South side apartment developments

I received an email from an agent selling apartments off-the-plan, listing four current projects.  Here are the details that were sent to me.

Fish Lane Apartments

-          48 Apartments at corner of Melbourne and Cordelia Street, South Brisbane;

-          Brisbane State High School catchment area

-          Currently under construction (completion to 5^th floor) and expected settlement on December 2013.

-          Bosch appliance (gas cooktop, microwave, oven, dishwasher) and dryer inclusive

-          One bedroom apartments with car – sold out

-          Two bedrooms two bath one car apartments North East city view facing Level 5 from $595,000

Edge Apartments 

-          48 Apartments at Manning Street, South Brisbane

-          Brisbane State High School catchment area

-          Currently complete demolishment and expected settlement late 2014

-          Bosch appliance (gas cooktop, microwave, oven, dishwasher) and dryer inclusive

-          One bedroom apartment with car – sold out

-          Two bedroom two bath one car apartment South-West facing Level 1 and 2 from $555,000

-          Current promotion with $25,000 cash back at settlement or $10,000 cash back and full furniture pack

Arena Apartments 

-          191 Apartments at Edmonstone Street, South Brisbane

-          Brisbane State High School catchment area

-          Currently commence construction, expected settlement Dec 2014 to Feb 2015

-          Bosch appliance (gas cooktop, oven, dishwasher) and dryer inclusive

-          One bedroom apartment with car - $390,000 Only two left

-          Two bedroom one bath one car - $520,000 at Level 5

-          Two bedroom two bath two cars with 86m2 internal and 45m2 court yard - $645,000 at Podium Level

-          Three bedroom full upgrade Skyhomes with three cars - $1.45m, $1.7m and $1.75m three available

Glass Factory

-          47 Apartments at Vulture Street, West End

-          Brisbane State High School catchment area

-          VIP Launching on 7^th September

-          One bedroom with car from $370,000

-          Two bedroom two bathroom with car from $555,000

-          Three bedroom two bath two car with city view at high levels from $825,000 

FKP's Albion Project

FKP is promoting its The Hudson at Albion Hill project.  See www.themillalbion.com.au.

Quote from Courier Mail advertorial, 8 June 2013 from FKP's general manager of developments:

"Overwhelmingly pivotal in all deals has been the size of apartments...  This difference is real, it matters and its definitely a deal-maker.  People want space in an apartment."

The advertorial highlights a 2 bedroom, 1 bathroom apartment that is 67 sqm.  In my view, a 67 sqm two-bedroom apartment does not have space!  This is a tiny apartment.  One of these apartments is advertised at $399,000.

Ryder says Brisbane apartment market is heating up

A commentator named Terry Ryder says that the Brisbane apartment market heats up.  See story on Property Observer website.  However, take care reading this.  The article is based primarily of sales of new and off-the-plan apartments.  What is not stated is that these sales often made to foreign investors, who cannot purchase existing apartments due to FIRB rules.  When looking at resales of existing (i.e., not new) apartments, the story is different.  For example, the REIQ report, mentioned in a post yesterday, shows that less than 1 apartment per day sold in the March 2013 quarter in downtown Brisbane.

Ryder also says that consumers (I suspect he means foreign investors) have a preference for 1 bedroom apartments over 2 bedroom apartments.  My guess is that this is because new two bedroom apartments being sold by developers are overpriced.

Darkness on Alice Street

Sunland has obtained development approval for its apartment tower at 140 Alice Street, on the corner of Albert Street.  Recently, barricades went up around the existing unit block.  I suspect that demolition will start soon.

It appears that this skyscraper will contain 139 luxury apartments and will tower over and shade the Botanical Gardens.

"With apartments priced between $700,000 and $4 million, there would be a pool, gym, a 24-hour concierge for tenants, business centre and a Turkish hammam."

Sunland has branded this complex as Abian Apartments.  Have fun when dealing with Sunland:

"The Victorian Supreme Court dismissed Sunland's claims in June 2012 because their key witness was deemed untrustworthy."  Sun Herald

New Apartment Developments in Brisbane

New developments:

• 38 High Street, Toowong
• Arena South Brisbane
• Riverpoint, West End
• Urban Edge, Kelvin Grove
• Park at Newstead
• Pinnacle at Hamilton
• Vida, West End
• Hamilton Reach
• Mowbray, East Brisbane
• Aspect on Benson, Toowong
• Savoir Faire, Milton

The above is only a partial list of new and off-the-plan apartment developments in Brisbane.  Take care when buying new and off the plan, as often the pricing is much higher than existing near-new apartments in a similar location.

It is also worth reading the following book, available on the Amazon Kindle and Apple stores.  

Buying An Apartment Off The Plan in Queensland - A Guide For Successful Buying

Infinity Tower Grows

The Courier-Mail has learnt Meriton has since last March been seeking permission from the Federal Department of Infrastructure and Transport to operate a crane at a height of 311m for two weeks during the ongoing construction of the 81-storey, 262m Infinity tower in Herschel St.

In spite of the 10-month wait, Meriton said the project remained on track for a November completion and the developer remained "confident the application will be approved in the near future".

Courier Mail

Charlotte Towers Sales

Let’s have a look at the four most recent sales in Charlotte Towers (as set out in government records) located at 128 Charlotte Street in Brisbane:

• Apt 4403 - a very good two bedroom apartment, purchased August 2005 from the developer for $585,000, resold October 2012 for $560,000
• Apt 3010 - purchased October 2004 from the developer for $380,000, resold October 2012 for $365,000 to well known Brisbane property investor Sarina Russo
• Apt 3705 - purchased September 2004 from the developer for $374,000, resold October 2012 for $350,000
• Apt 3007 - purchased from the developer in May 2006 for $533,000, resold February 2009 for $485,000, resold again in September 2012 for $497,000

As can be seen from the above, every purchaser from Devine who purchased off the plan has lost money.  The losses are greater than those shown above once stamp duty and agent's selling fees are taken into account.

Charlotte Towers was developed by Devine, at that time run by David Devine and Ken Woodley, who now run the Metro Property Group.

Increase in Sales of One Bedroom Apartments in Brisbane

"Research from Colliers and Place Projects reveals that there were 1,065 new project apartment sales Brisbane in 2007 and 1,278 in 2011.  The average sale price in 2007 was $688,000 with 54% of new units being 2 bed, 22% were 1 bed, 18% were 3 bed and 6% were penthouses or the like.

The average sale price in 2011 was $560,000 with 45% of new units being under $550,000 (mostly 1 beds), 46% between $550,000 and $750,000 (mostly 2 beds) and only 9% for larger units. The sale of more affordable 1 bed units jumped from 22% to probably near 40%.  This accounted for the drop in the average sale price."

Who Is Buying Inner City Apartments in Brisbane in the Current Market

Devine Makes a Killing at Hamilton Harbour

"Devine reported the sales success at Hamilton Harbour as one of the highlights of its financial year as it reported an underlying profit after tax of $11.1 million but a statutory after tax loss of $12.9 million.

Devine says 90% of total apartments in the two Hamilton Harbour towers have now been settled.  Construction of both towers is now complete with a third tower now under construction.  There are 13 apartments available for purchase in tower one and 31 available in tower two.

Devine says the inner-Brisbane market, the focus of more than 40 apartment projects by a variety of developers, is now stable after a “prolonged period of weakness” with successive quarters of good volume sales.

The Hamilton Harbour precinct located between Racecourse Road and the Brisbane River in Hamilton is a joint venture between Devine and Leighton Properties with one-bedroom apartments starting at $425,000.  Devine says price is continuing to drive the majority of sales with 70% of unconditional sales under $550,000.

Devine expects Tower three settlements to commence prior to December 2012 and contribute to current year earnings with almost 70% of this tower contracted."

Extract from Property Observer article

Aria in South Brisbane

Aria has been in the news recently.  Extracts from two stories below.  I think that South Brisbane is a good location, but a number of Aria's apartment buildings are located in non-prime and C-tier locations within South Brisbane.

"THERE are pockets of prosperity to be found in southeast Queensland's property sector despite the recent lacklustre performance of the market. Nestled between two flanks of the winding Brisbane River, medium-rise residential and commercial properties are popping up among the easy-living environs of Southbank, the city's convention centre hub, the Gallery of Modern Art and Griffith University. South Brisbane, just across the Victoria Bridge from Brisbane's central business district, is benefiting from local and state government changes to push it out of its light industrial past and into a trendy and bustling future.

 Aria Property Group has made the area a focal point of its activities, with sales of their medium-rise residential towers in the inner-city area almost completely sold out before the foundations are sunk. Aria Property head of development Chris Mitchell says apartment sales at the company's 65-apartment project, Station 16, have just settled, while construction was under way on two of the company's other residential developments.

"South Brisbane is the focus of the business at the moment because of its location and rental premium over alternative inner-city locations," Mitchell says.  "We did quite an extensive amount of research to make sure what we were trying to deliver would fit the market in terms of quality and price points.  Certainly, the location was a big selling factor."

Aria Property Group has developed its inner-city niche in South Brisbane since arriving on the Queensland property scene almost a decade ago.  The company has a $250 million investment portfolio that includes 63 commercial, retail and industrial sites and tenancies across southeast Queensland. Its future apartment pipeline could be up to 2500 apartments.

Formed in 2003 by developer Tim Forrester - the son of FKP co-founder and long-serving chief executive Rod Forrester - Aria has concentrated on delivering high-end investment product in the region."

Full story in The Australian

See also Brisbane Times:

"The CMC asked Brisbane City Council in June to investigate its role in letting Aria buy the eight square metres of footpath for the Edmonstone Street development.

A Brisbane City Council spokesman said yesterday the council's investigations were completed last month and no evidence of official misconduct by council officers or staff with the former state Department of Resource Management had been found.

Aria's managing director Tim Forrester said the developer had no "short term" plans to go ahead with the Edmonstone Street tower. "We're focused on these more boutique developments," he said. Mr Forrester would not be drawn on the developer's further plans for South Brisbane, but said there was a "chronic" under supply of housing in the suburb "There's such a demand for apartments and as a result we're seeing rents remain incredibly strong," he said. "There's an increasing number of office workers in South Brisbane and that's really pushing up demand on the southern side of the river."

Mr Forrester added young professionals were also showing a preference for boutique apartment buildings on the southern side of the river, over soaring towers in the CBD. He said he was hopeful the council would welcome the proposal for Grey Street, as it came in under the area's 20-storey height limit.   Just two two-bedroom apartments remain for sale in the Artisan development, which is due to be completed in June next year. The remaining apartments are priced at $594,000 and $629,000. The complex features 66 apartments over 10 levels with 37 one-bedroom and 29 two-bedroom residences."

Project Marketing Techniques

Interesting article about how project marketing companies use online techniques and database collection  strategies to gain sales in off-the-plan developments:  How a development can secure sales

Rive Breakfast Creek

I recently visited the display apartments at Rive, Breakfast Creek.   (It is being advertised as Breakfast Creek, but it is really in Albion.)  I must say that I was a little disappointed.  The finishes inside are almost the same as the same developer did for Fresh Apartments in Toowong a number of years ago -- no improvement in finishes, and so Rive Apartments look so last decade.

The views I saw from the apartments were of flat metal roofs of neighbouring industrial areas, and busy roads.  The common space felt to me like a second tier suburban office park.  The surrounding neighbourhood is not fantastic by any means, unless you want to go to the Breakfast Creek Hotel or Albion Racetrack, which both neighbour this complex.

Prices have dropped (at least from the list price, which I suspect was always an opening gambit) -- a two bedroom has dropped from $610,000 to $570,000; and a three bedroom has dropped from $710,000 to $670,000.  An 88 sqm internal two bedroom is listed for sale at $640,000.

Place Report: Sales of New Apartments in Brisbane

Place Real Estate Agents have issued their report about off-the-plan sales and sales of new apartments in Brisbane in the June 2012 quarter.  Here is an extract:

Summary of the June 2012 Quarter 

• The June 2012 quarter saw a total of 426 unconditional sales. This is in line with the 448 unconditional sales recorded during the March quarter and is 73% above the 240 sales recorded during same period in 2011.
• A weighted average of $567,664 was recorded during the June 2012 quarter. Again, this is in line with previous periods, presenting a weighted average price only 5% below the June 2011 and resulting in a 12 month rolling weighted average price of $548,806.
• Almost 70% of the unconditional transactions during
• the three months to June 2012 were recorded under $550,000. A total of 11% of the period’s sales were made above $750,000. This is representative of a market that remains price point sensitive.
• Total gross sales, in dollar terms for the June quarter, was approximately $242 million, a figure 40% above the average total gross quarterly sales numbers recorded during the past five years.
• There were three new projects launched during the June 2012 quarter. Hamilton Reach’s new release, Watermarque on the Park, Drew Group’s Precinct and a newly renovated building in Kangaroo Point named Bella Vista.
• Brooklyn on Brookes was the top performing project for the quarter, registering 52 unconditional sales and Madison Heights saw a further 49 unconditional sales taking second position. Following this, Precinct in the Fortitude Valley totalled 38 transactions and Watermarque on the Park registered 34 unconditional sales taking the project to 50% sold on release.
• Inner Brisbane supply tightened during the June 2012 quarter. At the close of the financial year, 1,871 new residential apartments remained for sale. Based upon the sales rate recorded during the June quarter, this translates into a market supply of only 13.5 months.
• Of the apartments which remain for sale, two bedroom supply has increased through the past 12 months to now represent 54% of the available supply. A further 33% are one bedroom apartments whilst only 9% of stock are three bedroom configurations.

El Dorado Bust

Although there is still website advertising for PCN's El Dorado Village apartment development at Indooroopilly, it seems like the developer is in receivership, and the undeveloped property is for sale.  This is not a surprise.  See past posts on this issue.  Supposedly over 70 of the 100 apartments had been sold of the plan.  Either this was a lie, or the developer just could not make the project work even at PCN's crazy high off-the-plan prices.  I hope you are not waiting to move in to your new apartment at El Dorado Village!

I guess it is good-bye, not good buy, El Dorado Village.

South Brisbane apartment

Proposed apartment building by Aria at 77 Grey Street in South Brisbane.  Proposed to be 18 stories.
36 two bedroom apartments & 84 one bedroom apartments (for a total of 120 apartments), but only 106 car parks including visitor car parking.
Many of the apartments will have a nice view of the wall of the museum, or the very busy Grey St/Melbourne St intersection and busway.

Shrinking Apartment Sizes

In Brisbane, apartment sizes are shrinking.  Newer apartments are smaller than older apartments.  Many two bedroom apartments are now less than 85 sqm in total size (including balcony), compared with about 100 sqm five years ago, or 120 sqm ten years ago.

For example, DoubleOne3, a Devine project, has two bedroom, two bathroom apartments that have a total size of 74 sqm including balcony.  The "Superior" two bedrooms, on the corners of the building are 105 sqm in total size.

As another example, the size of two bedroom apartments in Mirvac's Park development at Newstead range from 96sqm to 112 sqm.  Mirvac builds larger than most developers, to a higher quality.  But compare Mirvac's Quay West development in Brisbane from more than 10 years ago.  There, the two bedroom apartments were 126 sqm.  In Mirvac's Arbour on Grey, from about ten years ago, most of the the two bedrooms were around 109 sqm.

In NYC, the size of new rental apartments is also decreasing, but the size of owner-occupied condos is increasing.  See NY Times.  I think that a similar distinction will arise in Brisbane, where two bedroom apartments less than 95 sqm in total size will be relegated as investor only product.  Moreover, care should be taken when comparing apartments.  Often the smaller newer apartments are more expensive than the older, larger apartments.

Alex Perry Apartments - Sales Slow?

The developers of the delayed 11-storey Alex Perry Residential apartment block in Brisbane’s Fortitude Valley have removed all three-bedroom apartments from the design and are awaiting council approval on a modified development application.  A spokesperson for developer Chrome Property told Property Observer there were few enquiries for the three-bedroom apartments since the project launched in May last year, complete with paparazzi and supermodels.  The three-bedders have been replaced with one-bedroom apartments as part of a “redefined product”, and 77 of the 143 apartments will be sold to investors as serviced apartments with a hotel operator lined up to manage them.  Investors are being offered 6% guaranteed rental returns for up five years net of management fees, with settlement anticipated for early 2014.  Construction is expected to start at the end of the year, with completion in early 2014.  One-bedroom apartments will start from $381,000 and two-bedroom units from $550,000.  Chrome has been reluctant to reveal sales numbers since the project was launched.
Full Story Here.

No Apple Store for M&A

Is Laing O'Rourke misleading people, or just careless?  Last month, to much fanfare, it released a press release to report that it has signed up a two level Apple store at its McLachlan & Ann (M&A) building in the Valley.  See Press Release and prior post.

But it is not an Apple store, but an Apple reseller.  Today's Courier Mail has an advertorial that refers to a "US-based Apple reseller."  There is a big difference between an Apple Store and an Apple reseller.  Myer, JB HiFi and Kmart are Apple resellers.  And there already is an Apple reseller just around the corner (Mac1 at James Street).

So no Apple Store for M&A, just a U.S. electronics store.  So that decreases not increases the appeal of M&A.

Kurv in Newstead

A proposed new development in Newstead, called Kurv.  It is located at 31 Longland Street, Newstead.

• Ground floor restaurant and offices.
• Five levels of 55 apartments
• 25 – studio apartments
• 30 – two bedroom apartments

Macrossan Residences Sale

I bet well-known Brisbane solicitor and Labor Party identity Con Sciacca is not happy.  He purchased an apartment off-the-plan in 2008 in Macrossan Apartments for $1,835,000.  The developer went bankrupt, and the remaining apartments have been bought by an investor, who is listing them for resale at "Almost $1 million below what they cost."
"Were Selling for up to $3M, Now Priced from $1.395M to $1.575M"

(I suspect that the real estate agent is exaggerating slightly - I doubt that the same apartment that Con purchased would sell for less than $1M.  So the million dollar discount is a bit of a stretch.  Video here.)

These discounts make it hard for an original buyer to resell without making a huge loss.

In any event, even these discounted prices are high for a 3 bedroom apartment that is not riverfront and that is sandwiched by Skyline and Soleil.