High Rises

In a post below, I mention that the May edition of Australian Property Investor had a good story about the oversupply of inner city Melbourne high rise, titled "High on High-rises" (page 86, May 2011 edition). Some quotes about the Melbourne apartment market:

• "What we have sitting out there is a potential tsunami of apartments. They're all high-rises and a lot of them are aimed at the investor market."
• "They're missing the point altogether, building high-rises and thinking this will solve the housing dilemma. These places have poor facilities, with a lack of shops and where people don't get a chance to mix in a community."
• "High-rise apartments are largely marketed to investors because developers are under pressure to sell a certain percentage off the plan before they can build. You're buying brand new, so obviously paying a premium for the 'wow' appeal."
• "The majority of this construction will also be relatively small one and two-bedroom apartments aimed at investors, and 50 to 70% populated by students. The initial vacancy rate is likely to be high, taking significant time to absorb the necessary demand."
• The Age recently reported 88% of the 4,155 apartment sales in the first half of 2010 were in investment focused buildings.
• "My concern is that with a high-rise there are so many of them and they're all the same. There's no point of difference."
• "Because so many come on the market at once, they get let very quickly to anybody that comes along. Before you know it they look like slums."
• "Investors should try and buy two-bedroom properties [rather than one-bedrooms] if they can afford it."
• "In a high-rise, you're buying a carbon copy of 100 or 200 other units. Your until will be completely dictated by what the last unit sold for."
• "Poor property struggles in the market for years."