Rental Pain

The Courier Mail has an article today about potential pain for rental property owners.  "A flood of new apartments being built in Brisbane spells bad news for property investors as rents are likely to soften in the competitive market.  New data from Urbis shows nearly 9000 new apartments will settle in Brisbane between now and 2017."  Confusingly, the article states that not all planned apartments will be built (so how could Urbis predict settlement of such apartments?).  Urbis goes on to say "So we are being cautious about predicting too much supply."

According to the article, Brisbane's inner north is by far the busiest precinct, with 1129 apartments predicted to settle in 2014 and a further 926 apartments next year.  It is claimed that 41% of apartments sold int he inner north in the June quarter were one bedroom apartments.

In my view, one must be careful to generalise here.  There may be many new apartments in certain areas, such as Bowen Hills, but few new apartments in other areas, such as downtown Brisbane or St Lucia.  There may be too many small apartments, and not enough 3 bedroom apartments.  So the oversupply may impact some and not others.

I would be careful buying in the Brisbane Showgrounds redevelopment area.  Although reasonably close to the city and the RBH hospital, there is not much within walking distance.  And there is a huge supply pipeline.  This weekend, Lendlease will release The Yards, the next stage of this redevelopment.  The development does not include any large parks, schools, kindergartens, supermarkets or the like.

Barangaroo Sydney receiving great interest

New harbour-side apartments in downtown Sydney, at Barangaroo, are generating great interest.  Lend Lease must be happy.

Lend Lease Puts On Its Big Show

The headline of a story in the AFR on Thursday:  "Lend Lease Puts On Its Big Show", a story about the Brisbane RNA Showgrounds development, Show Ground Hill.  The first 43 apartments (The Green) will go on sale soon according to the AFR, with the developer using a $2 million sales suite and marketing shows in Sydney, Singapore, HK and KL to drive sales.  It is said to be a 15 year project, with 2000 dwellings, so I guess if you miss out on the first release, you will still have a chance to buy later on.

Prices for the first stage are reported to be $345,000 for a one bedroom apartment without parking to $665,000 for a two bedroom apartment.  This is a higher price than what you can buy today for a three to five year old apartment in a more central location.

CBRE says that "there was little demand for three-bedroom units in the market following a glut of high-end owner-occupier stock was built in the mid 2000s."

Off the plan sales data shows average price points have fallen 50% from the 2007 peak according to the AFR.  This means that cheaper, lower quality apartments are currently being marketed, not that prices for like-for-like apartments being sold off the plan have decreased.

CBRE says "Eventually it has the potential to become its own suburb."  This means that when first being built, there will be little infrastructure or amenity nearby for the initial residents.  In 15 years it may turn out ok, but that is a long time to wait, especially if the average hold period for an apartment is about 5 or 6 years.

CBRE also says:  "The Brisbane market is quite challenging at the moment, but my view is we are at the bottom of the market."

Show Ground Hill video

Lend Lease has released a concept video for its Showground Hill development.  It shows lots of happy people doing wonderful things at places other than Showground Hill, because Showground Hill has not been built yet.  See video for some laughs.

Show Ground Hill

Lend Lease has commenced marketing its apartment projects at the Bowen Hills Ekka redevelopment site.  See The Green.  There will be five buildings in The Green.  The registration form only refers to 1 or 2 bedroom apartments.

Lease Lease is currently in the process of completing the on-site Sales Centre, located on St Paul’s Terrace, which will showcase both the Showground’s new Master Plan and the apartment options that will be available in The Green. The Sales Centre will be opening for both VIP and Pre-Release appointments in early October 2011.

Ekka Showgrounds To Become Apartment Getto

The 22-hectare showgrounds will be trimmed. Five and a half hectares will be transformed to residential apartments - 2000 across 12 buildings, with 145,000 square metres of commercial office space across six buildings.

Glen Steedman is the project director of Lend Lease's $2.9 billion project. He said the images of the first apartments - around 300 one and two-bedroom apartments with a small number of three-bedroom apartments - would go to the market in August.

Originally these were going to be in 10-storey apartment blocks, but testing of Brisbane's CBD market found a "courtyard" style with six or seven apartments per storey was more appropriate for the designers, architects Cox Rayner. They will now be offered in six five- and six-storey complexes behind the Jubilee Hotel.

Mr Steedman said Lend Lease is convinced these small changes will suit Brisbane's inner-city market.

"One and two-bedroom apartments react best to the demographic that lives in this area; the professionals, the students who want to live close to the city and close to the Valley," he said.

Mr Steedman believes the 1900 to 2000 units that will eventually be built will house just over 3000 permanent residents and around 12,000 people will work in the area.

Source: Brisbane Times

Apartment House

Bovis Lend Lease, an Australian company, is building a wonderful apartment building in New York City - 535 West End Avenue.

Some floors are full floor apartments, and on other floors there are two apartments per floor. One of the smaller apartments is 5 bedrooms, 5 bathrooms and is 408 square metres in size.

Why don't we get this quality apartment house in Brisbane?