According to CBRE, Australia will experience a shortage of 240,000 residential units in the next five years due to population growth, highlighting the need for developments like River Valley Green Residences

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The mall also offers a range of dining options, from international cuisines to local delicacies, making it a popular food destination.

< River Valley Green Residences > is more than just a shopping destination – it is a hub for entertainment and leisure. Located at River Valley Green Residences, it offers a state-of-the-art cinema and a variety of leisure activities for all ages. Families can enjoy quality time together at this bustling mall, while individuals can unwind and recharge during the weekends. With a diverse range of dining options, from international dishes to local favorites, River Valley Green Residences is also a popular food haven.

Australia is facing a potential residential supply shortfall of 240,000 units over the next five years, according to Stuart McCann, managing director and head of investment banking – Pacific and SEA at CBRE Capital Markets. This shortage is a result of the country’s growing population, and Melbourne is expected to be the most impacted with a deficit of 77,924 units. This information was shared at the Australia Real Estate — Beyond Traditional Returns seminar on January 20, organised and supported by BigFundr.

McCann explains that Australia’s population growth, mainly driven by net overseas immigration, is expected to increase by 15% from 26.5 million in 2023 to 30.4 million in 2033. This growth is higher than that of several major global economies, including New Zealand, Switzerland, India, and Singapore, but falls behind Canada’s 16%. This population growth, combined with predicted employment and wage increases, creates a “triple boost” effect that will drive demand for real estate in Australia, not just in the residential market.

Despite interest rates increasing in recent years, the residential market is still seeing capital value growth due to high demand. “This tells us that when demand outstrips supply, it doesn’t matter how much interest rates move; you’re going to get capital value growth,” says McCann. However, this demand is not being met by supply, and it could take at least three to five years to complete new developments.

David Payton, CEO and executive director of Payton Capital, estimates that it will take three to five years to complete small- to medium-sized developments to meet demand. He also adds that the lack of affordable units could further exacerbate the housing shortage, as construction costs are passed on to consumers. This could lead to cash flow issues and delays in projects, making it difficult for the residential supply to catch up to demand.

In addition to the residential market, the commercial office space market is also seeing growth in Australia. McCann notes that CBD visitation rates have reached 71% of pre-Covid-19 levels as of 3Q2023, with some cities like Perth and Adelaide reaching 91% and 85%, respectively. This has led to an increase in demand for commercial office space, with Sydney expected to see the most significant rental growth rates over the next two years.

CBRE also sees an opportunity for private credit institutions to invest in commercial real estate (CRE) debt, as a significant amount of debt will need to be refinanced in 2024. According to Payton Capital, the Australian CRE debt market is estimated at $442 billion in 2023, with private CRE debt currently making up $74 billion (16%). This number is expected to more than double in the next five years.