Rental Pain

The Courier Mail has an article today about potential pain for rental property owners.  "A flood of new apartments being built in Brisbane spells bad news for property investors as rents are likely to soften in the competitive market.  New data from Urbis shows nearly 9000 new apartments will settle in Brisbane between now and 2017."  Confusingly, the article states that not all planned apartments will be built (so how could Urbis predict settlement of such apartments?).  Urbis goes on to say "So we are being cautious about predicting too much supply."

According to the article, Brisbane's inner north is by far the busiest precinct, with 1129 apartments predicted to settle in 2014 and a further 926 apartments next year.  It is claimed that 41% of apartments sold int he inner north in the June quarter were one bedroom apartments.

In my view, one must be careful to generalise here.  There may be many new apartments in certain areas, such as Bowen Hills, but few new apartments in other areas, such as downtown Brisbane or St Lucia.  There may be too many small apartments, and not enough 3 bedroom apartments.  So the oversupply may impact some and not others.

I would be careful buying in the Brisbane Showgrounds redevelopment area.  Although reasonably close to the city and the RBH hospital, there is not much within walking distance.  And there is a huge supply pipeline.  This weekend, Lendlease will release The Yards, the next stage of this redevelopment.  The development does not include any large parks, schools, kindergartens, supermarkets or the like.

Show Ground Hill

Lend Lease has commenced marketing its apartment projects at the Bowen Hills Ekka redevelopment site.  See The Green.  There will be five buildings in The Green.  The registration form only refers to 1 or 2 bedroom apartments.

Lease Lease is currently in the process of completing the on-site Sales Centre, located on St Paul’s Terrace, which will showcase both the Showground’s new Master Plan and the apartment options that will be available in The Green. The Sales Centre will be opening for both VIP and Pre-Release appointments in early October 2011.

Ekka Showgrounds To Become Apartment Getto

The 22-hectare showgrounds will be trimmed. Five and a half hectares will be transformed to residential apartments - 2000 across 12 buildings, with 145,000 square metres of commercial office space across six buildings.

Glen Steedman is the project director of Lend Lease's $2.9 billion project. He said the images of the first apartments - around 300 one and two-bedroom apartments with a small number of three-bedroom apartments - would go to the market in August.

Originally these were going to be in 10-storey apartment blocks, but testing of Brisbane's CBD market found a "courtyard" style with six or seven apartments per storey was more appropriate for the designers, architects Cox Rayner. They will now be offered in six five- and six-storey complexes behind the Jubilee Hotel.

Mr Steedman said Lend Lease is convinced these small changes will suit Brisbane's inner-city market.

"One and two-bedroom apartments react best to the demographic that lives in this area; the professionals, the students who want to live close to the city and close to the Valley," he said.

Mr Steedman believes the 1900 to 2000 units that will eventually be built will house just over 3000 permanent residents and around 12,000 people will work in the area.

Source: Brisbane Times