Market Reset: Q&A with Yong Lim from Knight Frank
Our Market Reset series has delved into the challenges and opportunities faced by the urban planning and construction industries. This month, we’re chatting to a leading valuer, Yong Lim, about how industry and government can kickstart development projects in the face of multiple challenges.
Yong is a Certified Practising Valuer and Partner of Knight Frank Valuation & Advisory Victoria where he has worked for over 17 years. He has experience providing valuation and advisory services across all sectors including industrial, commercial, retail, and health and aged care with a particular focus on englobo land, subdivisions, and residential/mixed use development.
Yong shares his insights on how we can start moving from Groundhog Day towards our previously strong-performing development industry.
Q: What key changes have you seen in the property development industry over recent years?
A: The property development industry has experienced significant changes over the past few years. Since the apartment boom pre-2018, we have had the onset of the pandemic, escalating construction costs, rising interest rates, and changes in government policies. All of this has contributed to the market volatility, leaving the development industry very subdued.
Q: Where do you see the industry heading in the next 12 months?
A: The last two years have been somewhat of a Groundhog Day situation with the continuing hope of a rate reduction being pushed back due to the high inflation levels. This has resulted in the market treading water as best it can with increases in distressed assets this year.
Given it has been subdued for an extended period, we would logically expect a slow improvement over 2025 however, there remain global uncertainties which may still impact on the market.
Q: We know the major challenges that we're facing - rising interest rates, cost of living, council delays - but what are the less obvious barriers you're facing in the valuation industry? What needs to change to overcome those hurdles?
A: From a development valuation perspective, there has been very limited transactional evidence for the last 18 months. Notably, off the plan sales have been at a relative standstill for a few years. What is clear is that there is a disconnect between what a development needs to price a project at given current cost levels, and what the market is demonstrating with sales of existing completed product. The recalibration to come will rely on a number of things but incentivising investors back into the market would be a good start.
Q: What specific changes would you like to see when it comes to government reform?
A: The recent government reforms, whilst good to have a plan and some action, lack tangible impact. Simply approving increased density does not assist with kickstarting actual development as under the current conditions most of that density cannot be realised. Should the streamlining of approvals from authority groups, particularly those around servicing and infrastructure occur, that would be a welcome process improvement.
The raft of various newer taxes over the last few years such as Windfall Gains Tax, Vacant Land Tax and Commercial Industrial Property Tax are adding layers of uncertainty and costs for investors in Victoria and pushing them to look interstate. The reintroduction of temporary stamp duty concessions reverses a policy change made in the past which is a positive action however, if it only remains for a 12-month period, this will limit its effectiveness.
Q: From your perspective, what are some new and innovative ways that we can propel the property development industry forward?
A: It may be more a case of re-establishing some of the fundamentals that supported our previously strongly performing development industry. There are many stakeholders needed to propel the development market forward from developers, investors, builders, financiers, and government to name a few. Further collaboration is needed to incentivise each party to provide the returns and confidence to rebuild this sector.
Thanks to Yong for sharing his perspectives. Our Market Reset series will be taking a short break but will be back with fresh insights from February.
About Red23
Red23 is a leading sales and marketing partner for new land, townhouse and apartment communities across the eastern seaboard of Australia. We specialise in custom and data-driven strategies that turn prospective buyers into proud owners and help build thriving communities.
Since opening in 2007, we’ve built strong and lasting relationships with Australia’s leading developers and become a natural extension of their teams. While our clients have diverse projects, they all want the same thing - an agency that will pull out all the stops to deliver exceptional results.