Sunday, February 23, 2014

The Next Stage of Waterfront Newstead

Mirvac is soliciting interest for the next stage of its Waterfront, Newstead project.


Often, I register on these kind of sites, and never hear back.  When the developer is setting the sales price of apartments off-the-plan, one factor taken into account is how much interest they have in the presales stages.  Developers count the number of registrations on sites such as this, and take this information into account in setting price.

Saturday, February 22, 2014

Housing Market in Qld strongest in years, says real estate agents

From an REIQ press release yesterday concerning houses (not apartments):

"The numbers of house sales across Queensland peaked at the end of last year as well as recorded healthy price growth, according to the Real Estate Institute of Queensland (REIQ).

The REIQ December quarter median house price report, released today, found that the volume of house sales hit its annual peak of activity in the last three months of 2013. The numbers of sales was also one of the healthiest quarterly periods for a number of years.

REIQ CEO Anton Kardash said not only could the December quarter claim to be the third strongest in as many years, it was also firming without the aid of extraneous stimulus measures."

Warren Buffet's view of buying in the resale market

Should I buy off-the-plan from a developer, or a resale apartment?  Warren Buffet has an interesting view in relation to IPOs and stocks, from his letter to shareholders in 1992, that I have adapted below for residential real estate:

"The secondary market which is periodically ruled by mass folly, is constantly setting a 'clearing' price.  No matter how foolish that price may be, it's what counts for the holder of property who needs or wishes to sell, of whom there are always going to be a few at any moment.  In may instances, properties worth $X in value have sold at 1/2 or less.

The new off-the-plan market, on the other hand, is ruled by developers, who can usually select the timing of offerings or, if the market looks unfavourable, avoid an offering altogether.  Understandably, these sellers are not going to offer any bargains; it is rare you'll find X for 1/2 X here."

Tuesday, February 18, 2014

Another Pradella West End Development

Pradella has started marketing a new development on the large parcel of land it has accumulated in West End.  This development is being promoted as Gardens Riverside West End (although it is not river front, and has a road and the Waters Edge buildings between it and the river, and it is a long walk from the main shopping and restaurant street in West End).

There appear to be many more Pradella buildings planned for this plot of land in West End.

Thursday, February 13, 2014

New or Resale?

I am often asked whether it is better to buy a new or resale apartment?  A new apartment can be unsold developer stock in a new building or an off-the-plan apartment for a building not yet built.  A resale is a sale from someone other than the original developer.

There is a price difference between a new and resale apartment in Brisbane.  Sometimes, this is because a new apartment is new, with no wear and tear (e.g., freshly painted, new carpet, new kitchen, new appliances, etc).  But often, the price difference is not explained by newness.  Sometimes, the price difference is due to developer profit and marketing costs.

For example, Sunland is currently marketing Abian.  A large number of people I know have received a fancy brochure mailed to them, unsolicited, by Sunland.  There is an expensive display office onsite in Alice Street, where the landscaping alone would have cost a small fortune.  There is a video of a lost rich girl wandering around Brisbane, that does a good job not showing the neighbouring Quay West building.  Buyers are paying for all these marketing costs, plus the developers profits.

Another example is Infinity, by Meriton.  2 bedrooms, 2 bathrooms, 89 sqm in total, no balcony, 7 apartments per floor, short stay and hotel guests, for $647,000 and up!

Or you can buy an apartment in Metro 21, on level 25, with river views, a large balcony, 2 bedrooms, 3 bathrooms, 113 sqm total floor area, 4 apartments per floor, no short term rentals or hotel guests.  For a price less than a Meriton apartment.   Metro 21 is a boutique residential building, with good facility, and a low ratio of residents to facilities.  Seems like an obvious decision to me.

That is $7,269 per sqm compared with less than $5,700 per sqm.

Wednesday, February 12, 2014

Brisbane Update

A video from RP Data regarding the Brisbane property market is here, presented by Tim Lawless.

Tavis Back in Business

Real estate agent Tavis Callard is back in business, dealing with apartments in Brisbane via real estate agency Housian.  He won an "award" for the worst real estate agent in Brisbane in 2010,  was associated with Roma Properties (that owned the management rights for Admiralty Towers One and Two) that is now controlled by the banks, and went into bankruptcy himself.  And there are interesting stories about Tavis and a property that he supposedly signed a contract on to buy, but did not settle.

Prior stories here.

Tuesday, February 11, 2014

A valuer's view of Brisbane

From the HTW Month in Review for February 2014:

"... Brisbane is often touted as the next most likely to move after Sydney and Melbourne, and there’s no denying that some of these southern states saw a boom run on many suburban market as 2013 drew to a close.  In the field, agents are telling us that things are looking good. There have been multiple lookers at open homes and some auctions are jagging prices above vendor expectation. The pick locations are, and have always been, close to the CBD. The old story of limited supply and good quality stock plus comparatively high demand mean that as long as you’re appropriately priced, there is definitely a buyer or two out there for your property."

Saturday, February 8, 2014

550 Queen Street Potential Tower

Consolidated Properties has put 550 Queen Street up for sale.  It has frontages to Queen St, Ann St and Clark Lane.  The land has development approval for a 20,000 sqm tower.  The AFR reported on Thursday (8/2/14, p. 45) that there was strong interest from residential development companies.  (The article also states that 4000 residential apartments are currently under construction in Brisbane, with up to another 3000 that could complete by 2015/16.  There is a risk of oversupply.)

This proposed development will have a negative impact on Willahra Tower, at 540 Queen Street.  Willahra Tower is an apartment building that has short term rentals.  (Bad reviews on TripAdvisor.)  Small apartments, with a two bedroom less than 75sqm internal.  Apartments are advertised as "cheap", and there is a reason for this.  My advice -- avoid!

Wednesday, February 5, 2014

Botanica South Brisbane

From information provided by Aria:

Botanica will be located in a prime location at 2-4 Edmondstone Street, South Brisbane which is opposite Coles and adjacent to the renowned Boundary street retail precinct.   The building will consist of 1 and 2 bedroom units, indicatively priced as follows;

  • 1 bed 1 bath with parking (50sqm internally & 7sqm balconies): high $300’s - mid $400’s
  • 2 bed 1 bath with parking (65sqm internally & 10sqm balconies): high $400’s – mid $500’s
  • 2 bed 2 bath with parking (80sqm internally & 10sqm balconies): high $500’s - mid $600’s
That pricing seems high to me.  I can buy a great two bedroom two bathroom apartment in a good inner city building, that is more than 85 sqm internal and more than 12 sqm external, for less than these prices.

Executive Rentals Drying Up in Brisbane?

From Bees Nees:

Worryingly, the general consensus was that the executive rental market has been hit by the slow down in the mining boom and the completion of many plants that employed large numbers of workers. The feedback we got is that there may be a gap in the market between construction tailing off and the take up of skilled workers to run these plants. How long the gap will be is hard to quantify.
Two prominent executive relocation companies have said this was the quietest January they can recall in a long time. Based on this information our client has now decided to offer the property with an unfurnished option in the hope of boosting local enquiry. Watch this space in the coming months to see if executives rents are affected by this slow down.

Brisbane in Early Stage of Growth Cycle

"Rental rates continued to grow at a slower pace than dwelling values and further eroded rental yields across the capital cities. The markets where dwelling values have shown the most appreciation, Melbourne and Sydney, are now showing gross yields for houses below 4 per cent while the typical gross yield on a Melbourne and Sydney unit are higher at 4.2 per cent and 4.7 per cent gross respectively, however, they are lower than in all other capital cities.

According to Mr Lawless, such a yield environment may potentially start acting as a disincentive to investors. 

“With gross yields low in Melbourne, and not a lot better in Sydney, together with the fact that both these markets are well advanced in their growth cycle, it would suggest that investment fundamentals in these markets are waning. It is my view that investors will start seeking out the higher yields of Brisbane where the market is also far earlier in the growth cycle,” he said.

The Brisbane apartment median price is up 2.6% for the quarter and 0.8% for the month, according to RP Data.

Sunday, February 2, 2014

Recent Brisbane City Apartment Sales

Based on recent apartment sales in the Brisbane CBD area (resales, not off the plan), it looks like the market is strengthening.

Skyline, 30 Macrossan Street
  • Apt 242, 2 bedrooms - reported sold at $725,000
  • Apt 73, 2 bedrooms - reported sold at $660,000
  • Apt 121, 3 bedrooms - reported sold at $715,000
  • Apt 113, 2 bedrooms - reported sold at $602,000
  • Apt 125, 1 bedroom - reported sold at $347,000
  • Apt 173, 2 bedrooms - $588,000
M on Mary, 70 Mary Street
  • Apt 2202, 1 bed plus study - no car - $362,500
Aurora, 420 Queen Street
  • Apt 245, 2 bed, 1 bath - $620,000
  • Apt 435, 2 bed, 1 bath - $556,000
Riparian, 71 Eagle Street
  • Apt 4305, 3 bedrooms - $1,850,000
  • Apt 215, 1 bed - $510,000
  • Apt 37, 2 bed - $690,000
Casino Towers, 151 George Street
  • Apt 2002, 2 bedrooms - $690,000

Saturday, February 1, 2014

Aria's South Brisbane Bet

The AFR on Thursday (30/01/14, p.38) had a full page story about Brisbane apartment developer, Aria.  Some highlights:
  • Aria has sold 188 apartments in three residential towers it has completed in South Brisbane since mid-2012.
  • It has a 20 storey tower under construction on Grey Street.
  • It is about to start another 20 storey tower of the corner of Edmondstone and Boundary Streets.
  • Aria owns a dozen more sites in South Brisbane.
  • South Brisbane is catching up to Bowen Hills and The Valley for residential apartment development.
  • The change is due to construction of office towers, bring 10,000 workers to the area.
  • Residential building approvals have jumped from 151 in 2010/11 to 744 in 2012/13.
  • Gross rental yields are said to be 6%.
  • Prices for Aria's apartments are $7,500 to $8,000 a sqm, and are likely to rise.
  • Aria has lodged a DA for a 26 storey tower on Hope Street that will have over 180 apartments.
  • Aria pays interest on deposits for off-the-plan apartments.
  • 75% of Aria's clients are investors, with fewer than 10% being SMSFs.
  • Half the buyers are from SE Queensland.
  • There are more than 4000 apartments under construction in inner Brisbane.  The biggest supply potential is in Brisbane's North Eastern area, around Bowen Hills and The Valley - this is seen as a risk.

Low Growth Conditions for Property?

The Brisbane property market is somewhat uncertain at present.  There are fewer apartments on the market, with most property owners deciding to hold on to their property.  Low interest rates are good for investors.   Many of the apartments that are for sale have been for sale for a long time at an unrealistic price.  Price growth has not been magnificent in Brisbane.  And rent grown has been poor.  Currently, there is a higher vacancy rate for apartments (particularly furnished apartments).

The AFR on Thursday (30/01/14, p.3) states:

"Sydney and Melbourne house price growth is likely to slow to half the pace of last year, a leading property researcher says.  ...  But a weaker economic forecast, a lower Australian dollar, combined with rising unemployment and inflation are likely to keep a tight rein on further gains during the year."

But on the same day, Property Observer included the following:

While Melbourne and Sydney slow, Brisbane is tipped to bang.

“The Brisbane market is still in catch-up mode, but the Queensland economy is ramping up with regional centres recording growth. There will be an increase in job seekers in Queensland too, as they shift from Melbourne and Sydney where the jobless rate is higher,” Wilson says.  “Investors will be more interested in Brisbane real estate because of its potential for high yields and prospects of high capital growth.”