Showing posts with label apartment. Show all posts
Showing posts with label apartment. Show all posts

Thursday, June 15, 2017

REIQ says Brisbane apartment market is falling

According to the REIQ, which is a real estate agents' industry group, the Brisbane apartment market is falling.


Saturday, June 4, 2016

Brisbane apartment oversupply?

Will there be an oversupply of apartments in Brisbane?  In certain geographic areas, and for certain styles of apartments, I think that the answer will be yes.  Some clear reasons for oversupply include:
  • extremely high level of construction of high rise apartments in some areas, many with a large number of small apartments
  • low population growth
  • apartments targeted at investors, not owner occupiers, so a more limited market segment of buyers and renters
  • apartments being constructed in second and third tier areas.
However, I don't think that all the apartments currently "in progress" will actually be built.  This includes apartment projects that have good pre-sales and where "construction has started".  This is because:
  • some developers are unable to obtain the level of finance needed to commence the project
  • construction costs have increased dramatically, especially for union built projects, and so the project is no longer viable, even if the project is sold out
  • simply because the site has been cleared, and some work has started, does not mean the that project is underway -- it may never be built.
  • the number and percentage of presales in a development is often overstated by the developer in advertising and market surveys, and so the developer will not in fact be able to obtain finance at all.
So I think that the level of oversupply may be overstated.  There will still be oversupply, just not as bad as some people are predicting.

There are other risks in the high-rise apartment market:
  • off-the-plan buyers may have trouble settling, because valuations may be lower than contract price, because banks are not lending to offshore buyers, and because banks are requiring a higher cash contribution.
  • rents are likely to fall, which means that valuations will fall
  • some projects are overpriced, and it is likely that after settlement sales prices will be less than  the contract price
  • some constructions companies are in financial difficulties, and so are cutting corners -- the end product many be different, and lower quality, to what is expected by the buyer
  • many buildings are being built close to other buildings, impacting light, view and ventilation
  • foreign buyers may evaporate.
The question in my mind is whether this will impact the high quality buildings in good locations that have large apartments with good aspect?

Sunday, March 8, 2015

Advice from Warren Buffett

Forget what you know about buying fair apartments at wonderful prices; instead, buy wonderful apartments at fair prices. 

Wednesday, October 15, 2014

Brooklyn or Brisbane?

I can buy a two bedroom apartment in Brooklyn NYC for about the same price as a two bedroom apartment in Brisbane city.  See this listing for example.  Does that make sense?

Saturday, August 30, 2014

Top Yields

Today's paper had a chart with the top rental yields for inner-city Brisbane.  All were apartments.  A summary of some of the data:

  • Spring Hill - based on 170 sales, median sale is $380,000, median asking rent is $485, so indicative gross yield is 6.6%
  • Brisbane city - based on 666 sales, median sale of $500,000, rent $600, so a yield of 6.2%
  • Woolloongabba - 86 sales, sale price of $400,000, rent $465 so yield of 6%
  • The Valley had an indicative yield of 5.6%
  • South Brisbane had an indicative yield of 5.4%
These figures are a little rubbery.  The apartments being sold may not be the same apartments listed for rent.  The rent is the asking rent, not the rent achieved.  The figures do not take into account vacancy.  And the sales price does not include stamp duty.

Take the following example, of an apartment sold for $431,000 and then rented furnished for $550 a week.  On a simple calculation using these numbers, the yield is 6.63%.  If stamp duty of $13,510 is added, the real sales price is $444,510, so the yield changes to 6.43%.  Once letting agents fees, body corporate fees and rates are taken into account, the yield drops to 4.5%.  And this does not include vacancies and repairs.

I recommend focusing on net yield, after expenses.  For a one bedroom apartment, you should aim for a net yield of 5%.  For a two bedroom, aim for a net yield of 4.5%.  For a three bedroom, 4%.

Sunday, January 26, 2014

Selling Your Apartment

When reading a recent story in The Times (from London) titled "How to avoid house-sale hell", about a lady who went through a series of real estate agents, and taking 18 months to sell her London house in a rising market, it reminded me of many stories I have heard about bad real estate agents in Brisbane.

Some common complaints about Brisbane agents:
  • Not returning phone calls and emails.  (This always amazes me.  As as cash buyer, I often have trouble having agents return my emails when I am wanting to buy an apartment that they have listed for sale.)
  • Pushing expensive advertising packages on the seller.
  • Pushing auction sales on the seller.  For most properties, an auction is the less desirable way for the seller to sell a property, often leading to higher sales costs and a lower sales price.
  • Using a "front man" who sells the agency's services, but who is never seen again.  Young inexperienced sales agents then do the open house and deal with the buyers and sellers.
  • Having an agent give a misleading impression as to how long it will take to sell the property.
  • Listing the property at too high a price.
  • Conditioning the seller, with unreasonably low (and sometimes fake) initial offers.
Many sellers are often surprised at how few people come to inspect, and that those who do are often completely disinterested.

Saturday, January 25, 2014

Queensland Coastal Apartments - Capital Losses

RP Data recently issued is "Coastal Housing Markets - December 2013" report.

"Across the Sunshine Coast, median house values are typically most expensive in the Noosa region and most affordable between Caloundra and Maroochydore. Sunshine Beach has the most expensive median house value ($894,733) and Currimundi the most affordable at $400,631.

Median house values across the Gold Coast and Tweed Coast tend to be most expensive at the northern end of the Gold Coast. Across the region, the most expensive houses are found in Surfers Paradise ($962,563) and the most affordable are in Labrador ($392,681)."

Medium value as at September 2013 for apartments:
Noosa Heads - $528,000
Maroochydore - $323,857
Mooloolaba - $358,380
Kings Beach - $367,888
Surfers Paradise - $337,767
Broadbeach - $401,824
Palm Cove - $336,795
Port Douglas - $251,312

Number of apartment sales:
Noosa Heads - 238
Maroochydore - 404
Mooloolaba - 234
Kings Beach - 124
Surfers Paradise - 1068
Broadbeach - 418
Palm Cove - 54
Port Douglas - 270

Change in value over past 5 years
Noosa Heads -  negative 23.3%
Maroochydore - negative 17%
Mooloolaba -  negative 5.2%
Kings Beach - negative 13.7%
Surfers Paradise - negative 15.4%
Broadbeach - negative 10.5%
Palm Cove - negative 21.5%
Port Douglas - negative 13.1%

Thursday, January 9, 2014

Brisbane Apartment Sales Up

According to RP Data, Brisbane unit and apartment sales (that is, the number of sales) is up 16% than the same three month period a year ago.

(click on image to make bigger)
Based on RP Data’s estimates, there were 9,639 Brisbane house sales over the three months to October 2013 and 3,671 apartment sales.

Friday, December 27, 2013

El Dorado Redone

A few years ago, a South African developer tried to redevelop the El Dorado cinema site in Indooroopilly.  The developer, PCN, went bust.  Now, a new development is planned, not just for the El Dorado site, but for neighbouring sites as well.

The development that has been proposed consists of two towers, as well as a podium containing cinemas, a bowling alley and possibly an open air cinema.

The first tower is 16 storeys, with 78 residential apartments.  (These will be mostly two bedroom apartments.)

The second tower is 21 storeys, with 255 residential apartments and 70 short stay suites.  There will be 135 two bedroom apartments, with the remainder being 1 bedroom or studios.  The second tower also has a round Skybar on level 21!

There will be no three bedroom apartments.

See www.eldoradovillage.com.au


Friday, July 26, 2013

Fat Australia

It is even making new in New York that Australians are getting fatter.  In New York, many people live in apartments, and do a lot of walking.  In Brisbane, many people who live in apartments still drive everywhere.  One reason for this -- there are often less facilities within walking distance.  The government thinks that high density living is good, but only thinks about the place to sleep.  In NY, it is easy to walk to schools, playgrounds, kindergartens, swimming pools, and everyday stores (such as chemists, bakers, barbers) from your apartment.  This is often not the case in Brisbane.

Sunday, June 9, 2013

Urban Edge Apartments at Kelvin Grove

Pradella has completed two of the three buildings in its Urban Edge complex at Kelvin Grove.  The "Horizons" building recently completed, and residents have moved in.  The Skyview building, the third of the buildings on the site, is in early stages of construction.

Horizons is an 11 storey development, with about 133 apartments.  As at late May 2013, about 40 apartments were available for sale.  The majority of these apartments are on the Ramsgate Street side, facing west, and not with city views.  I counted 20 one bedroom apartments available for sale on this side of the building.

Some example apartments that remain for sale:
  • Apt 20808, level 8, 1 bedroom, 52 sqm internal, 66 sqm total, $429,000
  • Apt 20506, level 5, 2 bedrooms, 2 baths, 72 sqm internal, 85 sqm total, $550,000
  • Apt 21105, level 11, 2 bedrooms, 2 baths, 76 sqm internal, 91 sqm total, $584,000
  • See also REA listings
These apartments appear to be of good quality construction.  However, I don't like high-rise where the air-conditioning compressor is located on the balcony and where there are aircon headends on the walls.  For a number of apartments, the kitchen is just a row of benches on the wall, and the dining area is in this kitchen space.  (That is, no separate room or even an island bench-top for the kitchen.)  Some of the bedrooms have very small windows.


Top End Apartments

Some high end apartments for sale in Brisbane:
  • The Refinery at New Farm, 4 bedrooms for $3.65M
  • Pinnacle at Roma Street Parklands, 3 bedrooms, 291 sqm, auction
  • Pinnacle at Roma Street Parklands, 3 bedrooms, 229 sqm, auction
  • Hamilton Harbour, 2 bedrooms plus media room, auction
  • The Grosvenor, 3 bedrooms, about $1.4M
  • Riparian, 3 bedrooms, $7M.

Friday, June 7, 2013

REIQ reports that apartment demand is increasing


Sales of units and townhouses across Queensland have strengthened further over the last year, according to the latest Real Estate Institute of Queensland (REIQ) data report.  Over the March quarter, the preliminary numbers of unit sales in Queensland increased by 2 per cent compared to the same period last year.

But it is sales in our major tourism centres of Cairns and the Gold and Sunshine coasts that are the real story with sales sky-rocketing over the past year in these areas.

“The popularity of units and townhouses in our major tourist precincts has returned,” REIQ CEO Anton Kardash said.  “These areas have experienced the highs and lows of the GFC, and the strength of the Aussie dollar, more than most over the past four years so it is heartening to see them stepping back into the light.  Many of these areas have also become more affordable, even those with unique seaside locations, so this is no doubt spurring buyers into action before the tide has turned to the positive completely.” 


In Brisbane, the median unit price was steady at $390,000 over the March quarter. Solid performers over the period were Upper Mount Gravatt and Kelvin Grove which posted price growth of 9.6 per cent and 8.8 per cent respectively. 


[Click on chart to enlarge]

Sunday, February 17, 2013

Investing in Apartments

I have read a number of property books and property blogs recently relating to investing in apartments, and this is a summary of what I have read:

1.  The closer the apartment is to the GPO, the more desirable the apartment will be to renters and buyers.

2.  As a secondary factor, being located near to a rail station, bus way, ferry terminal, University or hospital is also desirable.

3.  The internal size of the apartment matters.  A larger apartment will be more desirable than a smaller apartment of the same configuration.

4.  The number of bathrooms has greater weight in determining value than the number of bedrooms.

5.  Internal layout and design is important.  Does the apartment have good natural light, significant external windows in all rooms, good storage and a good feel?

6. Property values go up and go down.  Property is not a risk free investment.  The whole market may change.  Or the value of property in a particular location may change differently to the market as a whole.  Or the value of a particular apartment may change in the opposite direction to the market (for example, if a building is built nearby that blocks out views.)

7. Employment has a greater weight in determining value and market movement than interest rate changes.

8.  A vacation property or short term rental property is a more risky investment than a CBD or near CBD apartment.  However,  pricing of vacation properties does not take into account this extra risk.

9.  Property investment should be for the long term.  Buying with the intention of owning for less than 5 years is risky.  Transactional costs are high, property is an illiquid investment, and capital gains are often small.  On average, over a period of less than 5 years, a property owner is likely to make a capital loss not a gain.

10.  Financially, for many people, renting is better than buying.  It is also easier to move to where jobs are located if you are not tied to a property.

11.  No one can predict the future.  Many predictions made in the past about property investment have been wrong.  Relying on the advice and predictions of "experts" does not guarantee success.  (Similarly, no one can predict future demand, future interest rates, future unemployment rates, etc.)

12.  Many "independent experts" are not in fact independent.  And many are not experts.  Many say the same thing each year, regardless of the market.  ("It is better to do something than nothing."  "Now is the time to sell."  "Now is the time to buy."  "The property market has bottomed and is on the rise.")

13.  Older apartments are often better value than new apartments. Older apartments are often in better locations and are larger.  When buying from a developer, you are paying for the developer's profit and marketing costs.

14.  There will be future demographic changes as baby boomers retire and die.  This may cause an oversupply of some types of properties or in some areas and an undersupply elsewhere.  But no one really knows what will happen.  (My prediction, for what it is worth, is that older people will prefer apartments to retirement villages where possible, thus creating a greater demand for well located apartments within walking distance of good facilities.  But as mentioned above, many predictions are wrong!)

Friday, February 8, 2013

Apartments v. Houses

"With the release of the RP Data-Rismark Home Value Index results earlier this month, we also received the updated information on median selling prices of homes over the three months to January 2013.  This data revealed that the gap between selling prices of houses and units reached a record high over the first month of year."

See RP Data Blog

"Dwelling approvals data which was released by the ABS earlier this week shows that developers are beginning to look to develop a much greater number of units than they have historically. Throughout 2012, 90,144 detached houses were approved for construction and 61,042 units were approved. In comparison to the number of approvals throughout 2011, house approvals have fallen by -4.4% whereas unit approvals are up by 6%."

 See RP Data

Sunday, January 27, 2013

An agent's view on inner city apartment rentals

"There’s now fewer rental homes in our CBD than we had in 2006, according to new data on Brisbane’s housing market. The Residential Tenancies Authority stats for the December quarter show our CBD rental pool shrank yet again.

The RTA track all rental bonds and in Brisbane CBD and Spring Hill the total has reduced by 700 since its 2007 peak. For example for the full year 2012 the rental pool in postcode 4000 grew by a miserly 3 homes, despite the completion of Adelaide Street’s “Soleil Tower” with 464 apartments.

And there’s no large additions to the rental pool on the horizon.  There’s just one big tower under construction in the CBD but it’s a long way from completion. So we’d expect it’s going to be well into 2014 before we see any worthwhile increase in supply.

Despite this we haven’t yet seen any big jumps in rent and 2012 finished with a modest 3% growth in Brisbane’s rents. Our team [at Bees Nees] and other real estate agents are reporting a busy January market and we’re overall optimistic.  But renewing tenants are generally not agreeing to big rent increases and rent affordability remains top of mind. Inner city tenants do often move further out to save money. Landlords are still cautious too and they don’t want to risk a vacant home. So it looks most likely that 2013’s rent rises will be steady.

As a sidenote we often see new apartments being sold off-plan with forecast rents that must have some large increases expected on today’s rents. ‘Ambitious’ might be the polite way to describe some of their estimates. Let’s hope those investors do their homework."

Sunday, January 6, 2013

Renting in Brisbane

Introduction

At this time of year, finding a good apartment or home unit to rent in Brisbane is not easy.  In January and February, the demand for apartment rentals is high and many tenants are looking for a place to live.

In the best buildings, the existing tenants do not often leave, and when they do move out, the apartment is often snapped up quickly. For the better buildings, a large percentage of the apartments are occupied by the owner, and so are not rented out.   Also, onsite managers often control the rental rolls, and don't often advertise on the usual property websites (as they don't need to do so).  Some have their own website.  Also, onsite managers may have a relationship with executive relocation services, and the better apartments may be provided to corporate tenants.  For the mid-quality buildings, many apartments are furnished and rented on a short term basis, sometimes even overnight.  Thus, there may be fewer than expected apartments available for rent. 

The largest number of listings are located on RealEstate.com.au, but a number of onsite managers do not use this website.  A newer website that has a number of rental listings is the REIQ website.  CityApartmentSales is sometimes used by onsite managers to list apartments for rent.  Also, try Central Apartments for rentals in Pradella buildings.  Domain.com.au is used by real estate agents and private owners, and so may have properties listed that are not listed elsewhere.

At one time, a good specialist website for apartments was www.seqrents.com.au However, it seems that some buildings are not using this site anymore, or are not bothering to update their listing on this site. So, although useful, it is less useful.

You have to find out how each manager advertises his/her vacancy.

Generally, in my opinion, you want to avoid any buildings managed by Oaks, as they focus on short term hotel style rentals.

This website has a list of most city apartment buildings, with useful information and links about them. Also, try this customised search engine.  And see www.apartmentreviews.com.au.

You can also look at prior posts on this blog regarding rentals.

Downtown Brisbane:

If you want to live downtown, then I recommend the Admiralty Precinct. This comprises three first-tier buildings (Admiralty One, Admiralty Two and Admiralty Quays), plus River Place and Skyline (second tier).  Recently opened just behind these buildings is Meriton's Soleil (in my opinion, lower quality).

Admiralty One is good value, and has some of the largest two bedroom apartments in Brisbane, and is a smaller building.  It is direct river front - http://www.admiraltyone.com.au/

Admiralty Two also has good sized apartments, and the building has great facilities. http://www.admiraltytwo.com.au/

Admiralty Quays is newer, and has a great pool, but the apartments are smaller than the two Admiralty buildings listed above, and it is more expensive. http://www.admiraltyquays.com/

Nearby on the river in the city is River Place, and is likely to have availability as this is a large complex.  Be careful of Storey Bridge noise. Great views.  Great pool.

Soleil has only just opened.  It is currently the tallest building in Brisbane.  A large building with over 400 apartments, but a large nunber have not been sold.  It has short term rentals.  This link lists Soleil apartments for rent.

On Alice Street in the city, if you can get an apartment in Quay West, that is fantastic, as it has park and river views.  About half the apartments in this building are hotel managed, so it is easy to get short term accommodation in Quay West, but difficult to find an apartment for a long term lease.  All apartments are privately owned.  Try to rent above level 7 for the better views.

For an inner city downtown building, Metro 21 is one of the better quality buildings. It has only 4 apartments per floor -- and tries to be more upmarket so is better than most downtown buildings that aim at students -- it seems to have better availability, and some of the two bedroom apartments have three bathrooms. The baloneys are large:
http://www.realestate.com.au/realestate/agent/metro+21+brisbane/mlibri
and http://www.metro21apartments.com.au/

M on Mary has recently been taken over by new management, so it will be interesting to see what happens in this building.  It was not high on my list previously, but that may change with the new management.

Parklands at Roma Street also has some good apartments.

SouthBank

I recommend Arbour on Grey at SouthBank: http://arbour.com.au/cms/welcome.html

Also, Saville (Mantra) at SouthBank is one of the nicest buildings if you get a river facing apartment.  The apartments are level 8 and above.  Below level 8 is a hotel.  The best thing to do here is call to find out availability.  Telephone 07 3305 2559


West End

There is likely to be some availability in some of the riverside West End apartments.  These include Waters EdgeFlow, Koko and Left Bank.

Some of the better apartments not on the river road include SL8 and Tempo.

In my view, all of the above West End apartments are too isolated.

Apartments in Suburbs

The suburbs that I recommend, due to location, transport and large number of better quality apartments, are Toowong, St Lucia, Taringa, Indooroopilly and possibly Milton and Hamilton.  I don't recommend Chermside.

In Indooroopilly, there has been very little recent construction.  Two of the newer, quality buildings Riva and Ciana.

Riva has apartments with great river views. It is a quiet building, with a pool, and is close to the train station and Indooroopilly Shopping Centre.  It has good onsite managers, but apartments rarely become available here.

Ciana is a larger new complex, in a central location, with many large apartments. There is a pool and gym, plus a bowls club and restaurant! 

One of the newest complex in the Toowong / Taringa area is Fresh.  This complex has two pools, a gym and great gardens, and a large number of apartments are owned by super funds and thus are rentals.  Try here.

Next door to Fresh is Encore, which is a relatively nice complex, with good pricing (but not as nice as Fresh, and some of the apartments are small).  This complex flooded in January 2010.  

St Lucia is harder to find quality -- there are few buildings with onsite managers. So you have to try local real estate agents.  The best buildings are riverfront, and are expensive.

If you want an apartment complex that feels more suburban, then Parklands at Sherwood is a great choice. Many apartments have park/rural views, and there is a great pool and bbq area.

Nearby is Tennyson Reach, where you can get a large new apartment on the river. This is a new complex, but (apart from river views) not a great location.  It was badly flooded.  You can rent a high quality apartment at a reasonable price here, if you don't mind the location.

Tuesday, November 27, 2012

Regrets and Traps


What main regret did homebuyers have?
Although the percentage of first homebuyers* who had regrets about their property purchase is fairly low, at 17.7% nationally (but up to 20.1% in Queensland), the main regret (with over 27% nationally) was that they wished they'd bought in a different area. This was followed by: they wish they'd shopped around more for a property; and, they wished they'd waited until they could afford a property that was closer to their ideal property. 
Three 'traps' for first homebuyers
Paul Osborne highlights three other 'traps' that, in his experience, first homebuyers may fall into:
·         Buying a property that is too common and has limited scarcity.
“These include new construction apartments and generic housing estates".
·         Buying too far away from the CBD.
“Buyers often have remorse about getting something bigger – but located further out.  They find they don't really need the extra space but truly value the convenience of being close to the city."
·         Emotional buying.
“Many purchasers who engaged in emotion-filled auctions in 2009 and 2010 find themselves sitting in negative equity.  Some buyers regret how they bid at auction for their property." 

Sunday, November 4, 2012

To buy or not to buy a Queensland Unit?

See here for a transcript of a conversation with property analysts, as to whether it is too risky to buy an apartment in Qld due to the changing strata laws and levy entitlements.

Friday, October 5, 2012

Apartments v. Houses

"The apartment market is not just more affordable to enter than the detached housing market but apartments are growing in prevalence in inner city areas and along the transport spines of many large cities. These unit markets are typically located close to major working nodes and nearby to entertainment and dining facilities as well as being close to public transport amenity. This week’s Property Pulse looks at the median ‘value’ of houses and units across suburbs nationally and determines the suburbs where you can make the greatest savings if you choose to purchase a unit rather than a house."