Questions

• What will happen to the inner city Brisbane apartment market if foreign students stop coming to Brisbane?
• When interest rates rise, will Brisbane apartment prices fall?
• Will Meriton build a building in Brisbane that is lesser quality than Devine? Is that possible?
• When will Felix have its river views blocked by development?
• Will rental returns to owners in Oaks buildings decrease this year?
• Will apartment prices in Brisbane continue to fall into 2010?
• When first home owners stop buying, will sellers who have not sold become desperate?
• Are the only investors buying at present the vultures and bottom-feeders?

Oaks 08/09 Results

Oaks Hotels & Resorts Ltd net profit was down 33.3% to $9.8 million in the year to June 30, 2009, on revenue up 11.5% to $120.9 million.

• 38 properties under management
• 4,788 serviced rooms under management (12% increase over last FY)
• occupancy rate down 2.11% to 84.38 for CBD properties
• average room rate $151 for CBD properties
• new central reservations team -- I wonder what owners are being charged for this?

Sales in Felix

2 bedrooms:

• Floor 36, Apt 361 - $430,000 (April 2009)
  
• Floor 35, Apt 356 - $490,000 (January 2009)
• Floor 35, Apt 355 - $420,000 (October 2008)
  
• Floor 34, Apt 342 - $495,000 (October 2008)
  
• Floor 32, Apt 325 - $430,000 (March 2009)
• Floor 32, Apt 322 - $487,000 (February 2009)
• Floor 31, Apt 314 - $460,000 (June 2009)
  
• Floor 29, Apt 294 - $424,000 (September 2008)
• Floor 27, Apt 272 - $491,000 (May 2009)
  
• Floor 25, Apt 256 - $522,000 (August 2008)
• Floor 24, Apt 245 - $415,000 (July 2008)
  
• Floor 24, Apt 246 - $500,000 (October 2008)
• Floor 22, Apt 225 - $420,000 (September 2008)
• Floor 21, Apt 217 - $485,000 (Feb 2009)
• Floor 20, Apt 204 - $440,000 (Dec 2008)
• Floor 17, Apt 173 - $480,000 (August 2008)
• Floor 17, Apt 176 - $497,000 (July 2008)
  
• Floor 16, Apt 163 - $476,500 (Sept 2008)
• Floor 14, Apt 144 - $421,500 (Sept 2008)
  
• Floor 13, Apt 133 - $465,000 (Sept 2008)
• Floor 13, Apt 136 - $462,000 (Nov 2008)
• Floor 11, Apt 113 - $485,000 (Jan 2009)
  
• Floor 10, Apt 103 - $475,000 (Oct 2008
  

1 bedroom:

• Floor 29, Apt 291 - $340,000 (Sept 2008)
  
• Floor 24, Apt 248 - $333,000 (March 2009)
• Floor 18, Apt 188 - $335,000 (Dec 2008)

Apartment numbers ending in 1 and 8 are Plan B - 51 sqm internal
Apartments ending in 2 and 7 are Plan D - 77 sqm internal
Apartments ending in 3 and 6 are Plan E - 82 sqm internal
Apartments ending in 4 and 5 are Plan C - 62 sqm internal
Some floors have different configurations to this plan, including different sized balconies.

Oaks "Hotels"

If you are thinking of buying or renting in an apartment managed by Oaks, then you should read the online reviews written by people staying in the building, who are short stay "hotel" guests. The problem with Oaks buildings is that they were built as cheap apartment buildings (not as hotels) but a large number of rooms are rented out (often for a night at a time, via Wotif) to people who think they are staying in a hotel. Thus, both residents and "hotel" guests are often not happy.

Example Reviews:
Aurora
212 Margaret
Festival Towers
Casino Towers
Charlotte Towers
Felix
Lexicon
River City

Similar issues for M on Mary.

Brisbane Apartment Recent Auction Results

• Felix, Apt 317, Level 31, 3 bedrooms, 3 bathrooms, over 150 sqm - highest bid $820,000, now listed at $950,000
• Willahra Tower, Apt 49, 2 bed, 2 bath, 96sqm, no bid at auction, now listed at $449,000
• Quay West, Apt 401, Level 4, 2 bed, 2 bath, 126 sqm, vendor bid of $600,000
• Roma Street Parklands, Building 3, Apt 3095, 3 bed, 2 bath, end/rear unit, vendor bid $535,000, listed at $600,000 and reported as sold
• Roma Street Parklands, Building 4, Apt 4046, 3 bed, 2 bath, lower floor with no view, vendor bid $550,000, now listed at $700,000
• SoHo South Brisbane, Apt 605, 3 bed, 2 bath, impacted by new bridge being built, highest bid $550,000, now listed at $600,000
• Toowong, 24/12 Patrick Lane, 2 bed, 2 bath, sold for $487,000
• New Farm, 7/38 Elystan Road, 2 bed, 1 bath, sold for $780,000
  

Ray White Sunday Auction Results

See Courier Mail blog

• Felix: 342/26 Felix St, 2 bed, 2 bath, sold for $495,000.
• Festival Towers, 1901/108 Albert St, passed in $450,000
• Festival Towers, 3508/108 Albert St sold prior to auction, reported at $555,000 or $445,000??
  
• Charlotte Towers, 1502/128 Charlotte St, 2 bed 2 bath, passed in on vendor’s bid of $420,000
• River Place River Terrace House: 1/82 Boundary St was passed in at $1.35 million, now listed at $1.5M
• Skyline, 12/30 Macrossan St, three bedroom unit passed in at $900,000, now listed at $1,240,000
  
• Aurora Tower Penthouse: 651 and 656/420 Queen St passed in at $2.4 million, now listed at $2.6M
  
• Soho, 416/8 Cordelia St, 1 bed, South Brisbane was passed in at $280,000
• SoHo, 615/8 Cordelia St was passed in for $465,000, looking for offers above $500,000
  
• SoHo, 108/8 Cordelia St passed in at $505,000
• Euro, 1308-2-6 Manning St, South Brisbane, 2 bed 2 bath, passed in at $400,000
• Trilogy, 336/51 Hope Street, Spring Hill, 2 bed, 2 bath passed in at $540,000, sold after for $550,000 (vendor was off the plan owner who had paid $595,000)
  
• Stradbroke Tower, 74/2 Goodwin St, Kangaroo Point passed in at $875,000
• 1/24 Brisbane Street, St Lucia, sold for $414,000
• 6/211 Baroona Rd Paddington, 2 bed, 1 bath, sold for $431,000
• LeftBank, 64/35 Buchanan St, West End, passed in at $1.15 million

"Hundreds turned out to the convention centre on Sunday to see 80 properties offered for sale as part of the Ray White Property Auction Spectacular. There was a wide range of units and houses was on offer but properties sold under the hammer for prices well below what would have been expected six months ago.
Chief auctioneer Philip Parker said he pleased with the lacklustre clearance rate of almost 30 percent but said those who sold at auction realised they were not going to get what they thought their property was worth before the economic downturn. He said while no-one was happy with the current economic climate, sellers realised if they wanted to move a property they had to meet the market.
``Out of those that sold today, only one buyer didn’t go down on their original (minimum) price,’’ Mr Parker said.
He said the vendors who didn’t budge, didn’t get a sale. Negotiations are continuing on several properties offered for sale." http://blogs.news.com.au/couriermail/publicproperty/index.php

Sales and Auction Results for Brisbane Apartments

Felix

• Apt 294 - highest bidder = $395,000

Skyline

• Apt 254 - passed in
• Apt 422 - passed in
  

Riverplace

• Apt 32 - highest bid - $640,000
• Apt 304 - passed in

Aurora

• Apt 583 - highest bid $900,000
• Apt 584 - highest bid $900,000

Casino Towers

• Apt 3104 - sold for $316,000

River City

• Apt 2105 - sold for $375,000

Market Forces

My theory is that if a building has too many apartments for sale at any one time, this negatively impacts the value of the apartments. First, it shows high turnover (which could mean dissatisfaction. Second, it drives the price down -- as purchasers can play each seller off. On the other hand, scarcity drives values higher.

I have tried to work out how many apartments are for sale in certain buildings as at today, looking at various sources, and this what I conclude. I did not count anything reported to be under contract. The details are probably inaccurate, but the overall picture is probably about right:

Brisbane City

• Admiralty Towers One - 0
• Admiralty Quays - 1
  
• Admiralty Towers Two - 2
• Quay West - 2
• Metro 21 - 4
  
• River Place - 5
  
• Felix - 6
  
• Casino Towers - 8
• Skyline - at least 26 (plus what the developer has not yet sold)
• Festival Towers - 32
• Charlotte Towers - at least 40 (plus what the developer has not yet sold)
• Aurora - 41
• M on Mary - more than 100

South Bank area

• Saville South Bank - 0
• Arbour on Grey - 2

A Niche Realty Newsletter reports the following regarding number of sales and median sales price over a six month period (1 May 2007 to 30 October 2007):

• • Aurora: 29 sales, medium sales price of $470,000
  • Casino Towers: 26 sales, medium sales price of $477,500
  • Felix: 13 sales, medium sales price of $440,000
  • Riverplace: 7 sales, medium sales price of $600,000
  • Admiralty Towers 2: 7 sales, medium sales price of $700,000
  • 212 Margaret: 7 sales, medium sales price of $322,000
  • Admiralty Towers: 4 sales, medium sales price of $755,000
  • Quay West: 4 sales, medium sales price of $445,000

By comparison, in the whole of Indooroopilly, there are 12 apartments/units currently listed for sale, of varying age and quality.

Aurora Becomes A Hotel

Another Brisbane apartment building is being turned into a hotel. This time it is Aurora.

Owner residents and tenants are upset and complaining.

http://www.brisbanetimes.com.au/articles/2008/02/01/1201801005451.html

http://www.brisbanetimes.com.au/news/queensland/hotel-boom-will-push-rents-up/2008/01/31/1201714119885.html

http://www.brisbanetimes.com.au/news/queensland/hundreds-face-high-rise-eviction/2008/01/30/1201369225722.html

See prior posts.:

Casino Towers Falls to Oaks

Charlotte Towers to Become Hotel

Turning Apartments into Hotels

When will the Council stop this?

A number of buildings are adding anti-Oaks provisions to their by-laws. The latest to do this is Admiralty 2.

Two Bedroom Apartments Above $800,000 in Brisbane City

Some recent sales (all two bedrooms)

• Parklands, Apt 6042, $875,000
• Felix, Apt 377, $950,000
• Quay West, Apt 1901, $850,000
• Quay West, Apt 2006, $830,000

Some listings (all two bedrooms)

• Casino Tower Penthouse, $1,300,000
• Riparian Plaza, $2,200,000
• Quay West, Apartment 606, $800,000
• Evolution, Apartment 52 (level 5) (77sqm internal), $958,000
  
• Evolution, Apartment 166 (level 16) (89sqm internal), $868,500
  
• Evolution sub penthouse, Apartment 323, $1,640,000
• Evolution, Apartment 344, $1,740,000
  
• Evolution, $850,000
• Admiralty Towers Two, $815,000
• Admiralty Quays, $880,000
• Parklands, Pinnacle, 9th floor, $1,050,000
• Parklands, Pinnacle, 6th floor, $975,000
• Quest River Park Central, 29th floor, $1,400,000
• Grosvenor on Edward, $1,100,000

Casino Tower Falls

Oaks has taken over the management of Casino Towers (another Devine building) and has the aim of turning this into a short term accommodation building.

Casino Towers has many apartments with good views over the river to South Bank. But it has its share of problems, even before Oaks gets involved. It faces West. Once it was advertised as having "never to to built out views", owners are now concerned that a large building is planned for right in front on the river as part of the North Bank project. And many of the apartments are poorly laid out, with small window or windows in a room facing the wrong direction.

Oaks is taking over the bottom end buildings in Brisbane:

QUEENSLAND
Oaks Aspire - Ipswich (Opening Soon)
Oaks Lexicon - Brisbane CBD
Oaks 212 Margaret - Brisbane CBD
Oaks Felix - Brisbane CBD
Oaks Festival Towers - Brisbane CBD
Oaks North Quay - Brisbane CBD
Oaks Seaforth Resort - Sunshine Coast
Oaks Calypso Plaza Resort - Coolangatta
Oaks Anchorage - Townsville
Oaks City Quays - Cairns
Oaks Piermonde - Cairns
Oaks Lagoons - Port Douglas

And many occupiers are complaining:

http://cityboard.com.au/viewtopic.php?t=436

http://cityboard.com.au/viewtopic.php?t=272

Brisbane Apartment Short Term or Hotel Stays in Suites

I am often asked which apartment buildings are good for short term stays. That is, which apartments in Brisbane downtown and nearby are furnished, safe and have good facilities.

These are my recommendations, in this order:

1. Quay West, on Alice Street overlooking the Botanical Gardens.

Consistently rated as the number one hotel in Brisbane on TripAdvisor.
One and two bedroom suites, with daily service and room service. Pool, gym, restaurant. Large balcony. Great location and great views from all suites. The one bedroom suites have kitchen, large living area with desk, laundry room, bathroom and large bedroom. Two modern flat screen TVs. The nicest pool in Brisbane. Operated by Mirvac.
Book here.

2. Felix Apartments on Felix Street at Eagle Street.

An apartment building that Oaks has turned into a short term stay building. Good location, and most rooms have river views. Pool. Partly air conditioned (not central air conditioning). No room service. No hotel facilities. Good clientèle. Weekly clean.
Book here.

3. Saville Hotel at SouthBank

Only 18 months old, one of the newest hotels in Brisbane. Great location, just out of the downtown, but with many good restaurants nearby. A full service modern hotel. Pool and gym. Room service.
Book here.

4. Oaks - 212 Margaret Street

This was once a good place to stay, but now has a large construction site next door. No services.
Book here.

5. Oxygen Apartments, at Spring Hill

This is a favourite place for IT workers. Small apartments, just out of the city. No services.
Book here.

...

The best hotel, for a standard hotel room, is Stamford Plaza, on the Brisbane River. Book here.

Will You Have Hotel Guests Staying In Your Building?

A number of Brisbane apartment buildings are being slowly turned into hotels by the Oaks Group, who have purchased management rights for the buildings.

If you are thinking of buying an apartment to live in, or renting an apartment for six months or more, you should take care not to buy or rent in apartment buildings that are or will soon become short term stay accommodation. The reason - the other "residents" of the building may only be staying for one or two nights -- there have been complaints about noise, parties, security issues, overuse of facilities such as pools, rubbish left in halls, and parking in the wrong spaces.

The apartments in such buildings will not, in my view, have good capital gains, as they will be less desirable for owner-occupiers and will become run down over time.

You should take extreme care before buying or renting in the following buildings:

• Festival Towers
• Felix
• Charlotte Towers
• 212 Margaret Street
• River City
• Any building managed by the Oaks Group
• Any building built by Devine
• Any building where the management rights are controlled by a real estate agent named Marshall.

(I see that a 2 bedroom apartment in Festival Towers, on level 31, recently was sold at auction by Ray White for $410,000. Another one on level 39 was unsold with the highest bid less than $450,000. It is now listed for sale at $499,000. Other apartments in the same building that are not as good as listed for sale in the high $400K and above $500,000 -- TAKE CARE!)

Here is a recent press report:

Oaks Hotels & Resorts has ramped up its growing domination of the Brisbane CBD accommodation market after snaring the management letting rights (MLRs) to two premier high-rise apartment towers, the 41 level Festival Towers and the 39 level River City project, for $14.1 million.

Today’s announced deal for the two properties delivers an additional 532 apartments to the rapidly expanding Oaks stable.

Managing director Brett Pointon says the latest acquisitions will boost Oaks Brisbane CBD portfolio to seven high-rise apartment buildings including Oaks 212 Margaret Street, Oaks Lexicon Apartments, Oaks North Quay, Oaks on Felix and Charlotte Towers (Oaks to take over management in October 2007).

While the 532 apartments delivered under the latest acquisition will initially be included in Oaks permanent letting pool, the company expects to progressively convert a majority into its short-term serviced letting pool to compete in Brisbane’s burgeoning short-stay market.

There is also a further 89 apartments in the buildings that are owner occupied or managed by external agents.

Pointon says Oaks expects to swell its short-term room stable from the 3,489 to over 3,600 serviced apartments by the end of June 2007.

In addition to the MLRs to the two properties, Oaks also acquired the freehold to the manager’s apartments in both properties for $1.45 million.

He adds the two latest acquisitions and the commissioning of Charlotte Towers deliver Oaks an unrivalled position in the increasingly buoyant Brisbane CBD accommodation market, and deliver a pipeline of units to further swell its serviced letting pool over the next two to three years.

"We’re expecting the market to continue tightening given the lack of any mooted major new hotels or serviced apartment projects in the CBD for the foreseeable future, with the exception of Charlotte Towers, which we’ve already secured the MLR for," he says.

"With Brisbane now boasting the highest hotel occupancy rate in Australia at around 80 percent, this strengthened presence in the local market will prove a cornerstone of Oaks financial performance over the next several years."