Saturday, June 28, 2008

Newstead Waterfront

Record-breaker rises from toxic wasteland

Fiona Cameron | June 27, 2008

The Australian

AN apartment to be built on formerly contaminated land in inner-city Brisbane has sold off the plan for $14.25 million, smashing the city's residential price record.

The buyer has not been identified but developer Mirvac said it was a Brisbane businessman who planned to make the riverfront luxury penthouse at Newstead his principal place of residence.

The contract, which will be settled when the building is completed in mid-2010, was signed two weeks ago and became unconditional on Tuesday.

Mirvac's proposed Waterfront project is on a site that is part of a larger land parcel that was home to a gasworks until 1968 and still contains the heritage-listed steel skeleton of a giant old gas tank dating from 1860.

The surrounding land became a toxic nightmare for various parties involved and was the subject of long-running litigation over its clean-up until the Environmental Protection Agency finally gave it a tick of approval in April. In the past five years, one million tonnes of soil had been removed from the 17.4ha site, some dug from as far as 9m below ground level, Mirvac said yesterday.

Mirvac said three other apartments in the Waterfront project had been sold for prices ranging between $5.95 million and $8.75million. In total, 60 apartments had been sold for a total $201 million before the project's public release this week.

The penthouse deal has overshot Brisbane's previous residential record by more than $3 million. That record had stood only since April last year when John and Susan George paid $11.2 million for a historic sandstone home on Hamilton hill that was owned by the Anglican Church and home to its archbishops for decades. Mr George is the founder of the Mrs Crocket's salad business.

The Newstead penthouse deal is a graphic indicator of where money is flowing at the market's top end: many of the biggest deals these days are in super-flash apartments rather than old-style mansions.

Developers have zoned in on the trend, and according to agency DTZ's project marketing director, Paul Barratt, another three apartment projects planned in inner Brisbane will have penthouses priced above $14 million.

SouthPoint at SouthBank

"The Queensland Government has given the nod for early works to start on a $650 million luxury hotel and residential development next to the South Bank railway station.

It will include restaurants and retail spaces as well as the hotel, cinema and 56 residential apartments."

See Brisbane Times



The tentative new proposed Northbank design for Brisbane includes a 30 floor building at the Elizabeth Street off-ramp. This will impact the views from Casino Tower and probably the Empire Square development.

Watch Video

News About Union, Albion and Northbank

Ten News Video

Indooroopilly El Dorado Development

From Brisbane Times

"While sales marketing has so far been low key, Dr Preller said there had been an overwhelming response from investors. "We have pre-sold more than 70 per cent of the residential component, so obviously there is a huge demand for this type of product."

My guess is that the presales have all been to South African's who put in the finance for this building. I haven't seen any pre-sales marketing at all. The building doesn't even have development approval, and objections were lodged with Council.

Sunday, June 22, 2008

Rates Protest and Rates Analysis

[click on images to make bigger, then click again for full screen]

[Click on image to make bigger]

Meriton Confident About Brisbane - AFR

Story from Thursday's AFR (19/-6/08, page 55) that despite drop in sales volumes for new city apartments, Meriton is still interested in Brisbane.

AFR - Meriton

Waterfront at Newstead

Mirvac has released its top end apartments for its Waterfront Newstead project. Overall, this project will consist of a huge number of apartments. The first release was of the 99 best apartments, with river views. All apartments are large 3 or 4 bedroom apartments. Many have sold. Price range $2,150,000 to $4,500,000 for apartments and $6.4M to $8.9M for penthouses. These are all large apartments, but constructed on a highly contaminated (and hopefully cleaned) site.

Mirvac's Quay West

Mirvac built (and continues to manage) the Quay West apartment building in Brisbane's Alice Street, overlooking the botanical gardens. Large one and two bedroom apartments on the lower levels, with penthouse apartments on the top 5 levels. One of the residents is a senior person from Devine, who is constructing the French Quarter development next door. The French Quarter development will move the prices of Quay West even higher.

One bedroom on level 9, listed at $525,000
Two bedroom on level 16, listed at $850,000

Saturday, June 21, 2008

Protest at Council Tax Increases

"More than 100 angry inner-city apartment dwellers attended a public meeting at City Hall today to protest "unfair" rate hikes in the order of 150 to 300 per cent."

Brisbane Times

No relief for Brisbane apartment renters

Brisbane Labor Councillor David Hinchcliffe says according to his calculations, which are based on the Council's budget figures, rates on some inner-city apartments will rise by up to 700 per cent.

But Lord Mayor Campbell Newman has rejected such figures.

"There have been some significant increases for a small number of properties around the CBD and CBD frame," he said.

"Typically the increase... for the hardest-hit people is around about 150 to 160 per cent."

"The worst increase for any unit in the whole of the city of Brisbane is 300 per cent."

Mirvac Downgrade

"Due to the sustained deterioration in market conditions including prolonged global financial market volatility, rising cost of capital and general slow down in global and Australian economic conditions, Mirvac has reassessed the value of residential and non-residential developments, intangible values and co-investments in managed listed funds. Accordingly, Mirvac has adjusted its asset carrying values of between $300 million and $400 million, a 3.8 per cent to 5.0 per cent decrease in total asset value."

"Current weakness in the NSW residential market will continue and will, to varying degrees, be experienced across other markets."

"Strong product positioning and premium brand continues to attract pre-sales in excess of $950 million1 of exchanged contracts due to settle from FY09 to FY11"

Wednesday, June 18, 2008

Price Report

"The best performers during the three-month period were Hobart, where the median price was up 4.6 per cent, Brisbane (up 3.8 per cent) and Darwin (up 3.5 per cent)."

North Bank Dead?

"MULTIPLEX has given up on its controversial $1.7 billion design for the proposed North Bank redevelopment on the Brisbane River.",23739,23879482-3102,00.html,23739,23883742-3102,00.html

Brisbane Times

Construction Near Oaks Apartments in Brisbane

If you are buying or renting or doing a short stay in an Oaks apartment, make sure there is no construction nearby. This morning, walking down Albert Street, I past 3 construction sites, all next to apartments. It was before 8am, and there were jackhammers that I could hear more than a block away from Charlotte Towers.

Oaks Charlotte Towers

Oaks 212 Margaret Street

Oaks River City


Tuesday, June 17, 2008

Prediction from BIS Shrapnel

Saturday, June 14, 2008

REIQ Apartment Price Report for Brisbane - First Q 2008

REIQ March Quarter Unit Report:

Downtown Brisbane:
Median March Quarter: $450,000
Median 12 months to end of March 08: $449,755
Change over 1 year - 6.5%

West End:
Median March Quarter: $625,000
Median 12 months to end of March 08: $518,500

St Lucia:
Median March Quarter: $510,000
Median 12 months to end of March 08: $401,500

Median March Quarter: $425,000
Median 12 months to end of March 08: $401,750

From the Brisbane Times:

"REIQ chairman Peter McGrath said current figures reflect historical averages for the year's first quarter.

"Brisbane is coming down off a high, so to speak ... the market is simply returning to normal," Mr McGrath said.

Yet Mr McGrath conceded investor demand has cooled recently as servicing increasing loan repayments becomes more difficult.

"Investors appear to be staying out of the market until rents reach a level where they match the increase in interest rates and they are confident that the market has definitely stabilised," he said.

The trend has been felt hardest within the CBD, where apartments in complexes on Charlotte Street have remained unsold for four months.

"It is taking 30 days longer to sell inner-city apartments because investors are bowing out," LJ Hooker Brisbane Central principal agent Alexandra Rutherford said.

Prices have been scaled back accordingly Ms Rutherford said.

"We have had apartments priced at $480,000 reduced to $460,000 and some reduced to $420,000."

However, Mr McGrath warned real estate agents against judging the current market against last year's anomoly.

"I don't think some agents realised how good it was last year, thinking. it could last forever. Now we are just moving back to a more traditional market," he said."

Rates and Rents to Increase

"TENANTS will be slugged with rent increases as council rates, high property demand, and interest rates take a hold on the industry, analysts say.

The Brisbane City Council's Budget imposed a rate increase of 8.76 per cent and extra tax for luxury innercity apartments, will sting renters already under pressure from a 55 per cent rise over the past five years...."

See Courier Mail article

"The rates increase for unit owners will rise from 7.9 per cent for a unit on land valued at less than $1 million, to 9 per cent for land valued between $1 million and $5 million, by 16 per cent for land between $5million and $10million and 60 per cent on land worth more than $10million.

These rates are higher for apartments that are investment properties."

See Brisbane Times article

See also Brisbane Times article

These increases will not only increase rents, but will make buyers think twice before buying an apartment in Brisbane.

Friday, June 13, 2008

Oaks and Aurora

This is what the Supreme Court of Queensland wrote in a judgment concerning management rights for Aurora. It appears that the original developer did not want the building managed by Oaks as that would hurt sales. Aurora is now managed by Oaks.

"Oaks is in the business of providing accommodation for travellers, holiday makers and semi-itinerant urban workers. The news that the plaintiff, the proposed letting agent for the Aurora complex, would become an Oaks subsidiary caused considerable anxiety in the minds of the defendants’ directors. Rightly or wrongly they associated Oaks with a distinctly plain, perhaps plebeian, approach to the provision of accommodation. To maximise profit from its development the first defendant asked high prices for Aurora’s residential lots and promoted the development as one suitable for those who enjoy wealth and its display. They thought that Oaks’ reputation and its method of operation would be inimical to achieving that result.

The first defendant had two concerns. The first was Oaks’ involvement as the letting agent. The second was the operation of ‘short term accommodation, serviced apartments or hotel style accommodation typically used as holiday and nightly business or corporate accommodation ...’ from the tower. Mr Morris anticipated that about one third of the buyers of residential lots would live in the units but the balance, about 320 owners, would let their apartments to tenants. Mr Morris believed that letting a large number of units on a short term basis would be inimical to the first defendant’s proposed marketing strategy. As he said:

‘... the operation of a short term accommodation business from the Aurora Tower, particularly of the kind which appears from the Oaks prospectus would be conducted by Oaks, would be completely inconsistent with the way the development had been promoted, advertised and marketed and inconsistent with the type of development that buyers were told it would be.’

Both Mr Potts and Mr Morris were disposed to deny that Oaks’ involvement in the letting of units in Aurora was a particular concern. They maintained that it was the prospect of frequent numerous changes of tenants in the building which would reduce its appeal to buyers, regardless of the identity of the letting agent. If it matters I express my satisfaction that Messrs Potts and Morris were particularly alarmed at the thought that Oaks would be the letting agent. Indications of this fear appear in the correspondence, and I thought their denials unconvincing.


The plaintiff’s solicitors’ file note records the discussion:

‘Having sold the units to owners on the basis of it being a high quality residential complex ... owners would have some claim against the developer and possibly some way of getting out of the contracts if it became branded as an Oaks hotel/resort. It was acknowledged that the sale of contract contemplated that ... owners could let out units for short term lettings but it was never promoted as a short term letting complex, hotel or resort.’


It should perhaps be noted briefly that the possibility of the plaintiff operating a hotel from Aurora Tower was so slight as to be disregarded by any sensible person. The building is not suitable for use as a hotel. It does not have sufficient lifts, storage space, staff quarters or vehicular access to function as a hotel. This was accepted by all parties. The first defendant cannot sensibly have thought that the plaintiff, or Oaks, would conduct a hotel from the tower.

It is possible to let a substantial number of the units as serviced apartments but to do so would require some physical alteration to the building. There would need to be a large storage room for bed linen and towels and probably facilities for the cleaning staff. These alterations could only occur with the approval of the body corporate. The consequence is that the letting agent could only let a large number of apartments as serviced ones with the approval of the body corporate which would have to effect the alterations on its common property. The first defendant could hardly complain about lots let as serviced apartments if the parties to the letting agreement agreed on that course and, if necessary, varied the letting agreement to effect it."
But Aurora is now a hotel: Brisbane Times

Parklands at Sherwood

Pradella's Parklands at Sherwood development, stages 1 and 2, are reported to be more than 50% sold, with settlement of Stage 1 planned for the end of this year.


Admiralty One - New Listings for 2 bed apartments

A few days ago, I wrote about a good 2 bed apartment for sale in Admiralty Towers Two. I have recently become aware of two large two bedroom apartments for sale in the neighbouring building, Admiralty Towers. These apartments are large -- 130 sqm for a 2 bedroom apartment -- which is larger than many three bedroom apartments being built today. Absolute river views that can never be built out. End apartments, so windows on the side (for the kitchen and bathroom). Admiralty Towers has a well run body corporate and a large sinking fund.

Two bedrooms listed for sale at $880,000.

Two bedrooms listed for sale at $840,000.

It is unusual for these kind of 2 bedrooms to be offered for sale.

Wednesday, June 11, 2008

Admiralty Two - New Listing

An apartment design that I consider to be a very good design, in a good building, is now listed for sale. It is a two bedroom, two bathroom apartment in Admiralty Towers Two. It is large compared to newer apartments -- 116 sqm -- and has a quality feel. (There are other 2 bed designs in this building that are smaller, so take care when doing comparisons.) Good views and good location. The building has two pools, and apartment owners on the higher floor have exclusive access to the rooftop pool and gym. The balcony is not large, but this results in more internal space. Plenty of cupboards and a separate laundry room / storage room inside the apartment. Admiralty Towers Two has no short term rentals.

This apartment is on level 28, and is listed at $850,000.

Compare this renovated apartment in River Place, listed at $875,000. River Place is a lesser quality building, with many more apartments and vacation rentals. It has a great outdoor pool, overlooking the river, and the apartments have a larger usable balcony (but with the airconditioner compressor located on the balcony!)

Tennyson Reach video

Mirvac's Tennyson Reach video.

Saturday, June 7, 2008

El Dorado Indooroopilly Redevelopment

There is a current proposal by a South African developer to redevelop the El Dorado cinema complex at Indooroopilly. It is proposed to keep 5 cinemas, but build a 14 storey tower over the top. The tower will include 100 apartments, with a mixture of 1, 2 and 3 bedroom apartments. The two bedroom apartments will be approximately 85 sqm internal, or slightly larger for one style that has a study.

Friday, June 6, 2008

Comment on Matusik

A reader comments on the Matusik post from earlier this week:

"I think the report misses some important trends, there are also quite a few factual errors.

For one, not ALL US houses mortgages are non-recourse, only a few states including California. MOST US houses mortgages are recourse. The biggest difference between the US and Australia is the commodity boom, but how long will that last?

Second, all the 0-down, interest-only mortgages are mushrooming in Australia as well. Australia also has stated-income loans which is no different from the US.

Second, he entirely misses the point of what commodity boom does to evolution of cities. If he concedes that the commodity (particularly energy) boom will go on for years, which argues for a booming property market, then it is the inner cities or places with good public transportation will benefit. However, he was presenting a sprawling suburban future that is completely impossible with oil price heading for the sky. He predicts that people will start commuting from Blue Mountains, it is just not going to happen if gas price is on the current track.

He is also completely off the mark in predicting a mild US recession. Many financial heavy weights including Warren Buffet, Jim Rogers, George Soros etc have come out to say that this is going to be the worst recession since the Great Depression, which is a euphemism of saying Great Depression Episode II.

The funniest of all is, if he thinks everything is rosy, US will recover in 2009, and Australia's commodity boom will go on forever, why will interest rate FALL in 2009? Shouldn't interest rate fall because the economy is NOT doing so well???

I can understand that Matusik is always arguing that property can only go up up up because he is sponsored by real estate developers, but this report just looks way to biased, to the extent that he cannot even get facts right."

Is Indigo embarrassed about Kelvin Grove?

Thursday, June 5, 2008

Wednesday, June 4, 2008

Image of Council Plan for Milton

Matusik on Brisbane Property

Matusik, who is often engaged by developers to write reports that are provided to potential purchasers, states the following in a seminar given for Urban Pacific at Fernbrooke on 28 May 2008:

  • one in three new apartment projects fell over in 2007. The attrition rate could be as high as 50% this year.
  • the cost to provide new inner city apartments is much higher now than suburban detached housing. i.e. $575,000 for 2 bed apt (85sqm/1 car space) versus $385,000 for 3 bed house (225sqm/320 sqm allotment)
  • overall today investors make up less than 30% of the market.
  • 80% of detached houses are held by owner-residents as is 50% of our semi-detached product, whilst over 70% of attached product is owned by investors.
  • nearly 70% of Australia’s attached dwellings is occupied by residents under 30 years of age

Monday, June 2, 2008

Brisbane Apartment Prices Still Increasing

"The RP Data/Rismark International end of month indices report released today confirmed that capital growth in the key markets of Sydney and Melbourne has flattened considerably during 2008. ...

RPData's Research Director, Tim Lawless, is confident that the supply side imbalance in the national housing market will see further property value increases over the next five years. “We expect low levels of housing supply to continue placing upwards pressure on housing prices over the long term. However in the short to medium term, demand side constraints are acting to slow the market. Most importantly, the current high inflationary environment is causing a high degree of uncertainty in the market which translates to low buyer and investor confidence. Cashed up buyers now have a large amount of leverage as a result of current market conditions especially now that properties are taking longer to sell and there are fewer buyers,” Mr Lawless said. “The best immediate opportunities can be found in Adelaide, Brisbane and Darwin, not to mention many of Queensland’s regional areas.”

Brisbane is also continuing to show solid growth in property values with overall growth of around 3 percent for houses and units during the first four months of 2008. The value gap between Brisbane and Melbourne is becoming wider as growth in the Melbourne market has slowed considerably. At the start of 2007 house values in the two cities were virtually on par, however the stronger value growth in the Brisbane market has seen Brisbane house values g g now 5 percent or $24,000 higher than Melbourne’s."

March 2008 Median Unit Price Brisbane = $344,247
April 2008 Median Unit Price Brisbane = $346,184
April year to date increase = 3.14%
April 12 month (year on year) increase = 18.12%
Days on Market April Quarter = 16 days
Yield - Brisbane apartments - March Quarter = 4.76%

See Rismark - RP Data report.