Developer's Profit Margins and Marketing Costs

It is interesting to review the information Devine has published regarding its French Quarter development, that it is in the process of selling. It gives a good idea as to developer profit margins and costs of new apartment developments, such as French Quarter. (The information was not password protected at first, now it is, so you will have to trust me on this.)

For the "Carrington" Building (268 apartments, with 302 car parks).

Revenue for residential apartments - $11,400 per sqm, totalling $411M
Revenue from selling management rights - $2.45M

Total Development costs, including land value at $49M and construction costs at $177M = $310M

Profit - $85M

Interestingly, marketing & commission costs are $22M.
("Marketing Costs allowance 2.0% of Gross Sales Revenue. Commissions of 3.0% of Gross Sales Revenue with 50% paid on unconditional contracts & 10% deposit held.")

So, for a 2 bed, 2 bath apartment (110sqm in size), the average price would have been $1.2M. Of this, about $350,000 is profit, and $60,000 approx is marketing costs and commission for the sales agent.

From Devine's Report

French Quarter in Alice Street Brisbane

"Continuing to progress the submission of an application for a development approval for this exciting future redevelopment opportunity."

Hamilton Harbour

"Excellent market response to the first stage of the “Hamilton Harbour” residential development"

"Development approval now received and marketing of first stage of residential commenced March 2009. First stage 86% sold."

"Strong pre-sales of residential units in Hamilton Harbour stage 1 with 86% of 257 units now sold. (This project is also a JV with Leighton Properties)"

Commencement Dec Qtr 2009
Est. Completion Staged development over approximately 5 years

Source

200 Apartments Sold At Hamilton Harbour

"After launching the first residential offering in early March, Hamilton Harbour joint-venture partners Leighton Properties and Devine have achieved their first major milestone – achieving 200 sales.

Selling out more than $100 million worth of apartments in just over four months is a triumph for the developers, which have attributed strong sales to the developments’ Hamilton location.

Devine National Marketing Director Ken Woodley says more than 80 percent of buyers are from Brisbane."

Construction has not yet commenced.

http://www.qbr.com.au/news/articleid/57924.aspx

Rive Apartments Hamilton

If you have thinking of buying in Hamilton Harbour, have a look at Rive Apartments first. Similar location, larger apartments, and a lower price.

See also http://www.vecchio.com.au/news/2009-03-04.pdf

Harbour One Launch!

Ken Woodley, the Marketing Director for Devine, left the Harbour One sales office in Hamilton this afternoon with a big smile on his face. As he drove back to his large apartment in the Mirvac Quay West building in Brisbane, he was no doubt thinking about the 85 apartments that his team "sold" by way of expression of interest over the past two weeks in the Hamilton Harbour development.

The glossy brochure for Hamilton Harbour given out at the sales office is very impressive. You can feel the quality in the brochure. It is a shame that the brochure is misleading. There are nice PhotoShopped photos (i.e., fake photos) that show happy people on balconys with impressive river views. However, no apartment in Harbour One will have a balcony with the designs shown in the brochure, and the views will not be anywhere near as impressive (because there are buildings between Harbour One and the river.) And is it correct to say "Waterside Living" for a building on Kingsford Smith Drive that is two blocks back from the river with no direct river views?

The apartments with the best views face West, which is not great in a Brisbane summer.

The apartments are small and expensive. There are only three elevators for 238 apartments! There is no gym included -- you can join a commercial gym being built on the site. The living areas for most apartments have popcorn ceilings with oyster lights -- not the highest quality. Many one bed apartments do not have a car park. And a number of the one bed apartments do not even have a laundry -- not even a cupboard with a washing machine or dryer.

Type A One bedroom
41 sqm internal, 50 sqm total
No river views.
No car park.
No laundry.
Kitchen is a strip of cupboards in living room.
No room for dining table inside -- plan shows dining table on balcony.
Sliding doors to bedroom.
Price range - $295,000 to $385,000.
Price per square metre for most expensive of this design - $7,700
But if you add $50,000 for lack of carpark, then price per square metre is $8,300.

Type C One bedroom plus "extended living space"
54 sqm internal, 64 sqm total
Potential river views.
Kitchen is a strip of cupboards in entry way.
No room for dining table inside -- plan shows dining table on balcony.
No bath - shower only.
Price range - $405,000 to $495,000.
Example: Level 7 apartment is $430,000
Price per square metre for most expensive of this design - $7,734

Type E Two bedroom
73 sqm internal, 84 sqm total
Potential river views.
Second bedroom not near second bathroom
Both bedrooms at front
Price range - $555,000 to $695,000.
Example: Level 10 - $640,000
Price per square metre for most expensive of this design - $8,273

Type F Two bedroom
84 sqm internal, 98 sqm total
Largest two bed apartment
End apartment.
Potential river views.
Excellent glass-fronted wall to ceiling living space -- should give this apartment a wow factor!
Bedrooms at side or back -- second bedroom looks into blank wall.
Price range - $605,000 to $805,000.
Examples: Level 10 - $690,000; Level 12 - $745,000
Price per square metre for most expensive of this design - $8,214

It would be interesting to track re-sales in the recent Devine Charlotte Towers, to see if the apartments were priced too high when sold off-the-plan.

According to REIQ, the medium Hamilton apartment price for December Qtr 2008 was $415,000, which is down 11.6% on the previous quarter. Buying an existing apartment may be better value, or even Portside. For example, a two bedroom apartment in Admiralty Two, with direct river views and absolute river front, can be purchased for less than $650,000 (106 sqm) and is less than $6,000 per sqm. A one bedroom in Quay West, where Ken Woodley lives, is about 74 sqm, includes a car park, and is about $440,000 (less than $6,000 per sqm).

Hamilton Harbour Floor Plans

Devine has released floor plans for Hamilton Harbour.

The apartments are small.
Example one bed sizes are:

• 41 sqm internal, 50 sqm in total
• 45 sqm internal, 53 sqm in total
• 54 sqm internal, 64 sqm in total (see plan above).

Example two bed two bath sizes are:

• 73 sqm internal, 84 sqm in total
• 74 sqm internal, 90 sqm in total
• 84 sqm internal, 98 sqm in total (see plan above).

All have fully ducted air conditioning. There appears to be 22 levels of apartments, with about 12 apartments per floor.

"The residential buildings Harbour One and Harbour Two are each placed to take best advantage of river views. While being 22 and 19 storeys respectively, the buildings make a deliberate effort to present architecturally appealing building facades to the nearby neighbourhood while providing occupants with the best available living environment within the apartments."

Hamilton Harbour Website

Devine has new content on its Hamilton Harbour website, www.hamiltonharbour.com.au

"1, 2 & 3 bedroom apartments $295,000 to $1.59M

• two commercial towers commanding the Kingsford Smith gateway
• two residential towers providing city and river views for many apartments and huge al fresco balconies for all
• an urban village in between, where residents and office occupants will mingle among boutiques, bars and restaurants they call their own

Beyond their own boundary, Hamilton Harbourites have easy strolling access to the dining, shopping, cinemas and City Cat terminal which already make this riverside enclave one of Brisbane's most attractive new places to live and work.

At the upstream end of Northshore, Brisbane's grandest and most ambitious ever urban renewal initiative, Hamilton Harbour is a landmark development which can place you at the centre of the city's astounding future growth. As a resident, tenant or investor, Hamilton Harbour demands your serious attention."

Hamilton Harbour - 4 Buildings Proposed

New website for Hamilton Harbour residential building, called Harbour One. It is behind the Bretts Wharf development, on Kingsford Smith Drive.

"A 19-storey tower and 22-storey tower will house a total of 416 apartments, and the developers have already committed to selling a percentage of residences in the low-to-medium price range.

The budget apartments will be "space-efficient" while other one-bedroom offerings will come without a car space.

"This will enable these units to be offered for sale at a considerably lesser price to those who would otherwise be unable to afford housing in such a well-serviced location," the project plan details."

Brisbane Times

View from the air

Devine Update

"Devine believes the fundamentals for the housing market in Australia remain sound with a significant and growing undersupply of housing which is evidenced by historically low vacancy rates and rising rents."

French Quarter precinct (Brisbane): Expected commencement: June Qtr. 2009, Hotel/Residential/Retail, Estimated Gross Realisation: $1,200M

Hamilton Harbour (Brisbane ) Expected commencement: Dec. Qtr 2008 / Early 2009, Commercial/Residential/Retaill, Estimated Gross Realisation: $400M

See http://clients.weblink.com.au/clients/Devine/article.asp?id=4202568

Following ongoing consultation with the Brisbane City Council and the newly established body, the Urban Land Development Authority, which has been formed by the government to oversee the future development of the “North Shore” precinct at Hamilton, progress is being made to secure a development approval on the Devine/Leighton Properties JV’s Hamilton Harbour project. This is situated adjacent to Brisbane’s new cruise ship terminal at Hamilton, an inner suburb of Brisbane. A $400M mixed-use development is planned for the site.

As announced progressively over the last year, Devine has secured a total of six sites that will comprise a precinct to be known as, “The French Quarter”. A multi-staged development including a six star boutique hotel, up-market residential unit developments, an office building and retail space is planned for this prime site. It is located opposite Brisbane’s Botanical Gardens on the corners of Alice, Albert and Margaret Streets in the Brisbane CBD. Following an international architectural competition, a London based architectural firm (Atkins) who were the architects for the world renowned Burj Al Arab hotel in Dubai, were selected for the $1.2B project. They will be working in conjunction with ML Design, a Brisbane based architectural firm. It is intended that a JV be entered into with a third party to develop the site. Work is now progressing to secure a development approval for the staged project to be developed over several years.

99 Mary Street in the Brisbane CBD – A number of options for this site are currently being considered which include possible strata titled office building and a hotel development. Discussions with a particular party in relation to the latter option are currently progressing.

http://clients.weblink.com.au/clients/Devine/article.asp?id=4202565

“There is a significant and growing undersupply of housing in Australia which is evidenced by historically-low vacancy rates and rising rents,” Mr Devine said. “Based on this fact and indications that interest rates in Australia might start to trend down in the near future, we expect a recovery of the housing sector although uncertainty remains as to the timing.”

http://clients.weblink.com.au/clients/Devine/article.asp?id=4202567

Update: Hamilton Harbour

From the developer, Devine, regarding Hamilton Harbour:

"The first stage of the exciting Hamilton Harbour mixed-use development in Brisbane's most prestigous postcode could be completed as early as mid 2010.

As Devine Limited and Leighton Properties continue their work on the $420 million project, plans are underway to commence marketing towards the end of this year.

The joint venture expect Hamilton Harbour, just 4.5km from the CBD, will provide a more affordable residential alternative to city and fringe areas.

It will offer an exclusive address close to Hamilton's renowned Racecourse Road café and boutique precinct, as well as Brisbane's Northshore - the city's largest single urban redevelopment project - the Portside development and to the city's cruise ship terminal.

When complete, Hamilton Harbour will consist of approximately 30,000m² of prime green office space, 4000m² of retail and showroom facilities and in excess of 300 apartments.

Vibrant commercial, residential, retail, outdoor and meeting place environments are all planned through quality product that has strong growth potential.

Luxury one, two and three bedroom apartments will meet todays residential demands while the commercial component will create landmark opportunities for a range of users who want the exposure and address advantages of Kingsford Smith Drive frontage.

Similar to other Devine Limited and Leighton Properties developments within the city, important emphasis is being placed on 'green smart' design techniques within the project.

Yours faithfully,

Ken Woodley
National Marketing Director
Devine Limited"

Hamilton Harbour - Over 200 Apartments Planned

From Devine's website:

PROJECT SIZE

•Mixed-use development comprising approximately 250 apartments, 30,000m2 commercial office space and 1500m2 retail space.

PROGRAM

•A preliminary development application was lodged over the site in January 2007, which is currently being processed by Brisbane City Council and is anticipated to be approved in early 2008.

PROJECT END VALUE

•$400 million

ANTICIPATED COMPLETION DATE

•FY 2011 (stage development)

ANTICIPATED CONSTRUCTION START DATE

•Last quarter 2008

Drawings