Australia’s ageing population is driving a trend towards oversize luxury apartments and could see the creation of more luxury towers in major cities.
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Demand for luxury apartments in Australian cities is rising in tandem with the growth of Australia’s wealthiest age demographic – the over-65s.
Ayre Real Estate principal and director Adrian Wilson cites 1205/61 Macquarie Street as an example of how prices are shifting amid this dynamic. It was purchased for $4.9 million in November 2021 and was sold by Ayre for $6.5 million in April 2023 to former Citrix chief executive Kirill Tatarinov. This represents a 32% gain in less than 18 months without any improvements made to the property.
Another case is 2204/129 Harrington Street in the Rocks, which was purchased for $2.1 million in April 2022 and sold for $2.35 million 12 months later, representing a 12% jump.
“There is a lack of stock in apartments, but particularly towards the upper end of the premium market segment,” he says.
People in the over-65 age group have average asset levels that are 50% higher than the average household. This is largely because of the unprecedented growth in house prices over the past 20 years. The proportion of older Australians will continue to grow steadily. In 2021, 17% of the population was aged 65 and over. By 2061, they will account for almost a quarter of the population, equivalent to 8.8 million people.
Ayre Real Estate specialises in luxury apartments, and its largest buyer group are Baby Boomers, born between 1946 and 1964. Wilson says that the demand for luxury apartments in Sydney is strong, with prices that are more robust than other segments, such as the investment-driven market.
‘Early downsizer’ makes market debut
Wilson has also observed a new demographic entering the market in higher numbers: the early downsizer.
“We have noticed that the move to downsize is coming forward for a lot of people,” he says.
“Ten or 15 years ago, most downsizers were in their seventies and eighties. Now, many are downsizing in their fifties and sixties. These early-stage downsizers coming into the market means there is a much broader range of people looking for that high-end stock.”
In the past, the typical route to apartment living involved downsizing from a large house to a smaller, single-storey home or a townhouse and then into an apartment. Many others preferred to remain in a family home for as long as possible – and would then move directly into a care home.
With early-stage downsizers skipping many of these stages by moving from a freestanding home into an apartment, there is a general preference towards an oversized apartment.
Wilson says that savvy developers are taking note. Apartment sizes in Sydney have been increasing since around 2000 when many investors bought one and two-bedroom apartments off-the-plan following the excitement around the Sydney 2000 Olympic Games.
“A very high number of these are oversized three-bedroom and two-bedroom apartments, which is very different to the kinds of developments that we saw completed in the last five to 10 years,” says Wilson.
Queensland luxury towers are highly sought after
Demand for oversized luxury apartments in many parts of Queensland is also increasing, says Chrisney Formosa, the principal and head of design at Plus Architecture.
Formosa says that last year there were a strong number of inquiries becuase of proposed planning law changes that didn’t end up going ahead. The changes would have adversely affected the luxe market, so everyone wanted to get their DA in before they came into effect.
Plus Architecture receives around two inquiries every week, and they specialise in oversized luxury apartments. Formosa says it is a strong and steady supply of business. However, she can’t say that it is more than last year because of the anomaly in the market that occurred.
“In the Brisbane and Gold Coast markets, we’re seeing a real dominance of imported money coming up from other cities around Australia – from Melbourne in particular,” she says.
“Many of our clients have moved out of really large houses after their kids have moved on – or have been kicked out – and so they’ve got this capital, but they just don’t want the maintenance. It’s been a robust market for us, and we see it becoming even stronger in future.”
“Ten or 15 years ago, most downsizers were in their seventies and eighties. Now, many are downsizing in their fifties and sixties.”
Ayre Real Estate principal and director Adrian Wilson
Formosa cites Luna at Burleigh Heads on the Gold Coast as a recent standout project she has worked on. Each of the eight levels contains one apartment, with an elevator that opens directly into the home. Another is Kin-Kora on 19th Avenue in Broad Beach on the Gold Coast. The 18-storey building contains only luxury apartments – it is not mixed-use. Each residence is more than 200 square metres, with prices starting from $3 million.
“Of course, the higher you get, the more expensive it gets, and we’ve actually had clients come in and say that they will take levels nine and ten. Some have requested three levels for one residence.”
Luxury apartment towers on the horizon
Wilson believes that Australia’s wealthy and ageing population will be able to support the creation of more all-luxury apartment towers in the future. Unlike New York City and London, Sydney has very few all-luxury towers – generally, it is just the penthouse and upper floors that offer luxury living.
Wilson says this is not because of a lack of demand among buyers.
“Councils often pigeonholed developers into creating mixed-use properties with a certain number of one, two and three-bedroom apartments required to get approval. That is hopefully changing because Australia’s population can support the development of many more luxury towers.”
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