Showing posts with label fortitude valley. Show all posts
Showing posts with label fortitude valley. Show all posts

Wednesday, February 14, 2018

Is there an oversupply of apartments in Brisbane?

"Brisbane’s high-rise apartments have been growing at a rate of 34% to 43% each census since 2001. This year alone, Brisbane has had 9,000 new apartments supplied, which is a massive 200% increase since 2015. As a result, Brisbane currently has a huge supply of new apartments, and is evidently oversupplied in popular inner-city suburbs such as Fortitude Valley, Newstead and West End.

However, over the past 12 months, there has been a large reduction in apartment building approvals as more developers have become fearful of the current market. At the moment, 38% of projects with development approval have been deferred indefinitely. Larger developers are even opting to land bank and sell existing projects as they fear getting stuck with a partial apartment development. This is now contributing to Brisbane’s stalling apartment price growth in the densely populated suburbs."

Saturday, March 7, 2015

Developments in Brisbane

A good website to look for future developments in Brisbane is the Brisbane Development website.  It demonstrates that there are many large apartment buildings in the pipeline for Brisbane.  Some examples:
  • CavCorp's proposal for 366 apartments at Newstead Gasworks.
  • Walker Corporation has plans for 433 apartments on Ann Street in the Valley.
  • Aria plans for 84 apartments in Vulture Street in the South Brisbane
  • Plans for 353 apartments on Brunswick Street in the Valley
Before buying, it is worth looking to see if your views will be blocked by any proposed new development.  And keep in mind that there is likely to be an oversupply of new apartments in Brisbane in the next 2 years.  Maybe wait until these buildings all settle, and you may then get a better price.

The Brisbane Development website has a good interactive map showing developments.


Saturday, August 30, 2014

Top Yields

Today's paper had a chart with the top rental yields for inner-city Brisbane.  All were apartments.  A summary of some of the data:

  • Spring Hill - based on 170 sales, median sale is $380,000, median asking rent is $485, so indicative gross yield is 6.6%
  • Brisbane city - based on 666 sales, median sale of $500,000, rent $600, so a yield of 6.2%
  • Woolloongabba - 86 sales, sale price of $400,000, rent $465 so yield of 6%
  • The Valley had an indicative yield of 5.6%
  • South Brisbane had an indicative yield of 5.4%
These figures are a little rubbery.  The apartments being sold may not be the same apartments listed for rent.  The rent is the asking rent, not the rent achieved.  The figures do not take into account vacancy.  And the sales price does not include stamp duty.

Take the following example, of an apartment sold for $431,000 and then rented furnished for $550 a week.  On a simple calculation using these numbers, the yield is 6.63%.  If stamp duty of $13,510 is added, the real sales price is $444,510, so the yield changes to 6.43%.  Once letting agents fees, body corporate fees and rates are taken into account, the yield drops to 4.5%.  And this does not include vacancies and repairs.

I recommend focusing on net yield, after expenses.  For a one bedroom apartment, you should aim for a net yield of 5%.  For a two bedroom, aim for a net yield of 4.5%.  For a three bedroom, 4%.

Saturday, February 1, 2014

Aria's South Brisbane Bet

The AFR on Thursday (30/01/14, p.38) had a full page story about Brisbane apartment developer, Aria.  Some highlights:
  • Aria has sold 188 apartments in three residential towers it has completed in South Brisbane since mid-2012.
  • It has a 20 storey tower under construction on Grey Street.
  • It is about to start another 20 storey tower of the corner of Edmondstone and Boundary Streets.
  • Aria owns a dozen more sites in South Brisbane.
  • South Brisbane is catching up to Bowen Hills and The Valley for residential apartment development.
  • The change is due to construction of office towers, bring 10,000 workers to the area.
  • Residential building approvals have jumped from 151 in 2010/11 to 744 in 2012/13.
  • Gross rental yields are said to be 6%.
  • Prices for Aria's apartments are $7,500 to $8,000 a sqm, and are likely to rise.
  • Aria has lodged a DA for a 26 storey tower on Hope Street that will have over 180 apartments.
  • Aria pays interest on deposits for off-the-plan apartments.
  • 75% of Aria's clients are investors, with fewer than 10% being SMSFs.
  • Half the buyers are from SE Queensland.
  • There are more than 4000 apartments under construction in inner Brisbane.  The biggest supply potential is in Brisbane's North Eastern area, around Bowen Hills and The Valley - this is seen as a risk.

Wednesday, August 28, 2013

Foreign Investors

Foreign buyers snapped up one in every eight new properties built this year - up from one in 20 properties in 2011, National Australia Bank research reveals.

Australia's foreign investment rules ban foreigners from buying established homes, and developers can sell half their properties to foreign investors before they are built.

Colliers International's managing director of residential property in Australia, Peter Chittenden, yesterday said Asian buyers were purchasing 60 per cent of units being sold off-the-plan in big developments.

He said overseas buyers had snapped up two in every three of the 588 luxury apartments in the Singaporean-owned Tower Melbourne development - being constructed as the city's tallest building.

Foreign investors have bought 15 to 20 per cent of the 710 apartments being built by Pearls Australasia and Metro Property Development in three towers in the inner-Brisbane suburbs of Bowen Hills and Fortitude Valley.  Pearls Australasia executive director David Higgins said Asian buyers were more likely to buy the more expensive apartments - costing more than $600,000 - with extra space or views.

Source:  Courier Mail

"According to research from LandMark White, of the 27 apartment projects completed in the inner-city precinct between 2011 and 2012, the vast majority were rental properties.  "Anecdotal evidence reports circa 40% to 50% of these investors are Asian buyers," it reports.  "Current conditions indicate investment in the inner apartment market remains robust due to strong rental growth and tight vacancy."

Source:  Courier Mail, Saturday August 24, 2013, p.33

See also: Property Observer: Trends

Wednesday, August 14, 2013

Alex Perry Residential Struggling?

Alex Perry Residential in the Valley launched with great hype, and, according to hits on this blog, was of great interest to people looking to buy an apartment.  The dreams and promises of 2011 may not come true.  According to Property Observer:

"... the much touted Alex Perry Residential development, which hit the market more than two years ago complete with supermodels and paparazzi, continues to struggle with developer Chrome Property providing no update on off-the-plan sales to Colliers International.  Colliers International records 40 apartments sold to date out of 143 for a project which was first marketed in May 2011 and is now being managed by property development services group Xede, after being re-jigged with three-bedroom apartments replaced with one bedroom apartments and more than half of the 143 apartments to be sold to investors as serviced apartments.

Xede managing director Rod Fiddler told Property Observer the project had received development approval with a builder appointed.

“Sales are continuing and we are progressing towards financiers’ pre-sales targets.  We are not in the business of publicly declaring sales results as these are too often manipulated or misinterpreted," he said.  “Construction is targeted to commence this side of Christmas with demolition as early as September 2013,” he said.

Metro Property Group - A remarkable marketing machine

Last week, Ken Woodley, marketing director of Metro Property Group, zoomed past me in his Jaguar.  He was leaving his Mirvac penthouse and heading in the direction of the Valley.  He must be super happy with the sales of Metro's off-the-plan apartments in the Valley.  As reported today in Property Observer, Metro has been hugely successful in its Valley developments.  Although they are marketed as luxury apartments, in my view, they are small, basic apartments, targeted at foreign investors who cannot buy existing apartments due to FIRB rules.

"Devine’s Metro Property Development group recorded 67 off-the-plan sales over the March quarter for Cambridge Towers, the first stage of its $450 million Central Village development in Fortitude Valley making it the top seller by some margin, according to the latest inner Brisbane apartment update from Colliers International.  Now under construction, Metro had sold 92 out of 165 units in the development as of the end of the March quarter.  In a release earlier this month, Metro said it had sold 80% of the 160 apartments in Oxford Towers, stage two of the project, with one and two bedroom apartments ranging from $275,000 to $575,000.  On completion Central Village will comprise five towers and approximately 970 apartments. The project is expected to take approximately five years to complete."

Sunday, June 9, 2013

Fire at Cathedral Place

There was a fire this afternoon in an apartment on the top floor of Cathedral Place.  This building is located on the edge of Brisbane City, in the Valley. The building was developed by Devine, under the control of David Devine, now of Metro Property Group.

See http://www.abc.net.au/news/2013-06-09/residents-trapped-in-inner-brisbane-apartment-building-blaze/4742780 and Sun Herald

In my opinion, this is a very poor quality building, with small apartments, surrounded by main roads.  I would always be extremely careful before buying or renting any apartment that was built by Devine.

Some apartments for sale in Cathedral Place:  Apt 107, Apt 21, a one bedroom.

Saturday, February 16, 2013

New Apartments

RealEstate.com.au has a section that lists new apartments being sold off the plan.  Here it is for The Valley in Brisbane.  Useful if you want a new, overpriced apartment.


Saturday, November 17, 2012

Metro's Central Village

Metro Property Development has announced a new project with over 1,000 new apartments.  It is called Central Village and is located at 66 Brunswick Street in the Valley.    This is a busy road.   It is not the greatest location either.  Even through it is called "Central Village", according to Google, it is an 18 minute walk (1.5 km) to the Emporium Hotel (shown in the photos on the website) and 1 km to the main part of the Valley.  Neither of these would be pleasant walks.  You should try the walk before buying!

The first stage, called Cambridge Towers, has 163 apartments over 18 levels, mostly 1 bedroom apartments.

See also Brisbane Times story.


Monday, October 22, 2012

M&A Update

The M&A (McLachlan & Ann) mixed use development is under construction on Ann Street in the Valley.  The commercial tower has topped out, and is currently being fitted out for commercial tenants, with a move-in date expected in March 2013.  The residential tower is up to level 8 out of 21 levels, and is reported to be on schedule for completion in late 2013.  From the photo below, it can be seen that the towers are in a commercial area of the Valley, so it will be interesting to see how a residential development changes the character of this area.  It also appears that the residential adjoins the commercial tower in an L-shaped configuration, which blocks some of the aspect from some of the apartments.


Sunday, August 19, 2012

Belise

A nice video fly-through for the planned Belise apartment complex at St Paul's Terrace in the Valley has been made available.  See here.  Also, more information here.  Belise is 21 levels, and has a 228 apartments, a mixture of 1, 2 and 3 bedroom apartments.  Two bedroom, two bathroom advertised from $550,000.

Saturday, July 21, 2012

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.

Saturday, May 5, 2012

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.

Friday, April 13, 2012

Brisbane Not Yet At Bottom


For Apartments:
The Brisbane apartment market fared worse than the house market in the last six months of 2011 and faces an oversupply of this type of property.  REIQ figures for the December quarter 2011 show that rental vacancies in inner Brisbane – where most of the stock is apartments – increased from 1.4% in the September 2011 quarter to 1.9% in the December 2011 quarter while the overall city vacancy rate remained unchanged at 2.3%  

In addition, valuation firm LandMark White is warning that a combination of too many projects and historically low demand could result in an oversupply of new apartments in inner-city Brisbane suburbs like Fortitude Valley and Bowen Hills.

The firm’s property valuers believe affordable “entry-level” apartments within five kilometres of the CBD will continue to appreciate in value but expect values in prestige units in new complexes to continue to fall.
“We have seen demand for prestige units decline again, with extended marketing periods or heavy price reductions,” says WBP.

On the other hand, “entry-level units are being purchased by single professionals who require affordable housing and access to the Brisbane CBD. We have recently seen volumes of sub-$400,000 unit sales increase.”

Michael Yardney is very bearish about Brisbane units, placing the market in the relatively early stages of a property downturn at three o’clock.

“There are a large number of off-the-plan apartments available in the Brisbane CBD and surrounding suburbs. Many of these remain unsold, and this oversupply of properties will put downward pressure on prices and rentals,” he says.  “Many of the apartments that have been sold off the plan are coming on stream in the next few years and have been purchased by investors.  Some will have difficulty getting finance and settling their purchase. Others will be disappointed to see the end value of their properties is less than their purchase price,” Yardney says.

“There will be an oversupply of inner-CBD and near-CBD apartments in Brisbane for a few years, causing prices to fall slightly.”


For houses:
As the house price growth figures from RP Data show, Brisbane’s housing market continues to fall.
House prices were flat over the final quarter of 2011, according to figures compiled the Real Estate Institute of Queensland, which says that one year on from the floods, the housing market is showing signs of stabilising.

Michael Yardney, Louis Christopher and Charles Tarbey all believe Brisbane has some way to go before it bottoms out.

“House prices in Brisbane have dropped for the last two years. Brisbane buyers are lacking confidence to re-enter the market and are sitting on the sidelines waiting for signs that the market has bottomed before they make a purchase,” says Yardney.  “This may occur later this year as Brisbane prices stabilise. Prices are unlikely to start rising until the second half of this year or 2013.”

Saturday, April 7, 2012

Midwood Report - Brisbane OK

"The outlook for the new Brisbane apartments market remains healthy with supply and demand evenly matched, but the Gold Coast market continues to struggle with sales of new apartments still at post-GFC lows, according to the latest Midwood Report.

Unconditional sales of new Brisbane units increased from 74 in the November quarter 2011 to 186 in the February 2012 quarter. Stock levels have declined to 1,446 from a peak of 1,683 in May last year, which equates to two-and-a-half years’ worth of supply at current sales rates.

Investors have been spurred on by rising rental returns, with one-bedroom inner-Brisbane flats registering rental growth over the past 12 months of 9% to a median of $300 per week, with a smaller 4% increase in two-bedroom flats ($380).

The strongest-selling project was David Devine’s Metro Property Madison Heights development in Bowen Hills, which clocked up 57 sales with prices ranging from $350,000 for a one-bedroom apartment to $434,000 to $556,000 for a two-bedroom apartment. Madison Heights features 296 apartments, with 200 sold since launch of the project in March 2011. There were also 15 sales at Metro Property’s The Chelsea development also in Bowen Hills, with 190 out of 195 apartments now sold in the project. Prices range from $355,000 for a one-bedroom apartment to $546,000 for a two-bedroom apartment, and there were 20 sales recorded for Brooklyn on Brookes in Fortitude Valley, Metro’s joint development with Indian-based developer Pearls. The other strong performer was Meriton’s 81-storey Infinity Tower, currently under construction, with 34 sales recorded and prices ranging from $470,000 for a one-bedroom apartment to $650,000 for a two-bedroom unit. To date 123 out of the 287 apartments in the tower have been sold."

Full article here at Property Observer.

Saturday, February 18, 2012

A Reader's Response

Here is a note from a reader:

I read with interest your article “Positive sign for Brisbane Property market.”. When an individual or some organisation with an interest in selling real estate starts telling the world (or anyone else that will listen for that matter), that race is on again and property sales are going just short of gangbusters, you can bet they are not.  

The sellers and marketers of real estate need to understand that the market of potential buyers has changed and we are not fools this time round. We’ve all seen someone close by with mortgage stress trying to pay for something they paid an inflated price for in the first place.  And those properties that have now become liabilities as they continue to fall in value. Just go and ask your bank for a loan to buy “off the plan”, you won’t even get an interview. What does that tell you?

About 24 months ago, a New Farm/Valley real estate agent told me he expected 2006 prices by Jan 2012.  Now he’s revised that to saying year 2000 prices and dropping. That’s no gain in 12 years.  A really good investment isn’t it.  

Take a drive around at night to any of the big new apartment complexes now on the market. Either they can’t afford electricity or they are empty, take your pick – the lights are out on half the block or more, every night. To say the rental market is tight  - well I disagree.  Down Teneriffe and Newstead way, the signs are out day and night offering 1, 2 and 3 brm apartments to rent.  There’s no shortage and dozens to choose from.

Your writer may indeed have seven positive signs to offer from a seller perspective.  Let me offer rule Number One in commerce: The smart money is made upfront during the purchase process, not at sale time 30 years later (if one is lucky enough to be able to keep up the payments with interest for all that time and, by sheer luck, the market is up at the time one wishes to sell).  

In simple terms, it’s made upfront buying at below market value. Real estate in Australia is grossly overpriced and regardless of the spin put by real estate marketers, developers the Treasurer et al, let me say to you all, stop wasting your breath, we know the joke.  Money in the bank on-call earning interest with no risk and renting beats buying at inflated prices and a life time of serfdom paying off a mortgage for an overpriced piece of real estate.  When prices fall by at least another 40%, then perhaps a property may be a consideration. Now that’s a more positive outlook.  

Please don’t come back with “investment” property with rental income or negative gearing.  Rents are already at their peak, the ability to pay will set the market, not the owner’s idea of what rent should be.  It doesn’t take too many weeks of no income to ruin an investment.  Rent is insufficient to fund an investment property. I’ve done the sums dozens of times recently. It doesn’t stack up unless you can exclude the ATO’s share of the deal, and that’s not recommended. And let’s not forget CGT later on. Need I continue.  

As mentioned, when prices fall by at least another 40%, then perhaps a property may be a consideration. The smart money unloaded in 2008 and now rent. We’re laughing at the property market now days.

Friday, February 3, 2012

Mosaic Apartment Complex to Become Grand Chifley Hotel

The Mosaic Apartment complex in the Valley will include a Grand Chifley Hotel.  I hope that the building is constructed to comply with all the proper fire regulations for a hotel.
Story here.

Friday, January 13, 2012

The Dunmore in the Valley

There is a new apartment development currently being marketed in Fortitude Valley.  It is called The Dunmore.  Management rights have been sold to Mantra, and the property will be managed under the Peppers brand as a small hotel.  For investors, the rental returns will be on a pooled basis based on lot entitlements, similar to many Mirvac properties.

According to the selling agent, The Dunmore will comprise of 78 apartments including:
-           42 One bedroom apartments, a number without car parking
-           18 One bedroom + study nook apartments
-           18 Two bedroom apartments (inc. flexibility of dual key access)

Product
Price Range
1 Bedroom
$376,000 - $462,000
1 Bedroom + study
$399,000 - $482,000
2 Bedroom
$572,000 - $632,000