Showing posts with label glut. Show all posts
Showing posts with label glut. Show all posts

Sunday, March 20, 2016

Glut of one bedroom apartments?

Many of the new apartment buildings have a large number of small one bedroom apartments, that have been sold to investors.  These investors are hoping to rent them.  In the past, a one bedroom apartment gives a good rental return relative to purchase price.

However, at present, there is a problem.  There are too many one bedroom apartments.  Owner-occupiers prefer two bedroom  (or larger) apartments or houses.  There is less demand for short term rentals at present, where a one bedroom apartment was a good alternative to a hotel room.  And most young Brisbane renters prefer to share and rent large apartments or houses.

Some one bedrooms are sold without a car park, making them even less attractive.  In my view, a one bed with no car that is 60sqm or less in size is worth about $310,000.

If rents go down, which they will, then capital values will fall.

There may be one exception here.  Some of the riverfront older apartments, which have larger apartments (e.g. a one bedroom over 70sqm) seem to be holding up well.  See for example this apartment and this apartment in Admiralty Towers

Sunday, April 5, 2015

Supply Greater than Demand in Brisbane

4BC Real Estate Guru Keven Turner has downplayed any risk of undersupply in the Brisbane apartment market despite recent reports of an upcoming boom in demand.
Speaking to Mark Braybook on 4BC Mornings, Mr Turner said that the supply of new units far outweighs recent increases in demand.
"If you look at the number of approvals sort of going forward, we've only got something like 2000 or 1500 to 2000 units in the pipeline which is not even going to meet demand."
Mr Turner said Melbourne is at a far greater risk of oversupply with over 20 000 new units being planned or developed.
However Mr Turner has warned potential buyers in Brisbane to be prepared to hold onto properties well into the long term if they are seeking to make a profit.  
"Developers actually have a huge amount of control over new stock, new development stock, so they pretty much do actually control that market.  If you find that you're buying a unit you're probably gonna have to hold onto it for anything up to five to 10 years to get something value back out of it." 
Source 4BC Radio

Thursday, April 2, 2015

Start Sounding the Alarm!

Australia will run into a glut of apartments in just two years led by Melbourne and Brisbane - but other cities are also building more than they need, says BIS Shrapnel.

The forecaster, which started warning about an apartment overhang in Melbourne a year ago, is now also ramping up warnings about Brisbane and Adelaide. 

Brisbane's voracious appetite for apartment construction has resulted in a stock surplus that dates back at least to 2006, but that glut is about to triple from 5000 from last financial year to 15,000 by next year, BIS Shrapnel says.
See AFR

Wednesday, April 1, 2015

No oversupply in Inner Brisbane for Apartments?

"Brisbane's inner-city apartment market is a long way from being oversupplied, according to leading real estate adviser Urbis.
Issuing its detailed inner-city report on Wednesday, the group reported that a record 1500 sales had been made in the December quarter from 111 apartment projects. The September quarter recorded 1400 and such numbers have not been seen since 2007.
Urbis economic and market research director Mal Aikman said future supply was "not an issue" and that investors from Sydney and Melbourne were seeing value in Brisbane.
"Looking forward what we find is that in the first and second quarters of 2015 there are about 5000 apartments available for sale," Mr Aikman said.  "At the current rate of demand, that would equate to a sales rate of about 4000 apartments. So demand is slightly behind, but not significantly, and we're a long way from saying there's an oversupply or a glut."
Urbis noted that the Brisbane central business district had a huge surge in sales almost entirely driven by AMP Capital and Billbergia's Skytower, which saw 415 sales worth $267 million."
In my opinion, Urbis is overly optimistic.  There may be buyers for off the plan apartments, but will there be enough renters?  I suspect that most buyers in Brisbane Skytower are from China.

The Brisbane Times provides this gloss:

He admitted prices for new apartments were highly unlikely to rise in the coming year due to the increased supply and stopped short of guaranteeing they would fall.  However, he indicated tumbling price tags to live in the inner-city were probable.  "Our view is prices aren't likely to rise but whether they will fall really depends on the developers," he said.

Thursday, March 12, 2015

Brisbane Apartment Glut, then Crash

Queensland University of Technology property economist, Professor Chris Eves, has warned a glut in apartments in Brisbane's CBD, South Brisbane and West End would cause a price crash for apartments in 2016.
"I know of one construction company [Hutchinson] that currently has contracts out for 3000 units in those locations and basically when you are looking at those sorts of numbers, you are looking at a serious oversupply, he said.
Professor Eves said research showed there had been a 9% increase in the number of approvals for apartments in inner-city Brisbane in the past year.
"But we are not seeing the same sort of increase in the population," he said.
The crash will hurt major developers, off-the-plan buyers and some banks, but deliver a bonanza for renters and buyers.
"If we see those approval numbers continue, we are looking at the potential of another Gold Coast/Sunshine Coast glut in the unit market."  
He said the glut in Brisbane CBD, South Brisbane and West End apartments would peak in 2016, causing prices to drop sharply.

Sunday, October 26, 2014

Brisbane Skytower

Pre-marketing has commenced for Brisbane Skytower, said to be the tallest residential tower in Brisbane when it is completed.

It is being developed by Billbergia on the old Vision tower site (now called 111 + 222).

It has four sections, a downtown section, an uptown section, a skycity section and a skyrise section.  The starting price for what I guess is a one bedroom apartment starts at $425,000 in the downtown section and increases to a minimum of $595,000 in the skyrise section.

In less than a city block, there are more than 2,000 apartments coming online.  There are three towers, Skytower (at 222 Margaret Street), Abian (on the corner of Alice and Albert) and Camelot (on the corner of Albert and Margaret).  Seems like a glut to me.