Auction Results and Monday Morning

On Monday morning, the newspapers often have an article about the health of the property market, based on the weekend's auction results report by APM. This is often misleading, for the following reasons:

• The APM results that are the basis for the report are often incomplete, as a number of auction results have not yet been reported.
• Brisbane has far fewer auction sales than Melbourne and Sydney - so the report does not take into account sales other than by auction which is the bulk of the sales in Brisbane
• The APM results focus on Saturday auctions, and do not capture auctions during the week. Ray White, for example, often has Friday morning auctions.
• The report, for the most part, relies on agents reporting to APM. If the agent has a bad result, there is less incentive to report.

Read Chris Joye here on this topic. This article makes a similar comment.

Tennyson Reach Liquidation Sale!

As previously reported on this blog, a number of off-the-plan purchasers at Mirvac's Tennyson Reach failed to settle, and are being sued by Mirvac. Mirvac is now selling these apartments by auction.

"A very frenetic listing week has culminated with the official listing of nine riverfront apartments (under instructions from Mirvac Queensland where the buyers have not settled). These apartments are to be auctioned in a line on Saturday the 14th November at 12 noon. Our clear instructions are that these quality riverfront apartments WILL BE SOLD.

Elsewhere, buyer activity in the middle and upper ends of the market continues to increase as we move into one of the busiest sales times of the year.

Warm Regards,
Dianne Bauer
Associate
JOHNSTON DIXON

Auction Comment - Ray White CBD

"... last night at our Gala Auction event at the Greek Club, 22 properties went under the hammer for sale and again a large crowd was in attendance and there was great energy in the room. Over 60 buyers registered to bid and there was good bidding throughout the night but it was hard work. The first home buyer market has grown smaller as many have now already bought and the first home buyers grant has now been reduced.

Still we had some great results with 9 properties selling under the hammer at auction and a further 3 sold straight after the auctions."

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
  

RP Data Auction Results

RP Data Auction Results
These results appear to be more accurate than other auction result sources.

Comment from a Reader re Oaks and Aurora

A reader kindly sent me this note, in response to a prior posting:

I am concerned about trends in the industry, whereby the Oaks are flouting the law by operating a hotel in a Classification 2 building. The Oaks has more money than any Owner’s Corporation, and they know as long as Brisbane City Council and the State Government of Queensland turn a blind eye to them, they can out spend any Body Corporate in our legal system.

I went to a recent auction run by LJ Hooker in Aurora, and the agent was late because he could not get up and down the lift (the Oaks closes two of their five lifts down between 10:00 am and 2:00 pm). When we finally got into the building, there were hotel guests unpacking and repacking their bags in the lobby. The lifts were crowded with students, overnight stays ....

It is no surprise to me that the auction of a $1.1 Million plus unit did not attract any bids. The vendor made a bid of $725,000, and about 12 people stood around, hands in pockets. After the auctioneer consulted with the owner and got instruction, the vendor’s bid was lifted to $770,000 and again no bids. I don’t know if this property ever sold. It was passed in on the day.

The presence of any hotel group, in my opinion devalues the units and lowers the general feel and look of a residential building and diminishes the lifestyle of resident owners. Other factors to consider are:

Don’t Owners get Higher Rents for Hotel Guests/Short Term?

Your committee and the Manager might try to tell investors that they will earn more money. Yes, their rents might be a bit higher, but that is only part of the story. With higher rents, come higher risks, such as risk of vacancy, more tenant churn, more wear and tear on common property and much higher Management Fees.

Management Fees are Higher

The Oaks tend to return to investors about 48% to 50% of the total rent collected, when the high management fees, charge-on costs and miscellaneous costs are all taken into account. I believe this to be in line with any other hotel group’s figures. Perhaps someone from the Oaks could confirm these figures.

Rental Pools – How do they work?
As an investor in a ‘hotel’, your unit is most likely going to go in a ‘rental pool’. It is impossible to tell how often your unit is let out, as the agreement entitles you only to a portion of the total pooled funds. That means that if your unit is a superior one, and is let fully, you will be subsidizing other units which may be inferior and not let out fully.

Hidden Costs?

There are lots of hidden costs to any investor from their hotel manager. One horror story involves an owner who double checked his statements, and each month they would be buying ashtray, glasses, microwave, mattress protector, etc. The Managers did not need to give any proof that the item was damaged or broken, they simply went ahead and bought these items, added a hefty commission and merrily went about spending the owners’ money, despite instruction from the owner that she would replace any items in the unit herself. Another horror story involves a man who went straight to the manager’s desk and asked if there were any vacancies. Yes, the manager said, just go to that phone over there and ring this number. The unassuming man went over and used the phone, the manager answered and earned 30% commission (out of the owner’s pocket) for the exercise. There are more stories where these come from. This is just scratching the surface.

Fire Regulations?

As indicated already, regulations appear to mean nothing to the Oaks. They run a hotel in Aurora, which is a Classification 2 Building, with inferior fire safety protection for the occupants.

How do Hotel Groups and bad Managers devalue units?

There are many drawbacks to a hotel group taking control of a residential building. Investors need to be aware that although it may seem that rents increase, their net income will drop. Aurora has shown us that units will be significantly devalued by the presence of the Oaks, or any other hotel group. Colin Archer was recently quoted at the Unit Owner’s Conference as saying that “if owners want to buy into a hotel, they should buy a hotel. If they don’t wish to live in a hotel, don’t buy in a residential building managed by any hotel group”, because he well knows the massive and negative impact a hotel operation has on the permanent, resident owners. One owner stood up and asked Colin Archer what owners in Aurora could do to protect themselves, because the Management Rights were sold to a Hotel Group to the detriment of owners. He started squirming in his seat. He is a director of the Oaks, and he was sitting on the panel with Michael Teys who sold him the Management Rights. They seemed to think it was quite a funny joke. After some good natured squirming, Colin Archer said that owners need to ensure a bylaw is in place with a three month limit on leases. To his credit (I think he wants to retain his right to practice law), Michael Teys stood up and corrected Colin Archer. He told the crowd that such a bylaw would offer absolutely no protection to owners.

Take also into account that backpackers, suitcases and crowds in the lobby negatively impact on any residential home. In Aurora, I believe that two of the five lifts are closed off to residents because of the cleaners activity between 10:00 am and 2:00 pm. Cleaners block not only the lifts, but the corridors of all of those unfortunate souls who live on the ‘hotel’ level. There is more wear and tear on common property, and the end result is that all owners pay a price – investors pay the financial price and resident owners pay the price of a diminished lifestyle.

Is there any upside to a Hotel?

No, not that I can see. Hotel Management Rights are there for the sole benefit of the managers, and to the detriment of both investor owners and resident owners. If someone can convince me that the Oaks have increased the value of the units in Aurora, or enhanced the lifestyle of all occupants, I will happily listen. Until I hear a good case for owners, I won’t be changing my mind anytime soon.

Aurora No Sale

Auction on Saturday: Aurora, Apartment 609, 3 bedrooms, 60th floor, passed in. Now listed at $825,000. Previously listed at $915,000

Brisbane Unit Auction Results

• Breeze at Indooroopilly,41/8 Belgrave Road: 3 bed, highest bid at auction was $400,000, auctioneers bid of $780,000, passed in, now listed for $900,000
• Admiralty Quays, 144/32 Macrossan Street, Brisbane, 3 bed, sold for $1,885,000
• Skyline, 62/30 Macrossan Street, 2 bed, passed in at $563,000, now listed at $600,000
  
• Dockside Hotel, 601/44 Ferry St, Kangaroo Point, 2 bed, no bid
• Dockside Hotel, 510/44 Ferry St, Kangaroo Point, 2 bed, no bid
• MacArthur Chambers, 104/229 Queen Street, 2 bed, 2 cars, passed in at $720,000, now listed at $790,000
• 95/260 Vulture Street, South Brisbane, 2 bed, passed in at $645,000, now listed at $675,000
• Aurora, 117/420 Queen Street, 2 bed 1 bath, sold for $395,000
• 7/146 Macquarie Street, St Lucia, 2 bed 1 bath, sold for $500,000
  

Most of the above were auctioned at the Ray White Sunday Auction

Recent Apartment Sales in Brisbane City

Skyline - Apartment 344 - Level 34 - Two bedrooms - $600,000 (highest bid, did not sell, relisted at $650,000 and did not sell. Current owner paid $695,000)
Aurora - Apartment 439 - Level 43 - Two bedrooms - $460,000
Club Lodge - Apartment 51 - Two beds, two cars - $440,000
Vue - Apartment 2409 - Two beds - $445,000
River City - Apartment 3802 - Two beds - $403,220
Flow West End - Apartment 80 - Four beds - failed to sell at auction

Roma Street Parklands Sale

A recent Brisbane apartment auction:

7041/7 Parkland Boulevard, Brisbane
3 bedrooms, 2 bathrooms, 2 car parks
In 2006, it was listed for sale for $685,000.
Sold at auction on 21 February 2009 for $730,000

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

Brisbane Apartment Auction Results

• River City Apartments, Apt 2105, 2 bedroom, 2 bathroom, 1 car, sold at auction for $375,000
• Aurora Skyhome, Apt 547, three bedrooms, passed in at auction with highest bid of $740,000
• Charlotte Towers, Apt 1810, passed in at auction with highest bid of $290,000
• Charlotte Towers, Apt 3811, passed in at auction with highest bid of $310,000
• Festival Towers, Apt 2806, 1 bed, 1 bath, 1 car - no bid at auction

Recent Sales in City

Casino Towers, Apartment 3702, Level 37, 2 bedrooms, 2 bath, study, 2 car spaces, 125 sqm, probably the best position in the building, sold at auction by Chris Hinds for $705,000

Aurora, Apartment 419, level 41, 2 bedrooms, 1 bathroom, 1 car, great views, sold for $485,000

Recent Sales

Casino Towers, Apartment 3702, Level 37, 2 bedrooms, 2 bath, study, 2 car spaces, 125 sqm, probably the best position in the building, sold at auction by Chris Hinds for $705,000

Aurora, Apartment 419, level 41, 2 bedrooms, 1 bathroom, 1 car, great views, sold for $485,000

Housing Market Flooded in Brisbane, but Few Buyers

From The Courier Mail, 5 July 2008:

"STRESSED home owners and investors are flooding the market with thousands of houses but agents say they can't find any serious buyers for some properties.

As home mortgage lending in Queensland dives for the second consecutive quarter, the number of houses for sale is up 150 per cent compared with the same time last year.

There were 4750 new listings added this week - 1842 in Brisbane.

Almost 40,000 residential properties are listed for sale across the state, compared with 15,900 last year.

Auction clearance rates are suffering in the slowdown.

At yesterday's Ray White's corporate auction, just one of 11 properties was sold under the hammer. The three-bedroom unit in Casino Towers sold for $705,000.

It was a similar story last week, when 12 properties were put to market, and only one - a Norman Park home - was sold for $840,500.

The marketing agent for a prime residential site near the Brisbane River said a recent auction of the property failed to get any bids.

And the one buyer who showed some interest had now gone cold.

"Just finding anyone interested has been a problem - last year there would have been a handful," the agent said.

At yesterday's auction chief auctioneer Philip Parker said he was surprised when just two early bids were heard for an inner-city house.

"It's good real estate - you'd think you'd have more (bids) than that," he said...."

Auction - Ray White Spectacular

Auction - 20 April 2008

112 properties listed for sale, including 26 vacant lots on Russell Island and 6 rural properties.
10 out of 80 residentials sold prior to auction
18 out of 70 sold at auction
21 sold within a week after auction.

According to Ray White, the day proved a good "educational process. .. Buyers are more discerning. ... some vendors are not yet in tune with the slight change in the market."

There were about 10 apartments that went to auction, including one in Skyline and some in Aurora and Festival.

Brisbane Auction Results for early March 2008

From APM Home Price Guide Newsletter:

In Brisbane this week 171 properties were auctioned and the clearance rate was 41%. Last week, 102 properties went to auction and the clearance rate was 47%. During this week of last year 46 properties went to auction with 59% selling at auction or prior.

17 properties were auctioned this week on the Gold Coast and the clearance rate was 20%. Last week 49 properties were auctioned with 22% selling at auction or prior. During this week last year the clearance rate was 58%.

• Aurora, 420 Queen Street - Apartment 336 (6th Floor) 2 bed, 2 bath, 1 car, reasonable river views - not sold - highest bid $535,000

For the week ending 8 March, auction results for apartments in Brisbane were not good.

At a midweek Ray White auction, there was good attendance. But mostly people watching the market. There were few active buyers.

Results of the midweek Ray White Auction

Charlotte Towers (128 Charlotte Street, Brisbane)

Apartment 3801 - Level 38 - 1 bed plus study - 57 sqm - no car park - sold at auction for $320,000
Apartment 3105 - Level 31 - 1 bed with big storage room - 60 sqm - no car park - not sold
Apartment 2410 - Level 24 - 1 bed with large shower - 61 sqm - no car park - sold at auction for $310,000

[I suspect the above sales were below the original purchase price, so the seller made a loss.]

212 Margaret Street
Apartment 1504 - not sold

River Park Central (120 Mary Street)
Apartment 602 - 2 bed, 2 bath, 1 car - 85 sqm - not sold at auction - now listed for $420,000

Saturday Auction (Brisbane clearance rates were a low 44%; national clearance rates

Elysees (15 Walsh Street, Milton)
Apt 33, Penthouse - 3 bed, 2 bath, 2 car - no bids at auction - now listed for $969,000

15 February Ray White Auction

Tempo (West End)
75/20 Donkin Street, 3 bed, 2 bath, 2 car - not sold - vendor bid of $800,000 - still listed for sale.

Not A Good Week for Auctions in Brisbane

This week (ending 8 March), auction results for apartments in Brisbane were not good.

At a midweek Ray White auction, there was good attendance. But mostly people watching the market. There were few active buyers.

Results of the midweek Ray White Auction

Charlotte Towers (128 Charlotte Street, Brisbane)

Apartment 3801 - Level 38 - 1 bed plus study - 57 sqm - no car park - sold at auction for $320,000
Apartment 3105 - Level 31 - 1 bed with big storage room - 60 sqm - no car park - not sold
Apartment 2410 - Level 24 - 1 bed with large shower - 61 sqm - no car park - sold at auction for $310,000

212 Margaret Street
Apartment 1504 - not sold

River Park Central (120 Mary Street)
Apartment 602 - 2 bed, 2 bath, 1 car - 85 sqm - not sold at auction - now listed for $420,000

Saturday Auction (Brisbane clearance rates were a low 44%; national clearance rates

Elysees (15 Walsh Street, Milton)
Apt 33, Penthouse - 3 bed, 2 bath, 2 car - no bids at auction - now listed for $969,000

15 February Ray White Auction

Tempo (West End)
75/20 Donkin Street, 3 bed, 2 bath, 2 car - not sold - vendor bid of $800,000 - still listed for sale.

Other recent sales in Brisbane:

• River Place, 1 bedroom with river view - Unit Type N (about 62 sqm including balcony) - no car park - Apt 116 - $370,000
• Charlotte Towers, 2 bedrooms, 1 bath, 1 car - 27th floor - apartment 2703, 82sqm total including alfresco dining area - $461,000
• Aurora - 2 bed, 2 bath, 1 car, Apt 301, 107 sqm including balcony, listed at $600,000, sold for $570,000
• Festival Towers, 2 bed, 2 bath, 1 car, Apt 1208, listed at $428,000, sold for $415,000 (one of the best floor plans in Festival Towers, 83 sqm plus small 3 sqm balcony, but now has no view as it looks into M on Mary).

Average price per sqm for these four recent sales (including balcony area) is $5,427. Festival and Charlotte are B minus buildings, Aurora is a B building, and River Place a B plus (due to location).

Recent Brisbane Apartment Sales

Felix (26 Felix Street) Apt 194, sold for $412,000

River City (79 Albert Street) - Apt 1703 - sold at auction for $428,000

Festival Towers (108 Albert Street) - Apt 3109 - failed to sell at auction - highest bid was $440,000

Charlotte Towers (128 Charlotte Street) - Apt 507 - failed to sell at auction - highest bid was $330,000

Recent Apartment Auction Results and Apartments for Sale

These are auction results from the Ray White auction rooms, for a series of auctions taking place on Friday 21 September 2007.

• Charlotte Towers - Apartment 4405 - Level 44 - 2 bedrooms, 2 cars, facing North West - $610,000
  
• Aurora - Apartment 331 - Level 33 - 2 bedroom - 107sqm - 1 car - $620,000
• Aurora - Apartment 509 - Level 50 - 2 bedroom - $515,000
• Festival Towers - 2 bedroom - $495,000

Ray White has these apartments el cheapo apartments listed for sale (as at early October 2007) in Festival Towers,

108 Albert Street

:

• Festival Towers - Apt 604 - 1 bed, 53 sqm internal, H type with no view - very small balcony (3 sqm) no car park - $295,000
• Festival Towers - Apt 1405 - 1 bed, 53 sqm internal, I type with no view - very small balcony (3 sqm) no car park - $300,000
• Festival Towers - Apt 901 - 2 bed, 2 bath, 75 sqm internal - E type on corner - very small balcony (3 sqm) - $417,000
• Festival Towers - Apt 1311 - 1 bed, 54 sqm internal, M type with no view - very small balcony (4 sqm) no car park - $315,000
• Festival Towers - Apt 1401 - 2 bed, 2 bath, 75 sqm internal - E type on corner - very small balcony (3 sqm) - $435,000
• Festival Towers - Apt 1408- 2 bed, 2 bath, 83 sqm internal - D1 type - looking into back of M on Mary, very small balcony (3 sqm)- $415,000
• Festival Towers - Apt 3601 - 2 bed, 2 bath, 75 sqm internal - N type on corner - balcony that can be closed in (10 sqm) - $515,000
• Festival Towers - Apt 3702- 2 bed, 2 bath, 87 sqm including balcony - O type, one of the better plans - looking into Charlotte Street, however view of river to West will be lost when Westin Hotel is built on Elizabeth Street, small balcony (5 sqm)- overpriced at $525,000
• Festival Towers - Apt 3902- 2 bed, 2 bath, 87 sqm including balcony - O type, one of the better plans - looking into Charlotte Street, however view of river to West will be lost when Westin Hotel is built on Elizabeth Street, small balcony (5 sqm)- very overpriced at $555,000
• Festival Towers - Apt 2502- 2 bed, 2 bath, 87 sqm including balcony - O type, one of the better plans - looking into Charlotte Street, small balcony (5 sqm)- auction at end of October