Devine Hamilton Harbour Settlements

Devine recently issued a stock market release saying:

"Market conditions have continued to deteriorate across most Australian property markets which have had a significant impact on the company bringing new projects to the market."

In Brisbane, Devine has a joint venture with Leightons on a multi-building apartment complex called Hamilton Harbour, where most off-the-plan sales for buildings one and two have reached settlement.

According to the AFR this week, as at late December, Devine had settled 80% of the off-the-plan sales.  Why have 20% not settled?  All may be revealed when Devine's financial results are released shortly.  If 20% of the sales have fallen over, this may impact nearby developments by Brookfield Multiplex, Mirvac and Citimark.

Devine has a rental website for the project, advertising two bedroom apartments for rent from $545 per week.  But some two bedroom apartments are listed on RealEstate.com.au for $795 a week, which seems outrageously high for a 85 sqm apartment facing West.

Not So Devine

"Home developer Devine warns deteriorating property market conditions will cut its full year pre-tax profit by 31 per cent.

Market conditions had continued to deteriorate across most Australian property markets, which had delayed Devine's ability to bring new projects to the market, the company said on Wednesday."

See Business Spectator

Hamilton One (also called Harbour One)

Here is a comment sent to me by a reader:

Recently, I arranged an inspection of apartments for sale in Hamilton One.  I am in the market so the request for an inspection was 100% genuine. 
The complex was only just finished. The thing that turned me straight off permanently in my particular situation, was that all the one bedroom apts do not have an oven to cook with and there is no provision for one, just a two-burner gas top. They have put in a movable bench-top convection microwave. It would be impossible to put a small gas BBQ on the balcony because the balcony’s are essentially closed in albeit for the concertina sliding windows which are up at about eye level upwards so the gas BBQ would essentially be inside, a VERY BIG no-no.  Of course, horses for courses and some people don’t cook, (I suppose??) so they may see that as a plus. Micro-waved and wok-cooked food does not appeal to me personally. 
While prices are advertised at $300,000 for one bedroom, that’s with a view of other high rise buildings, and no car park. I guess if you don’t have a car that’s fine, why pay for one if you don’t need or want it? I personally could not do without one. Therefore for me with a car, I think from memory (check for yourself) that one needed about a $415,000 start to have a car park however, that did include a reasonable view (in my opinion) since the one brm apts with car parks are on higher floors than those one brm apts without a car park. 
The concertina windows when open did seem to provide good ventilation and individually controlled ducted air con is throughout. The apt’s did have plenty of natural light which I thought was good, though another seven story complex is now under construction on the Nth side so that may impact on light, maybe not. 
Comms are Optus only. I personally did not like that “no-choice” option. According to the agent, hot water is individually metered from a central (gas??) boiler that distributes hot water around the complex and water is individually metered. I’m not sure how one went about getting electricity. I wonder what the unit rate for those utilities is? Foxtel is wired in, buy it yourself if you want it. 
The sales agent while quite pleasant seemed otherwise busy so other than a couple of apartment configurations, I was not shown around the complex to see the pool and any other facilities that may be there. I saw one pool though I think there may be two???

Northshore Hamilton

The $5 billion Northshore Hamilton urban redevelopment is underway, with thousands of apartments expected to be built in the next 10 years.  About 15,000 new residents are expected to move into this area, which is an old port and industrial precinct 6 km down river from Brisbane City.

• Two Devine apartment buildings are almost complete, with a third on the way.
• Brookfield Multiplex is building another Portside apartment building, Promenade (172 apartment), with two more planned.
• Citimark has development approval for Rivana, 15 levels with 208 apartments.
• Mirvac has a three building apartment complex planned, with a sales display office constructed onsite.
• Australand has launched 78 apartments as part of its $400 million project, Hamilton Reach.

Will there be an oversupply of small, non-riverfront apartments in this part of Hamilton, where there are few facilities and not much within walking distance?

Devine's Hamilton Harbour

Hamilton Harbour is a three building apartment complex (plus one additional building of commercial space) currently being developed by Devine.  Two of the three buildings are almost complete.

According to Place Real Estate Agents, across the three buildings there are 658 apartments.  There are 125 apartments remaining for sale (mostly in the third building).  In the September 2011 quarter, 14 apartments sold (about one a week).  At this rate, it will take 26 months to sell the remaining apartments.

One beds are listed for rent from $300 a week, two beds from $510 a week, and three beds from $850 a week.

Here are some recent photographs, taken from the Portside area, of the two finished buildings.

Luxury Apartment?

Old time property developers, David Devine and Ken Woodley, now of Metro Property Developments, specialised in low end high rise apartments.  They are advertising one of their many new developments, Brooklyn on Brookes, as "Luxury Valley Apartments from $305,000".

I wonder what makes these apartments "luxury"?  Sure, they will be new, but a new apartment does not mean it is luxurious.  Let's look at the facts:

• built on a main road, Ann Street
• no city or river views from most levels
• 191 apartments, most with only one bathroom
• small apartments
• no separate kitchen
• bathrooms do not have separate bath and shower
• little cupboard and storage space in apartment
• no balcony

In my view, calling these "luxury apartments" is seriously misleading.  Buyers beware! 

Charlotte Towers - Recent Sales Results

There have been 5 reported sales of apartments in Charlotte Towers in the July 2011 to October 2011 period.  Charlotte Towers was developed by Devine, is managed by Oaks, and is located at 128 Charlotte Street, Brisbane.

All sales have been one bedroom, one bathroom apartments, without a car space for parking.

• Apt 3101 - sold for $313,000
• Apt 2605 - sold for $325,000 (purchased off the plan for $326,000; listed for sale at $349,000)
• Apt 1406 - sold for $306,000 (purchased off the plan for $291,000)
• Apt 609 - sold for $302,000 (purchased off the plan for $295,000)
• Apt 3309 - sold for $302,000 (purchased off the plan for $347,000)

Taking into account stamp duty, legal costs, and real estate agent fees, all five of these original owners sold at a loss, and is some cases, for a loss greater than 10% (not taking into account inflation, interest costs and any furniture packages that may be been purchased -- so the overall loss will be somewhat more substantial.)  There are big risks in purchasing off the plan from the developer, and buying an apartment in Brisbane as an investment is not so easy.

Also, note that the highest reported sale for the whole building, for a four month period was $325,000.

With a tower being built across the road, values are unlikely to increase for some time.

Metro Property

Metro Property, owned by Pearls from India, David Devine and Ken Woodley (who lives in a Mirvac apartment), will soon launch The Plaza at South Brisbane.  It is a ten story building located on Manning Street, with 165 small apartments.

Metro have sold their 37 Mayne Road development in Bowen Hills.  The rumour is that it was sold to Arden Property Group.

In other news, there is a rumour that Devine/Leighton (no longer associated with David Devine) has sold its Camelot site on the corner of Albert Street and Margaret Street.

Devine's Brisbane City and Teneriffe Plans

Devine reports that it has secured the opportunity to build a 107 apartment project in Teneriffe, launching in the first half of 2012.

Devine also has two pending apartment projects in the Brisbane CBD, one on Albert Street at the corner of Margaret Street (the Camelot site) and another nearby on Margaret Street opposite the synagogue. From Devine's reports, it looks like these two city buildings are a long way off.

Devine's Hamilton Harbour

Devine reports to the Australian Stock Exchange, as at 25 August 2011, the following in relation to its Hamilton Harbour apartment development:

"Continued strong sales performance

• HarbourOne - 98%sold ($137 million in value)

• HarbourTwo - 86% sold ($92 million in value)

• Riverside - 60% sold ($57 million in value)

Construction on schedule for all three towers:

• TowerOne 78% complete

• TowerTwo 63% complete

• TowerThree commenced

Significant progress on mixed-use elements of Hamilton Harbour with strong retail and commercial leasing underway

Construction on Hamilton Harbour is ahead of schedule and under budget with completion of first two towers in first half of FY12

• Hamilton Harbour TowersOne and Two are both ‘topped out’, with fit-out complete on over 60% of apartments

• Construction delivered revenue of $108 million

• Devine Construction awarded $60 million contract to build ‘Riverside’ – the third tower at Hamilton Harbour."

So, Riverside is costing $60 million to build (including profit for the builder); and 60% sold gives $57 million in sales. Looks like a good profit margin here for Devine.

Sunland's Brisbane Development

Sunland reports that it was holding discussions with Cbus Property about a joint venture for $250 million Carrington Tower on Alice Street (also known as the French Quarter site -- that Devine sold to Sunland). The new tower (B1??) is awaiting final approvals. Mr Abedian of Sunland is reported as saying:

"With a project as unique as Carrington and given its proximity to the city and entry into the Botanic Gardens, we will ensure that the timing of the launch is one where we have the greatest confidence. We think 2012 is the more appropriate time to launch such a project. But we are no in a hurry and we won't rush a flagship project such as this."

It sounds to me like this apartment development will not start construction for some time.

Reapfield Sells Maidson Heights

If you are thinking of buying a property in Brisbane, why not ask a property consultant in Singapore. For example, Metro Property Group is marketing its Bowen Hills developments in Singapore through Reapfield. They are even advertising in newspapers. One example, above, is the "iconic" Madison Heights development. I wonder if buyers in Singapore know the track record of David Devine and the actual location in Bowen Hills of the property? As reported in the Courier Mail recently, Bowen Hill has 12 traffic bridges. It is not a place that I would want to spend the night.

The image immediately below, from the Reapfield website, shows the proposed Madison Heights location (yellow line) and Chelsea Apartments proposed location (thin red line). Below that is another view of Bowen Hills - Madison and Chelsea are located approximately behind the red circle titled Inner City Bypass.

Hamilton Harbour Tops Out

It looks like two of the Hamilton Harbour apartment buildings by Devine have reached full height. A photo above from Kingsford Smith Drive of two of the towers, with the Brett's Wharf buildings to the right.

Metro Property Group

There is a rumour that David Devine's Metro Property Group is in the process of selling one of its Bowen Hill's projects to another developer.

Will Hamilton Harbour Buyers Settle?

"Hamilton Harbour’s settlement rate should be on the development industry’s “must watch list”. Hamilton Harbour is a litmus test for the Brisbane apartment market – a beachhead, if you will."

All investors in Brisbane apartments should read this note by Matusik.

Charlotte Towers View and Sale

Recently, apartment 1009 in Devine's Charlotte Towers sold for $366,000. This is a larger one bedroom apartment with a car park. It is on level 10. The building is managed by Oaks. Unfortunately, its view will be impacted by the new The Midtown development across the road. Construction can be seen from this photo from apartment 1009. This type of apartment has sold for as high as $430,000 in the past -- so one can see that there has been a 10% to 20% decline in prices in this building since the peak of the market.

Bowen Hills Developments

See article in BusinessDay.

Towers of up to 30 storeys high will soon start being built in Bowen Hills as developers snap up land in Brisbane's booming inner-north. But ailing confidence in the property market has one company struggling to secure pre-commitment commercial sales vital to the commencement of construction. ...

Metro Property Group, headed by property baron David Devine, has also turned its attention to Bowen Hills announcing last month it had sold all 195 units in The Chelsea, on Hamilton and Tufton streets, since the project's launch last November.
Metro Property Group has been given the green light for another two apartment towers of 24 and 30 storeys in the suburb.The developer's 24-storey tower on Mayne Road, which will protrude over the Edgar Street laneway, includes 242 apartments in total. Although the taller tower, The Madison on Campbell Street, exceeds the ULDA's 24-storey general height limit in the precinct, the body's design panel said the additional storeys made the tower appear more "slender".

Recent Brisbane Auction Results

Just over a week ago, Ray White had an auction where 12 Brisbane inner city apartments went to auction. Only one sold at auction (1201 in UniLodge for just over $100,000). Over a week after the auction, most of the apartments that did not sell at the auction are still listed for sale. Why vendors decide to go to auction in Brisbane amazes me. These apartments are not selling at the prices listed below, so the market must be saying that they are worth less than this. And why buy an off the plan apartment for more than these prices? Some examples of the many apartments that Ray White was unable to sell:

• Felix, Apt 121, 1 bed, no car - failed to sell at or after auction, now listed for $330,000
• Felix, Apt 147, 2 bed, 2 bath, 1 car, end apartment - failed to sell at or after auction, now listed for $470,000
• Charlotte Towers, Apt 605, 1 bed, no car - failed to sell at or after auction, now listed for $315,000
• Charlotte Towers, Apt 2401, 1 bed, 1 car - failed to sell at or after auction, now listed for at the unrealistic price of $410,000
• Festival Towers, Apt 906, 1 bed, no car - failed to sell at or after auction, now listed for $320,000
• River Park Central - Apt 603, 2 bed, 2 bath - failed to sell at or after auction, now listed for $410,000
• River City, Apt 1803, 2 bed, 2 bath - failed to sell at or after auction, now listed for $433,000
• Aurora, Apt 626, 3 bed - failed to sell at or after auction, now listed for $1,300,000
• Grosvenor, Apt 1504, 3 bed - - failed to sell at or after auction, now listed for $1,800,000

Hamilton Harbour

Update from Devine:

"Construction at Hamilton Harbour is progressing on schedule; the rise of Brisbane’s newest lifestyle Mecca will be completed by Christmas 2011. With the first tower, Harbour One, already beyond level 20 and internal fit out is occurring from level 1 to 17; and Harbour Two now at level 11 with the internal fit out occurring from level 1 to level 8, excitement is definitely building as the project becomes a reality."

"With construction well under way, the first two residential apartment towers of Hamilton Harbour are on schedule to be completed prior to Christmas 2011.

Riverside Hamilton, the third and final residential stage in prestigious Hamilton, is selling fast and due to commence construction later this year with completion in 2013."

Hamilton Harbour is located on the busy Kingsford Smith Drive, and is not riverfront, but one block back from the river.

A tiny 61 sqm internal two bedroom apartment with views to the airport and not the river is available from $533,000 on level 15, or $485,000 on level 2.

Reminds me of the article about the shrinking apartment size. Clearly, this building is aimed at investors and not residents.

Sales in Charlotte Towers and Festival Towers

The following are all reported sales from December 2010 to now in Charlotte Towers and Festival Towers.

Charlotte Towers, 128 Charlotte St, Brisbane

Apt 3607, 2 bed, 1 bath, high floor, western side, $430,000

Apt 2407, 2 bed $520,000

Apt 803, 2 bed, 1 bath, low floor, overlooking Wintergarden $429,000

Apt 2805, 1 bed, 1 bath, 1 car, overlooking Wintergarden $350,000

Apt 1404, 1 bed, 1 bath, no car, overlooking Wintergarden $350,000

There are one bedrooms without car parking available in Charlotte Towers for sale for less than $300,000. For example, this apartment is listed at $299,000. Or $320,000. Or $325,000.

Festival Towers, 108 Albert St, Brisbane

Apt 202, 2 bed, 2 bath, 2 level, can be used for commercial premises $550,000

Apt 4108, $649,000

Apt 1511, 1 bedroom, $350,000

Apt 2209, 2 bed, 2 bath, $473,000