Sunday, May 30, 2010

Buy in the Bust?

"Mr. Sternlicht hopes to foreclose on many of Corus’s errant borrowers, restyle their buildings and sell units for a significant profit once the real estate market recovers. He says he and his investors can afford to wait until then because the F.D.I.C. has provided them with $1.4 billion in zero-coupon financing and an additional $1 billion in low-cost loans that can be used to complete unfinished projects."

See full article in NY Times: "Barry Sternlicht, the Real Estate Bargain Hunter"

Saturday, May 29, 2010

Offsite Letting Agents

In a prior post, I warned against dealing with unlicensed or unusual offsite letting agents for holiday rentals. Recently, Accommodation One on the Gold Coast closed down -- leaving landlords and guests out of pocket. So guests of both Tailly (A1) and Accommodation 1 have recently lost their holiday bookings as well as their prepayments. Booking sites such as RoamFree and eBay should take some responsibility for dealing with these operators and helping them market their accommodation. ebay has set up a compensation fund for guests, but landlords miss out (and now have to find new tenants in competition with all of Accommodation One's other landlords, in a slow winter market.)

Monday, May 24, 2010

Recent Sales

  • MacArthur Chambers - 2 beds, 2 bath, Apt 609, 229 Queen Street, sold for $790,000 and now listed for rent at $730 per week furnished.
  • Aurora Towers - 2 beds, 1 bath, Apt 365, 420 Queen Street, sold for $490,500
  • River Park Central, 2 bed, 2 bath, Apt 1102, 120 Mary Street, sold for $420,000

Property Investor Information

Two sites with useful information for property investors:

Devine Hamilton

The Australian Financial Review included an advertisement last week stating that Devine had received construction finance for Hamilton Harbour.

Devine has also started to market a new building on the same site, Riverside Hamilton.

Saturday, May 15, 2010

Vue Apartments

The Vue Apartment complex on Coronation Drive has been impacted by its bad location and road construction activity. There is construction of the Hale Street link and GoBetween Bridge nearby, and the complex is located on the corner of a busy road and a highway. It was developed by FKP, who is now pushing a new development at Milton called The Milton. Example listings in Vue:
  • Apt 1705, 2 bed with roof top terrace listed at $750,000 being sold by the original developer FKP
  • Apt 3102, 2 bed, renting at $460, listed at $430,000 (sold for $350,000 in 2006)
  • Apt 2303, 2 bed, 5th floor, listed at $470,000 (purchased off the plan for $440,000 in 2004)
Apt 2409 sold off-the-plan by FKP in 2006 for $535,000 and was resold in February 2009 for $445,000.
Apt 2001 sold off-the-plan for $445,000 and resold for $400,000 in October 2009.
Apt 2008 sold off-the-plan for more than $504,000 and resold in Sept 2009 for $479,000

Ray White Auction Results

Last Sunday, Ray White had a large scale auction at a Valley hotel, called an Urban Living Auction. There were a number of unique and prestige apartments and houses offered for sale. The results for the sellers were not good. More than 50 propeties were listed for auction, with only 17 selling on auction day (at the auction or shortly after).

"Ray White South Brisbane principal Dean Yesberg said 17 out of 54 properties sold on the day. “We had a large number of buyers and a positive response but the number of sales was down on previous years,” Mr Yesberg said. “Certainly the message we got out of the day is that owners need to bring their expectations back into line with the marketplace and what buyers are prepared to pay. People still want to buy but recent interest rate rises and current uncertainty in the world economy is starting to make people nervous. “It was a successful day but it was a tough day at the office.” Despite the lower than average number of sales on the day, Mr Yesberg expected more properties to be sold over the next week.

Press Release from Ray White

Some good apartments that did not sell include

Sunday, May 9, 2010


My favourite floorplan in Skyline (30 Macrossan Street) is the G2 floorplan. It is a 3 bed apartment, and most have 2 carparks. There is a big difference in views from lower floors (which have a good city street view towards the Marriott Hotel, and some river glimpses between Admiralty Quays and Admiralty One) and the higher floors, that have a river view over Admiralty One.

The downside with this apartment is that each of the 3 bedrooms will look into The Macrossan tower and the Soliel tower, both being built right next to Skyline.

Apt 401 in Skyline, which is this floorplan on one of the highest floors, is currently listed for sale for $899,000. The listing states: "This apartment has been priced for a quick sale at only $899,000+. It was independently valued at $990,000 in September 2009."

This apartment was sold off-the-plan in September 2004 for $770,000. The current owner paid $970,000 in November 2007.

The same apartment downstair, Apt 391, sold for $875,000 in October 2009, so my guess is that the independent valuer for 401 was wrong by $100,000! Also:
Apt 291 sold for $765,000 in October 2009.
Apt 281 sold for $755,000 in March 2009.
Apt 141 sold for $740,000 in February 2010.
Apt 91 sold for $707,500 in November 2009.

The developer has a number of this type of apartment still on his books, it seems.

Lateline Story on Building Approvals

See Lateline

Recent Apartment Sales in Brisbane City

Casino Towers (151 George Street)
The Gardens (204 Alice Street)
RiverCity (79 Albert Street)
Charlotte Towers (128 Charlotte Street)
  • Apt 2809, 1 bed, 1 bath, 1 car passed in at auction - auctioneer's bid of $395,000

Saturday, May 8, 2010

Edenview at Kelvin Grove

Edenview Apartments at Kelvin Grove are currently being marketed by a number of agents. Due for completion in mid-2011, this complex includes 15 one bed apartments (all sold), 40 two bed apartments (about 1o sold), and 7 three bed apartments (1 sold).

The prices for the 2 bed apartments range from $519,000 to $605,000. The 3 bed apartments start at $749,000.

As an example, apartment 126 is located on level 6, with street views. It has 2 beds, 2 baths and 1 car park. It is 78 sqm internal and 18 sqm on the balcony, for a total area of 94 sqm. It is listed at $579,000, which is about $6,150 sqm. The lounge/dining area is 4m x 6.3m, which is a good size. The bedrooms are 3m x 3.2m, a little tight. The second bedroom has a window onto the apartment hallway, which I don't usually like.

The complex has a pool, and the apartments have split system deducted air conditioning.

The Studio, St Lucia

The Studio student apartment complex, "sold out" in less than a week just recently. About one third of the apartments were sold, with the remainder being kept by the developer, Aspect Property Group. The complex is located within the University of Queensland, and will be complete about July 2010.

Aspect is also in the planning stages of an apartment complex at the beginning of Fred Schonell Drive, to be called Linear.

Ferry Road, West End

On Wednesday, 5 May 2010, the Australian Financial Review had an advertisement of page 7 for 51 Ferry Road, West End. Jones Lang LaSalle is marketing the property for sale, as a 6,381 sqm riverfront site, with major development potential. Expressions of interest closing 3 June.
This would be a worry for purchasers in Waters Edge, because this is the neighbouring site, and many of the apartments look directly into this site. It may also impact the cheap apartments built on Ferry Road.

Riverbend Indooroopilly

Riverbend Towers in Indooroopilly are back on the market. They were offered for sale about 2 years ago, but then the developer decided not to proceed with selling any. Now some are on the market again. The building has 2 and 3 bedroom apartments, and they are a good size. Many have river views. Some road noise. Three bedrooms listed from $710,000

Real Estate Marketing Videos

I like the fact that some agents use YouTube videos to market their properties. Here are some examples:

Quay West, Alice Street, 2 bedrooms

Ciana, 2 bedrooms

Ciana, 2 bedroom listed at $530,000:

High Density Liveability Guide

A QUT academic has published a high density liveability guide.

Thursday, May 6, 2010

Alderley Square Update

"Alderley Square is a village-style, mixed-use community inspired development set to reinvigorate the heart of one of Brisbane's most established suburbs. It combines the finest of residential apartment living, a thriving retail centre and a bustling commercial precinct.

The 241 residential apartments comprise a mixture of studio, 1, 2 and 3 bedroom residences over two towers and a terrace homes complex.

Both owner-occupiers and investors alike will appreciate the open plan designed apartments with generous sized balconies to take advantage of the prevailing breezes. Breathtaking views to the CBD, North-East and over the mountain will significantly enhance the 'Queensland lifestyle' feel of Alderley Square."

1, 2, 3 Bedroom Packages

Wednesday, May 5, 2010

103 Mary Street

A proposed new apartment at 103 Mary Street, between the Vision hole and River City. It will impact the views of River City and 212 Margaret Street.

Monday, May 3, 2010

Beware of unlicensed offsite operators

The results of the recent Circle on Cavill lawsuit is a warning both to renters and apartment owners who use unlicensed offsite operators.

Tailly leased about 40 apartments in Circle on Cavill from owners, on a long term basis, for example, on one year leases. He then advertised the apartments for rent on the Internet on a short term basis. The Federal Court found that his websites were illegal, and shut them down. Tailly then went into bankruptcy. The apartment owners were not paid rent. The renters and holidaymakers lost their money and had no booking -- Tailly collected the money upfront at the time of booking, and then spent the money. Tailly was not a licensed real estate agent or travel agent -- just a tenant illegally subletting his apartments.

So if you are an apartment owner, make sure that you are using a licensed real estate agent and that you prohibit your tenant from subletting. (In this case, many of the apartment owners used real estate agents that expressly allowed Tailly to sublet!) If you are a renter or holidaymaker, it is best to deal directly with the property or use a reputable website such as Wotif.

If you are getting a too-good-a-deal from eBay, Stayz or a website that is not operated by a real estate agent or travel agent, then watch out! Not all websites are legitimate.

Another example is Paul Whitehead and his company, WorldTourism. Take care when booking with WorldTourism, to make sure you understand who you are booking with. See story on A Current Affair, and these newspaper stories.

Oaks Fined for Car Park Leasing

A newspaper reports that the Council fined Oaks $25,000 for renting our carparks to non residents, in breach of development conditions.

"BRISBANE: One of the largest building management agencies in the CBD has been fined $15,000 for illegally leasing out car parks to inner-city workers.

Brisbane City Council has fined The Oaks Group for unlawfully leasing residential carparks to commuters after an investigation which City News understands lasted several months.

According to its website, The Oaks Group arranges short-term bookings for eight unit blocks in the CBD. Car parking spaces meant for long-term residents have instead been leased to inner-city workers for up to $5000 a year. Councillor David Hinchliffe (Central) welcomed the penalty and said he believed the practice was widespread and was “potentially just the tip of the iceberg”.

He said he believed senior managers in both the private and public sectors had paid for carparks made available in contravention of the Council’s planning approvals. “If you’re operating a commercial carpark, then you need to be zoned and approved for a commercial carpark,” he said. “One carparking space can generate easily around $5000 a year in revenue for the company, 200 car spaces are worth $1 million in revenue.

“My understanding is that apartments are being rented out without carparks so that the company can lease out the carparks separately to commuters, encouraging more people to drive to work and park and adding to congestion.”

Brisbane City Council failed to answer several questions about the practice before City News’ deadline. When contacted for comment, an Oaks spokeswoman replied: “We are not at liberty to respond to that matter.”

M on Mary

M on Mary advertises itself as a hotel. It is not -- it is a poorly designed apartment building with a large number of 1 bedroom apartments, and some 3 bed apartments.

Interestingly, this article says that they only do 28 days as the minimum stay. However, Wotif will allow me to book a 2 day stay. How can they advertise this low grade apartment building as a hotel?

i have been living here for about a year as i fly in and out of the country all the time this is the worst hotel i have ever stayed in nothing works and no one cares i have asked over the last year at least twenty times for my air con,tv reception,my shower,and my intercom to be fixed as i pay 500 dollars a week in rent to be told by the manager who is a real piece of work no we won't fix anything because that costs money,well so does the rent pal i have had clients stay here who have been shocked with the service and have commented that its like a rerun from faulty towers maybe they should rename the place shocking service terrible place to stay go somewhere else

Bad Onsite Agent

Office of Fair Trading - Minister's Statement:
10 year ban for real estate employee

An investigation by the Office of Fair Trading has resulted in a Kangaroo Point-based resident letting agent and his company being banned from holding licences under the Property Agents and Motor Dealers Act 2000 for ten years after ripping off unit owners.

Minister for Fair Trading Peter Lawlor said Leigh Gregory Craig, who was also fined $2500, was found guilty by the Queensland Civil and Administrative Tribunal of failing to follow his clients’ instructions and producing false invoices. His company Brass Properties No 1 Pty Ltd was also banned for 10 years and fined $3,000.

“Mr Craig first came to the attention of Fair Trading officers after they received a complaint from a unit owner who was falsely charged a $132 fee for the retrieval of a set of car keys accidentally dropped down a lift shaft,” Mr Lawlor said. “Following an investigation, Mr Craig was also found to have advertised Bridgeport Apartments for short-term letting which flies in the face of body corporate by-laws which impose a minimum period of six months.

“He deliberately misled unit owners by failing to disclose the higher than usual fees he was charging renters, which at times was double the normal amount. This additional income was not passed on to the unit owners. This type of behaviour has no place in Queensland’s real estate industry. Queenslanders deserve to know they are dealing with reputable and licensed agents,” he said.

"This decision is a clear reminder to the real estate industry to act responsibly. If an agent chooses to breach the law by deceiving their customers, they risk the loss of their licence, reputation and livelihood. The legislation is there to protect businesses and clients, and must be complied with. Licensees caught doing the wrong thing will be penalised."

Talking Up the Top End

"Publicly listed property company Mirvac has also started the decade on a positive note, selling $30 million worth of $1 million-plus apartments around Queensland in the first three months.

Mr Johnston said the exclusive riverfront development at Tennyson Reach had exceeded everyone’s expectations in the current market. "The fact it’s sold so well in a market affected by the GFC is testament to the quality of the product and the prime location," he said.

The Tennyson Reach sales ranged up to $2.845 million for luxury apartments on the riverfront, located close to the new Tennyson Tennis Centre. Mr Johnson said that apart from families with old money, 2010 had seen the return of the investor – and they’re not all mum and dad investors with $600,000 to spend on a three-bed, one-bath inner-city renter.

An increasing number of multi-million dollar sales have been to investors, such as one riverfront apartment Mr Johnston sold for nearly $3 million last month. The investor is planning on renting the apartment out.

Ms Havig said foreign investors and expats were also present in the prestige market.
"They feel that the market is still going to rise considerably and want to get in before it does," she said."

See Brisbane Times for full story.

Sunday, May 2, 2010

Tax Reform and Property

The Henry Tax Review was released at 2.30pm today. It was expected to have an impact on property investment, but it appears that the impact will be minimal in the short term. See Summary of Report and Mr Swan's response:

From the Report:

  • Over a long transition period, a land tax should be introduced on all land on a more efficient and uniform basis linked to unit land values, removing disincentives for institutional investment in rental property and integrated over time with property rate assessments.
  • Over a similar period, transfer taxes on property should be reduced, and ultimately removed, with revenues replaced by efficient taxes, preferably annual land tax.
  • Subject to transitional provisions, and following action to improve the current shortfall in housing supply, a more neutral personal income tax treatment of private residential rental investment should be introduced, with less volatile market effects, through a 40 per cent discount on all net residential rental income and losses, and capital gains.
The structure of land taxes could be improved by broadening the land tax base to eventually include all land. Land tax rates should be based on the value of a given property, so that the tax does not discriminate between different owners or uses of land. A tax-free threshold based on the per-square-metre value of the land could be set such that there would be no tax liability on most agricultural and other low-value land. Higher-value land could be taxed at differentiated rates based on the per-square-metre value of the land.

Stamp duties on conveyances are inconsistent with the needs of a modern tax system. While a significant source of State tax revenue, they are volatile and highly inefficient and should be replaced with a more efficient means of raising revenue.

Conveyance stamp duty is highly inefficient and inequitable. It discourages transactions of commercial and residential property and, through this, its allocation to its most valuable use. Conveyance stamp duty can also discourage people from changing their place of residence as their personal circumstances change or discourage people from making lifestyle changes that involve a change in residence. It is also inequitable, as people who need to move more frequently bear more tax, irrespective of their income or wealth.

Reforming land tax and conveyance stamp duty arrangements, along with the proposed changes to the taxation of rental housing and Rent Assistance, will go some way toward improving housing affordability. However, to a significant extent housing affordability is a supply issue (see Box 6.1).

Media Reports:

"Likewise the second part of the Henry Review’s two “key directions for efficient land and resource taxation”. The first part is the idea of a 40 per cent resource rent tax, which was first leaked in January. The response to the leak was obviously sufficiently mixed for the thing to become the centrepiece of Mr Swan’s tax reform.

The second part – and given equal weight in the review – is a national land tax of 1 per cent applying to all land regardless of use. Absolutely no mention of that in either leaks or today’s statement.

The Henry Review also recommends a 40 per cent discount to individuals for net interest income, residential rent, capital gains and interest related to listed shares. Also leaked, but rejected."

The review proposes a 40 per cent discount on all income from savings, as well as on all residential rental income and losses, and capital gains.

These recommendations were widely flagged prior to today's announcement, with critics saying the current system doesn't give enough incentives for workers to put money in savings accounts.

Currently, interest earned on all savings accounts and term deposits is taxed at a worker's top marginal rate.

It is far less generous than the tax treatment of other investments such as shares and property, which the review says encourages investors to take on too much debt.

"The tax advantages from borrowing to invest in a rental property, also relevant for shares, leads to investors taking on too much debt and distorts the rental property market," the review says.

News Corp

Flood Maps

It is interesting to look at flood maps of Brisbane. You can see, for example, that SL8 is in a flood zone. Newstead River Park is an overland flow zone.

Better buying a recent apartment, than off-plan?

"“There are so many disasters out there,” said Lawrence Rich, a vice president of Prudential Douglas Elliman. “Every day you hear of another new building that’s in trouble, and people don’t want a building where there might be problems and they won’t enjoy living there while it all gets worked out.”"

Saturday, May 1, 2010

March 2010 Index Data

The RP Data – Rismark March Hedonic Home Value Index results released yesterday reveals that home values in Australia’s capital cities rose by 1.4 per cent in March (and +1.1 per cent on a “seasonally adjusted” basis) following on from similarly strong 1.7 per cent and 1.1 per cent growth rates across Australia in the months of January and February, respectively. In the 12 months to end March, Australian capital city home values have increased by 12.5 per cent. Director of Research, Tim Lawless, stated “We expect capital growth rates to cool in 2010 as the cost of mortgage finance is normalised by the RBA. Over the longer-term home values should be expected to track disposable incomes.”

Brisbane values up 2.4% (median price: $439,000)

Brisbane apartments: Capital Growth to February 2010

Month: -0.9%

Quarter: 0.8%

Year to date: 1.9%

Year on year: 7.6%

Brisbane apartments: Capital Growth to March 2010

Month: 1.8%

Quarter: 3.7%

Year to date: 3.7%

Year on year: 9.1%

Medium over quarter = $375,000

Brisbane houses: Capital Growth to February 2010

Month: 0.4%

Quarter: 1.1%

Year to date: 2.0%

Year on year: 7.2%

Brisbane houses: Capital Growth to March 2010

Month: 0.2%

Quarter: 2.1%

Year to date: 2.1%

Year on year: 6.2%

Full details

Annual Rate of Return - Felix and Admiralty Two

Lot P-Price P-Date Sell Price Sell Date A RoR
Admiralty Two
20 $445,000 13/09/04 $725,000 11/05/09 11.03%
25 $369,000 24/02/94 $850,000 11/02/10 5.36%
47 $700,000 29/08/05 $945,000 1/09/09 7.77%
81 $720,000 23/11/07 $725,000 27/03/09 0.51%
94 $615,000 19/12/06 $730,000 7/05/09 7.45%
97 $340,000 20/02/98 $780,000 12/06/09 7.61%
106 $490,000 15/11/04 $750,000 24/06/09 9.67%
107 $485,000 1/02/02 $990,000 15/08/09 9.92%
124 $615,000 13/04/07 $750,000 19/10/09 8.20%
137 $432,000 22/03/97 $815,000 15/07/09 5.28%
63 $415,000 20/12/05 $445,000 24/09/09 1.87%
82 $305,000 10/08/01 $480,000 30/12/09 5.55%
137 $355,000 4/06/04 $494,000 14/12/09 6.16%
161 $214,900 16/05/03 $325,000 20/11/09 6.55%
195 $280,000 13/08/01 $428,000 7/09/09 5.40%
256 $522,000 6/08/08 $530,000 3/12/09 1.15%
258 $248,950 30/08/01 $351,000 23/09/09 4.35%
291 $264,450 28/04/04 $358,000 24/02/10 5.33%
302 $746,000 13/09/01 $500,000 23/12/09 -4.72%
371 $630,000 4/08/05 $670,000 17/02/10 1.36%