Tennyson Reach Flooded

Extracts from Story from The Australian:

"Yesterday, as the smell in the luxury dwellings at Tennyson Reach, home to tennis greats including Ashley Cooper, rose with the temperature and humidity, owners wondered how the planning controls that were meant to regulate development could have gone so wrong.

Several said they were assured before buying that the ground level would not flood unless the Brisbane River reached a mark of 8.4m, well above the 4.46m at which it peaked last Thursday after a massive discharge of 645,000 megalitres from Wivenhoe Dam on Tuesday.

Between cleaning up and moving out yesterday, several owners said they needed explanations from Mirvac and the council about their true flood immunity and whether the development, completed less than two years ago, should have been approved, given its history of inundation.

The flooding at Tennyson Reach is one small part of a major problem for Brisbane City Council and the Queensland government, as the losses of owners, the liability of developers, and the policies of governments combine in a perfect storm of recrimination and confusion. The residential precinct went through all the council's usual approvals process after the Beattie government sought tenders to make something glorious from the site of the abandoned and obsolete power station.

Apartment owner Chrissie Buchanan, who bought in June 2009 with her husband, Sam, who is a quadriplegic, has had damaged floors, walls and cabinets. She said she was fortunate to have insurance and was in a lot better position than many in Brisbane.

"The things that have been damaged are easily replaced," Ms Buchanan said. "There are people who have lost their businesses and houses. I feel for people who are a lot worse off than ourselves."

She said flooding risk was "not an issue" that was canvassed when she and her husband bought the property. "You never believe it's going to happen to you," she said.

Keith George, who paid $2.25 million for his ground-floor apartment 18 months ago, said he had waist-level water throughout his property. As a result, he will have to rip up floors and carpets, rebuild walls, and most of the apartment's cabinets will have to be replaced. "I'm going to have to spend at least $100,000 to replace the cabinetry," he said. "We won't be back in here for months."

Mr George said the flood risk never came up when he was buying the property, partly because City Hall had approved the development.

"And I always believed the Wivenhoe would not let the Brisbane River come up," he said.

Another resident, Julie Savage, said most people living in the complex were not too concerned on Tuesday night when other parts of the city started to evacuate their homes.

"I got the impression everyone was relaxed because it could withstand a flood of 8.4m, so it would all be fine," she said.

It is not only residents on the ground floor who are affected, with those on the many levels above unable to return home because there is no power and no lifts working. "They were saying 12 weeks until they can return, but it might be eight," Mr George said.

...

Mirvac Development Queensland chief executive Matthew Wallace, who inspected the development yesterday, said the priority was to work with the body corporate to get the buildings reinstated, and "get peoples' lives and properties back together".

The flooding hit the apartments 12 hours before the peak in Brisbane of 4.46m. It is believed the body corporate does not have flood insurance.

Several owners who bought their apartments before the global financial crisis had looked for loopholes to litigate a way out of their contracts before settlement, but failed after filing actions in the District Court. The irony is that being misled over the level of their flood immunity might have provided a perfect exit.

After successfully defending itself against some residents' claims that it misrepresented the quality of the river views, as well as a host of technical legal arguments surrounding the contract documents, Mirvac said the original buyers had to meet, in some cases, hundreds of thousands of dollars in default interest and associated costs."

Mirvac Group said its Waterfront Newstead development had experienced some basement flooding, while its Tennyson Reach building had basement and ground floor inundation.

Mirvac added that the Brisbane floods were having a limited impact on its residential projects.

Aerial Photos of Brisbane

Mirvac's Newstead Waterfront project

Mirvac's Tennyson project

Pradella's Water's Edge

Kelvin Grove Urban Village

Chermside

South Bank

(photos taken September 2010)

When will Park Get Into Drive?

Mirvac's Park development at the Newstead River Park is currently being sold off the plan, and is due for completion in about June 2012. It is divided into two sections, Park North (which is more expensive) and Park South (which is less expensive.) There are 100 apartments in Park. So far, about 30 apartments have been sold. (See prior Park posts.)

It appears to be a quality but basic development. No pool. No gym. But it is priced too high for investors, and so seems to be aimed at owner occupiers.

In Park South, you can buy a 2 bedroom, 2 bathroom apartment on level 5 for $745,000. This apartment is 81sqm internal with a balcony of 15 sqm. The living room and both bedrooms are at the front.

There is also a 2 bedroom, 2 bathroom apartment on level 4 for $740,000. This is 93sqm internal, with a 15 sqm balcony. The living room is at the front. Both bedrooms are at the back. It is a floor-through apartment.

The kitchens for these apartments are located on the wall of the living/dining room. So taking out the bathrooms and balcony, these are 3 room apartments.

Mirvac's Hamilton Project

Listed real estate group Mirvac is set to continue its successful track record of quality residential development on Brisbane in-fill sites after the purchase of a prime 7,637-square-metre former Department of Primary Industry site at Hamilton.

Previous projects by Mirvac on classic in-fill sites in Brisbane include The Arbour On Grey (at South Bank), Quay West, Grosvenor, Waterline Bulimba, Park Hill Village, Mariner’s Reach, Cutters Landing and more recently Waterfront Newstead.

Mirvac’s Queensland CEO Matthew Wallace says the Hamilton site, located in Hercules Street, is six kilometres from the CBD and will likely accommodate more than 500 residences. Its end value will be around $300 million.

“We are very excited about the purchase of this site and while our planning is still in its initial stages at present we will be delivering a residential product that will broaden the price segments in which we operate,” he says. “The site is extremely well located and the same team that has delivered such projects as Cutters Landing, Tennyson Reach and more recently Waterfront Newstead will be behind the Hamilton development.

“The product will be affordable, it will be quality, it meets the State Government and city council’s planning goals of higher density in the CBD fringe and will be a prime example of contemporary urban design.” Wallace says the Hamilton development is a prime example of Mirvac’s national strategy to continually review and refine its product offering in line with demand and opportunities that arise.

...

Wallace says the Hamilton development will leverage off the established amenity within the immediate locale and it is proposed that the urban street environment will integrate with the existing Portside development.

The site is adjacent to the Portside Wharf development and cruise ship terminal, is approximately 500 metres to the City Cat, five minutes to the Gateway Motorway and 10 kilometres south of the Brisbane Airport.

The DPI has recently vacated the site.

“We are planning a range of innovative one and two bedroom product on the site and our research indicates that there will be significant demand for this product and this location,” he says.

“Our plan is to provide affordably priced, high-quality residences to a broad section of the marketplace and our team is excited about turning their minds to a new challenge.

...

Wallace says it is expected that approvals permitting, Mirvac will release the first of the residences at Hamilton next year.

See QBR

Buyer Gets Out of Contract with Mirvac at Tennyson

See Wilson v. Mirvac regarding Tennyson Reach

"it is declared that the applicant has validly cancelled, pursuant to s 214(4) of the Body Corporate and Community Management Act1997 (“the BCCMA”), the written contract entitled “Sale Contract Tennyson Reach” dated 4 December 2007 between the applicant and the respondent"

"The apartment was to be the principal place of residence for the applicant, her husband, and two teenage children. It was adjacent to the Queensland Tennis Centre (a major public facility) and a busy public thoroughfare. At the time the applicant’s husband’s occupation was such that the whole family might reasonably have a heightened sense of vulnerability to unlawful attack. The security system had been promoted as an integral feature of the development and arrangements for its management. Viewed objectively, a person in the applicant’s circumstances in August 2009 would be disadvantaged in a substantial way by its omission. That disadvantage was compounded by the omission of other items of property which would have enhanced the amenity of the apartment."

See also Changes to Your Development: When is a Buyer Materially Prejudiced? - Property and Commercial Services Update - May 2010

Talking Up the Top End

"Publicly listed property company Mirvac has also started the decade on a positive note, selling $30 million worth of $1 million-plus apartments around Queensland in the first three months.

Mr Johnston said the exclusive riverfront development at Tennyson Reach had exceeded everyone’s expectations in the current market. "The fact it’s sold so well in a market affected by the GFC is testament to the quality of the product and the prime location," he said.

The Tennyson Reach sales ranged up to $2.845 million for luxury apartments on the riverfront, located close to the new Tennyson Tennis Centre. Mr Johnson said that apart from families with old money, 2010 had seen the return of the investor – and they’re not all mum and dad investors with $600,000 to spend on a three-bed, one-bath inner-city renter.

An increasing number of multi-million dollar sales have been to investors, such as one riverfront apartment Mr Johnston sold for nearly $3 million last month. The investor is planning on renting the apartment out.

Ms Havig said foreign investors and expats were also present in the prestige market.
"They feel that the market is still going to rise considerably and want to get in before it does," she said."

See Brisbane Times for full story.

Flood Maps

It is interesting to look at flood maps of Brisbane. You can see, for example, that SL8 is in a flood zone. Newstead River Park is an overland flow zone.

Mirvac's Park

The public release of Mirvac's Park is taking place today -- the same day that 3 apartments at Mirvac's Tennyson Reach are being auctioned due to failure of the buyers to purchase -- and where the off-the-plan contract price is now above market price.

In my opinion, Park is overpriced:

"One, two, three bedroom apartments plus Pavilions are available for purchase now off the plan. Featuring classic toned interior colour schemes with functional spaces, clever storage and useable outdoor areas, each tower has a selection of floor plan styles to choose from.

One bedroom apartments from $495,000

Two bedroom apartments from $675,000

Three bedroom apartments from $975,000

Pavilions from $1.6 million"

See this post for a comparison of these prices with current market pricing. Before buying in Park, I would go to the auction of a 2 bed apartment in Mirvac's Quay West -- which is over 125sqm in size, park and river views, a better location, plus a pool (which Park does not have).

Mirvac's Waterfront - New "Park" release

Mirvac has started its pre-release sales campaign for the Park building at its Waterfront development in Newstead. From the materials I have seen, it will have about 100 apartments. The building is divided into two sections, Park North and Park South. There is a mix of 2 and 3 bed apartments, plus some 1 bedrooms at the back of the buildings. It appears that this building has no gym or pool.

The floorplans are very Mirvac. For example, the smallest 2 bedroom apartment has a floorplan similar to the two bedroom apartments in Mirvac's Arbour on Grey at Southbank. The difference is size. The Park two bedroom is 81 sqm internal with a 14 sqm balcony, for a total of 95sqm. The similar Arbour on Grey apartment is 106 sqm in total.

That being said, there are some larger two bedrooms, and all seem to be well designed. There are floor-thu apartments, with the living at the front and bedrooms at the rear. The two bedroom apartments range in size from 95sqm total, to 108sqm, to 112sqm, to 116 sqm.

In some of the 2 bedroom apartments, the living room is very small, and is only 3.5m wide, which in my view is too tight. Most of the apartments have the laundry in a cupboard, and have a galley kitchen along the dining room wall (and no island bench).

The building is way back from the river, on a park to be constructed -- the site was an old industrial site, and had contamination problems that have been cleaned up.

Mirvac plans about 7 other buildings for this site, so there will always be more apartments to compete with. Also, FKP and others are building on Newstead River Park site.That being said, it is generally a good location. See maps here and here and here.

What concerns me is price. An equivalent Mirvac two bed apartment, overlooking Southbank Parklands or the Brisbane Botanical Gardens would sell in the price range $650K to $800K, with sizes from 106 sqm to 132 sqm, and river views. It appears that these new Park apartments, although smaller and newer, will sell for $100,000s more than the current price for a quality Mirvac apartment in Brisbane.

And remember that Mirvac had over 15 apartments fail to settle at Tennyson, and they were resold about 20% less than the original sales price.

Tennyson Reach Auction Results

Mirvac auctioned 9 apartments at Tennyson Reach last weekend. There are more than 15 purchasers of off-the-plan apartments at Tennyson Reach who failed to settle. Mirvac auctioned off nine apartments where there was no legal dispute between the Mirvac customer and Mirvac. (S0 there will be more sales of failed settlements coming.) The auctions were all three bedroom apartments with river or mangrove views. For all these apartments, they sold off-the-plan for more than $1M.

At the auction, there was only one apartment where bidding was more than $1M. This was apartment 3311 (a 6th floor end apartment, 234 sqm including balcony.)

For all other apartments, the majority of bids were in the $800K and $900K range. Most of the apartments did not reach the reserve, and were passed in. Some sold after auction, and at least 5 were still for sale when I looked recently. The apartments that did not sell at auction or immediately after were:

www.johnstondixon.com/3111k
www.johnstondixon.com/3103k
www.johnstondixon.com/4117k
www.johnstondixon.com/4212k
www.johnstondixon.com/4215k

Mirvac is being very secretive regarding the results of the auction and the ultimate sales price. In my experience, when the seller and seller's agent do not publicise auction results, this is often because the results were not good. The results were not reported to APM, and so the weekend auction result report for last weekend was even worse than reported for Brisbane.

Tennyson Reach Lawsuit Judgment

As previously noted, Mirvac is suing a number of its off-the-plan customers for failure to settle at the over-priced Tennyson Reach development. Mirvac was recently successful in court on one issue. A purchaser claimed that the lot size of the apartment was 1sqm less than shown on the plan. This is what the court said on this issue:

"The contract provided that the seller could make changes to the size of a lot of up to five per cent (more or less) than that shown in the Disclosure Statement. Accordingly, the description of the floor area on the plan insofar as it operated to clearly identify the lot should be taken to be up to five per cent different (more or less) from 177 m2, namely that it would have an area of between 168.15 m2 and 185.85 m2. On this basis the reduction in the size of the balcony by 1 m2 as depicted on later plans including plans that became part of the second further statement did not mean that the Disclosure Statement contained information concerning the floor area of the proposed lot that became inaccurate.

In short, insofar as the description of the floor area served to clearly identify the lot, the floor area was to be between 168.15 m2 and 185.85 m2 and this information did not become inaccurate after the Disclosure Statement was given. On this basis, the reduction in the size of the balcony by 1 m2 did not give rise to an inaccuracy that the plaintiff was required to address in a rectification statement under s 22."

The leason to learn here is that most off-the-plan contracts have a clause that says that apartment sizes can vary. In this case, the purchaser could have ended up with 10sqm less than what they believed they were getting, and would still be required to settle.

See http://archive.sclqld.org.au/qjudgment/2009/QSC09-269.pdf

Tennyson Reach Liquidation Sale!

As previously reported on this blog, a number of off-the-plan purchasers at Mirvac's Tennyson Reach failed to settle, and are being sued by Mirvac. Mirvac is now selling these apartments by auction.

"A very frenetic listing week has culminated with the official listing of nine riverfront apartments (under instructions from Mirvac Queensland where the buyers have not settled). These apartments are to be auctioned in a line on Saturday the 14th November at 12 noon. Our clear instructions are that these quality riverfront apartments WILL BE SOLD.

Elsewhere, buyer activity in the middle and upper ends of the market continues to increase as we move into one of the busiest sales times of the year.

Warm Regards,
Dianne Bauer
Associate
JOHNSTON DIXON

New Apartment Developments in Brisbane

There are very few new apartment developments in inner city Brisbane under construction and nearing completion. This is good news for owners of existing apartments, as the number of apartments available for sale will not increase dramatically in the next few years. This is my list:

• Evolution - completed last year, overpriced, developer trying to sell remaining apartments
• Vision - developer in bankruptcy situation - unclear if this will proceed, and if so, in what form
• Trilogy - on hold
• Meriton's Soliel - under construction
• Meriton's Herschel Street highrise - advertised by Meriton as coming soon
• Devine's Hamilton Harbour - not in inner city - construction to commence January 2010, maybe Devine's last apartment project in Brisbane
• Rive at Breakfast Creek - construction commencing
• Waters Edge at West End - first stage: ground works commencing
• Riverpoint at West End - first stage under construction
  
• Code at Bowen Hills
• Multiplex's Promenade at the Hamilton shipping terminal
• Mirvac's Waterfront at Newstead
• Macrossan Towers, under construction, one apartment per floor
• Yungaba at Kangaroo Point, about to start pre-sales in the next month
• Mosaic, in the Valley, in presales

Tennyson Reach Auctions

Two apartments went to auction today at Mirvac's Tennyson Reach. Both were 3 bedroom, 2 bathroom apartment on level 3. They have river and mangrove views.
See Apt 4108 listing and Apt 3205 listing.
For both apartments, there were no bids. Passed in.
This does not bode well for Tennyson Reach. So far, there have been no resales, even though there are about 30 apartments listed for resale. In addition, from what I can determine, between 15 and 20 apartments failed to settle.
When compared with similar quality apartments located in inner city areas, I would say these apartments are worth less than a million, but I am not a valuer. I suspect that the owners (who paid more than $1.3M) will take a bath if they sell.
A warning against buying of the plan during a boom.

Poor returns at Mirvac's Tennyson Reach

I pity the investors who purchased an apartment at Mirvac's Tennyson Reach. The returns are terrible. The quality and size of the apartments are great. There are magnificent river views from most apartments. But the location is pretty terrible. There is no neigbourhood. The tennis centre is very industrial.

As previously reported, Mirvac has sued at least 10 purchasers who did not settle. Valuations for some apartments came in $200,000 or more under contract price. It will be hard for an original buyer to resell without making a loss. There are about 30 apartments listed for resale at present.

As at mid July 2009, there were 23 apartments listed for rent by the onsite manager. There are over 40 rental listings on realestate.com.au. Rents for unfurnished apartments are:

• 2 bedrooms: $500 to $600 per week
• 3 bedrooms: most in the $700 to $790 per week range, although one is listed at $590 per week and another at $600 per week
  

So let's compare with Parklands at Sherwood. The Parklands apartments don't have river views, and are smaller than Tennyson. But the location is better, and the pool area is superior.

Tennyson - 2 bedroom sold for $990,000 and rents for $500 per week
Parklands - 2 bedroom sold for $495,000 and rents for $450 per week

Tennyson - 3 bedroom sold for $1,400,000 and rents for $720 per week
Parklands - 3 bedroom sold for $700,000 and rents for $570 per week

The Tennyson apartments are double in price, but the rent is not.

Tennyson Reach Price Drop

From a Mirvac email:

"We have just been advised that commencing immediately the current prices have been reviewed offering substantial savings on most apartments. 3 Bedroom apartments now commence at $845,000."

Current representative prices for the off-the-plan apartments:

• 3 bed 2 bath, with family room, end apartment and floor-thu, 230sqm in total, level 4, for sale at $960,000
• 2 bed, 2 bath, 190sqm total (so very large), floor-thu, level 6, for sale at $810,000
• 3 bed, 2 bath, with family room, floor-thu, 235sqm, level 4, for sale at $1,165,000

Port Douglas

Queensland residential property analyst Bill Morris, author of the Midwood Queensland Investment Report, said there were almost no sales in new Port Douglas projects over the past quarter.

Units for sale in Port Douglas generally fetched more than $700,000 and anything in that price bracket in the state was struggling.

The strata market was highly volatile and speculative, he said. "It is overpriced and oversupplied," Mr Morris said. "It is a lovely place that does well in booms and badly in recessions."

See The Australian

Email from Juniper:

Sea Temple Resort & Spa – Port Douglas

Luxury 2 Bed 2 Bathroom Penthouse Apartment with Private Rooftop Jacuzzi & BBQ Pavilion

Was $895,000 Now $649,000 That’s a saving of $246,000!

Comes with:

• Large Master Bedroom with En Suite with Spa Bath
• Choice of Lagoon or Golf Course Views
• Massive Rooftop Terrace(120sqm) with Jacuzzi & BBQ
• Fully Remote Central Air-Conditioning
• Personal Lock-Up Garage
• Fully Furnished
• $30,000 a year leaseback for 2 Years
• 25% Discount off all Food & Beverage
• Body Corporate Levies Paid for 2 Years
• Fantastic discounts at Mirvac Hotels throughout Australia

Click Here to view the online video tour for this amazing Penthouse apartment.

Located in the heart of a rapidly expanding North Queensland tourist destination, Sea Temple Resort & Spa Port Douglas is a world-class facility catering for holidaymakers of all tastes.

Sea Temple Resort & Spa Port Douglas is situated right on the beachfront in Port Douglas and provides 136 apartments and beachfront Villas. At ground level the resort features include a fully equipped health spa, a spectacular lobby, restaurant and bar, set amongst the 3,000sqm resort lagoon pool with a pool bar. With the added advantage of being located between Four Mile beach and adjoining our renowned championship Links design18 hole golf course, Sea Temple Golf Club, Sea Temple Resort & Spa Port Douglas offers an irreplaceable lifestyle and investment opportunity.

Sea Temple Resort & Spa Port Douglas is one of the Juniper hot spots in Tropical North Queensland and appeals to astute investors wishing to add this vibrant and exotic location to their property portfolios.

Long-time Port Douglas real estate agent Tony McGrath said “in 23 years in the seaside resort town he had never seen such a discount before”.

Mirvac Sues Many

Mirvac Queensland has recently launched a number of lawsuits in the Supreme Court of Queensland. These lawsuits appear to seek performance of off-the-plan contracts for Tennyson Reach, where the buyer did not settle. Buyers that have been sued include McGann, MG Taylor Nominees, O'Hagan, De Pasquale, Holland, Crooks, Douyere, Thompson, Ibencastle Pty Ltd, Beioley, Campbell, Horne, and others. It would appear that Mirvac believes that the apartments that swiftly sold a few years ago off the plan are now worth less than the contract price? In the third stage of Tennyson Reach, about 70 apartments remain for sale in the Farringford Building. There are at least 12 apartments in stages one and two listed for resale. When I visited recently, the development seemed like a ghost town.

Mirvac's Tennyson Reach

Mirvac's Tennyson Reach (Stage One - the first two apartment buildings) is complete, and residents will be moving in this month.

I visited the display apartment at Mirvac's Tennyson Reach apartment complex. The apartment was on the 6th floor of the Softstone building -- it is a 3 bedroom apartment -- a "floor through" apartment with the main bedroom and a balcony at the front and two bedrooms at the rear. The view from the main bedroom, with floor to ceiling glass, was absolutely fantastic. A great view up river towards Indooroopilly, and you can see the city in the other direction. The Indooroopilly Gold Course is across the river.

The quality of the apartment was A1 plus. Plenty of room. The lighting was particularly clever. I loved the apartment and the view to the river. The view out the back was so-so. If the apartment was not so expensive (about $1.7M for the display apartment) and the location was not so remote, then I would definitely buy!

There seem to be more than 30 apartments listed for re-sale on RealEstate.com.au. Some examples:

• 3 bedroom, 226sqm, 7th floor, $1,850,000
• 3 bedroom, 3rd floor, $1,380,000
• 3 bedroom, 5th floor, $1,600,000
• 2 bedroom, 6th floor, $1,150,000

Tennis Anyone?

Mirvac's Tennyson Reach project sold extremely well to start, but sales appear to have stalled. There are six apartment buildings planned for the site, at Tennyson in Brisbane on the same site as the Queensland Tennis Centre. Although more than 65,000 tennis spectators attended the recent tournament last week, no apartments were sold during the event.

The first two apartment buildings on the site, containing 115 apartments released in June 2007, sold out in three days. Prices ranged from $943,000 to $4.9M. These two buildings should be read for occupancy in the next 5 months.

The third building, currently for sale off the plan, has 92 apartments. Released in December 2007, 70 apartments still remain for sale. Originally marketed with a minimum price of $805,000, the minimum advertised price has now been reduced to $698,000.

According to the AFR, Mirvac plans to release building 4 at the end of 2009.

There are more than 10 resales listed on RealEstate.com.au. These include:

• 3 bed on 6th floor, listed at $1,820,000 (155sqm of internal living plus 15sqm of balcony)
• 3 bed on 5th floor, listed at $1,795,000 (174sqm of internal living plus 21sqm of balcony)
• 3 bed on 4th floor, listed at $1,395,000 (169sqm of internal living plus 21sqm of balcony)
• 3 bed on 2nd floor (so restricted river views I suspect), listed at $1,515,000 (162sqm of internal living plus 15sqm of balcony)

My guess is that these prices will drop, as a number of owners will not want to or can't settle, and rents for these apartments will be luck to be more than $800 a week.