S P Setia marches on with new grand projects in the most liveable city.
Parque Melbourne@St Kilda Road is Setia's second development in Australia.
By Lee Yan Li lylee@thestar.com.my
AUSTRALIAN are living a good life. Aside from sunny beaches, dry deserts, 'the bush' and 'the Outback', Australia also holds an impressive record on its urban dwellings.
Touted as one of the world’s most highly urbanised countries, Australian cities Melbourne, Adelaide and Perth, have been ranked as among the world’s most liveable cities by Economist Intelligence Unit (EIU), with Melbourne holding the top honour for the sixth consecutive year.
The market took notice, prompting investors flooding the housing market and attracted the attention of some of Malaysia’s big developers.
CoreLogic’s latest figures showed Australia’s property prices had risen by 9.7% on average this year. Sydney’s 14.6% and Melbourne’s 11.5% increases are the strongest performers, which represent over 95% and 80% gain respectively since January 2009.
However, the housing boom has also become a source of concern for the local community. Prime Minister of Australia Malcolm Turnbull recently called out the needs to provide affordable housing for young Australian couples, an echo of the frustrating situation faced by young prospective homebuyers in Malaysia.
Economic Co-operation and Development (OECD) has urged the Reserve Bank of Australia (RBA) to reverse its position in low interest rates, stating that there is a need “to unwind tensions from the low-interest environment, notably in the housing market, which has in many places experienced rising prices for some time”.
Forecasting Sydney and Melbourne’s property prices will rise around 10% to 16%, SQM Research claimed both cities are overvalued at 40%, which could lead to a possible correction in 2018. However, Fitch Ratings stated that while Australia is building more homes that the population growth demands, it is well below the excess of Ireland and Spain before the bust of their housing market.
Artist impression of S P Setia's project Maison Carnegie in Melbourne, Australia.
HSBC’s more measured analysis stated while Australian housing market is expected to cool in 2017, there will be no correction nor a crash. The agency expected the price of detached house prices in Melbourne to grow by 5% to 6% with a solid demand and limited supply, while the price of the apartments in the inner city is likely to fall between 2% to 6%.
Perhaps, the irony is that while property prices in Melbourne are still booming, the risk of oversupplying the apartment products in certain markets is slowly creeping in. According to RBA, these risks appear greatest in inner-city Brisbane and Melbourne, where new supply is largest relative to existing dwelling stock.
Earlier this year, four major banks in Australia clamped down on foreign lending, which has hugely affected Australia’s property market. However, the government has recently changed course and allowed foreign buyers to purchase new apartments from oversea buyers in a move to limit housing restriction for foreigners. Previously, foreigners were banned from doing a second-hand transaction for off-the-plan purchases.
Facing fierce competition in the booming market, one of the Malaysian developers that made substantial headway in Australia is S P Setia Bhd, which has established a foothold in Melbourne through projects such as Fulton Lane and Parque Melbourne. Both were sold out within months of its launch and completed ahead of schedule.
S P Setia Bhd non-independent non-executive chairman Tan Sri Datuk Dr Wan Mohd Zahid Mohd Noordin said the Parque Melbourne, Setia’s second development in Australia launched in mid-2013, was fully taken up within three months.
“It is the only residential private apartment in Melbourne with a private one-acre heritage garden, with 12 150-year-old elm trees listed on the National Register of Significant Trees by National Trusts of Australia,” he added.
Wan Mohd Zahid at Parque Melbourne grand opening ceremony.
Speaking at the grand opening ceremony of Parque Melbourne, Setia (Melbourne) Development Company Pty Ltd chief executive officer Choong Kai Wai said while most buyers attracted by Fulton Lane were Malaysians, the success of their first project in Melbourne has raised a lot of local interest.
“Parque Melbourne has a percentage of 55% to 60% local buyers, while the rest mainly consists of Malaysian and Chinese buyers,” he added.
In September, the developer launched Maison Carnegie, a low-rise residential development at an upscale neighbourhood just 11 km southeast of the Melbourne Central Business District (CBD), and it is situated close to Monash University Caulfield Campus. The compact project that offers 48 apartment units has achieved 65% take-up rate to-date.
In addition, S P Setia secured another two prime sites in its acquisition of High Street Prahran and 308 Exhibition Street@Melbourne CBD that will be launched in 2017. High Street Prahran is located in a trendy neighbourhood, 15 minutes from the CBD.
At a price of approximately RM334mil (A$101mil), 308 Exhibition Street’s 4,140-sq m site is the largest east-end CBD development site in Melbourne to be sold in over a decade. The development, which is currently in planning, consists of twin towers and the introduction of a new five-star luxury hotel fronting Calrton Gardens, a UNESCO and World Heritage Site.
Besides other international footsteps in Vietnam, the United Kingdom, China and Singapore, S P Setia Bhd president and chief executive officer Datuk Khor Chap Jen said the company also has plans for other parts of Australia, including Sydney and Adelaide.
He said while Setia is focusing on high-rise development, they are not ruling out the possibility of developing landed properties in future.
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The article is first published in StarProperty.my pullout on Dec 7. Download StarProperty.my e-Mag(bit.ly/StarProperty_Emag) to read more.
Read more: SP Setia’s ever expansion in Melbourne
