Lenders cut key barrier to unlock Geelong’s apartment boom

The location of many apartment projects in Geelong seems to be changing.

The city’s apartment market remains in a state of flux as a growing number of projects gain planning approval, but are yet to proceed to sales or construction.

At the heart of this issue is the barrier between construction costs, the ability to get money versus residential properties that cannot be sold in the city.

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Matt Deledio, who has joined CBRE’s Victorian Debt and Structured Finance team in its Geelong office, said the financial landscape is improving while optimism is growing for the region’s future.

“Most people tend to point to the local council and the planning issues, but in reality the council has been busy with population growth and trying to open up as many opportunities as possible,” said Mr Deledio.

But big lenders may open the door by lowering the sale price of the apartment earlier.

“Historically it would have been 80 percent of the construction cost before the sale,” he said. “Now they’re bringing that down to 25 percent or 50 percent – that’s the biggest hurdle they’re lowering, just trying to encourage people to build.

Matt Deledio leads the Victorian Debt and Structured Finance team from CBRE’s Geelong office.

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“We’re seeing a real movement to try to meet that pre-sale demand to give other developers some comfort that they can deliver these (projects),” he said.

“Obviously there has to be a response that the sales are there and there’s something in the market.”

Mr Deledio said that although Geelong’s apartment market was still nascent as many buyers opted for the established housing sector, developers could grow significantly ahead of time.

“In addition to that the fundamentals of the market are very strong. There is a lot of investment in the local market and there is an increase in population going forward, along with the product, or the growth of a certain package.”

The increasing trend of downsizing among the elderly population is feeding part of the demand.

“I think you’re seeing a lot of people moving toward that well-appointed, well-designed and well-built community,” he said.

Construction of the Motif apartments project at 1 York St, Geelong, has been completed.

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Recent apartment projects built in Geelong include the Motif building on York St, where the majority of pre-sales were to out-of-town investors, and Pitard Group’s 11-storey, 117-apartment complex at 23-25 ​​​​Myers St, the Melbourne-based development group has begun the process of transferring ownership to National Affordable Housing.

Developers of the city’s first direct retirement area, Bellevue Geelong, are preparing to launch project sales in March, while mixed-use projects such as Monno’s Moorabool development and Up Property’s Malop St have won planning approval. Gurner indicated that his Brougham St mixed-use project could be launched this year.

Mr Deledio said developers could see a real hit in the growing apartment market, based on population growth.

“I think the council has really shown its hand in a positive way, trying to say that we want this to happen, which is very good,” he said.

Pre-sale marketing has begun at Geelong’s “first retirement village” on Bellerine St, Geelong.

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“That gives developers a strong level of confidence that they know what won’t be a major obstacle.”

Construction costs remain an issue, as well as the fact that it costs the same to build a project in Melbourne or Geelong, but the apartments were cheaper in the end.

“It will depend on the products because there are still pockets within Geelong where you can get that price for residential properties,” he said.

“It comes down to what you pay for the site, but also who decides to actually build it. I think there is confidence now that it is established and if people buy the right packages of the right product, I think we will still sell regularly and the developers will be able to make a margin.”

Gurner has indicated that his Brougham St, Geelong project could be launched in 2026.

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Mr Deledio joins CBRE after six years as senior development manager at Costa Property Group and brings deep knowledge of the property industry across Geelong and Melbourne.

“I look forward to working with local developers, commercial property owners, agribusiness owners and established businesses looking to plan, improve or expand their credit strategies as the region continues to grow and develop,” said Mr. Deledio.

“Geelong is experiencing significant growth in population, employment and major commercial development, creating a strong demand for high quality infrastructure solutions. It is already a unique place to live and do business, and with the level of investment continuing across the region, Geelong is well positioned for continued commercial and economic growth.”