Admiralty One

Apartment 59 in Admiralty Towers One sold at auction this week for $585,000.  It is a two bedroom apartment, in one of the best buildings in the city.

Are Auctions A Good Way to Sell Property?

From a recent RP Data submission to the Queensland Government:

We conducted some analysis of auction sales in each of these two States for the period 1 October 2012 to 30 September 2013 in order to ascertain whether or not there were any material differences in terms of outcomes between the states. For each of the auction sales in the respective states during that period, we compared the sale price with RP Data’s estimate of the subject property’s market value at the sale date, derived from our automated valuation model (“AVM ”) and utilising only those AVM estimates we deemed reliable. The percentages in the table below demonstrate, by relevant price band, the extent to which the sales price exceeds our estimate of market value. For example, for all properties sold for less than $500,000 in Queensland during this period, only 14.9% of homes were sold for a price we consider to be higher than the estimated market value of the property at that time, with the remaining 85.1% of properties sold at or below our estimated market value.

I just don't understand

It seems to me that newer apartments are overpriced.  One example.
You can buy a year old apartment in Meriton's Soleil as follows:

• 93 sqm internal
• No balconey
• Air conditioning not ducted
• 2 bedrooms, 2 bathrooms
• Facing West, so hot in the summer
• General views of an ugly part of Brisbane
• Large, impersonal building, used as a hotel
• Your neighbour may be an Eastern European hooker or a football team on tour
• Price = $629,000 (apartment 4403) - $6,763 a sqm

Or you could buy an apartment in River Place:

• 113 sqm total
• Massive balconey
• Riverfront
• 2 bedrooms, 2 bathrooms
• Outdoor pool overlooking the river
• Price - $659,000 (apartment 54) - $5,831 a sqm

Or you could buy an apartment in Quay West:

• 130 sqm total
• Two balconies
• Ducted air-conditioning
• About 130 apartments in building
• Views of botanical gardens
• 2 bedrooms, 2 bathrooms
• Price - about $600,000 - $4,615 a sqm

It will be interesting to see what this apartment sells for in Admiralty One:

• 130 sqm in total
• Balconey
• Direct riverfront
• Ducted air-conditioning
• 2 bedrooms, 2 bathrooms, separate laundry room
• North Eastern view
• About 120 apartments in the building
• Auction -- there has not been a similar apartment sold in this building for years.

Why would you buy in Soleil?  Or in some of the currently marketed off-the-plan developments, when some of the "older" apartments are cheaper on the price per sqm basis, and in better locations?

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Auctions Not Popular in Brisbane

In Melbourne, many properties are sold by auction.  In Brisbane, less properties go to auction, and auctions are less successful.  I find it interesting that some agents really push vendors to have auctions -- often leading to unhappy vendors.

See RP Data report

Brisbane Apartment Recent Auction Results

River Place - 82 Boundary Street, Apt 192, 2 bedrooms, sold for $605,000
Aurora - 420 Queen Street, Apt 286 - passed in
Skyline, 30 Macrossan Street, Apt 304 - passed in
Admiralty Quays, 32 Macrossan Street, Apt 95 - passed in

Charlotte Towers Sale

Apartment 2808 in Charlotte Towers, 128 Charlotte Street, is reported as sold for $510,000.  This is a 2 bed, 2 bath apartment.  Total area is 87 sqm, so this is $5,800 a sqm.

Ray White Auction Results

I went to the Ray White auction yesterday.  Some results concerning apartments:

• Apt 2804 Charlotte Towers, 1 bed, 1 bath, no car - sold prior to auction
• Apt 2808 Charlotte Towers, 2 bed, 2 bath, 1 car - sold for $510,000.
• Apt 3409, Festival Towers, 2 bed, 2 bath, 1 car - passed in at $480,000.
• Apt 287, River Place, 2 bed, 2 bath, 1 car - unsold, inspect now!

Casino Towers Auction Result

A sub-penthouse in Casino Towers (Apt 3803, 151 George St), recently sold at auction for just over $800,000.  This was a large two bed apartment, about 130 sqm internal.  It faced East, and did not have river views.

The owner/vendor purchased this apartment in August 2006 for $875,000, and so lost money.

The first owner purchased this apartment off the plan from Devine for $840,000 in 2005, and so over 6 years, this apartment went down in value.

"Auctions A Bad Way to Sell"

Interesting report on Sunrise, that touches on real estate agents not reporting bad auction results.  See here.  Also discusses current uncertainty in property market.

River Place Auction Sale

From a Ray White email:

"Brisbane's CBD Prestige Market Is Running Hot!!

This morning over 100 people attended the auction for 326/82 Boundary Street, a River-front penthouse in River Place.

With 18 registered bidders there could only be one outcome, a successful sale reaching $1.497M!

This proves there are buyers out there wishing to secure quality properties within the Brisbane CBD."

Ray White Auction

From Ray White:  "The Urban Living Group auctions were held last Saturday at The Emporium Hotel where 52 properties went up for sale under the hammer.  A great day was had with a crowd of over 200 people attending the event and 79 registered bidders on the day.  The auctions kicked off with a bang selling 7 out of the first 8 properties, with 13 out of the 26 in the first section selling at a 50% success rate. The second section of the day was far tougher with 7 out of the 26 properties selling under the hammer, but with negotiations on multiple properties we believe we will have over 80% sold by the end of next week."

Charlotte Towers

Apt 3101 sold for $313,000 (1 bed, no car)

Aurora

Apt 236 passed in at $490,000, now listed for sale at $525,000 (2 bed, 2 bath, 1 car)

Apt 458 passed in at $450,000, now listed for sale at $480,000 (2 bed, 1 bath, 1 car)

Apt 534 passed in at $925,000

212 Margaret

Apt 2103 passed in at $340,000, now listed at $375,000 (1 bed, 1 bath, 1 car)

Admiralty Quays

Apt 67 at 32 Macrossan St did not sell at $560,000 (1 bed, 1 bath), but now listed as sold.

Bidding at Auction Via Skype

"In early October, a potential bidder for a two-bedroom unit at Cathedral Place in Brisbane's Fortitude Valley requested to use Skype from Sydney to see the auction room and observe the atmosphere. The bidder, who had previously inspected the property, ended up buying the apartment under the hammer for $437,000.

While it was a first for Ray White's New Farm office, other agents have been using the web-based PTY Property, which provides an online bidding service that has also racked up recent sales including one of more than $3 million."

See:  The Australian

I guess this is better than phone bidding -- at least you can try to see if there are any dummy bids and see how many people are actually at the auction.

Auctions for Apartments

I never think an auction is a good way to sell a normal apartment.  The auction process benefits the real estate agent more than the seller.

Ray White South Brisbane in its latest newsletter writes:

"Last night Ray White South Brisbane & CBD Residential again held it's monthly In Room Gala Auctions at the Greek Club with 19 properties going under the hammer. A busy night was had by all with over 200 people attending and 48 registered bidders on the night. 8 properties sold under the hammer & further negotiations are taking place on 4 other properties which should deliver over 60% clearance showing again that the 'hammer' beats a flat market."

But HS Brisbane Property's newsletter this weeks says:

"Love affair" with Auctions at an end! Once touted as the best way to achieve the best price, our 'love affair' with auctions seems well and truly at an end. Just on 80% of sellers in Queensland would want to sell their property through an auction, preferring to go through the "normal" private treaty sales process are even more sceptical, with a staggering 83%* avoiding auctions. The main reasons for buyers' steering clear of this type of purchasing process are:

- Worry about paying too much, due to the excitement of the auction

- Wasting money with property searches etc. if you don't end up winning the auction

- Stress of the bidding process

Property sales statistics reflect the Queenslanders' scepticism with less than 25% of all Brisbane homes being sold by auction, while it's around 50% nationwide.

The climax of the renovation reality show, The Block, gave many viewers a wake-up call as 3 of the 4 painstakingly renovated properties didn't even achieve reserve price in the all-deciding auction finale!

Previously we've highlighted the pitfalls of auctions, and it seems that the fundamentals of the auction process are far from ideal for the current Brisbane  - and particularly CBD - residential property market ... and many Queensland sellers and buyers appear to see it this way too!"

Riparian Update

A three bedroom apartment in Riparian (4801/71 Eagle Street) on level 48 recently sold for $2 million. This is a 314 sqm apartment. It was listed last year for sale at $3.4 million. (The current owner paid just over $1.6 million in 2002.)

The three bedroom apartment next door (Apt 4802) is currently for sale. It has been listed with agents for $3.8 million. Noel Robinson, the architect, paid just over $1.8 million in 2002.

Downstairs, a two bedroom apartment (4702/71 Eagle Street) is listed for auction. See video. This property sold in 2001 for just over $1 million, in 2006 for $1.6 million, and has been on the market for a year. In September, it was listed at $1.6 million, but today's advertising says "disregard all previous pricing.... must be sold."

Apt 4804, with 3 bedrooms, sold in December last year for $2,350,000.

Dumb Advertisement

An advertisement in this Saturday's Courier Mail by Ray White CBD for an apartment at 6 Parklands (Apt 6008): "CBD Parkland Living - Below Market Value. Auction." How can a well run and well promoted auction sell a property at below market value? The auction result is exactly market value on the day of the auction. Is Ray White CBD is saying that it does not do a good job promoting the auction so that few people will know about it, and therefore it will sell at auction below market value? Another example of dumbness.

Admiralty Two - Doing Well

The Courier Mail reports today that a 3 bedroom apartment in Admiralty Towers Two (Apt 180 on level 32 in the "high rise" section of the building at the Storey Bridge end) was sold for $1.05M. Despite getting water in the basement carparks during the floods, the prices in this prestige riverfront building are holding firm. The body corporate of this building is reportedly installing special plates to stop river water entering the basement through air vents (similar those in Admiralty Quays nearby that did not flood.)

Another 3 bedroom, Apt 119, also sold recently for $1.08 million.

There is a 3 bedroom on the city end on level 30 listed for sale at $1.15M (Apt 166).

There is also a large 116 sqm two bedroom on level 12 for sale in Admiralty Towers Two (Apt 70) for $860,000.

Recent Brisbane Auction Results

Just over a week ago, Ray White had an auction where 12 Brisbane inner city apartments went to auction. Only one sold at auction (1201 in UniLodge for just over $100,000). Over a week after the auction, most of the apartments that did not sell at the auction are still listed for sale. Why vendors decide to go to auction in Brisbane amazes me. These apartments are not selling at the prices listed below, so the market must be saying that they are worth less than this. And why buy an off the plan apartment for more than these prices? Some examples of the many apartments that Ray White was unable to sell:

• Felix, Apt 121, 1 bed, no car - failed to sell at or after auction, now listed for $330,000
• Felix, Apt 147, 2 bed, 2 bath, 1 car, end apartment - failed to sell at or after auction, now listed for $470,000
• Charlotte Towers, Apt 605, 1 bed, no car - failed to sell at or after auction, now listed for $315,000
• Charlotte Towers, Apt 2401, 1 bed, 1 car - failed to sell at or after auction, now listed for at the unrealistic price of $410,000
• Festival Towers, Apt 906, 1 bed, no car - failed to sell at or after auction, now listed for $320,000
• River Park Central - Apt 603, 2 bed, 2 bath - failed to sell at or after auction, now listed for $410,000
• River City, Apt 1803, 2 bed, 2 bath - failed to sell at or after auction, now listed for $433,000
• Aurora, Apt 626, 3 bed - failed to sell at or after auction, now listed for $1,300,000
• Grosvenor, Apt 1504, 3 bed - - failed to sell at or after auction, now listed for $1,800,000

Markup Update

There are a huge number of properties listed for sale at present, well more than average or for this time of year.

At the Ray White auction on the past Friday, about 10 inner city apartments went to auction. Only a studio apartment sold.

The Mood In Brisbane

I have spoken to a number of agents and bankers lately in Brisbane. It seems that the mood in changing, and properties are starting to sell, especially in the $400,000 to $550,000 price range. Buyers, including investors, are buying where the price is right (typically 5% to 10% below the peak), and sellers are accepting offers. Bankers are back in sales mode and appear to be willing to lend. Vacancy rates are low and rents are good.

For example, at the Ray White auction today, a relatively new two bedroom apartment at Indooroopilly (113 sqm in total) sold for $400,000 under the hammer, where the rent is $500 per week. Another 2 bed apartment of similar size in a different complex with river views also in Indooroopilly recently sold after only a few weeks on the market for $485,000.

Good quality two bedroom apartments in the downtown area are renting for $650 per week unfurnished.

But this more confident mood is not the same everywhere. The top end apartment market is very dead. For some apartments over a million, no buyers are calling at all. On the Gold Coast, things are very slow. Juniper's Soul development has been slowed down, with the first batch of settlements being delayed until the second half of this year and there are less construction workers on site. I wonder why?

In short, the mood is picking up in Brisbane for well priced investor apartments.

Sunshine Coast Troubles

There was an auction last weekend of a large number apartments in the Crowne Plaza Resort near Caloundra, at Pelican Waters. None sold. See story from AFR:

"Heavy discounts, a year to settle and a $5000 rebate were not enough to entice buyers to a liquidation auction on the Sunshine Coast yesterday. Reed Property Group released the final 36 units in its 2005-built Crowne Plaza Resort & Spa in a Helmsman auction, where all units are offered simultaneously to boost interest.

Despite bids on 30 of the 36 units none was sold, although post auction talks continued later yesterday. Reed Property chief executive Ken Reed said the market was soft. “It’s a buyer’s market. Conditions on the Sunshine Coast are not too different from elsewhere in south-east Queensland,” he said.

An opening bid of $65,000 for an 88 square metre one-bedroom unit was the lowest offer made. One of the 512sq m penthouses attracted a maximum bid of $600,000 after it was listed for $1.58 million. Kings Beach residents Deborah and Jeff Taylor said the event was “a fizzier”. “The marker is so depressed at the moment. Things are selling for prices you wouldn’t believe. There are so many units on the market around here at the moment,” Mrs Taylor said.

The $65 million tower has access to a Greg Norman-designed championship golf course, pools, tennis courts and a gym."