Supalai sets out to provide affordable housing to Australians

The collaboration, announced during Supalai’s Melbourne field trip on Monday, aims to deliver affordable housing across major Australian cities.

Prasas Tangmatitum, director of Supalai Australia Holdings, revealed that the collaboration took the form of a joint venture, with both companies signing a contract to establish SSRCP HoldCo Pty Ltd. This joint venture involves an investment of 1.063 billion AUD (approximately 25.3 billion baht) in real estate developments throughout Australia.

It is currently planning to develop 12 projects in five key cities across four states, including Sydney and Wollongong in New South Wales, into which Supalai has yet to expand. The total project value of these 12 projects in terms of Supalai’s shareholding portion is 5.785 billion AUD (137.7 billion baht).

The company has already demonstrated significant growth in the Australian market from its existing 12 projects, with sales in the first half of 2024 reaching 1.7 billion baht, a 70% increase over the same period in 2023. The current accumulated sales value as of June 30, 2024 from these 12 projects stands at 24.5 billion baht.

Supalai entered the Australian real estate market in 2014 and has been working on 12 projects in four cities: Melbourne (Victoria), Geelong (Victoria), Brisbane (Queensland), and Perth (Western Australia), totalling over 50 billion baht.

 

Focus on Affordability
Affordability remains a pressing concern within Australia’s housing sector. The escalating costs of land and construction, combined with restrictive lending practices, have made homeownership increasingly challenging. 

According to the OECD report, Australia’s housing system has been historically underinvested, resulting in a significant supply shortage. In 2022, the country’s housing supply was 420 per 1,000 people, which is lower than the OECD average.

Mike Davis, Stockland’s executive general manager & Master planned Communities, painted a positive picture of the Australian residential property market, citing robust economic conditions and significant population growth as key drivers. However, he also highlighted a critical undersupply of housing, with approximately 280,000 new residents expected annually against only 180,000 new homes being constructed.

To combat this, Supalai and Stockland are concentrating on developing affordable housing options, including townhouses and apartments.

He emphasised that both companies are focused on providing affordable home and land packages by sharing and combining their expertise while incorporating environmentally friendly features.

Nonetheless, ongoing challenges with affordability and living costs continue to be a source of concern for the future.

He reaffirmed the company’s commitment to providing affordable home and land packages that incorporate sustainable elements. 

“Affordability is a critical consideration, particularly for many of our young families and first-time buyers. Offering really great value, but affordable home and land packages is a really important factor for our business,” he said, adding that the cost of living challenges that their customers face, as well as the cost of construction, are current market challenges.

 

Positive Market Outlook 
This collaboration emerges at a difficult time for Australia’s real estate market, marked by rising demand, limited supply and rising costs. According to the National Real Estate Report, property prices have risen by 2.4% in the last three months, with Sydney and Melbourne experiencing significant price rebounds, putting pressure on demand.

Despite these challenges, both Supalai and Stockland maintain optimism regarding the long-term prospects of the Australian property market.

Joseph Gersh, executive chairman of Gersh Investment Partners Limited, an Australian real estate advisory firm, highlighted the effects of 13 consecutive interest rate increases on the property market. 

While these interest rate hikes have affected the market, he noted that certain regions, such as Perth and Queensland, are experiencing robust sales activity, signalling a positive outlook for Supalai and Stockland to further invest. As interest rates are anticipated to decline, Gersh expects a resurgence in demand, particularly in Melbourne.

He agreed that the collaboration would assist Supalai and Stockland in developing an innovative solution for providing affordable housing. 

“The overwhelming problem...is one of affordability, which influences customers’ decisions on how much land or how large a house they can afford. Affordability is determined by both the cost of the product and the rate at which you borrow money from the bank,” he explained. 

 

Long-Term Investment Perspective
Athip Bijanonda, another director of Supalai Australia Holdings, expressed his confidence in the long-term growth trend of Australia’s property market.

“Home is one of the four most important aspects of human life, and it remains a top priority. Given Australia’s current property landscape and government support measures, it is reasonable to expect that demand for housing, particularly among first-time homebuyers, will continue to rise. Apart from focusing on people with high net worth, it is the developer’s responsibility to manage the house so that it is affordable to this group of people,” he said. 

He then highlighted Australia’s appeal as an investment destination, citing the country’s strong economy, abundant resources, high purchasing power, and increasing foreign immigration as key factors driving sustained housing demand growth.

The partnership between Supalai and Stockland is expected to use their shared values of professionalism, legality, business integrity, and trustworthiness to address Australia’s housing challenges and foster long-term growth in the property sector, he concluded.