You may have noticed that over the last two years, Lion has been focusing more and more on luxury real estate for our development projects. This decision hasn’t come about hapahazardly but is rather a reflection of market trends, in-depth research and our long term business strategy and goals. Here are some key insights we’ve uncovered along the way.
Why focus on luxury property development?
The primary benefit of developing luxury property is that there is effectively no upper limit on the sales price that can be achieved.
If you were developing a product intended for mainstream buyers, your target audience can be restricted by financial limitations—even if they wanted to pay more, they literally can’t afford to.
Whereas with luxury homes, it’s not uncommon for them to sell for millions of dollars above the listed price.
Market forces at play
The number of Ultra-Wealthy individuals in Australia is projected to grow 20 percent by 2025. This rise in wealthy individuals will also increase demand for luxury homes.
Expatriates returning home during COVID outbreaks has also impacted prime real estate prices, since 39 percent of expats have purchased a property since returning home.
Sales volumes are on the rise, for both mainstream and prime real estate. The first quarter of 2021 saw all five major Australian cities record positive annual growth in sales volume. This has only happened three times in the last ten years.
Market performance
‘Prime real estate’ refers to the top 5 percent of a market by value. For Melbourne, this is homes valued above $3 million and for Brisbane this is homes above $2 million.
Prime Residential Outlook – % annual growth
| 2020 | 2021 | 2022 forecast | |
|---|---|---|---|
| Australia | 2% | 11% | 8% |
| Sydney | 1% | 12% | 9% |
| Gold Coast | 3% | 11% | 8% |
| Melbourne | 0% | 9% | 7% |
| Brisbane | 3% | 9% | 6% |
| Perth | 4% | 10% | 6% |
On the waterfront…
Prime waterfront properties in Australia have achieved prices 79 percent higher than inland properties. This is an increase of 14 percent compared to one year earlier.
Melbourne waterfront properties experienced the strongest growth in 2021, with the waterfront premium increasing by 22 percent.
Brisbane also performed well with buyers attracted to riverside positions in blue-chip suburbs—the waterfront premium increased by 14 percent in 2021.
Waterfront property location by sales volume
| Harbour | 64% |
| Coast | 16% |
| Canal | 13% |
| River | 7% |
It’s research like this which has motivated us to pursue prime real estate development projects, especially those with waterfront locations.
