Lenders clear key hurdle to unlock Geelong’s apartment boom – realestate.com.au

The threshold for getting more apartment projects off the ground in Geelong appears to be shifting.

The city’s apartment market has remained in flux as an increasing number of projects receive site plan approval but have yet to be sold or built.

At the heart of the matter is the barrier between construction costs and the ability to secure financing at the price for which apartments in the city can be sold.

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Matt Deledio, who has joined CBRE’s strengthened Victorian Debt and Structured Finance team at its Geelong office, said the development landscape is improving financially, while confidence in the region’s future increased.

“Most people tend to point the finger at a council and planning issues, but the council has actually been quite proactive in terms of increasing density and trying to create as many opportunities as possible,” Mr Deledio said.

But major lenders may open the door by lowering the bar for apartment pre-sales.

“Historically, this would have been 80 percent of the construction cost at pre-sale,” he said. “They’re now lowering that to 25 percent or 50 percent – ​​that’s a pretty substantial hurdle that they’re lowering just 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 see a real move to try to meet that pre-sale requirement to give some developers some comfort about being able to deliver these (projects),” he said.

“Clearly there needs to be some feedback that sales are close and that there is some traction in the market.”

Mr Deledio said while Geelong’s apartment market was still in its infancy, with most buyers preferring the established detached housing sector, developers could expect significant growth.

“It’s more that the fundamentals of the market are quite strong. There’s a lot of investment in the local market and there’s a lot of population growth going forward, linked to the product, or the growth of a particular segment.”

An increasing downsizing trend among older population groups fueled some of the demand.

“I think you’ll see a lot of people moving into that well-located, well-appointed, well-built apartment complex,” he said.

Construction has been completed on the Motif apartment project at 1 York St, Geelong.

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

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

Mr Deledio said developers can see the real benefit of a growing apartment market based on population growth.

“I think the council has really shown their hand in a positive way, trying to say we want this to happen, which has been excellent,” he said.

Pre-sale marketing has started for Geelong’s first “vertical retirement village” in Bellerine St, Geelong.

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“That gives developers pretty strong confidence that they know what won’t be a major hurdle.”

Construction costs remain an issue, along with the reality that it costs the same to develop a project in Melbourne or Geelong, but housing in the latter countries was cheaper.

“It will be product dependent because you still have pockets within Geelong where you can get that premium price for apartments,” he said.

“It still comes down to what you pay for the site, but also who you appoint to actually build the site. I think there is confidence now that the site has stabilized and if people buy the right wallet for the right product, I think it will still always sell and developers can still make a margin.”

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

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Mr Deledio joins CBRE after six years as a senior development manager at Costa Property Group and brings with him in-depth knowledge of the property sector in Geelong and Melbourne.

“I look forward to working with local developers, commercial real estate owners, farm operators and established businesses looking to structure, optimize or expand their debt strategies as the region continues to grow and evolve,” said Mr. Deledio.

“Geelong is experiencing significant population, employment and major commercial development growth, creating strong demand for cutting-edge capital solutions. It is already an exceptional place to live and do business, and with the scale of investment underway across the region, Geelong is well positioned for continued commercial and economic expansion.”