Capital Growth

In December's Australian Property Investor magazine, there is a chart from Collier's that lists average capital growth and average hold years for certain Brisbane apartments, as at August 2010. The capital growth period and methodology to produce these figures is not disclosed:

Casino Towers - 5.9%, 3.7 years average hold

Aurora - 5.4%, 3.6 years average hold

Felix - 5.25%, 3.8 years average hold

Quay West - 4.9%, 5.1 years average hold

Festival Towers - 2.3%, 3.9 years average hold

M on Mary - 1.1%, 2.9 years average hold

Charlotte Towers, 0.9%, 3.5 years average hold.

My guess is that the hold period is calculated from when the off-the-plan contract is signed, not when settlement takes place.

Off-the-plan investors in Devine's Festival Towers and Charlotte Towers have clearly lost money. A word of warning for investors in Devine's Hamilton Harbour. Devine's Casino Towers has done ok, but that is unlikely to be repeated now that Jupiters is building a massive hotel across from Casino Towers that will block much of this buildings river views (but not the western sun). Out of this group, my pick would be Quay West -- only 132 apartments, with a long hold period and good capital growth, never to be built out views.

Sunland in Alice

What looks like an Alice in Wonderland building, we have Sunland filing a Development Approval for a 44 Level residential tower in Alice Street. Proposed 233 apartments, from 1 to 4 bedrooms each. They look larger than is typical in Brisbane new developments these days. (Sunland's Circle on Cavill development had large apartments too.) Located at 140 Alice Street, next door to Quay West, on the Carrington site.

The Apple Brisbane

A small apartment building, called The Apple, is currently being marketed off-the-plan in Brisbane. The building comprises 1 bedroom apartments, which are 40 sqm internal, plus (for the most part) a 10 sqm balcony. There is one bedroom, one bathroom and a living room/kitchen. Very small. Priced from $339,000 to $560,000+. The apartments are located at 466 Ann Street, Brisbane and will block some of the views of the lower apartments in "Mantra on Queen". Compare Quay West one bedrooms, 74sqm with park views and a pool, for $450,000 or so, furnished.

Ray White Auction Results

Last Sunday, Ray White had a large scale auction at a Valley hotel, called an Urban Living Auction. There were a number of unique and prestige apartments and houses offered for sale. The results for the sellers were not good. More than 50 propeties were listed for auction, with only 17 selling on auction day (at the auction or shortly after).

"Ray White South Brisbane principal Dean Yesberg said 17 out of 54 properties sold on the day. “We had a large number of buyers and a positive response but the number of sales was down on previous years,” Mr Yesberg said. “Certainly the message we got out of the day is that owners need to bring their expectations back into line with the marketplace and what buyers are prepared to pay. People still want to buy but recent interest rate rises and current uncertainty in the world economy is starting to make people nervous. “It was a successful day but it was a tough day at the office.” Despite the lower than average number of sales on the day, Mr Yesberg expected more properties to be sold over the next week.

Press Release from Ray White

Some good apartments that did not sell include

• Quay West Sub Penthouse Apartment 2403
• Quay West Apartment 2006
• Admiralty Towers Apartment 123

Real Estate Marketing Videos

I like the fact that some agents use YouTube videos to market their properties. Here are some examples:

Quay West, Alice Street, 2 bedrooms

Ciana, 2 bedrooms

Ciana, 2 bedroom listed at $530,000:

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).

Apartments for Sale in Brisbane

I looked at RealEstate.com.au to see what good apartments are for sale at present. These are quality apartments, in my view, and are relatively new. This is a good comparison when looking at off-the-plan developments and other apartments. All include car parking.

Two bedrooms

• Saville Southbank - 9th floor, river and city views, 127 sqm in total, listed at $780,000
• Quay West, 10th floor, 126 sqm, park views, just listed in the $700s with Colliers
• Parksland Sherwood, top floor, park and city views, one year old, includes separate study that could be used as third bedroom. 110 sqm in total, listed at $530,000
• Fresh Toowong, one year old, two pools, 134 sqm, listed at $555,000
• Riva Indooroopilly, river views, but only one bathroom, 90 sqm, listed at $535,000
• Ciana Indooroopilly, includes separate study that could be used as third bedroom, huge balcony, over 150sqm, listed at $649,000

Larger One bedroom in buildings about 10 years old

• Admiralty One, direct riverfront, level 12, 77 sqm listed at $600,000
• Admiralty One, side river views, listed at $449,000 or $485,000
• Quay West, 10th floor, river and park views, over 70 sqm, listed at $460,000

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.

Annual Rate of Return for Apartments in Downtown Brisbane

Often, there are statistics that are published that set out the change in the medium house or apartment price. These statistics are often not helpful. For example, if in one quarter there are many low end properties that are sold, and in the next quarter, there are many top end properties sold, the medium price will increase. Similarly, if there are new apartments entering the marketplace, this will most often result in an increase in the medium price for the area. However, in both these cases, you cannot say that values have increased.


I think that it is more useful to track the gains on resale of the same property over time. I have looked at three quality apartment buildings in Brisbane, namely Admiralty Towers, Admiralty Two and Quay West on Alice Street to see what capital gains owners have made. I have looked at all apartments that have been reported as sold this year (2009), and then looked back to see what the owner paid when first purchasing the apartment. In all but one case, the resale was the third or more resale of the same apartment. I have then calculated the Annual Rate of Return, using this calculator. The Rate of Return only looks at capital gains, and does not take into account rent received, expenses paid or transaction costs such as stamp duty or agents fees. Here are the results (with P-Price being the original purchase price on the P-Date; and Sell Price being what that owner received when reselling this year):

Lot	P-Price	P-Date	Sell Price	Sell Date	A RoR
Admiralty Towers One
5	$282,500	2/08/01	$520,000	25/09/09	7.77%
73	$490,000	19/10/06	$600,000	30/06/09	7.79%
76	$498,000	15/05/03	$685,000	31/08/09	5.19%
92	$510,000	21/03/07	$545,000	7/08/09	2.83%
119	$810,000	1/02/06	$1,200,000	19/03/09	13.36%
Quay West
23	$230,000	6/12/02	$420,000	8/07/09	9.57%
24	$435,000	16/05/08	$450,000	18/04/09	3.74%
49	$256,000	4/11/95	$425,000	25/09/09	3.71%
55	$310,000	10/05/04	$440,000	25/02/09	7.58%
68	$585,000	4/03/05	$675,000	11/10/09	3.15%
99	$400,000	13/08/96	$700,000	25/09/09	4.35%
120	$275,000	28/04/97	$460,000	2/09/09	4.25%
Admiralty Two
20	$445,000	13/09/04	$725,000	11/05/09	11.03%
47	$700,000	29/08/05	$945,000	1/09/09	7.77%
81	$720,000	23/11/07	$725,000	27/03/09	0.51%
94	$615,000	19/12/06	$730,000	7/05/09	7.45%
97	$340,000	20/02/98	$780,000	12/06/09	7.61%
106	$490,000	15/11/04	$750,000	24/06/09	9.67%
107	$485,000	1/02/02	$990,000	15/08/09	9.92%
124	$615,000	13/04/07	$750,000	19/10/09	8.20%
137	$432,000	22/03/97	$815,000	15/07/09	5.28%

Annual Rate of Return for Brisbane Apartments

Often, there are statistics that are published that set out the change in the medium house or apartment price. These statistics are often not helpful. For example, if in one quarter there are many low end properties that are sold, and in the next quarter, there are many top end properties sold, the medium price will increase. Similarly, if there are new apartments entering the marketplace, this will most often result in an increase in the medium price for the area. However, in both these cases, you cannot say that values have increased.

I think that it is more useful to track the gains on resale of the same property over time. I have looked at three quality apartment buildings in Brisbane, namely Admiralty Towers, Admiralty Two and Quay West on Alice Street to see what capital gains owners have made. I have looked at all apartments that have been reported as sold this year (2009), and then looked back to see what the owner paid when first purchasing the apartment. In all but one case, the resale was the third or more resale of the same apartment. I have then calculated the Annual Rate of Return, using this calculator. The Rate of Return only looks at capital gains, and does not take into account rent received, expenses paid or transaction costs such as stamp duty or agents fees. Here are the results (with P-Price being the original purchase price on the P-Date; and Sell Price being what that owner received when reselling this year):

Lot	P-Price	P-Date	Sell Price	Sell Date	ARoR
AD1
5	282500	2001	520000	25/09/09	7.77%
73	490000	2006	600000	30/06/09	7.79%
76	498000	2003	685000	31/08/09	5.19%
92	510000	2007	545000	7/08/09	2.83%
119	810000	2006	1200000	19/03/09	13.36%
QW
23	230000	2002	420000	8/07/09	9.57%
24	435000	2008	450000	18/04/09	3.74%
49	256000	1995	425000	25/09/09	3.71%
55	310000	2004	440000	25/02/09	7.58%
68	585000	2005	675000	11/10/09	3.15%
99	400000	1996	700000	25/09/09	4.35%
120	275000	1997	460000	2/09/09	4.25%
AD2
20	445000	2004	725000	11/05/09	11.03%
47	700000	2005	945000	1/09/09	7.77%
81	720000	2007	725000	27/03/09	0.51%
94	615000	2006	730000	7/05/09	7.45%
97	340000	1998	780000	12/06/09	7.61%
106	490000	2004	750000	24/06/09	9.67%
107	485000	2002	990000	15/08/09	9.92%
124	615000	2007	750000	19/10/09	8.20%
137	432000	1997	815000	15/07/09	5.28%

No French Quarter for Brisbane

Devine is not proceeding with its French Quarter hotel and apartment project in Alice Street. The site was listed for sale in yesterday's AFR.

As mentioned in a prior post, Devine is selling the French Quarter site.

Here are the sale details: http://www.frenchquarterbrisbane.com.au/

"The French Quarter vision has been shaped by Devine Limited after extensive research, planning and design. The French Quarter includes an agreement with IHG for an InterContinental* Hotel which will complement the development. The marketing and sales success of the apartments at French Quarter is predicated on five key success drivers:

• Brisbane’s best CBD residential address.
• A “cutting edge” architectural design.
• A broad mix of 4 and 5 star apartment types.
• The Parisian style retail environment presenting to Albert Street.
• The presence of the world renowned InterContinental Hotel.

Alice Street is Brisbane’s equivalent of Macquarie Street in Sydney and Clarendon Street in Melbourne. Alice Street has long been recognised as Brisbane’s best apartment address with the presence of The Parliament of Queensland, The Queensland Club, Quay West and The Grosvenor. Buildings on Alice Street overlook the city’s Botanical Gardens and the Brisbane River with high level views as far as the Border Ranges, Moreton Bay and the Glasshouse Mountains.

Albert Street is the principal pedestrian link between the gardens and the Queen Street Mall. This active pedestrian friendly street is well patronised for its many cafés and retail shops."

See also The Australian

Also, Story in the Courier Mail:

Twin tower plans for Brisbane axed by Devine
Michelle Hele | September 17, 2009 12:00am | CM

ANOTHER residential tower project has fallen over in the Brisbane CBD, with Devine pulling out of its $1 billion French Quarter development. An international competition was held to pick its designer and it was to house the most expensive apartments in Brisbane – up to $15 million.

Devine spent years buying up individual apartments in buildings which are currently on the land so it could control the site on the corner of Albert, Alice and Margaret streets. Stage one was to feature a tower with a luxury six-star hotel, with apartments on top, retail and commercial space on the lower levels and Parisian-style cafes and walkways.

But with Devine appointing agents to sell the property it seems unlikely it will ever be delivered.

Meanwhile, Austcorp's Vision Tower is still in limbo with no work carried out for months and some of the group's companies in the hands of voluntary administrators.

Work is also delayed on Trilogy Tower, an $800 million project on the site of the former Red Cross Blood Bank, and Metacap scrapped plans for its $500 million Empire Square tower on Elizabeth St.

Geoff McIntyre of Jones Lang LaSalle and Rick Bird of Ray White Transact have been appointed to sell the French Quarter site and will market the property internationally. Mr McIntyre said it was a one-in-a-million site. Mr Bird spent months negotiating the individual purchase of units in the apartment blocks. The agents said the plan was to sell the property to another party which would go ahead with the project.

Devine managing director David Devine said he was disappointed but after a review of operations the company realised house and land packages were providing a better short-term return at lower risk. The group was also reviewing its land holdings in Queensland and would sell some soon.

Mr Devine said the focus now would be on buying more land in Victoria so the group could turn it into profits quickly.

"You can't do everything that you want to do," he said. "It is disappointing but the fact is that our business is exceptionally good on the house and land front where demand is high and supply is low. We have too much land in some areas in Queensland and we are looking at selling that."

Mr Devine said good sites such as the French Quarter site would sell in any market. Offers to purchase French Quarter close on November 12. Mr McIntyre said in a good market the site could make up to $90 million. Mr Bird said with all the work that had gone into planning, a developer would have a significant head start on the project.