Developers switch to larger units to meet buyers changing demand

PUBLICATION: The Australian

Developers are redesigning apartment projects to include fewer one-bedrooms and more large apartments suitable for owner occupiers to meet buyer demand in a changing market.

The trend comes amid a regulatory clampdown on bank lending to property investors, as well as elevated house prices that are enabling empty nesters to sell, downsize into a luxury apartment and pocket the difference.

In one recent example, architects Fender Katsalidis were appointed to design the second phase of Asia-backed developer Growland’s $600 million Victoria Square project in Melbourne’s Footscray, where the floorplan was reconfigured for more two- and three-bedroom apartments and fewer one-bedrooms.

The decision followed feedback from the first stage of the project where local demand exceeded expectations.

Fender Katsalidis director James Pearce says one-bedroom apartments have become less preferable but two-bedroom, two-bathroom apartments can be used by a wider variety of residents, such as owner-occupier couples with a young child or even two couples renting together. “We’re seeing that trend over all of our projects,” Mr Pearce said. “People are seeing the value for money in the apartments that are more functional and more appropriate to

live in, which is this idea of flexibility that the two-bedroom, two-bathroom provides.”

Mr Pearce earlier worked on Riverlee’s Jaques project in Richmond, where the third stage was redesigned to offer large two- and three-bedroom apartments instead of smaller stock. Other redesigns have taken place at Pellicano’s suburban Alke development and multiple Moda projects in the southeastern suburbs, where the number of units was reduced to include more large homes.

Marshall White Projects director Leonard Teplin has seen a “significant increase” in demand for larger apartments over the last two years.

“We have worked with many developers recently to adjust their product mix to be more in line with current market conditions,” Mr Teplin said.

CBRE managing director of residential projects Andrew Leoncelli sees projects redesigned often, to cater to owner occupiers but also to improve the financial returns.