Last week we published domain data showing that inner-Melbourne apartment rents have collapsed, falling by between 16% and 30% in the year to March 2021:
Shortly after it was revealed that many investors had dumped their Melbourne apartment holdings, taking losses of 30% to 40% in the process.
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The reason for the falls is obvious: the collapse of immigration and international students has cratered demand and driven up vacancy rates. And the situation is unlikely to reverse until immigration is rebooted.
Now, a proposal to convert empty office buildings into apartments has been rejected by urban designer Leanne Hodyl, who conducted a built form review of the CBD for the Victorian government. Hodyl claims the plan would add to the glut because there is simply “no demand”:
NSW chief economist Stephen Walters this week called for empty offices to be converted into residential apartments in Sydney – in a similar push to those undertaken in London and New York – to reinvigorate that city’s CBD…
“There’s definitely not a high demand for apartment living in the city at the moment, we’ve lost international students, we’ve lost immigration, obviously. So there’s actually not a demand – you could convert them, but I don’t know who would be moving in”, [Leanne Hodyl said].
Office vacancy rates hit 13.2 per cent in March, according to Macquarie.
I have a better idea. Given Melbourne has a huge number of homeless and rough sleepers, why not use some of the surplus accommodation to solve this issue?