W Hotels on old court site

It is reported that W Hotels will manage a new hotel that will soon be developed on part of the old State Courts site on George Street.  The three tower development will include residential apartments. Some may remember that Westin Hotels (a sister company) was to manage a proposed new apartment and hotel development on nearby Elizabeth Street, called Empire Square, that never went ahead.

Falling prices

I have been looking at the listing and sale prices for two bedroom apartments in Brisbane. During the peak of the market, which was about 2008, good quality two bedroom apartments (which were more than 110 sqm in size, and often larger) were selling in the $800,000 range. Now, these same apartments are selling in the mid to low $600,000s. That is a decrease of about 20%. One wonders what would have happened to Vision and Empire Square buyers, where the contract price of two bedroom apartments exceeded $1 million.  These buildings did not go ahead, despite Colliers reporting strong presales.

Empire Square To Be Reborn

According to the AFR, Grocon (owned by the Grollo family in Melbourne) is in due diligence to buy the Empire Square site and also the Trilogy site.

Doubtful Vision

"The developer behind the $900 million Vision Tower skyscraper on Mary Street is confident construction will proceed, despite the global credit crisis and economic uncertainty. Austcorp's ambitious 79-storey building will be the tallest in Brisbane when complete and is tipped to become an icon of the city's burgeoning growth. However, doubt has been raised over the likelihood of construction, following last week's collapse of the high-profile Empire Square development on Elizabeth Street that was sparked by the worsening world economic climate.

Industry sources told brisbanetimes.com.au a contingency plan had been devised if finance, which had been arranged but not officially confirmed, was to fall through.

Excavation of the building's basement-level car park is underway, but that could be as far as Vision gets if the credit crisis prohibits Austcorp's financial backing. The developer could sit on the site and operate it as a public car park until things improved, one source said.

However, Austcorp spokesman Terry Lee rejected the suggestion that Vision was in doubt, and said plans remained very much on track. "We have funding commitments (and) we are still working with the banks to finalise that documentation ... it will take time for us to do that," Mr Lee said.

"This is a normal process that all development projects go through."

Mr Lee acknowledged the turmoil in the global market, but would not be drawn on whether it posed a risk to the development.

"I know there are various rumours circulating in the market, there has always been talk about Vision one way or the other," he said. "We are progressing as we planned ... I don't want to be drawn on market speculation."

He would not comment on the possibility Vision would be delayed by the on-going credit crisis.

Austcorp had secured more than $12 million in apartment sales in the last quarter, which meant about 70 per cent of residences were now pre-sold with unconditional contracts. "Total apartment sales amount to $260 million ... Vision will ride out the current market turmoil to become Brisbane's landmark building when delivered in three to four years' time."

See Brisbane Times

Future Brisbane Apartment Developments

There is likely to be a shortage of apartments in Brisbane in the near future. (This statement assumes that that is not massive unemployment in Brisbane.) There are few developments under construction, and so very little new stock will come onto the market in the next three years. What new stock remains unsold is either overpriced or poor quality.

Downtown Apartments

• M on Mary - completed - mostly poor quality 1 bedroom apartments, mostly unsold. Developer has ceased sales campaign and is running this building as short term accommodation
• Evolution - completed - about 20 apartments unsold - small and overpriced
• Skyline - completed - about 20 apartments unsold - building surrounded by other buildings, and generally overpriced
• Aurora - completed
  
• Empire Square - cancelled
• Trilogy Tower - status uncertain - in presales, with planned completion in 2012 - both hotel rooms and expensive apartments
• Vision - status uncertain - in presales, with completion not before 2012
  
• Soleil Tower - soon to start presales - 403 apartments, with completion about 2011
• French Quarter - early days, no planning approval
  

Inner City

• Flow (West End) - completed - about 5 remain unsold, will negotiate on price to sell
  
• Koko (West End) - completed - about 5 remain unsold, will negotiate on price to sell
• Tempo (West End) - completed - about 5 remain unsold, will negotiate on price to sell
• IceWorks (Paddington) - almost complete - about 6 apartments remain unsold
  
• SL8 (West End) - under construction, with completion expected in April 2009, poor location
• Waters Edge (West End) - off-the-plan selling, overpriced and selling poorly, completion in 2010
• Ciana (Indooroopilly) - almost complete - about 25 out of 130 apartments remain unsold - good value
  
• Tennyson Reach - 2 buildings nearing completion, 1 building not far behind, 3 more buildings planned
• Newstead Waterfront - 2 buildings selling well off-the-plan
• The Mill at Albion - almost sold out, relatively expensive
• El Dorado Village - to be launched to the marketing in October 2008, completion likely in 2011
• Milton Union - received planning approval

Fall of an Empire

The Empire Square project on Elizabeth Street in Brisbane, which was to include a Westin Hotel, has been scrapped.

"Developer Metacorp is today in the process of advising investors it will not proceed with the development because it has lost financial backing, sources have told brisbanetimes.com.au. The empty retail stores on the site of the planned development have been readvertised for lease."

It was reported that a large number of the 100 apartments had sold off the plan. The minimum price was $1.3M for a 2 bed apartment.

See Brisbane Times.

Vision or not?

See this AFR story, which says that Vision does not have finance and no construction contract has been signed. Trilogy sounds more optimistic. It reports that 74 out of 192 hotel apartments have been sold. The Westin Empire Square -- hard to tell what is actually happening -- sales are good, but no finance yet.

The Compass Points North

See SMH

Look out Sydney and Melbourne, the exclusive apartments that are planned along the Brisbane River, the Gold Coast and further north are threatening to steal your limelight.

MONEY IN THE BANK

Roseville resident Rhonda Sear knows how to identify a prime apartment in a quality development. This full-time property investor bought a $1,175,000 penthouse in Queensland's South Bank development in 2004 and sold it 18 months later for $1.6 million. Sear has just listed for sale her three-bedroom, two-bathroom apartment in Norman Reach, a $108-million premium development on the Brisbane River at Norman Park.

Sear bought the apartment for $1,739,000 in 2006 and expects to make a profit despite the softer market. "It's an appealing city and it's a lot more affordable than Sydney," she says. "The key is actually buying the prestige product that has a uniqueness because it should still show strong growth in a soft market because it represents a certain lifestyle."

Sear has also spent $1.51 million on a unit on level 55 of Empire Square, Brisbane.

Google Insights

Google has an interesting service, that allows you to see what people are searching for on Google.

It is called Google Insights. It is helpful when making investment decisions.

For example, when looking at searches conducted in Australia over the past 12 months, the following are relative rankings of various searches:

trilogy brisbane	27
mill albion	38
empire square	44
westin brisbane	21
sl8	13

mirvac	59
pradella	1
devine	62
fkp	10
stockland	56

indooroopilly	62
new farm	40
west end	54
st lucia	19
toowong	44

Will Empire Square Get Built?

There was an interesting story in The Australian last week, but states that the Empire Square development in Brisbane has not yet obtained construction finance. Also, no construction contract has been signed. The developer says:

"The worst possible scenario for Empire Square would be that if it didn't start by the end of the year, for whatever reason, we would be left with half an acre in the CBD that could be rented out for the next two or three years," Mr Chopard said.

Empire Square - presales

"Located from level 47 up, the 98 two-and three-bedroom apartments are priced from $1.3 million and marketed as having full access to the services of the building's Westin Hotel.

The residential component also includes six penthouses priced from $4.5 million.

Metacap Developments insists there has been no shortage of interest in the $500 million development, which also includes 306 hotel suites and 23,000 square metres of commercial space.

Expressions of interest were placed on 80 per cent of private apartments, before sales officially opened yesterday.

"We have already been inundated with enquiries... (this) is a great result, particularly given current market conditions," company director Jerome Chopard said.

Empire Square will also feature 306 hotel suites and a range of five-star facilities, including a gym, pool and restaurant.

Permanent residents will have access to the full services of the hotel, including the concierge, maid, doorman and personal assistant."

From Brisbane Times, 30 July

NorthBank

The tentative new proposed Northbank design for Brisbane includes a 30 floor building at the Elizabeth Street off-ramp. This will impact the views from Casino Tower and probably the Empire Square development.

Watch Video

Brisbane Empire Square Apartment Drawings

Drawings of apartments in the Brisbane Westin development at Empire Square.

Westin to Block Casino Towers and Festival Towers views

Here is a photograph that I took today from the South side of the Brisbane River.

Brisbane City

Casino Towers is the tallest looking building, in the centre of the photo. (Casino Towers is 120 metres high). To the left of Casino Towers, you can see Festival Towers. The Casino is the old building in the foreground. Number 111 George Street is on the far right (145 metres).

Below, is a similar photo, showing the planned Westin Empire Square building. As you can see, Festival Towers will be impacted (you can't even see it in the photo below), and many apartments in that building that have river views today may not have river views when the Westin is complete. The Westin Empire Square will be 62 levels and 220 metres high. Also, a number of the "back" apartments in Casino Towers will have their views taken away by the Westin Empire Square.

Westin - Empire Square

Trilogy Update

From Australian Financial Review, 28 May 2008

Mirvac will manage a 192-room hotel in APH Capital Partners' $A800 million tower development in Brisbane. The Trilogy complex at 480 Queen Street, set to be Brisbane's tallest building, will also comprise 30,000 square metres of office space and 109 apartments. It is likely that Mirvac will manage the hotel under its Quay Grand product. The news follows Westin Hotels & Resorts' commitment to manage Metroplex's Empire Square development, also in Brisbane.

Extract from the Brisbane Times:

The $880 million Trilogy Tower will include office space, residential apartments and a five-star hotel, APH Managing Director John Wilson said.

He said the 70-level, 265m-high building would be Brisbane's tallest when it is completed by the middle of 2012.

Mr Wilson said the tower would feature a large, solar-powered lamp at the very top that would be seen from all over the city.

"We've gone to great lengths to try and create something that will be instantly recognisable in Brisbane, like a lot of landmark buildings across the world," he said.

"In fact, we'd like to have Trilogy Tower associated with Australia, ultimately."

The tower will be built on a 3487 square metre site that will combine land formerly occupied by the Australia Red Cross building at 480 Queen Street, and the Dome Nightclub next door.

The nightclub will be demolished when its purchase is finalised next month.

Mr Wilson said "everything" from the concrete rubble to steel and glass from the demolition sites would be recycled.

Mr Wilson said Trilogy Tower's one- and two-bedroom apartments would go on the market "within the next two to three weeks".

Brisbane Building Heights

Trilogy (proposed) - 265 m
Vision (proposed) - 259 m
Empire Square (proposed) - 250 m
French Quarter (proposed) - 230 m ??
Aurora - 207 m
Riparian Plaza - 200 m
Skyline - 150 m
Waterfront Place - 162 m
M on Mary - 145 m
Charlotte Towers - 138 m
Festival Towers - 135 m
Felix - 131 m
Admiralty Towers Two - 126 m
Casino Towers - 120 m

Brisbane Project Sales - First Quarter 2008

Not including M on Mary (for which no data is easily available), there were only six new apartment projects selling in the January to March 08 quarter. These were Aurora, Evolution, Pinnacle, Skyline, The Macrossan and Vision. (Empire Square and Trilogy Tower were taking expressions of interest, but no contracts were issued or signed in this quarter.)

Of these six buildings, there were only 20 reported sales in the first quarter 2008.

Aurora - 2 sold, none remaining for sale
Evolution - 3 sold, 23 available for sale
Pinnacle - 1 sold, 12 available for sale
Skyline - 2 sold, 16 available for sale
The Macrossan - 1 sold, 13 available for sale
Vision - 11 sold, more than 100 available for sale
Empire Square - about 100 available for sale
Trilogy - 192 hotel rooms and 109 Skyhomes available for sale

Totals - 20 sold, about 592 available for sale.

By way of reference, there are just under 7000 completed apartments in the Brisbane CBD. In 2007, there were 1229 apartment sales in the Brisbane CBD.

Trilogy Tower - Going Ahead

Trilogy is a building that will have three parts - office, hotel and residents. APH tried to sell the office component and failed. See Brisbane's $300m Trilogy tower campaign fails from The Australian.

That article states:

APH managing director John Wilson said a funding package, led by the Bank of Scotland, was now in place for Trilogy and negotiations finalised with builder Laing O'Rourke.

"At no stage have we hesitated," he said.

A deal had been signed with a five-star hotel operator and would be announced soon.

Marketing would begin this month on the sale of the 192 one- and two-bedroom hotel apartments, which would range in price from $500,000 to $900,000.

The 110 residential apartments at the top of the tower would be priced between $1 million and $5million.

A start of work on the $700 million Trilogy -- which APH said would be taller than any other existing building in Brisbane -- would confirm the race had begun to deliver the city's next generation of super towers.

However, with funding difficult in the wake of the credit crisis, analysts believe many of the developments proposed for Brisbane will fail to materialise.

With timing now crucial, GPT Group has started work on its $500 million 111 Eagle Street tower nearby, and work is under way on Austcorp's $1 billion Vision tower.

APH has begun demolition on its site between Queen and Adelaide streets and expects to start construction next month.

Mr Wilson said special techniques would speed construction and allow delivery of the office space by May 2011.

"As far as we know we will be first to market, in terms of buildings that are about to start," Mr Wilson said.

Meanwhile, Metacap Developments -- a joint venture between Sydney-based Newell Palmer Securities and Brisbane developer Alex Jimenez -- has announced it will start construction in the new financial year on its $500 million Empire Square tower on Elizabeth Street. It secured a deal last year with five-star hotel operator Westin over the 306 hotel rooms and 104 branded apartments.

Empire Square will include about 23,500sqm of A-grade office space.

Empire Square Article

Extracts from the Brisbane Times:

http://www.brisbanetimes.com.au/articles/2008/05/09/1210131233926.html

• Construction will begin later this year on a 65-storey residential, commercial and hotel high-rise on Elizabeth Street that is set to dominate Brisbane's skyline.

• The tower will comprise 306 luxury hotel suites, 98 two and three-bedroom apartments and six penthouses.

• A recreational area will be located on level 30 of the building and feature a luxury day spa, 20m indoor swimming pool, sauna and gym.

• Metacap director James Chopard said permanent residents would have access to services like gourmet chef-prepared room service, housekeeping, a concierge and valet parking.

• Designed by architecture firm Cottee Parker, the soaring green skyscraper will dwarf neighbouring buildings and sit across from the car park entrance to the Myer Centre.

• Colliers International has been appointed as marketing agents for the development and two-bedroom apartments will be priced from $1.3 million.

• Construction is expected to start at the end of the year and completion is scheduled for 2012.

See: Press Release

See video

The Residences at The Westin

The Empire Square "The Residences at The Westin" website has gone live.

www.empiresquare.com.au