""In Melbourne the oversupply will be significant, in Brisbane it will be worse. It is an accident waiting to happen," said BIS-Shrapnel managing director Robert Mellor at the group's six-monthly Building Forecasting Conference."
Has the end already started?
Let's look at a recent apartment project in Brisbane, that recently completed -- The Milton at 55 Railway Terrace, Milton. Some examples of the disaster there:
- Apartment 1302 is listed for sale for 10% below in the initial price, at $365,000. For a one bedroom apartment, looking West, which has a 55 sqm internal floor space, and a main bedroom that is only 3m by 3m, and no car space, $365,000 is expensive. Rent is estimated by the selling agent to be $450 to $460 per week unfurnished, which seems to be optimistic.
- Apartment 2901 - one bedroom, is not even listed at a price -- "make an offer"
- Apartment 2709, which is four bedrooms, if it sells at all, will sell for a huge amount less than the current owner has paid
- Apartment 2005 is listed at $1.1M, which is very high for a 3 bedroom apartment in Brisbane that is only 123 sqm -- you can buy luxury two bedroom apartments elsewhere that are this size and at a lower price, and it only has a narrow tandem carpark
- Apartment 2311, is not listed with a price
- Apt 2609 is two bedrooms, "bring me offers"
- Apartment 3008, a top floor two bedroom, 91 sqm in total, is listed unpriced
- Apartment 3009, also a top floor two bedroom, is listed for $849,000 -- are they dreaming?
- Apartment 2511, 2 bedrooms, listed at $659,000 is said to be under offer
- Apartment 2007, 1 bedroom, is listed at $490,000
- Apt 502, 2 bedroom, 74 sqm internal, is listed at $499,000
- The list goes on.
The onsite agents, Mint Residential, have a large number of apartments for rent. And so do offsite agents. The following are rent ranges, depending on floor, car parking etc:
- 3 bedrooms, from $650 per week to $800 per week
- 2 bedrooms, from $570 per week to $720 per week
- 1 bedrooms, from $370 per week to $490 per week
- A fully furnished two bedroom is listed at $640 per week
- Some apartments have 4 weeks free rent, which (for example) in effect reduces the rent per week of a $500 a week apartment to $460 a week over a yearly lease.
The Milton won my award for the wildest advertising claims of 2010. See this prior post. In that post, I said: "They have a sheet of paper showing investment returns for a 2 bed, 1 bath apartment listed at $650,000. The prediction is that this apartment will be worth $807,500 on completion of the project in 2013, and will be worth over $1M by 2016. The predicted rent is over $720 a week in 2013."
As can be seen from the above, this was in fact wildly inaccurate.
The Milton has a host of problems, not simply that it was sold for prices that are way above market price. The development is on a train line, with half the apartments looking west and close to a brewery. The river views are distant, and will be blocked by construction of apartments in front. Body corporate for a 2 bedroom is about $4,800 a year. See comments in prior posts. It is very dangerous buying off the plan in Brisbane.
Compare the above to a 2 bedroom, 2 bathroom, 1 car apartment, 106 sqm, with direct river views, for $700,000.
If The Milton is representative, then we are in for a very rough ride.