2020: The Year Ahead - Apartment Market 'Quality,' That's a Tricky One!
Predictions always require some degree of vision. Pondering the shape of the residential property and apartment market in 2020, the idea of 20/20 vision springs to mind, as it might just turn out to be an accurate reading of the new year.
The term 20/20 is a measure of visual acuity (perception, sharpness, keenness and awareness). It’s the ability to read over a distance, what a person with ideal vision, might see clearly. In our case that might be any one or group of industry players.
Or for a trendier generation 20/20 is ‘wicked’ and a positive ‘yes’. Over the next few weeks I’m going to hopefully apply some 20/20 vision to help deliver a hopefully sharp view of what 2020 might look like.
To help, I’ve had a number of conversations with some leading industry figures. From those conversations, I’m starting with one of the common threads that emerged, and that was ‘quality’, and quality in the widest sense of the word.
Quality in the context of residential property and in particular medium and high-density development, is a complex topic and one that I and several of my industry contacts are sure will come into sharper focus in 2020.
For our market sector quality has a number of touchpoints including, aesthetics and design, fundamental build quality, reputation, finishes and quality of life.
According to Paul Buljevic, Managing Director with PBD Architects, there is an understandable perception that quality has been compromised over recent years however, Paul believes this will further galvanise and define quality in coming years.
“During 2019, there’s been a lot of turbulence around the market, and alongside the economic pressures, mainly associated with funding, quality and that includes poor quality, has also been a big topic.
“Our clients appreciate that both design and delivery (build) focused quality yields better results (in terms of sales) and there’s now I believe a growing and a more acute understanding of buyer expectations”.
“Quality in the apartment market is also being driven by the reality that buyers in key locations do their research they understand good planning, finishes and architecture,’ he added.
From my own point of view, as the market recovers in 2020 it is clear that developments need to understand this and appreciate that the quest for quality is a complex proposition that needs to involve every aspect of a project. That involves developers, builders, architects – in fact all consultants, and essentially local councils.
Adrian Pozzo, CEO Cbus Property agrees and makes the point that any hint of poor quality can undermine buyer’s confidence in particular when dealing with off-the-plan sales.
“While now I see green shoots in the market, selling off-the-plan remains tough because we are selling the dream and it’s harder to sell that dream if quality is not delivered. That’s where reputation is so important, in reality you are only as good as your last project,” he said.
Adrian also describes 2019 as ‘a tough year’ however, as the market recovers, he comments further:
“It is essential that we deliver every project as promised and to do this we are fully engaged in the delivery of quality and we take, what I guess you could say is an old-school approach, and that includes the employment of a Clerk of Works on every project.
“These people are across every detail of the development. As property developers, it is our responsibility to work with and assist the best builders to deliver the best quality outcomes.”
Scott Hutchinson, Chairman of Hutchinson Builders offers his perspective on the need for and the delivery of quality.
“We’ve been directly working on improved quality for at least 10 years. We have a flat structure and we pay constant attention to our build quality. That’s required a complete change in attitude, we’ve over 300-pages of documentation to help, but I’d still suggest there’s about 20% of builders and contractors who should not be in the business.”
What these few comments do show is that industry wide, quality is a big issue, and before returning to a wider view of what buyers might be seeing in terms of quality in the design of new apartments, I’d like to share a further view on what quality means.
According to Don O’Rorke, Executive Chairman, Consolidated Properties quality must still be delivered across all price points and be driven by in Don’s words ‘giving the best value to every occupier’.
“Quality will always be driven by price point, we have a determination to deliver the best product. To the owner-occupier or investors, we know that investors will be looking in the main for rental yield. However, when we think of quality, we also have to remember the need to deliver affordable housing and that’s a hurdle we’ve yet to solve.”
It’s easy to see why quality is such an important topic and makes my list of factors that will impact the market in 2020. However, with further comments from architect Paul Buljevic, I’ll expand this topic with some of the design trends that he believes will influence quality next year and into the future.
An Investment in Quality Design
As the development industry takes a more holistic view of design and quality, Paul generally sees 2020 with a brighter outlook for his profession and his firm specifically.
A starting point might well be that the market in 2020 will see a continuation of ‘risk averse buyers’. Adrian Pozzo (Cbus Property) and Don O’Rorke (Consolidated Properties) both make the comment that currently buyers are not in a hurry, they are engaged in slow and detailed conversations and they fully explore any apartment purchase.
This is a reality that directly impacts every aspect of project delivery and that’s where Paul’s experience is interesting.
“Media scrutiny around some projects and pockets of Sydney have made buyers risk averse and off-the-plan pre-sales have been impacted.
“Buyers want to see, touch and feel what they are buying, and know that what they buy will stand the test of time.
“Projects that deliver this quality are seeing developers invest in design, so this is creating a positive outlook for 2020, as projects become more design focused, there are a few great examples of what buyers are looking for and can expect with new projects,” Paul said.
Demographics Drive Quality
Talking to Paul, I’d agree that it all starts with the target demographic and as we’ve found in a number of locations across Sydney, the strong presence of older ‘baby-boomer’ buyers and second and third generation apartment buyers, is currently having a big impact that’s also driving quality.
Paul talks about the impact of design and quality firstly externally and then internally and reflects upon a number of trends he sees for 2020.
“Externally the use of brickwork has been a trend with more inventive ways such as textured walls, patterns and sculptural design.
“Internally older buyers are looking to replace what they had in their current homes and that would include aspects like; wider living rooms, a separate family living room area, a number of bathrooms 2-bed with 2 baths 3-beds with 3 baths and so on. Solar access and a limited number of apartments per floor with private access is also important, and generally we see apartments in the sector offering at least 10% more space.”
According to Paul it’s also important to have solid planning so that developers know what buyers are after and plan projects accordingly. While buyers for their part do understand quality, they know how to judge a project’s feel and first impressions are important.
“To deliver quality, I believe that every member of the project team must be involved, be invested in the project, and understand the client’s motivation.
“Everything excites me about the market in 2020, and that includes the ability to hit the demographic, meet the needs of the end users, with space and amenity and that’s regardless of the market.
“This does not suggest over the top design and quality solutions, but projects that meet, the needs of the target,” said Paul.
Along with Paul, my other contacts have all pointed to a need for planning as an essential, so that any one party is not left racing against the clock – as either builders or architects getting caught ‘holding up the project’. Or developers racing to meet financial hurdles ‘at any cost’.
Quality and design look set to dominate the markets perception of what delivers a great project in 2020 and that will greatly boost confidence.
In next week’s content I will look at varied views concerning the impact of population, immigration and infrastructure shaping the market in 2020 and where exactly the market recovery sits. Asking the questions has the market completely bottomed and what impact will future supply have?