It is worth considering other established buildings, such as Arbour on Grey. An excellent 3rd level, 2 bed, 2 bath with park & river views is listed for rent fully furnished at $690 a week, much better value in my opinion.
Showing posts with label rent. Show all posts
Showing posts with label rent. Show all posts
Sunday, August 31, 2014
Austin on Grey Street
Austin on Grey Street is almost fully built. The rental campaign has started. A 2 bed 1 bath apartment on a high floor with "breathtaking views" is listed for rent at $550 a week. My guess is that this is a bait & switch offer, and that you will not be able to rent an apartment with "breathtaking views" at this rent. I suspect that the photos in the advertisement are not from this apartment, because the same photos are used for all apartments advertised for rent. A small two bedroom two bath is listed at "from" $640 a week unfurnished. This building is very close to a major traffic intersection.
It is worth considering other established buildings, such as Arbour on Grey. An excellent 3rd level, 2 bed, 2 bath with park & river views is listed for rent fully furnished at $690 a week, much better value in my opinion.
It is worth considering other established buildings, such as Arbour on Grey. An excellent 3rd level, 2 bed, 2 bath with park & river views is listed for rent fully furnished at $690 a week, much better value in my opinion.
Saturday, August 30, 2014
Rent Without An Agent
If you engage a real estate agent to look after your property rental, the costs can be rather high compared with the service actually received. Typically, the cost is a weeks rent to find a tenant, plus GST, and then 8.8% to collect the rent and do the ongoing management. On rent of $550 a week, assuming that you have a tenant change once a year, the cost is over $3,000 a year.
If you live near your rental property, and don't mind learning how to legally comply with rental laws (the RTA website has good information), then Rent My Estate is a good service for landlords. It helps manage the realestate.com.au advertising process, and is expanding into other programs for landlords (such as recording rents received). Readers of this blog will receive a $20 discount via this link shared by a reader - thanks John. The savings year on year could be substantial, if you are prepared to put in the time yourself to do things properly. There is also a good blog on that site.
If you live near your rental property, and don't mind learning how to legally comply with rental laws (the RTA website has good information), then Rent My Estate is a good service for landlords. It helps manage the realestate.com.au advertising process, and is expanding into other programs for landlords (such as recording rents received). Readers of this blog will receive a $20 discount via this link shared by a reader - thanks John. The savings year on year could be substantial, if you are prepared to put in the time yourself to do things properly. There is also a good blog on that site.
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%.
High-rise Brisbane
A newspaper article by Matusik in the Courier Mail today reflected on potential changes to the Brisbane inner city apartment market:
"Brisbane is set for an increase in the supply of new inner-city digs. Brisbane could well face an oversupply of downtown apartment stock. And that increase in stock might more resemble a tsunami in terms of its impart on the market and potential investment outcomes.
For the past five years, the Brisbane market has been undersupplied, with an underlying demand of about 9000 new dwellings across Brisbane. However, when we break down future demand by market segment, going rental demand (those who occupy a significant percentage of inner-city apartments) appears likely to fall. And Brisbane's future demand will more likely be deriven by the increasing downs and retirement markets. Those folk are, for the main, not enticed by large, high-rise complexes.
Rents are down, the vacancy rate is increasing and some resales in recently completed inner-city apartment buildings are already selling for losses.
Currently, the vacancy rate in Brisbane city is 4.2%. Two years ago it was 1.2%.
And there are now 276 properties (as at June) for rent in Brisbane/Spring Hill, compared with just 48 two years ago. For the first time in five years, rents have fallen."
"Brisbane is set for an increase in the supply of new inner-city digs. Brisbane could well face an oversupply of downtown apartment stock. And that increase in stock might more resemble a tsunami in terms of its impart on the market and potential investment outcomes.
For the past five years, the Brisbane market has been undersupplied, with an underlying demand of about 9000 new dwellings across Brisbane. However, when we break down future demand by market segment, going rental demand (those who occupy a significant percentage of inner-city apartments) appears likely to fall. And Brisbane's future demand will more likely be deriven by the increasing downs and retirement markets. Those folk are, for the main, not enticed by large, high-rise complexes.
Rents are down, the vacancy rate is increasing and some resales in recently completed inner-city apartment buildings are already selling for losses.
Currently, the vacancy rate in Brisbane city is 4.2%. Two years ago it was 1.2%.
And there are now 276 properties (as at June) for rent in Brisbane/Spring Hill, compared with just 48 two years ago. For the first time in five years, rents have fallen."
Sunday, June 1, 2014
Skyring Gasworks Newstead
Tom Dooley (TDD) is launching their Skyring development at the Gasworks site in Newstead (30 Festival Place). This area is a popular development area at present, with FKP, Devine, Mirvac and Metro all with off-the-plan and completed developments in this area.
The development has 23 floors, with 11 apartments per floor.
TTD is has a chart on their website, representing what rents they believe will be achievable. Some examples from the 10th floor:
The development has 23 floors, with 11 apartments per floor.
TTD is has a chart on their website, representing what rents they believe will be achievable. Some examples from the 10th floor:
- Two bedrooms - 82 sqm internal, 20 sqm balcony - $660 per week.
- Two bedrooms - 69 sqm internal, 18 sqm balcony - $590 per week.
- Two bedrooms - 105 sqm internal, 30 sqm balcony - $810 per week.
- One bedroom - 60 sqm internal, 17 sqm balcony - $525 per week.
Sunday, May 4, 2014
Two Tier Property Market in Brisbane?
Is there are two tier market in Brisbane for apartments? Are Brisbane owners, investors and renters looking for one kind of apartment, but developers are building another kind of apartment for foreign investors? Some commentators have said that there will be an oversupply of apartments in Brisbane. For a certain kind of apartment, that may be correct. But for what Brisbanites want, there may be an undersupply.
Take Bowen Hills for example. It is close to the city, but has very few local amenities. It was a light industrial area, and with highways cutting through it. It is not inner city, and too far to walk to downtown or the Valley. There are no parks or restaurants or river views. There are number of large apartment buildings being constructed in that area, with small one and two bed apartments. A lot of the sales and marketing is targeted at foreign investors, particularly the Chinese. But do locals want to live in these apartments? They are very small, and the buildings are very dense. There are very few owner occupiers in these buildings.
Some examples are Madison Heights (286 apartments) and Chelsea (195 apartments). It appears that it is taking a long time to rent out or re-rent the apartments in these buildings. Rents are being reduced, for example, to $485 for a two bedroom apartment. I suspect that the rental market is saying that, for the location and facilities, you can do much better elsewhere, so the apartments are renting only if rents are very competitive.
On the other hand, river front apartments in Brisbane city, apartments in New Farm, and "normal" residential locations such as Indooroopilly (where very few new apartments have been added to the market in the past five years), appear to be selling well and renting quickly. These apartments are often much larger (130 sqm compared to 75 sqm for a 2 bedroom apartment, for example), have a better location, have more owner occupiers, and there is not an oversupply.
I also wonder what rents and returns the investors in the new apartment buildings have been promised, and what they are actually receiving, and for how long the apartment sits empty not generating rent?
Will the rents hold up when it comes renewal time in six months or a year? Will tenants stay on or move out? The Chelsea is an example of a building that appears to have a number of apartments for rent; it completed in 2012, and received bad press at the time. (An advertisement below from last year for Urban Edge at Kelvin Grove, settled last year, where apartments will be coming up for renewal about now. Kelvin Grove is a much better location than Bowen Hills in my view.)
Take Bowen Hills for example. It is close to the city, but has very few local amenities. It was a light industrial area, and with highways cutting through it. It is not inner city, and too far to walk to downtown or the Valley. There are no parks or restaurants or river views. There are number of large apartment buildings being constructed in that area, with small one and two bed apartments. A lot of the sales and marketing is targeted at foreign investors, particularly the Chinese. But do locals want to live in these apartments? They are very small, and the buildings are very dense. There are very few owner occupiers in these buildings.
Some examples are Madison Heights (286 apartments) and Chelsea (195 apartments). It appears that it is taking a long time to rent out or re-rent the apartments in these buildings. Rents are being reduced, for example, to $485 for a two bedroom apartment. I suspect that the rental market is saying that, for the location and facilities, you can do much better elsewhere, so the apartments are renting only if rents are very competitive.
On the other hand, river front apartments in Brisbane city, apartments in New Farm, and "normal" residential locations such as Indooroopilly (where very few new apartments have been added to the market in the past five years), appear to be selling well and renting quickly. These apartments are often much larger (130 sqm compared to 75 sqm for a 2 bedroom apartment, for example), have a better location, have more owner occupiers, and there is not an oversupply.
I also wonder what rents and returns the investors in the new apartment buildings have been promised, and what they are actually receiving, and for how long the apartment sits empty not generating rent?
Will the rents hold up when it comes renewal time in six months or a year? Will tenants stay on or move out? The Chelsea is an example of a building that appears to have a number of apartments for rent; it completed in 2012, and received bad press at the time. (An advertisement below from last year for Urban Edge at Kelvin Grove, settled last year, where apartments will be coming up for renewal about now. Kelvin Grove is a much better location than Bowen Hills in my view.)
Friday, May 2, 2014
Likely increased investor activity in Brisbane predicted
From RP Data Press Release: "Gross rental yields on a typical Melbourne house are sitting at 3.3 per cent and Sydney gross yields are a bit higher at 3.7 per cent. According to Mr Lawless, such a scenario of low yields in these two cities suggests that housing values have moved out of step with rental rates which is likely to dampen some of the investor exuberance we have seen in both of these markets. I wouldn’t be surprised if Brisbane, where home values are much more affordable and rental yields are comparatively healthy, will start to see an increase in investor related demand based on Brisbane’s early stage in the growth cycle and comparatively healthy rental yields,” he said."
Monday, April 21, 2014
Vacancy Rate and Rents Fall in Brisbane
Recent Press Release from REIQ:
The majority of Queensland’s rental markets have returned to tighter conditions, according to the REIQ’s latest Residential Rental Survey.
REIQ CEO Anton Kardash said the survey, carried out in March across all REIQ accredited agencies, found that the majority of the state recorded lower vacancy rates compared to three months ago.
“Queensland is seeing a return to a tighter rental market,” he said. “Stronger tenant demand and a decrease in the availability of stock are the common themes across the State.”
In Brisbane, the overall vacancy rate for the metropolitan area was back down to 2.3 per cent, as seen at the end of September last year. Excluding the spike recorded in December, the Brisbane vacancy rate has been around the 2 to 2.3 per cent mark for over 12 months now. As expected, the Brisbane inner city rental market returned to a healthier vacancy rate following a spike in December. This is reportedly the result of easing asking rents to ensure vacancies are refilled quickly and also to compete with the new stock on the market. ...
Despite increased investor activity across Queensland in recent months, local agents report an increased number of sales of former investment properties to owner-occupiers, reducing the overall rental pool in some areas.
The majority of Queensland’s rental markets have returned to tighter conditions, according to the REIQ’s latest Residential Rental Survey.
REIQ CEO Anton Kardash said the survey, carried out in March across all REIQ accredited agencies, found that the majority of the state recorded lower vacancy rates compared to three months ago.
“Queensland is seeing a return to a tighter rental market,” he said. “Stronger tenant demand and a decrease in the availability of stock are the common themes across the State.”
In Brisbane, the overall vacancy rate for the metropolitan area was back down to 2.3 per cent, as seen at the end of September last year. Excluding the spike recorded in December, the Brisbane vacancy rate has been around the 2 to 2.3 per cent mark for over 12 months now. As expected, the Brisbane inner city rental market returned to a healthier vacancy rate following a spike in December. This is reportedly the result of easing asking rents to ensure vacancies are refilled quickly and also to compete with the new stock on the market. ...
Despite increased investor activity across Queensland in recent months, local agents report an increased number of sales of former investment properties to owner-occupiers, reducing the overall rental pool in some areas.
Wednesday, February 5, 2014
Executive Rentals Drying Up in Brisbane?
From Bees Nees:
Worryingly, the general consensus was that the executive rental market has been hit by the slow down in the mining boom and the completion of many plants that employed large numbers of workers. The feedback we got is that there may be a gap in the market between construction tailing off and the take up of skilled workers to run these plants. How long the gap will be is hard to quantify.
Two prominent executive relocation companies have said this was the quietest January they can recall in a long time. Based on this information our client has now decided to offer the property with an unfurnished option in the hope of boosting local enquiry. Watch this space in the coming months to see if executives rents are affected by this slow down.
Friday, January 31, 2014
Vacancy Rate Increases for inner Brisbane
As the Queensland sales market kicks into gear, pressure on the rental market has eased according
to the Real Estate Institute of Queensland (REIQ).
The REIQ Residential Rental Survey, carried out in December across all REIQ accredited agencies, found the majority of the State recording higher vacancy rates compared to the previous three months. REIQ chairman Rob Honeycombe said that it was usual for one market to thrive more than the other.
“Over the past few years, it has been the rental sector which has been the better-performing segment of the market,” he said. “Now while the sales market returns to healthy levels of activity after a period of subdued volumes, the rental market is experiencing a slight easing of vacancy rates after a long period of tight rental conditions. The rental market is also cyclical with January and February being the peak periods for demand. While rental markets within the mining regions are struggling with both supply and demand imbalances, the outlook for the rest of the Queensland rental market remains positive as business returns to normal now the Christmas holidays have passed.”
According to the survey data, over one third of REIQ member agencies reported an increase in investor activity which subsequently added stock to the rental pool. In addition to this, the end of the year is historically a period of lower tenant demand with many vacating over the Christmas and New Year periods, usually in a move to another area for either work or educational reasons. Over recent weeks, however, there has been an increase in enquiry and demand from tenants as is usual for January.
In the Brisbane City local government area, the vacancy rate as at the end of December was 3.2 per cent, up from 2.3 per cent at the end of September. A vacancy rate of around 3 per cent however is deemed to represent healthy levels of supply and demand.
Across Brisbane the results are varied. Inner Brisbane - suburbs within 5km of the CBD - recorded the highest increase, up 1.7 percentage points to 4.1 per cent.
“Local agents have reported a slight oversupply of rental properties with a number of new developments coming onto the market,” Mr Honeycombe said. “Also at the end of the year we generally experience lower tenant demand as residents vacate for work transfers or the end of the university year. From mid-January, demand increases again as tenants begin their search for their new property.”
The REIQ Residential Rental Survey, carried out in December across all REIQ accredited agencies, found the majority of the State recording higher vacancy rates compared to the previous three months. REIQ chairman Rob Honeycombe said that it was usual for one market to thrive more than the other.
“Over the past few years, it has been the rental sector which has been the better-performing segment of the market,” he said. “Now while the sales market returns to healthy levels of activity after a period of subdued volumes, the rental market is experiencing a slight easing of vacancy rates after a long period of tight rental conditions. The rental market is also cyclical with January and February being the peak periods for demand. While rental markets within the mining regions are struggling with both supply and demand imbalances, the outlook for the rest of the Queensland rental market remains positive as business returns to normal now the Christmas holidays have passed.”
According to the survey data, over one third of REIQ member agencies reported an increase in investor activity which subsequently added stock to the rental pool. In addition to this, the end of the year is historically a period of lower tenant demand with many vacating over the Christmas and New Year periods, usually in a move to another area for either work or educational reasons. Over recent weeks, however, there has been an increase in enquiry and demand from tenants as is usual for January.
In the Brisbane City local government area, the vacancy rate as at the end of December was 3.2 per cent, up from 2.3 per cent at the end of September. A vacancy rate of around 3 per cent however is deemed to represent healthy levels of supply and demand.
Across Brisbane the results are varied. Inner Brisbane - suburbs within 5km of the CBD - recorded the highest increase, up 1.7 percentage points to 4.1 per cent.
“Local agents have reported a slight oversupply of rental properties with a number of new developments coming onto the market,” Mr Honeycombe said. “Also at the end of the year we generally experience lower tenant demand as residents vacate for work transfers or the end of the university year. From mid-January, demand increases again as tenants begin their search for their new property.”
Wednesday, January 1, 2014
Infinity Brisbane by Meriton
Meriton's Infinity tower in Brisbane is now at its full height -- 81 levels -- and is now the tallest tower in Brisbane. The internal fit out in the upper levels is not complete. Lower levels are being occupied. Meriton is selling apartments up to level 64.
A two bedroom, two bathroom, 1 car apartment in the middle for the building will sell for around $665,000. These apartments are being offered for rent at $690 a week. No balcony. Internal size is 86sqm to 90sqm, which is not large. I suspect many of the buyers are not Australian residents.
Thursday, December 12, 2013
Rent My Estate
For landlords who do not like real estate agents, a new service -- Rent My Estate -- allows landlords to list on real-estate.com.au. It provides a good interface for landlords to create and manage online advertisements.
Where the rent is about $650 a week, an agent will typically charge more than $4,000 a year for property management services. Most agents, in my opinion, do a poor job on the rental side. So if you have the time and skills, and live near your rental property, you can save a substantial amount and get a better result using Rent My Estate.
Where the rent is about $650 a week, an agent will typically charge more than $4,000 a year for property management services. Most agents, in my opinion, do a poor job on the rental side. So if you have the time and skills, and live near your rental property, you can save a substantial amount and get a better result using Rent My Estate.
Tuesday, October 8, 2013
Rental Yields
Brisbane rental yields have increased dramatically over the past five years. At least one commentator is suggesting that this means Brisbane real estate prices have room to increase.
Friday, October 4, 2013
Brisbane Apartment Rents Fall
According to RP Data, rents for Brisbane apartments decreased by 1.5% over the past quarter. From what I can tell, it is harder for landlords in Brisbane to find tenants, and rents are decreasing.
Saturday, September 21, 2013
Prices Up, Rents Down?
Some real estate agents are telling me that sale prices for Brisbane apartments are increasing, with apartments selling faster, particularly those that suit owner/occupiers. On the other hand, agents are having trouble renting apartments -- rents are decreasing and days vacant are increasing. Thus, for investors, rental yields are getting worse, not better.
Thursday, September 5, 2013
Zero Rental Growth in Brisbane
According to RP Data, Brisbane rents have remained flat for the past 12 months, and have fallen slightly in the past quarter.
Monday, August 26, 2013
Rents and Vacancies
A number of onsite managers have reported to me that they are taking much longer than expected to fill vacancies, and that rents are going down, even when a tenant renews.
Thursday, August 15, 2013
Saturday, August 10, 2013
Rental Returns
I have conducted a review across about 20 apartment rental properties in Brisbane and S.E. Queensland, comparing the 12/13 FY with the previous financial year. The analysis is done before depreciation and tax is taken into account. Some of my conclusions, from this limited review:
- rent increases in the past year have been minimal, and I suspect below inflation
- vacancy periods between tenants have increased slightly
- body corporate fees have increased dramatically, and well more than rents and inflation
- council charges and water rates are slightly higher
- long term rental properties do much better than vacation or short term rental properties
- net returns, before interest, have decreased compared to the previous financial year (mostly due to body corporate increases being more than rent increases)
- fees and charges from rental agents are high, especially when considering the work done and value received -- self managed properties do better than agent managed properties for this reason, even if the rent received is slightly below market rent
- if interest rates had not decreased, then the overall picture would not have been rosy.
- because of decreases in interest rates, the overall cash position (not taking into account depreciation and tax) improved in the 12/13 FY compared with the previous financial year.
Friday, May 31, 2013
Brisbane Rental Report
Brisbane Letting Agent RBCX has issued the following rental report for Brisbane City and inner Brisbane:
"The CBD market seems to be like no other. Apart from short periods here and there, the demand for rental properties in the CBD is very strong. There may not be the 20+ attendees at every ‘Open Inspection’, but there are generally eight to 10 interested parties.
The rental demand is strong for units up to $800 per week Рand this includes furnished units. Above that level, the market shrinks significantly and vacancy periods can be three to four weeks+, unless the property is new and/or modern, with fixtures, fittings and d̩cor to match. River and City views are essential.
"The CBD market seems to be like no other. Apart from short periods here and there, the demand for rental properties in the CBD is very strong. There may not be the 20+ attendees at every ‘Open Inspection’, but there are generally eight to 10 interested parties.
The rental demand is strong for units up to $800 per week Рand this includes furnished units. Above that level, the market shrinks significantly and vacancy periods can be three to four weeks+, unless the property is new and/or modern, with fixtures, fittings and d̩cor to match. River and City views are essential.
The CBD buildings that experience less demand are those that offer short-term letting, as well as long-
term residential. These buildings can be very noisy with a pervasive party atmosphere.
The Inner-City market is not faring as well as the CBD market.
In the last quarter of 2012, the rental market tightened markedly with the first signs of the downturn in the Resources Sector. There has been further erosion to rents in 2013. There are many reasons why the rental market is flat and rents have contracted: the gradual 2012 exodus of Corporate tenants, who were the bread-and-butter of Inner-City rentals, gained momentum. In some areas, they have almost disappeared from the rental landscape; the announcement of the Federal election almost six months out from 14 September 2013 has seen many businesses go into semi-hibernation; job shedding in the Public Service market; the fallout from a Resources Sector seemingly in increasing decline; job insecurity; rising unemployment due to a flat economy; and loss of consumer confidence.
Also, many people who were Inner-City tenants have moved to the suburbs. They are prepared to sacrifice proximity to the city for more affordable rents. This trend is increasing with properties, particularly houses within 10 kms of the CBD being in heavy demand.
Our experience is the Inner-city renter wants everything within walking distance: transport, shopping, entertainment. They do not want to have to drive to services, facilities, infrastructure and entertainment precincts. There is also a great deal more competition from new developments in the Inner-City areas, including Kangaroo Point, Teneriffe and New Farm. New building stock with all the aforementioned criteria is offered at rents below those of older, established buildings. New buildings with trendy, contemporary interiors and more attractive rents are appealing to the sought-after Corporate market, as well as private renters."
The Inner-City market is not faring as well as the CBD market.
In the last quarter of 2012, the rental market tightened markedly with the first signs of the downturn in the Resources Sector. There has been further erosion to rents in 2013. There are many reasons why the rental market is flat and rents have contracted: the gradual 2012 exodus of Corporate tenants, who were the bread-and-butter of Inner-City rentals, gained momentum. In some areas, they have almost disappeared from the rental landscape; the announcement of the Federal election almost six months out from 14 September 2013 has seen many businesses go into semi-hibernation; job shedding in the Public Service market; the fallout from a Resources Sector seemingly in increasing decline; job insecurity; rising unemployment due to a flat economy; and loss of consumer confidence.
Also, many people who were Inner-City tenants have moved to the suburbs. They are prepared to sacrifice proximity to the city for more affordable rents. This trend is increasing with properties, particularly houses within 10 kms of the CBD being in heavy demand.
Our experience is the Inner-city renter wants everything within walking distance: transport, shopping, entertainment. They do not want to have to drive to services, facilities, infrastructure and entertainment precincts. There is also a great deal more competition from new developments in the Inner-City areas, including Kangaroo Point, Teneriffe and New Farm. New building stock with all the aforementioned criteria is offered at rents below those of older, established buildings. New buildings with trendy, contemporary interiors and more attractive rents are appealing to the sought-after Corporate market, as well as private renters."
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