Mirvac’s $2b answer to the lack of three-bedroom apartments
Nila Sweeney Reporter
Oct 13, 2024 – 2.25pm
Property developer Mirvac will launch its luxury $2 billion Harbourside Residences project in Sydney next month, cranking up the supply of sought-after but scarce three and four-bedroom apartments.
Although the broader market for new apartments is relatively soft, Mirvac has noted a stronger than expected demand from potential buyers, especially for larger apartments, according to development head Stuart Penklis.
Mirvac’s $2 billion Harbourside Residences comprises 263 one, two, three and four-bedroom apartmentsacross 48 floors.
The decision to launch the project comes at a critical juncture in the nationalhousing market. Demand for larger units is on the rise as more owner-occupiersmake the switch to apartment living.
“We’ve had strong interest from many previous purchasers who have been waitingfor this project as well as new potential buyers, which has exceeded ourexpectations,” Mr Penklis said.
“While it is a more subdued environment in terms of sales generally, across theboard, demand for this type of product has remained quite resilient.
“There’s a lack of supply in the market that islikely to remain for a long time. We’re continually seeing people wanting todownsize out of their existing large family homes, and there is certainly a lack ofsupply of larger apartments.”[https://www.afr.com/property/residential/sydney-doesn-t-have-enoughthree-bedroom-apartments-for-boomers-20241003-p5kfi 6]
The Harbourside is expected to be completed in 2027, and will consist of 263 one-,two-, three- and four-bedroom apartments over 48 levels, including threepenthouses and three sub-penthouses . Mirvac is yet to set the prices.[https://www.afr.com/property/residential/penthouses-in-harbourside-to-be-among-the-best-on-viewsprice-mirvac-20240903-p5k7ib]
Mirvac paid $252 million for the Harbourside Shopping Centre in November 2013and lodged its first application in 2015. Excavation is complete and sub-groundconstruction is under way for what will be the centrepiece of the NSWgovernment’s $15 billion redevelopment of the area.
Larger apartments still rare
Sameer Chopra, CBRE head of Pacific research, said demand for larger apartments currently outpaced supply.[https://www.afr.com/property/residential/the-apartment-trap-why-a-unit-may-no-longer-get-youa-house-20240220-p5f6bt]
“It’s still rare to get a three-bedroom apartment in the market. There’s definitelyconstruction happening in that space, more so than we’ve seen historically, but itwill take some time to get that stock on the market,” he said.
“We found that the three-bedroom newer apartments are getting around 45 percent premium compared to older vintage three-bedroom apartments, and they areattracting very sharp demand.”
Mirvac is not the only developer catering to the growing demand for biggerapartments from cashed-up buyers. Perth-based Gary Dempsey of Gary DempseyDevelopments deliberately reduced the number of apartments to be offered in hisnewly launched project Myka in Scarborough Beach.
“This project was originally planned for 65 apartments consisting of one-, two- andthree-bedders, but I decided to cut down to just 21 three- and four-bedroomapartments which will be larger than the average house,” he said.
Myka Residences, spearheaded by Gary Dempsey, will comprise 21 three- and four-bedroom apartmentsacross 12 storeys. DKO Architecture.
“Typically, there is a good supply of one- and two-bedroom apartments in the area.However, there are very few projects that are up to four bedrooms, and none thatexclusively consist of three- and four-bedroom residences that have 100- to 300-square-metre floor areas.
“We’ve been blown away by the response, even with prices starting at $3.5 million. Ithink it’s probably one of the few projects that is stacking up at the momentbecause people are willing to pay a premium for the right product. They aren’tpaying more for the small apartments, so those projects don’t stack up because ofhigher costs.”
Despite strong demand for bigger apartments, Mr Penklis said Mirvac wouldcontinue to include one- and two-bedroom apartments in its future projects, butwould build more three- and four-bedders.
“Mirvac buyers are largely dominated by owner-occupiers, and in recent yearswe’ve been building a higher percentage of larger apartments,” he said.
“So we’re doing more larger apartments than we’ve done, and I think that is ageneral trend across the market.
“There’s no question that there is still demand for smaller apartments, from anaffordability perspective. But the demand for our product is very much from those upgraders who are looking to move into a larger apartment and want to remainwithin the same precinct, and also people trading out of their family home intolarger apartments.”
In Sydney, Nine by Mirvac in Artarmon and The Frederick in Green Square alsohave a higher proportion of three-bedroom and four-bedroom apartments, MrPenklis said.