Wednesday, December 5, 2012

The Chelsea - an analysis

Matusik has done a very interesting analysis of The Chelsea development in Bowen Hills, that recently completed.  It is worth studying this analysis.  See The Chelsea.

Some points from the Matusik study:

  • More than half the sales were "rebated sales", making it hard to determine the actual sales price.  Most rebates were given early in the sales process.
  • It took about 2 years to sell the 177 apartments in the complex.
  • Only six apartments have been purchased by owner occupiers.  This is a very low percentage.  (My rule is to purchase only in buildings where there is a high percentage of owner residents in the building.)
  • 70% of the buyers appear to be Chinese, either from the Sunnybank area, Southern States, Singapore or elsewhere.
  • A number of apartments are now listed for resale, at about 10% below the recorded purchase price (before any rebates are taken into account).
"Too often the last dwellings in a new project are discounted [by the developer].  This undermines the project’s overall value; is very unfair to those who bought early in the piece (regardless of what incentives were offered) and also reduces the developer’s profit (assuming there is any!)"

3 comments:

Vascariz said...

"Too often the last dwellings in a new project are discounted [by the developer]. This undermines the project’s overall value; is very unfair to those who bought early in the piece (regardless of what incentives were offered) and also reduces the developer’s profit (assuming there is any!)"

I think that is quite a naive and narrow view of the situation. The real issue is why people were purchasing them at such a high price in the first place. This is also largely to do with the prices at which the apartments are listed. In my opinion, the prices of the last dwellings and the prices of the first few re-sales are the true indicator of the value of the properties.

Unknown said...

Unfortunately Michael Matusik does not understand how sale prices are reported in RP Data.

The State Govt requires that the Total Price listed on the Transfer Documents (and therefore the price that ends up on RP Data) be the "rebated price" - i.e. the price AFTER the rebates. His claim that "we don't know what they paid" is therefore a little misleading.

http://www.qls.com.au/Knowledge_centre/Areas_of_law/Property_law/Rebated_purchase_prices

fnq said...

The original article has now been taken down with an apology to developers.