Having made the decision at the start of 2015 to relocate from my hometown Sydney to the capital of South Australia, Adelaide, I’ve spent a lot of time acclimatising to the differences between the cities. And while I choose to stay well clear of any controversial Which City Is Better? antics, I have noticed that the two cities share some obvious market similarities. The most apparent of these is the increasing demand for residential dwellings close to the city.

Since I arrived in South Australia, new residential project marketing emails have been a regular fixture in my inbox. And while the demand for high-density apartment living in SA has not reached the heights that has sparked the historical levels of residential development in the Eastern Seaboard cities, higher density living in Adelaide is fast finding its place beside the traditional quarter acre block. As at September 2015, building approvals for private sector apartments in SA have grown 20.1% y-o-y and reached the highest average monthly unit approvals in over 20 years (figure 1). Over the same time period, approvals for private sector houses decreased 13.5%[1].

But the question is, at what point will we see high-density residential development spread beyond the CBD to the fringe like we have with St Kilda Road in Melbourne and North and South Sydney? So far, the majority of the high-density residential approvals in metropolitan Adelaide have been in the CBD with 74% of all apartment approvals year-on-year to June 2015 occurring within the LGA boundaries. And with a large proportion of the CBD still populated by ageing, low-rise commercial buildings, there is still plenty of opportunity for developers to snag res-dev sites at price points that stack up against development costs.

However, the South Australian Government has approved significant rezoning along the major Adelaide Fringe commercial zones of Fullarton Road and Greenhill Road as part of their Inner Metropolitan Growth Development Plan. These major roads border the parklands that surround the CBD and offer two major desirability factors for residential locations – proximity to the city and natural views. But despite this, there has been no rush to transition from a commercial precinct to a residential area. In fact, since the new zoning has been put in place, a number of commercial owners in the Fringe precinct have elected to undertake refurbishment projects over putting their assets to market or redeveloping their sites[2]. While there have been early movers on residential development in the Fringe[3], the lack of immediate amenity and retail in the area has impacted short-term demand, which would predominantly come from owner-occupiers. The redevelopment of the 16.5 hectare former Glenside Hospital (Fullarton & Greenhill Roads) may eventually spur neighbourhood retail and amenity to the immediate area. However, this precinct is still in planning and not expected for some time. Right now, with the significant amount of development sites available in the CBD which are more likely to attract the investor and student market, the transition of the Adelaide Fringe from commercial to residential may be a long-term prospect.

[1] ABS 8731.0 – Building Approvals, Australia – Sept 2015 – seasonally adjusted.
[2] 121 Greenhill Road, 123 Greenhill Road, 127 Greenhill Road and 140 Greenhill Road.
[3] 56 Greenhill Road – 64 Serviced Apartments (Colangelo Group), 179 Greenhill Road, Parkside.

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