Off-the-plan apartment sales and the project marketing agency industry’s role in Sydney’s build-to-sell market

Source abstract

Australia’s largest city, Sydney, witnessed a boom-bust Build-to-Sell (BTS) apartment market cycle closely associated with rising private investor-landlordism in the 2010s. Within a highly financialised asset class, apartments have become a wealth accumulation vehicle. Development financing is underpinned by off-the-plan sales facilitated by real estate intermediaries, or project marketing agents (PMAs). A ‘structure of housing provision’ lens is used to analyse the previously unexplored exchange ecosystem of new BTS apartment provision. We argue that pre-sales practices become complex and costly during a peak in BTS new apartment supply. A qualitative approach draws on interviews with industry professionals and apartment supply data. The analysis reveals a retail-wholesale model of achieving ambitious pre-sales targets involving five PMA groups, including large commercial real estate agencies and channel sales companies with domestic and international investor buyer networks. In the boom, PMA groups who pre-sold a large portion of new apartments also had vertically integrated services – selling land, leasing and managing properties for investor-landlords. The PMA industry structure and practices also evolved between the boom-and-bust phases in response to changing pre-sale requirements of financial institutions. This makes them one of the key intermediaries in the engine room of BTS apartment production, but also consumption.