Monday, September 24, 2007

Indigo Sued - Kelvin Grove Village Development

Today's Australian Financial Review (p. 60) reports a lawsuit against the developer of the Kelvin Grove Village apartment complex by three retailers. The developer is Indigo.

"According to the court documents, an Indigo employee had told the prospective retail tenants that more apartments had been sold in the complex than was the case."

I have always assumed this to be the case for most developments. I have seen agents say "development 50% sold" when that is not the case, or "construction started" when only demolition has started and the developer has not even obtained finance.

The AFR reports that several stores in the Village have already closed down, it would seem due to lack of people traffic.

The retailers are claiming over $700,000 in damages.

I visited the development last year, and my opinion was (at that time) that it was a dog. It seemed that it would take many years, if ever, for the area to develop into something. Although geographically close to the city, it is too isolated -- one cannot easily walk to the city, and the walk is unpleasant as you have to walk along major roads and cross a highway and a railway. There are no decent shops or facilities in walking distance -- other than the ones that are in the complex, and it appears that some are closing or have closed down. No-one I know living nearby would select the Village as a destination for shopping or relaxing.

The website states:

"Bordered by the Victoria Park Golf Course, Brisbane Grammar Schools, Queensland University of Technology, State Primary and High schools and within easy access to Royal Brisbane Hospital, the RNA Showgrounds, the Aquatic Centre, Suncorp Sports Stadium and the magnificant (sic) Roma Street Parklands - its the ideal location."

Really, the site is bordered four other development sites. Or your could say it is bordered by the six lane Kelvin Grove Road and the six lane Inner City Bypass highway. To get to Brisbane Grammar School, you have to cross the Inner City Bypass highway and a large railway line.

It is also in a gully.

About this time last year, none of the $770,000 townhouses had been sold.

A one bedroom is listed today at $420,000 by the developer being sued. Now, that sounds expensive! For that price, you could buy a 2 bed 1 bath in Skyline in the city, or a 1 bed in Quay West, or a 2 bed in a Devine building in the city.

Or you could snap up a 2 bedroom apartment from $549,000 to $625,000!!! (These are 77 to 90 sqm internal.) That is over $5,500 a sqm (including balcony) - very expensive for a suburb apartment building that has been on the market for some time.

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