A number of Brisbane apartment buildings are being slowly turned into hotels by the Oaks Group, who have purchased management rights for the buildings.
If you are thinking of buying an apartment to live in, or renting an apartment for six months or more, you should take care not to buy or rent in apartment buildings that are or will soon become short term stay accommodation. The reason - the other "residents" of the building may only be staying for one or two nights -- there have been complaints about noise, parties, security issues, overuse of facilities such as pools, rubbish left in halls, and parking in the wrong spaces.
The apartments in such buildings will not, in my view, have good capital gains, as they will be less desirable for owner-occupiers and will become run down over time.
You should take extreme care before buying or renting in the following buildings:
- Festival Towers
- Charlotte Towers
- 212 Margaret Street
- River City
- Any building managed by the Oaks Group
- Any building built by Devine
- Any building where the management rights are controlled by a real estate agent named Marshall.
(I see that a 2 bedroom apartment in Festival Towers, on level 31, recently was sold at auction by Ray White for $410,000. Another one on level 39 was unsold with the highest bid less than $450,000. It is now listed for sale at $499,000. Other apartments in the same building that are not as good as listed for sale in the high $400K and above $500,000 -- TAKE CARE!)
Here is a recent press report:
Oaks Hotels & Resorts has ramped up its growing domination of the Brisbane CBD accommodation market after snaring the management letting rights (MLRs) to two premier high-rise apartment towers, the 41 level Festival Towers and the 39 level River City project, for $14.1 million.
Today’s announced deal for the two properties delivers an additional 532 apartments to the rapidly expanding Oaks stable.
Managing director Brett Pointon says the latest acquisitions will boost Oaks Brisbane CBD portfolio to seven high-rise apartment buildings including Oaks 212 Margaret Street, Oaks Lexicon Apartments, Oaks North Quay, Oaks on Felix and Charlotte Towers (Oaks to take over management in October 2007).
While the 532 apartments delivered under the latest acquisition will initially be included in Oaks permanent letting pool, the company expects to progressively convert a majority into its short-term serviced letting pool to compete in Brisbane’s burgeoning short-stay market.
There is also a further 89 apartments in the buildings that are owner occupied or managed by external agents.
Pointon says Oaks expects to swell its short-term room stable from the 3,489 to over 3,600 serviced apartments by the end of June 2007.
In addition to the MLRs to the two properties, Oaks also acquired the freehold to the manager’s apartments in both properties for $1.45 million.
He adds the two latest acquisitions and the commissioning of Charlotte Towers deliver Oaks an unrivalled position in the increasingly buoyant Brisbane CBD accommodation market, and deliver a pipeline of units to further swell its serviced letting pool over the next two to three years.
"We’re expecting the market to continue tightening given the lack of any mooted major new hotels or serviced apartment projects in the CBD for the foreseeable future, with the exception of Charlotte Towers, which we’ve already secured the MLR for," he says."With Brisbane now boasting the highest hotel occupancy rate in Australia at around 80 percent, this strengthened presence in the local market will prove a cornerstone of Oaks financial performance over the next several years."