Developer Interest in High-Density Apartments Plummets

The market for residential developments in Australia is under duress.

Last year, total residential site sales in the country dropped to $4 billion, close to 65% lower than its 2014 peak of $11.3 billion, according to a report Tuesday from Knight Frank.

In addition, building approvals for new apartments sank below 40,000 in 2020 for the first time since 2013, the data showed. The pipeline for such units is set to plummet over the next three years, with 86,400 set to be completed by 2024, compared to the 135,300 that came online between 2018 and 2020.

Low-density developments are faring better, the data showed. Sales for those sites jumped 23.1% last year.

“Developers across the country are continuing to shift their focus and risk toward boutique apartment developments and diversifying their portfolios with low-density sites,” Shayne Harris, Knight Frank’s head of residential for Knight Frank’s Australia offices, said in the report.

Meanwhile, interest from foreign investors plunged in 2020, the data showed. There was less than $500 million of foreign investment last year, down more than 90% from its 2016 peak of $5.2 billion. It was the first time investment from foreign developers has dropped under $1 billion since 2012.

Because of the Covid-19 pandemic, Australia closed its borders to foreign travel, meaning investors were not able to scout sites as they normally would. That’s kept many from committing to new acquisitions.

“Although we’re in uncertain times, we can’t underestimate the impact investors will have on the apartment market as they start to return across the country,” Mr. Harris said. “It’s only time before they’re lured back to the new apartment market given the cheap finance, a thinning new supply pipeline and lowered residential vacancy rates.”

Some experts also expect Australia is on the precipice of a boom in pent-up foreign demand as soon as borders open and immigration normalises, Mansion Global has reported.

Close to half of sales of residential development sites last year were in New South Wales, which had nearly $2 billion in deals in 2020, according to the Knight Frank report. Victoria followed, with just under $1.3 billion in transactions.

The Gold Coast defied the trend away from high-density developments, registering a 238% increase in site sales in 2020, the report found. At the same time, sales of such sites in Brisbane itself dropped 86%.

Drifts of ground cover plants and wildflowers along the steps of the Sydney Opera House, traffic obscured by meadow-like planting and kangaroos pausing on city streets.

This is the way our cities could be, as imagined by landscape architect Jon Hazelwood, principal at multi-disciplinary architectural firm Hassell. He has been exploring the possibilities of rewilding urban spaces using AI for his Instagram account, Naturopolis_ai with visually arresting outcomes.

“It took me a few weeks to get interesting results,” he said. “I really like the ephemeral nature of the images — you will never see it again and none of those plants are real.

“The AI engine makes an approximation of a grevillea.”

Hazelwood chose some of the most iconic locations in Australia, including the Sydney Opera House and the Harbour Bridge, as well as international cities such as Paris and London, to demonstrate the impact of untamed green spaces on streetscapes, plazas and public space.

He said he hopes to provoke a conversation about the artificial separation between our cities and the broader environment, exploring ways to break down the barriers and promote biodiversity.

“A lot of the planning (for public spaces) is very limited,” Hazelwood said. “There are 110,000 species of plants in Australia and we probably use about 12 in our (public) planting schemes.

“Often it’s for practical reasons because they’re tough and drought tolerant — but it’s not the whole story.”

Hazelwood pointed to the work of UK landscape architect Prof Nigel Dunnett, who has championed wild garden design in urban spaces. He has drawn interest in recent years for his work transforming the brutalist apartment block at the Barbican in London into a meadow-like environment with diverse plantings of grasses and perennials.

Hazelwood said it is this kind of ‘complex nature’ that is required for cities to thrive into the future, but it can be hard to convince planners and developers of the benefits.

“We have been doing a lot of work on how we get complex nature because complexity of species drives biodiversity,” he said.

“But when we try to propose the space the questions are: how are we going to maintain it? Where is the lawn?

“A lot of our work is demonstrating you can get those things and still provide a complex environment.”

At the moment, Hassell together with the University of Melbourne is trialling options at the Hills Showground Metro Station in Sydney, where the remaining ground level planting has been replaced with more than 100 different species of plants and flowers to encourage diversity without the need for regular maintenance. But more needs to be done, Hazelwood said.

“It needs bottom-up change,” he said. ““There is work being done at government level around nature positive cities, but equally there needs to be changes in the range of plants that nurseries grow, and in the way our city landscapes are maintained and managed.”

And there’s no AI option for that.

Developer Interest in High-Density Apartments Plummets

With foreign buyers staying on their own shores, local residential development suffers.

A new AI-driven account by leading landscape architect Jon Hazelwood pushes the boundaries on the role of ‘complex nature’ in the future of our cities