Sunday, July 21, 2013

Festival Towers lawsuit

Many owners of apartments in Festival Towers in Brisbane, and the body corporate, are suing Devine Limited and Brookfield Multiplex Constructions for a large amount of damages concerning the construction (and alleged construction defects) in Festival Towers.  Details of the lawsuit can be found here on the Supreme Court website.  I have been told that there have been special body corporate levies to partially fund the lawsuit.

Any prospective purchaser should have their lawyers study the lawsuit paperwork, including the schedule of defects, in detail.

At the time of development and construction of Festival Towers, Devine Limited was run by David Devine, with Ken Woodley as the senior person on the sales side.  Devine and Woodley are now running Metro Property Group, which is a marvellous sales machine.

Festival Towers, managed by Oaks, doesn't have the greatest feeling in my view.  Partly short term accommodation and partly foreign students (packed into small apartments, and sleeping in hallways and living rooms), and a popular place for travelling hookers, Festival Towers has always disappointed me.

In my opinion, purchasing apartments off-the-plan has risks, because you don't know the level of quality that will actually be delivered.  The sales contract is most often in the developer's favour.  In a number of circumstances, I have seen glossy brochures inferring high quality, but the product that is delivered is low quality.  For this reason, I always take that view that off-the-plan pricing should be less than current market pricing to take into account this risk.  Unfortunately, most developers are selling apartments off-the-plan at prices that are higher than you could buy an existing similar apartment -- the only difference being age.

An agent I spoke to recently who was selling off-the-plan informed me that his competition was not other new developments, but resale apartments in recently finished buildings by the same developer.  He said the price of the resale apartments was about 15% less than his almost identical new, under construction apartments.  And buying an existing apartment is way less risky than purchasing off-the-plan.

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