The developer behind the largest apartment project under construction in Adelaide has dismissed claims of oversupply in the CBD, and is expecting more China-backed developers to enter the market.
Nicho Teng, who heads China-backed developer Greaton, is currently overseeing the $300 million West Franklin project, which is expected to deliver 560 apartments for more than 1000 new CBD residents.
According to Mr Teng, almost 250 of the first-stage 272 apartments have been sold off the plan, with pricing, design and location key to success in the city’s burgeoning apartment market.
“Lots of people say there are too many apartments in Adelaide but I don’t agree,” he said.
“Adelaide has lower entry barriers – land is cheaper and the supply is less, so while demand is smaller there is less supply.
“If we don’t pre-sell we don’t build. Whether an apartment project is do-able nor not do-able, the market will tell.
“If you look at Adelaide there 15 or 16 apartment projects in the pipeline but there are only three cranes – the market will tell if your product is not right.”
Mr Teng said 80 per cent of buyers in West Franklin were owner-occupiers and he expected more China-backed developers to enter the Adelaide market as South Australians recognised the convenience and other benefits of inner-city living.
The current boom in Adelaide’s apartment market is being fuelled by Chinese capital, with a recent report from international real estate group Colliers International revealing close to the 30 per cent of the apartment pipeline is being funded by Chinese interests.
“The bottom line forecast by ACBC SA is $4 billion of aggregate growth in expenditure in SA over the next 3 years to come from increased exports to, and investment from, China,” ACBC SA branch president Sean Keenihan said.
“While a substantial part of this will be driven by growth in agribusiness, tourism and education exports, investment in South Australia’s property sector will also be a significant driver.
“We have a growing number of well-credentialed Chinese developers actively seeking opportunities in the South Australian market, but we need to connect with and convert more large-scale, established developers to realise the potential opportunity.”
Originally appeared in The Advertiser 13th February 2018