More Affordable and Smaller Apartments

The Courier Mails reports that developers are building apartment buildings with smaller apartments, because that is what is selling today.  Does this mean that there will be a shortage of larger, family sized apartments in Brisbane in the future?

From the Courier Mail:

"Developer FKP recently withdrew a development application from Brisbane City Council for a future tower at its Gasworks development at Newstead.  It was lodged in 2009 and executive director Mark Jewell said it needed to be revised in line with the present market. The tower, known as Parkside Boulevard, will be released in the next three to five years.  Two weeks ago, the same developer released its reworked masterplan for The Mill development at Albion.  A change in market conditions early in 2010 saw it refund deposits for units already sold off the plan and designs changed. It has now launched the first tower and is waiting for sufficient pre-sales before it starts construction.

In Brisbane's CBD, Melbourne-based developer Billbergia unveiled plans to develop the failed Vision site into a 90-storey residential tower with about 800 apartments, a hotel and a 34-storey commercial tower.

Bellise at Fortitude Valley had initially been planned as a 199-unit development, but had received a new approval to reconfigure it to a 228-unit development of smaller product.

Citimark's Angus Johnson said the launch of its 200-unit Rivana development at Hamilton would wait until the market was right.

While Stockwell plans to proceed with the 150-unit stage two and 50-unit stage three of its Riverpoint development at West End, it has not yet advised a time frame.

Sunland has preliminary approval for the 47-storey Carrington in Alice St in the City. Managing director Sahba Abedian said there were conditions attached, which they were working through."

Evolution Sales - Massive Losses for Investors

I have written in the past about Evolution, and how Citimark sold these apartments off-the-plan at high prices.  It is not the greatest quality building in my opinion.  Most of the original buyers from Citimark were Korean.  Evolution opened in 2008.  Here is some recent sales evidence:

• Apt 245, sold off the plan in 2006 for $767,500.  Resold in November 2011 fully furnished for $605,000.
• Apt 184, sold off the plan in 2006 for $660,500.  Resold in November 2011 for $460,000.
• Apt 153, sold off the plan in 2009 for $570,000.  Resold in October 2011 for $410,000.
• Apt 276, sold off the plan in 2006 for $701,000.  Resold in September 2011 for $620,000.
• Apt 163, sold off the plan in 2007 for $649,500.  Resold in September 2011 for $435,000.
• Apt 194 sold off the plan in 2006 for $512,720.  It is currently listed for sale for $510,000.  Based on the above, it will be lucky to be sold for above $460,000.

This shows massive capital losses for each of these buyers.  Take care when buying from developers off the plan.  Take extra care if buying from Citimark!

Portside and Hamilton Harbour

This photo shows how crowded this area of Hamilton will soon become with apartment developments.

Site A has development approval for 87 serviced apartments.  Site B has DA for 127 residential apartments.

Devine Hamilton Harbour Settlements

Devine recently issued a stock market release saying:

"Market conditions have continued to deteriorate across most Australian property markets which have had a significant impact on the company bringing new projects to the market."

In Brisbane, Devine has a joint venture with Leightons on a multi-building apartment complex called Hamilton Harbour, where most off-the-plan sales for buildings one and two have reached settlement.

According to the AFR this week, as at late December, Devine had settled 80% of the off-the-plan sales.  Why have 20% not settled?  All may be revealed when Devine's financial results are released shortly.  If 20% of the sales have fallen over, this may impact nearby developments by Brookfield Multiplex, Mirvac and Citimark.

Devine has a rental website for the project, advertising two bedroom apartments for rent from $545 per week.  But some two bedroom apartments are listed on RealEstate.com.au for $795 a week, which seems outrageously high for a 85 sqm apartment facing West.

Northshore Hamilton

The $5 billion Northshore Hamilton urban redevelopment is underway, with thousands of apartments expected to be built in the next 10 years.  About 15,000 new residents are expected to move into this area, which is an old port and industrial precinct 6 km down river from Brisbane City.

• Two Devine apartment buildings are almost complete, with a third on the way.
• Brookfield Multiplex is building another Portside apartment building, Promenade (172 apartment), with two more planned.
• Citimark has development approval for Rivana, 15 levels with 208 apartments.
• Mirvac has a three building apartment complex planned, with a sales display office constructed onsite.
• Australand has launched 78 apartments as part of its $400 million project, Hamilton Reach.

Will there be an oversupply of small, non-riverfront apartments in this part of Hamilton, where there are few facilities and not much within walking distance?

Mirvac's Foreshore Hamilton

Mirvac has Foreshore Hamilton in pre-release at present. Mirvac sales agents are calling all potential buyers to make sales. Lower floor apartments in the first building, called Foreshore One, are being marketed off-the-plan. The building is about 23 floors, and only the top few floors will have a view. The actual outlook and location, although in the redevelopment area of Hamilton, is not great. The development will be located behind the Portside buildings, and next to a proposed Citimark building, Rivana. So really crowded. (Foreshore One will take away the rear views from the Promenade building being built by Multiplex.)

Many of the apartments are very small. One bedrooms are about 52 sqm to 55 sqm in total, no balcony, priced from $345,000. The two bedrooms range in size from 72 sqm to 105 sqm in total -- the smaller 2 bedrooms do not have a balcony. The larger 2 bedroom is priced from mid $600,000 to low $800,000. Not cheap. Some two bedrooms are priced from $495,000, but these are small.

Mirvac will probably build a quality product (better quality than Promenade and Rivana I suspect) but due to the apartment size, poor location and cost, I am not lining up to buy. Also, there are a huge number of apartments being being built in this area, including Hamilton Harbour by Devine next door, and so there will always be plenty of competition if you ever have to sell or find a tenant.

From a Mirvac email:

This is what will set 'Foreshore - Hamilton' apart in this exciting new urban development.  We will bring to the market 1 and 2 bedroom apartments:  1 bedroom apartments are priced between $345,000 and $525,000 - size range from 50sqm to  58.5sqm  2 bedroom apartments are priced between $495,000 and $975,000 - size range from 73sqm to 104sqm  Completion date will be the later end of 2013.

Developments at Portside

The photo shows development sites by Devine, Citimark, Mirvac and Brookfield Multiplex. (Double click on photo for larger view.) An endless supply of apartments, which means values are unlikely to rise significantly.