The Milton

FKP's The Milton development is growing over Milton Station.  Workmen tell me you get a good view of the train line and the XXXX brewery from the apartments.  This is being marketed as a luxury development, but I wonder what residents will think when they move in.

Milton off-the-plan apartments

There are two competing apartment developments in Milton, currently being developed.

• The Milton, being developed by FKP, at 55 Railway Terrace.  FKP has announced recently that it will be focusing on retirement properties, rather than residential developments.
• Westmark Milton, being developed by Lang Walker from Melbourne, at Railway Terrace between Walsh and Manning Streets.

FKP's renderings show a park across the road from its development.  What FKP does not show is any illustration with the Westmark building, that will (I suspect) block out any river or city views that residents of The Milton may have been expecting.

Due to the railway, both buildings should have uninterrupted views of the XXXX brewery.

The Milton -- but where exactly is the green space that is shown?

Across the road is Westmark

FKP's Albion Project

FKP is promoting its The Hudson at Albion Hill project.  See www.themillalbion.com.au.

Quote from Courier Mail advertorial, 8 June 2013 from FKP's general manager of developments:

"Overwhelmingly pivotal in all deals has been the size of apartments...  This difference is real, it matters and its definitely a deal-maker.  People want space in an apartment."

The advertorial highlights a 2 bedroom, 1 bathroom apartment that is 67 sqm.  In my view, a 67 sqm two-bedroom apartment does not have space!  This is a tiny apartment.  One of these apartments is advertised at $399,000.

FKP's SL8 Monster

FKP developed a project in West End, called SL8, a few years ago.  It is interesting to look at how it has performed.  FKP advertised this as an architect designed building in a good location.  In my opinion, the design was poor, and the location (even though in West End) is not great.

Here are the recent resales of apartments in SL8 (all two bedroom apartments), 8 Musgrave :

• Apt 146, sold off-the-plan for $545,000 in 2007; resold for $475,500 in May 2012
• Apt 123, sold off-the-plan for $585,000 in 2008; resold for $449,000 in November 2011
• Apt 174, sold off-the-plan for $725,000 in 2007; resold for $600,000 in November 2011
• Apt 144, sold off-the-plan for $765,000 in 2008; resold for $610,000 in October 2011
• Apt 214, sold by the developer for $520,000 in July 2010; resold for $440,000 in September 2011

Who said you can't loose buying property?  Every purchaser who has resold in SL8 has lost money.  And don't forget, the above does not take into account stamp duties and real estate agent fees.  Most buyers lost more than $100,000 when reselling.  If the buyers borrowed 80% of the purchase price, the buyers would have lost 100% or more of their equity.

Why such massive capital losses?  The property market has clearly gone into negative territory.  But a key factor here in my opinion is that the developer priced the apartments above the market value even in 2007, promoted the development heavily (including website keyword optimisation), and delivered a mediocre product.  (Have a look at the comments regarding this FKP advertorial.)  Take extreme care when buying off the plan!

More Affordable and Smaller Apartments

The Courier Mails reports that developers are building apartment buildings with smaller apartments, because that is what is selling today.  Does this mean that there will be a shortage of larger, family sized apartments in Brisbane in the future?

From the Courier Mail:

"Developer FKP recently withdrew a development application from Brisbane City Council for a future tower at its Gasworks development at Newstead.  It was lodged in 2009 and executive director Mark Jewell said it needed to be revised in line with the present market. The tower, known as Parkside Boulevard, will be released in the next three to five years.  Two weeks ago, the same developer released its reworked masterplan for The Mill development at Albion.  A change in market conditions early in 2010 saw it refund deposits for units already sold off the plan and designs changed. It has now launched the first tower and is waiting for sufficient pre-sales before it starts construction.

In Brisbane's CBD, Melbourne-based developer Billbergia unveiled plans to develop the failed Vision site into a 90-storey residential tower with about 800 apartments, a hotel and a 34-storey commercial tower.

Bellise at Fortitude Valley had initially been planned as a 199-unit development, but had received a new approval to reconfigure it to a 228-unit development of smaller product.

Citimark's Angus Johnson said the launch of its 200-unit Rivana development at Hamilton would wait until the market was right.

While Stockwell plans to proceed with the 150-unit stage two and 50-unit stage three of its Riverpoint development at West End, it has not yet advised a time frame.

Sunland has preliminary approval for the 47-storey Carrington in Alice St in the City. Managing director Sahba Abedian said there were conditions attached, which they were working through."

Another Milton Development

Walker Corporation announced it had bought land in Brisbane's inner west to embark on a new a $100 million-plus development with shops and 243 apartments across two towers, 12- and 20-storeys high.

Walker Corp has bought for a new mixed-use project at Milton in Brisbane was sold by Mominvest C, a company owned by Sydney-based John Hayson. The 3240sq m property fronting Milton Railway Station on Railway Terrace is an amalgamation of eight housing lots, with development approval for 243 apartments and shops.

Walker Corp plans to build one- and two-bedroom apartments priced between $420,000 and $550,000 within the traditionally industrial and low-density residential area where the Lion Nathan Brewery is also located. "Our project will provide high-quality, yet affordable accommodation for young people, who want to live less than 2km from the CBD," Mr Walker said.

The purchase is diagonally opposite FKP's The Milton project (at one time called Union).  According to the AFR yesterday, The Milton is close to 50% pre-committed (whatever that means).  It will be interesting to see if the Walker buildings block the views from The Milton.

See The Australian and AFR

Newstead Riverpark

"Developers FKP and Mirvac are major players in the quest to turn 17ha of prime riverfront land into a vibrant new community.  Located only 2km from Brisbane CBD, the Newstead Riverpark urban renewal precinct will become a residential hub, dining and entertainment venue, shopping destination and employment district."
Full story here.

Apartments in Teneriffe, Brisbane

Rents and apartment prices to face some stiff competition in Teneriffe?

The sky-high rentals and apartment sale prices being charged for apartments in Teneriffe may soon face some stiff competition when the several hundred brand new apartments being built by FKP at its new Gasworks complex combined with those already for sale at Mirvac’s Waterfront complex, both at neighbouring Newstead, come on stream.  There are some 600 units and apartments planned for construction in that area.

This may have been the trigger for the formation for the recently formed Teneriffe Apartment Managers Network. 

A recently released brochure, Renting in Teneriffe, is available around the area and promotes sales and renting of apartments through the on-site apartment managers listed and includes 19 apartment complexes that are let by on-site managers in Teneriffe.  Many of the apartments at Teneriffe are converted Woolstores while others such as Dalgety-Mercantile and Winchcombe-Carson complexes were built around 1994-96. 

Perhaps the Teneriffe apartment complex managers have already concluded that they can expect some fierce competition in terms of property prices and rents towards the end of 2012 when the FKP apartments come on stream, which start at $450,000 just a hundred metres down the road from Teneriffe. 

Woolworths is set to open a supermarket in the FKP complex, and boutique shops are planned along with office space and the 5 hectare Parklands area. It’s going to be interesting to see if rents and property prices hold up in Teneriffe when these complexes come on stream in late 2012 and early 2013.

FKP Releases The Hudson at Albion Mill

Yesterday, FKP released the first stage of the Albion Mill development for sale, off the plan.  Apartments are for sale in the building called The Hudson.  There are 134 apartments in this building.  It is located near the Albion railway station.  The building is about 12 storeys, and looks very much like the El Dorado Village development.

Milton Park

Extracts from an FKP Press Release:

Brisbane City Council’s plan to turn the old Milton Tennis Centre site into parkland is set to benefit surrounding properties, with The Milton the only major new development now on the horizon, says a leading property researcher.

Michael Matusik, director of Matusik Property Insights, said council’s plans to resume the 3.5 hectare site for suburban parkland would reduce the future supply of new apartments in the suburb by about 670, increasing the ‘scarcity value’ of stock in Milton.

Mr Matusik said, along with the reduction in supply, homes and apartments in Milton would benefit from a three to five per cent price premium generally afforded to properties within a one kilometre radius of major parkland.

“The single most common feature of any metropolitan area’s position as a desirable residential address is trees, and while buyers want to be in close proximity to the city, public transport and amenities, they still want access to green open space.

Mr Matusik said the significant reduction in future supply as a result of the development of the parkland at the old Milton Tennis Centre site would put increased demand on new and existing property in the suburb.

The 30-level The Milton, which is anticipated to begin construction this year, will feature 298 one and two bedroom apartments, most with views of the CBD or Brisbane River, along with a ground floor retail promenade and commercial office space."

My comment: The proposed park is some time off. It is located on the other side of the railway and the other side of Milton Road to that of FKP's development. So I don't think it will have much impact to people's decision to decide to rent or buy on a development near the Milton Railway Station, that has views of the brewery.

Yungaba and The Milton - Flood Issues

Yungaba is an off-the-plan development at Kangaroo Point current being built and marketed by Australand. The Australand Property Group informed the market yesterday that Yungaba would be delayed because of the floods. "That has obviously hampered progress on the project and the full impact is yet to be determined. First settlements are now expected in the first half of 2012 instead of the forecast second half of 2011".

I wonder what people will think of this project now -- I suspect sales may be a little slow for a while.

FKP said it suffered damage to its sales suite at Milton for its overpriced off-the-plan development "The Milton".

Analysts said Mirvac Group faced the risk of a slower sales rate because of the floods.

See also article in The Australian

2010 Brisbane Apartment Awards

These are our awards for 2010:

1. Wildest Advertising Claim

FKP Properties wins this for their overpriced The Milton development. Their sales agents are giving out printed information to potential investors about future property values. 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.

2. Worst Investment

This is a hard one. Many investors who purchased off-the-plan in 2006 or 2007 had to settle this year. Some were unable to get bank valuations anywhere near settlement. The contenders for this category are:

• Mirvac's Tennyson Reach
• Niecon's The Oracle at Broadbeach
• Raptis' The Hilton Surfers Paradise
• Evolution.

I think they are all bad investments, so maybe a four way tie!

3. Biggest Delayed Development

Again, a number of contenders for this category. There are many big developments that have been delayed indefinitely -- Trilogy, Evolution, Empire Square, FKP's Albion Mill. South Point is another contender here -- although it looks about to finally begin.

But the winner is El Dorado at Indooroopilly. Construction has been about to start for years now. What is going on at this development?

More Details from Colliers Apartment Report

A post below mentioned the Colliers September 2010 Brisbane Apartment report. See "Why Are Colliers Optimistic". Some more details:

See this report:

Lachlan Walker, Colliers International project management & research - residential, says the Brisbane apartment market is in a similar position in the property cycle as it was more than a decade ago, where the market was looking more positive and just a few years from a major property boom, following a substantial period of depressed market conditions.

"The resounding theme for the September 2010 quarter is that the Brisbane Apartment market has made strong progress in recovering from the effects of the GFC," he says.

"It has been a difficult two years since the impacts of the declining US economy impacted the Australian property market, however the most recent quarter has seen the strongest rate of sale for the Brisbane market since 2004."

The report revealed that there were 425 unconditional sales of new apartments within Brisbane's Inner Ring, encompassing the five kilometre radius from the CBD, representing an increase of 21 per cent per cent from the 276 sales recorded in the June 2010 quarter. This brings the total unconditional sales for the 2010 year to-date to 977 transactions for Brisbane's Inner Ring, 182 more transactions than recorded for the entire 2009 calendar year. It must be noted that 32 per cent or 135 of the 425 unconditional sales were recorded in Laing O'Rourke's new residential release, M & A, in Brisbane's Fortitude Valley.

Other strong performers were FKP's The Milton to be developed by FKP which registered 68 unconditional sales for the three month period, as well as Devine's Riverside Hamilton and Aria Property Group's Station 16, which saw 41 and 42 sales respectively.

The Milton at Milton

FKP has opened its sales office for "The Milton", a new apartment building that FKP plans to build next to the railway line at Milton Station.

The building will feature 298 one and two bedroom apartments. There will be no three bedroom apartments. There is a pool. Shops are located on the ground level.

Compared to all recent developments for Brisbane apartments, the floor plans for the apartments in The Milton are the best that I have seen. The apartments have wide frontages, good light, storage space, and most have good sized kitchens (rather than galley kitchens). There are no internal bedrooms. The apartments are an ok size - the average size for a two bed is 92 sqm including balcony and 62 sqm for a one bed.

The downsides:

• FKP's recent developments in Brisbane have not been great. Vue at Milton was did not turn out to be great, and many of the apartments there are still selling below the original sales price. The Albion Mill project never started. I considered the SL8 development at West End to be a disappointment.
• The Milton is being built on a railway.
• The Milton is located close to the XXXX brewery, and so residents will be impacted by smell, fumes and fallout from the brewery.
• Despite the nice brochures from FKP, The Milton is located a fair distance from the river. It is not river front, and will only have distant river views. There is the strong possibility that other towers will be built between this development and the river. In my opinion, the artist's impressions being distributed by FKP are somewhat misleading.
• There is the risk that the apartments on each end will be built out if similar apartment buildings are constructed on the neighbouring land. The Milton is not on a corner block, and this is a risk.
• The building does not have central airconditioning. The hallways are unlikely to be airconditioned. Not all rooms in your apartment will have an airconditioning output head. So FKP selected the low quality option here.

The biggest downside to me is the price. FKP is advertising that the median (not average) price for 2 bedroom apartments is $778,049 and for one bedrooms is $430,497.

For example, the apartment listed above (N type) on about level 12 is listed for sale at $795,000 plus an extra $12,000 for the "upgrade" interior package. This is over $8,500 per sqm metre, for an average residential starter apartment -- we are not talking about a luxury building or prime location here.

A two bedroom M type on lower than level 10 will cost $785,000 plus a $10,000 upgrade package. A two bedroom K type on a similar low floor will cost $748,000 plus $10,000 upgrade package.

What is even more amazing is the printed information that FKP is giving out to potential investors. They have a sheet of paper showing investment returns for a 2 bed, 1 bath apartment listed at $650,000. The predicition 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.

Take note! Investors who purchased a 2 bedroom 1 bathroom apartment off-the-plan in Evolution (a better location, in the downtown area) over 5 years ago at over $600,000 are now having great trouble selling that same apartment for $500,000 today, and similar apartments in Felix are selling for about $450,000 today. So it is a bit rich to say that a two bed, 1 bath apartment at Milton is good value at $650,000 today, and I find it very hard to believe that it will be worth 0ver $800,000 in three years time.

Take care!!

FKP's The Milton - in pre-release

The project is a mix of retail, commercial and residential development approved for 30 storeys above ground, at Milton Railway Station. It is approved for:

• 303 Residential Apartments in one and two bedroom configurations from level 2 to 30.
  
• First Floor Commercial.
  
• Ground Floor Retail outlets and Promenade.
  
• Almost every apartment has at least one Car Park.

One bedroom apartments with car parking start from $446,000.

Two bedroom apartments with car parking start from $640,000.

One bedroom apartments without car parking (there are only two of these available) start from $379,000.

Vue Apartments

The Vue Apartment complex on Coronation Drive has been impacted by its bad location and road construction activity. There is construction of the Hale Street link and GoBetween Bridge nearby, and the complex is located on the corner of a busy road and a highway. It was developed by FKP, who is now pushing a new development at Milton called The Milton. Example listings in Vue:

• Apt 1705, 2 bed with roof top terrace listed at $750,000 being sold by the original developer FKP
• Apt 3102, 2 bed, renting at $460, listed at $430,000 (sold for $350,000 in 2006)
• Apt 2303, 2 bed, 5th floor, listed at $470,000 (purchased off the plan for $440,000 in 2004)

Apt 2409 sold off-the-plan by FKP in 2006 for $535,000 and was resold in February 2009 for $445,000.

Apt 2001 sold off-the-plan for $445,000 and resold for $400,000 in October 2009.

Apt 2008 sold off-the-plan for more than $504,000 and resold in Sept 2009 for $479,000

The Milton

FKP has received development approval from the Council for its Milton Railway Station development. This development was once called Union, and is now called "The Milton".

The Milton will be a 31-storey, 303 residential apartment building on Railway Terrace. It will also have a number of retail lots.

Take Care Buying Off the Plan

If you believe the sales agents hired by developers who sell apartments in Brisbane off-the-plan, you can't go wrong. Sign today, but don't pay for a few years. Population growth. Depreciation benefits. Get is early to choose the best apartment. Early buyers will get the best price. There will be a price rise soon, so sign today!

But there are huge risks:

• the building may never start, and so the deposit is tied up for years
• the apartment may look different to what you expect, or have a worse view
• there could be development next door, impacting your view and the location
• the developer could onsell the development, and so you end up buying from someone other than who you signed with
• the apartment may be up to 5% smaller than set out in the marketing plans
• the quality may be different to what you expect.

However, the biggest risk is that you pay the wrong price. You are trying to guess tomorrow's price today. And let me tell you, prices do go down. In addition, you are paying for the developers marketing and sales costs, which is often more than 5% of the the purchase price. So you are 5% behind before you start.

Let's look at some examples of buildings marketed off-the-plan to see how the purchasers did.

Devine is selling Hamilton Harbour like hot cakes. Let's see their track record. Here are some example resales for Charlotte Towers, their most recent Brisbane apartment development. I have looked at typical midlevel apartments:

Apt 2003 - purchased Jan 05 for $444K, resold July 08 for $425K

Apt 2210 - purchased Dec 04 for $333K, resold Jan 09 for $312K

Apt 2302 - purchased March 07 for $483K, resold March 09 for $468K

Apt 2307 - purchased Sept 06 for $497K, resold May 09 for $490K

Apt 2308 - purchased Sept 05 for $501K, resold Feb 09 for $485K

Apt 2410 - purchased Dec 04 for $351K, resold March 08 for $310K

Apt 2608 - purchased Sept 04 for $508K, resold Aug 09 for $492.5K

Apt 2703 - purchased March 06 for $492K, resold Feb 08 for $461K

Apt 2908 - purchased Feb 05 for $508K, resold Nov 08 for $485K

Keep in mind the the purchasers paid stamp duty of between $5,000 and $15,000 and agents fees to sell the apartment of roughly $12,000, then you can see that many of the off-the-plan purchasers lost more than $30,000, after holding for 3 to 5 years.

Another example is FKP's Vue apartments, at 92 Quay Street, Brisbane.

Apt 1106 - purchased Oct 04 for $400K, resold July 07 for $368K

Apt 1205 - purchased Oct 04 for $475K, resold July 07 for $440K

Apt 2008 - purchased Jan 05 for $504K, resold Aug 08 for $480K

Apt 2409 - purchased June 06 for $535K, resold Feb 09 for $445K

So take extreme care building off the plan, as you may end up paying too much for something that you don't like or want.

Union at Milton

"Thank you for your email enquiry regarding our proposed project at Milton.

We are currently working thru the final stages of our Development approval, which we are hoping will be confirmed early December....

In broad terms we intend to develop a modern iconic 30 storey building with multi level car parking and a wide choice of unit types i.e. 1 bedroom, 1+1 bedroom and differing design 2 bedroom apartments. There will be attractive mix of retail at ground level, a very generous entry lobby and excellent resident facilities ie pool, gymnasium, owners lounge and more."

The Mill At Albion

The rumor around town is that the Mill at Albion development, by FKP, has been shelved and will not go ahead.