Canberra’s booming apartment market has so far weathered the storm of COVID-19 with settlements flowing and off-the-plan sales in May even surging, according to Canberra’s largest residential developer.
In the last six weeks, Geocon has settled about $130 million-worth of apartments across two buildings, Dusk and Republic, at its Republic precinct in Belconnen. It is Australia’s largest residential development under construction with about 1300 apartments.
There are 390 apartments in the first stage of the development – a mix of one, two and three-bedroom units that have attracted more investors than owner-occupiers – of which 360 have sold.
About 92 per cent of the sold apartments settled in the first six weeks with managing director Nick Georgalis only anticipating a 2 per cent fallover rate overall.
He said the fallover rate for off-the-plan apartments in Canberra averaged around 2 or 3 per cent, and that was without COVID-19 in the mix.
“In terms of the balance of the units due to settle, the last 8 per cent are due to some delays with financiers – they are a bit slower than we would like but they are coming through,” Mr Georgalis said.
It is understood about 10 units had lower valuations upon settlement, which could have been the cause of some delays.
Mr Georgalis said only two sales were expected to default because of COVID-19 or because people had lost their jobs.
“To only have two fall over due to COVID is really quite good. It is also a reflection of the workforce, we really are a white collar government workforce town. Our unemployment currently sits at 4.2 per cent, so we are still sitting miles ahead of the market.”
As of April, the other states and territories had higher unemployment levels of between 6 and 7.2 per cent.
As a consequence of COVID-19 and job losses forcing people to move back in with parents or international students and workers returning home, vacancy rates rose across all capital cities in April.
Canberra’s vacancy increased from 0.8 per cent in March to 1.4 per cent in April, according to Domain data, but still boasts one of the lowest vacancy rates across the capital cities.
“Canberra shows up on the map as really standing out at the moment, in terms of employment figures, in vacancy rates, yields (at about 7 per cent), and people are really recognising that. It’s starting to compete with Sydney, Melbourne and Brisbane as an investment location,” Mr Georgalis said.
May has also been Geocon’s strongest month of sales in a long time, with 150 apartments sold – across four of its projects – compared to an average of 30 sales a month.
The developer has a pipeline of more than 2000 apartments to be released to the market in the next two years and has plans for another 400 units at a development site in Civic it bought just last week through Savills for $24 million.