More apartments and institutional investment needed, says expert real estate panel.

Capital cities on Australia’s eastern seaboard are suffering from a significant undersupply of new apartments to meet population growth and a generational shift to inner city apartment living, a panel of property and economic experts said yesterday.

Speaking at MaxCap’s annual think tank, the panel including Mirvac CEO Susan Lloyd-Hurwitz, economist Saul Eslake, award-winning architect Callum Fraser of Elenburg Fraser, Luke Hartman CEO of Metro Property Development and Founding Partner and CIO of MaxCap Group Brae Sokolski debated the state of the property market and the Australian economy.

Mr Fraser said he couldn’t understand why anybody who was looking at accurate property data could be ‘bearish’ about the multi residential space.

“I’m amazed everyone is bearish about apartments but that’s not my experience. We have been shorting supply by 15,000 dwellings  per year in Melbourne for the last 10 years,” Mr Fraser said.

Ms Lloyd-Hurwitz added that developers are exacerbating the undersupply by only building about half of what is needed.

Ms Lloyd-Hurwitz also expressed surprise at the pessimism among Australians post the global financial crises, in an economy that is ‘actually quite good’.

MaxCap Managing Director Wayne Lansky said the panel discussion showed the property industry was ready to push back on misconceptions regarding key issues impacting the property market and the Australian economy.

“The Australian property market is suffering form the absence of transparency in planning processes, the potential of over-reach in prudential regulation, and a clear lack of appreciation for the multitude of positive fundamentals underpinning the market,” Mr Lasky said.

“The mood in the room and on the panel, who between them represent tens of thousands of apartments under construction and tens of billions of dollars in real estate assets, is that we need to be better addressing the misinformation for the good of the market and the broader economy,” he said.

MC Tom Elliot asked the panel how future projects would be funded, given pressure on Australian banks to reduce their exposure to commercial property.

“Development has been great for the banks’ bottom line, but a pressure valve has to be released. We can no longer expect every major deal to be backed by one of the four majors.” MaxCap’s Brae Sokolski said.

“Who fills in the vacuum? Foreign banks, Asian capital, or institutional capital from local and international resources. It’s inevitable that super funds will participate in real estate debt, like they have win the UK and the US, ” Mr Sokolski said.