New or Resale?

I am often asked whether it is better to buy a new or resale apartment?  A new apartment can be unsold developer stock in a new building or an off-the-plan apartment for a building not yet built.  A resale is a sale from someone other than the original developer.

There is a price difference between a new and resale apartment in Brisbane.  Sometimes, this is because a new apartment is new, with no wear and tear (e.g., freshly painted, new carpet, new kitchen, new appliances, etc).  But often, the price difference is not explained by newness.  Sometimes, the price difference is due to developer profit and marketing costs.

For example, Sunland is currently marketing Abian.  A large number of people I know have received a fancy brochure mailed to them, unsolicited, by Sunland.  There is an expensive display office onsite in Alice Street, where the landscaping alone would have cost a small fortune.  There is a video of a lost rich girl wandering around Brisbane, that does a good job not showing the neighbouring Quay West building.  Buyers are paying for all these marketing costs, plus the developers profits.

Another example is Infinity, by Meriton.  2 bedrooms, 2 bathrooms, 89 sqm in total, no balcony, 7 apartments per floor, short stay and hotel guests, for $647,000 and up!

Or you can buy an apartment in Metro 21, on level 25, with river views, a large balcony, 2 bedrooms, 3 bathrooms, 113 sqm total floor area, 4 apartments per floor, no short term rentals or hotel guests.  For a price less than a Meriton apartment.   Metro 21 is a boutique residential building, with good facility, and a low ratio of residents to facilities.  Seems like an obvious decision to me.

That is $7,269 per sqm compared with less than $5,700 per sqm.

Recent Brisbane City Apartment Sales

Based on recent apartment sales in the Brisbane CBD area (resales, not off the plan), it looks like the market is strengthening.

Skyline, 30 Macrossan Street

• Apt 242, 2 bedrooms - reported sold at $725,000
• Apt 73, 2 bedrooms - reported sold at $660,000
• Apt 121, 3 bedrooms - reported sold at $715,000
• Apt 113, 2 bedrooms - reported sold at $602,000
• Apt 125, 1 bedroom - reported sold at $347,000
• Apt 173, 2 bedrooms - $588,000

M on Mary, 70 Mary Street

• Apt 2202, 1 bed plus study - no car - $362,500

Aurora, 420 Queen Street

• Apt 245, 2 bed, 1 bath - $620,000
• Apt 435, 2 bed, 1 bath - $556,000

Riparian, 71 Eagle Street

• Apt 4305, 3 bedrooms - $1,850,000

Riverplace

• Apt 215, 1 bed - $510,000
• Apt 37, 2 bed - $690,000

Casino Towers, 151 George Street

• Apt 2002, 2 bedrooms - $690,000

Brisbane Apartment Sales Up

According to RP Data, Brisbane unit and apartment sales (that is, the number of sales) is up 16% than the same three month period a year ago.

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Based on RP Data’s estimates, there were 9,639 Brisbane house sales over the three months to October 2013 and 3,671 apartment sales.

Recent Sales in Brisbane's Admiralty Precinct

Admiralty Towers One (35 Howard Street)

• Apt 93, 2 bedrooms, 2 bathrooms, 2 car parks - sold in September for $880,000
• Apt 58, 2 bedrooms, 2 bathrooms, 1 car park - sold in September for $900,000

Admiralty Towers Two (501 Queen Street)

• Apt 108, 3 bedrooms - sold in September for $938,000
• Apt 132, 2 bedrooms - sold in August for $760,000
• Apt 26, 2 bedrooms - sold in July for $662,000

Admiralty Quays (32 Macrossan Street)

• Apt 100, 2 bedroom 2 bathroom - sold in October for $800,000
• Apt 12, 1 bedroom - sold in August for $590,000

Skyline (30 Macrossan Street - not riverfront)

• Apt 125, 1 bedroom, 1 car - sold in December for $347,000
• Apt 13, 3 bedroom - sold in October for $1,131,000
• Apt 172 - 2 bedrooms - sold in July for $590,000

Riverplace (82 Boundary St)

• Apt 215, 1 bedroom - sold in December for $510,000
• Apt 140, 1 bedroom - sold in November for $435,000
• Apt 316, 2 bedrooms - sold in October for $750,000
• Apt 54, 2 bedrooms - sold in October for $647,000
• Apt 146, 1 bedroom - sold in September for $370,000

Recent Brisbane City Apartment Sales

A list of some recent reported apartment sales in Brisbane CBD area, since June 2013.

Admiralty One

- Apt 93, 2 bedrooms, 2 bathrooms, direct river views, large 132 sqm - $880,000

- Apt 125, 2 bedrooms, side river views - $600,000

Admiralty Towers Two

- Apt 132 - 2 bedrooms, direct river views, 116 sqm - $760,000

- Apt 26 - 2 bedrooms, direct river views - $662,000

- Apt 124 - 2 bedrooms, direct river views - $705,000

Admiralty Quays

- Apt 104 - 3 bedrooms - $960,000

Riverplace

- Apt 146, 1 bedroom - $370,000

- Apt 82 - 2 bedrooms - $750,000

- Apt 165 - 1 bedroom - $500,000

- Apt 31 - 2 bedrooms - $650,000

Metro 21

- Apt 283, 1 bedroom on level 28, no carpark - $307,000

- Apt 301, 2 bedroom on level 30 - $553,500

Felix

- Apt 312, 2 bedrooms, 2 bathrooms - $555,000

- Apt 294, 2 bedrooms, 1 bathroom - $485,000

- Apt 324, 2 bedrooms, 1 bathroom - $475,000

Quay West - construction starting next door, and disharmony in building

- Apt 86, 2 bedrooms - $655,000

- Apt 129, 3 bedrooms - $1M

Saville South Bank - reports of two bedroom apartments selling above $900,000.

It appears that pricing is picking up.  In some instances, apartments are selling for record highs.  In other instances, prices are still below the 2007/2008 peak.  Volumes of sales in the period June to September do not appear to be high, although in recent weeks, this may have changed.  The high end sales appear to be to owner occupiers.

RP Data sales report

Over the 2012/13 financial year, RP Data estimates that there were 328,903 houses and 122,282 units sold across the country. Based on these figures, sales volumes over the year were 13.1% higher for houses and 6.4% higher for units. The data indicates that at a national level the vast majority of transactions were for detached houses, at 72.9% of all sales.

Brisbane – house sales rose 20.9% over the year with Brisbane recording 14.8% of all capital city house sales. The lift in unit sales was more moderate at just 7.4% and unit sales across the city accounted for 13.5% of all capital city sales.

Full Report Here

Top End Apartments

Some high end apartments for sale in Brisbane:

• The Refinery at New Farm, 4 bedrooms for $3.65M
• Pinnacle at Roma Street Parklands, 3 bedrooms, 291 sqm, auction
• Pinnacle at Roma Street Parklands, 3 bedrooms, 229 sqm, auction
• Hamilton Harbour, 2 bedrooms plus media room, auction
• The Grosvenor, 3 bedrooms, about $1.4M
• Riparian, 3 bedrooms, $7M.

Property Sales in Brisbane

RP Data reports that the number of sales of houses and apartments in Brisbane is more than 15% below the rolling five year average.  The number of sales is slowing increasing.

Recent Apartment Sales in Brisbane Suburbs

Ciana Indooroopilly (all sales from original developer)

• Apt 29, 2 bed, 2 bath, 2 cars, top floor, sold on 21 February 2013 for $555,000
• Apt 86, 2 bed, 2 bath, 2 cars, top floor, sold on 1 February 2013 for $560,000
• Apt 58, 3 bed, 2 bath,  top floor, sold on 1 February 2013 for $652,500
• Apt 49, 2 bed, 2 bath, 2 cars, top floor, sold on 1 February 2013 for $450,000

Riva Indooroopilly (Pradella development)

• Apt 5, 1 bedroom, ground floor, sold in February for $376,000 (seller had paid $245,000 in 2004)

Parklands Sherwood (Pradella development)

• Apt 202, 2 bed, 2 bath, large study, ground floor, sold for $370,000 (seller had paid $476,000 in 2009).

Recent Apartment Sales in Brisbane City

• Charlotte Towers, Apt 1504, 1 bed, 1 car, sold on 9 April 2013 for $410,000
• Felix, Apt 116, 2 bedrooms, sold on 30 March 2013 for $515,000
• Aurora, Apt 234, 2 bedrooms, sold at auction on 24 March 2013 for $548,500
• Charlotte Towers, Apt 501, 1 bedroom, 1 car, sold on 21 March for $415,000
• Skyline, Apt 61, 3 bedrooms, sold on 13 March for $710,000

More Sales in Brisbane

Two bed sale in Charlotte Towers - a record!?

A real estate agent is promoting a recent sale in Charlotte Towers:

"RECORD SALE OF THE YEAR! Being the only two bed, two bath apartment available in Charlotte Towers. This one went fast! Selling in less than a week, the high demand and professional approach allowed for another Record sale of $530,500 in this ever popular building.."  See here.

I guess it is only 8 weeks into the year, so it is probably not hard to get a records sale for the year in that period.

Recent Brisbane City Apartment Sales

• Evolution Apartments, 18 Tank Street, Apt 225, 2 bedrooms, 2 bathrooms, sold for $500,000 (previous owner had paid $762,000 off-the-plan from Citimark)
• Skyline Apartments, 30 Macrossan Street, Apt 333, sold for $750,000 (previous owner had paid $810,000 off-the-plan)
• Midtown Apartments, 127 Charlotte Street, Apt 1203, sold by developer for $432,500
• Aurora, 420 Queen Street, Apt 376, 2 bedrooms, 2 bathrooms, 107 sqm, sold for $585,000
• Riverplace, 82 Boundary Street, Apt 275, 1 bedroom plus study, sold for $481,000 (previous owner had paid $525,000 in 2008).

On the Market

RP Data reports that there are over 88,000 properties advertised for sale in Queensland at present.  This is an increase from this time last year.

Skyline Sale

Recently, a 3 bedroom apartment in Skyline Apartments sold for $700,000.   Many of the same type of apartment sold off the plan a number of years ago for more than this.  The pricing dropped at around settlement time to just over $700,000, and now it appears that $700,000 is market price for these three bedroom Skyline apartments.

The trouble with Skyline is that it is not direct riverfront, and is crowded out by other buildings.

Recent Brisbane Apartment Sales

Recent sales:

• Riparian, 71 Eagle Street, 3 bedrooms on level 44, sold for $2.3 million
• Charlotte Towers, 128 Charlotte St, Apt 1903, 2 bedrooms, 1 bathroom, sold for $465,000 (after being on the market for some time)
• River City, 79 Albert St, Apt 2706, 2 bedrooms, 1 bathroom, sold for $420,000
• River City, 79 Albert St, Apt 2106, 2 bedrooms, 1 bathroom, sold for $430,000
• Admiralty Towers One, 35 Howard Street, Lot 110, 2 bedrooms, 2 bathrooms, sold for $535,000
• Roma Street Parklands, Apt 6008, 3 bedrooms, sold for $1,220,000
• Riverplace, 82 Boundary Street, Apt 82, 2 bedrooms, sold for $645,000
• Casino Towers, 151 George Street, Apt 1604, 1 bedroom, sold for $347,000
• Festival Towers, 108 Albert St, Apt 3402, 2 bedrooms, 2 bathrooms, $495,000
• Aurora Towers, 420 Queen St, Apt 568, 2 bedrooms, $750,000

Recent Sales - Arbour on Grey

Some recent sales for Arbour on Grey, at Grey Street, South Bank.  This building was developed by Mirvac about 10 years ago.

Apt 2103, 3 bedrooms, 2 bathrooms, 2 car parks, level 1: $800,500
Apt 2223, 2 bedrooms, 2 bathrooms, 1 car park, level 2: $610,000
Apt 2320, 2 bedrooms, 2 bathrooms, 1 car park, level 3: $660,000
Apt 2225, 1 bedroom, 1 bathroom, 1 car park, level 2: $400,000

This complex rents well.  Currently, there are no apartments available for rent in Arbour on Grey.

There is a 2 bedroom apartment currently for sale for $630,000.

Unrealistic List Prices and Lowball Offers

A nice article:  "Lowball offers for property not uncommon in current soft market and hard for vendors to swallow".  I am often surprised by the list price for an apartment.  For example, I have seen some apartments recently where the list price is $100,000 more than the sales price of a similar apartment a few floors away that recently.

Extract:

"Many vendors (irrespective of the value of the home) can be fixated on achieving a particular price for one reason or another. Owners of premium properties are no different and can sometimes be stuck on an unrealistic price. Quite often when sales agents call to inform me of silent listings, the first thing I ask is how the price has been determined. Very often they openly admit that it has been hard to set the price and ultimately it has been dictated by the vendors. In these instances, it can take time to condition the vendors to accept a significantly lower price than they originally hoped for."

Skyline Apartment Recent Sales

Some recent sales at Skyline Apartments, also known as Mint Short Term Apartments, at 30 Macrossan Street, Brisbane:

• Apt 393, 3 bedroom, sold in April 2012 for $800,000 (originally sold off the plan in 2004 for $840,000)
• Apt 154, 3 bedrooms, sold in April 2012 for $745,000 (originally sold off the plan in 2007 for $815,000)
• Apt 203, 2 bedrooms, sold in February 2012 for $530,000 (originally sold off the plan in 2008 for $615,000)
• Apt 123, 2 bedrooms, sold in February 2012 for $600,000 (prior sale was in 2007 for $630,000)
• Apt 251 sold in August 2012, price not yet reported

Does not look like values have held up very well in Skyline Apartments.

Inner City Apartments For Sale

Some apartments for sale in Brisbane City.

River Place, 82 Boundary Street (riverfront)
Apt 253, 1 bed plus study, 1 car park, level 28, 83 sqm, $495,000
With stamp duty - $510,750
$6,153 sqm
Rates $1,300 a year; body corporate $6,300 a year
Assume rent of $570 a week ($520 a week after agent's fees)
Net return per year - $19,440 per year before interest (3.8% return).

Apt 275, 1 bed plus study, 1 car park, 83 sqm, $505,000
With stamp duty - $521,100
$6,278 per sqm
Rates $2,200 a year; body corporate $5,950 a year
Assume rent of $570 a week ($520 a week after agent's fees)
Net return per year - $18,890 per year before interest (3.6% return).

Apt 185, 1 bed plus study, 1 car park, 81 sqm, $489,000
With stamp duty - $504,540
$6,229 per sqm
Rates $2,200 a year; body corporate $5,950 a year
Assume rent of $530 a week ($485 a week after agent's fees)
Net return per year - $17,070 per year before interest (3.4% return).

Apt 123, 2 bed 2 bath, 1 car park, 110 sqm, $689,000
With stamp duty - $713,030
$6,482 per sqm
Rates $2,447 a year; body corporate $6,600 a year
Assume rent of $660 a week ($610 a week after agent's fees)
Net return per year - $22,673 per year before interest (3.2% return).

Meriton's Soleil - new apartments (not riverfront)
Apt 5301, 2 bed 2 bath, 1 car park, 87 sqm, level 53, list price $627,000, but may discount to $615,000
Stamp duty refunded by developer
$7,068 per sqm
Rates $2,400 a year; body corporate $5,200 a year
Assume rent of $700 a week ($665 a week after agent's fees)
Net return per year - $26,980 per year before interest (4.3% return).

Assume that you can lock in an interest rate of 5.55% for 3 years (e.g., with BOQ), then you will be making a loss on all these investments after interest payments.

The above also assumes that these apartments will sell at the list price, which is an incorrect assumption, so the returns will be slightly better than stated above.