normalised levels, this augurs well for Finbar and its shareholders.
The average sales price for Finbar has risen consistently from a low in FY2018 of $526,000 to its current $650,000.
Construction at AT238 in the east of Perth’s CBD continues on schedule, with final completion expected early in the next financial year.
Similarly, progress continues at Civic Heart in South Perth and construction to date has gone to plan and expected to reach the ground across the whole site by December.
“In total, Finbar currently has $495 million in apartment value under construction, is scheduled to commence a further $231 million in value in the current financial year, and has an estimated $1.39 billion in end value future pipeline,” Mr Pateman said.
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